Fidelity National Financial, Inc.

Fidelity National Financial, Inc.

Press Release

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Apr 30, 2014

Fidelity National Financial, Inc. Reports First Quarter 2014 Adjusted Core EPS of $0.26; Adjusted Pre-Tax Title Margin of 5.5%; Black Knight Adjusted EBITDA Margin of 35.9%; Increased LPS Total Synergy Target to $290 Million

Supporting Materials:
Fidelity National Financial, Inc. Reports First Quarter 2014 Adjusted Core EPS of $0.26; Adjusted Pre-Tax Title Margin of 5.5%; Black Knight Adjusted EBITDA Margin of 35.9%; Increased LPS Total Synergy Target to $290 Million

Jacksonville, Fla. -- (April 30, 2014) -- Fidelity National Financial, Inc. (NYSE:FNF), a leading provider of title insurance, technology and transaction services to the real estate and mortgage industries, today reported operating results for the three-month period ended March 31, 2014.

Consolidated

  • Total revenue of $2.1 billion in the first quarter versus $2.0 billion in the first quarter of 2013
  • Adjusted net earnings of $84 million, or $0.30 per diluted share, for the first quarter versus adjusted net earnings of $102 million, or $0.44 per diluted share, in the first quarter of 2013; first quarter 2014 adjusted net earnings exclude $106 million of after-tax, unusual or one-time items, primarily related to the acquisition of Lender Processing Services, Inc. ("LPS") and a one-time Ceridian legal settlement
  • GAAP net loss of $22 million, or ($0.08) per diluted share, for the first quarter versus net earnings of $90 million, or $0.39 per diluted share in the first quarter of 2013

Core Operations

  • Total revenue of $1.4 billion in the first quarter versus $1.4 billion in the first quarter of 2013
  • Adjusted EBITDA of $148 million for the first quarter versus adjusted EBITDA of $179 million for the first quarter of 2013
  • Adjusted net earnings of $74 million, or $0.26 per diluted share, for the first quarter versus adjusted net earnings of $98 million, or $0.42 per diluted share, in the first quarter of 2013; adjusted first quarter 2014 net earnings exclude $80 million of unusual or one-time items, including $117 million of costs and expenses related to the acquisition of LPS, $75 million in purchase price amortization and a legal accrual of $2 million, less a $51 million non-controlling interest credit related to the LPS items, a $61 million tax impact from the adjustments and $2 million of realized gains
  • First quarter free cash flow used of $39 million versus $36 million used in the first quarter of 2013

Fidelity National Financial Ventures ("FNFV")

  • Total revenue of $686 million in the first quarter versus $656 million in the first quarter of 2013
  • EBITDA of $58 million in the first quarter versus adjusted EBITDA of $41 million in the first quarter of 2013
  • Adjusted net earnings of $10 million, or $0.04 per diluted share, for the first quarter versus $4 million, or $0.02 per diluted share, in the first quarter of 2013; first quarter 2014 adjusted net earnings exclude $26 million of unusual and one-time items, including $21 million in expense from a one-time Ceridian legal settlement and $12 million in purchase price amortization, less a $3 million non-controlling interest credit related to the purchase price amortization and a $4 million tax impact from the adjustments
  • Book value attributable to FNF common shareholders of approximately $1.3 billion, or $4.72 per share

Core Operations
Title

  • Adjusted pre-tax title margin of 5.5% for the first quarter versus 12.5% in the first quarter of 2013; adjusted EBITDA margin of 6.8% for the first quarter versus 13.5% in the first quarter of 2013
  • Open title orders of 469,000 for the first quarter, a decrease of 174,000, or 27%, compared with the first quarter of 2013; open orders per day of 7,700 for the first quarter versus 10,500 open orders per day for the first quarter of 2013; 55% of first quarter open title orders were purchase related versus 38% in the first quarter of 2013
  • Closed title orders of 295,000 for the first quarter, a decrease of 192,000, or 39%, compared with the first quarter of 2013; closed orders per day of 4,800 for the first quarter versus 8,000 closed orders per day for the first quarter of 2013; 52% of first quarter closed title orders were purchase related versus 31% in the first quarter of 2013
  • First quarter purchase orders opened increased by nearly 1.5% and closed purchase orders decreased by 6% versus the first quarter of 2013; purchase open orders increased by more than 3% for the first three weeks of April 2014
  • First quarter commercial title revenue of $104 million, an 18% increase from the first quarter of 2013, driven by a 23% improvement in the commercial fee per file slightly offset by a 4% decrease in closed orders; open commercial orders increased by 5% over the prior year
  • Overall first quarter average fee per file of $1,858, a 35% increase over the first quarter of 2013
  • ServiceLink total revenue of $215 million, adjusted pre-tax earnings of $10 million and an adjusted pre-tax margin of 4.7%; the adjusted pre-tax earnings exclude $60 million of costs and expenses related to the acquisition of LPS and $22 million of purchase price amortization

Black Knight

  • Total revenue of $187 million, led by mortgage servicing technology revenue of $120 million
  • Adjusted EBITDA of $69 million and adjusted EBITDA margin of 35.9%

The preceding table only includes commercial activity from FNF's commercial offices in the national commercial division and does not attempt to capture commercial activity in our local offices.

"This quarter was a return to more normal first quarter seasonality in our title insurance business where we experience seasonally lower purchase activity compared to other quarters during the year," said Chairman William P. Foley, II. "Purchase orders increased approximately 1.5% for the first quarter of 2014 versus the prior year first quarter and increased by more than 3% in the first three weeks of April. Despite a slower purchase market and refinance order volumes that declined by 48%, we were able to generate a 5.5% adjusted pre-tax title margin and an adjusted EBITDA title margin of 6.8%. Our title business will benefit from a continued improvement in the residential purchase market.

"Black Knight had a strong first quarter under our ownership. Total revenue was $187 million with adjusted EBITDA of $69 million, an adjusted EBITDA margin of 35.9%. We are experiencing strong demand for our industry standard loan origination and servicing technology products and are excited about the growing and recurring revenue, improving operating margins and strong free cash flow at Black Knight.

"The integration of LPS has progressed smoothly and we uncovered further cost synergies during the first quarter. We are now confident in raising our total cost synergy target to $290 million, with $215 million of that target already achieved by the end of the first quarter.

"Overall, we expect margins to improve in all of our core businesses as we move through the year, as the impact of the increased synergies become apparent in those core businesses and we also enter the traditionally stronger spring and summer real estate seasons.

"Finally, we continue to work through the process of setting up FNFV as a tracking stock for our portfolio company investments. The stockholder vote is set for June 18, 2014, and we hope to close the transaction and distribute the shares of FNFV to FNF stockholders on a 1-for-3 basis on or near June 30, 2014."

Conference Call
FNF will host a call with investors and analysts to discuss first quarter 2014 results on Thursday, May 1, 2014, beginning at 12:00 p.m. Eastern Time. A live webcast of the conference call will be available on the Events and Multimedia page of the FNF Investor Relations website at www.fnf.com. The conference call replay will be available via webcast through the FNF Investor Relations website at www.fnf.com. The telephone replay will be available from 2:00 p.m. Eastern time on May 1, 2014, through May 8, 2014, by dialing 800-475-6701 (USA) or 320-365-3844 (International). The access code will be 323968.

About FNF
Fidelity National Financial, Inc. (NYSE:FNF), is a leading provider of title insurance, technology and transaction services to the real estate and mortgage industries. FNF is the nation's largest title insurance company through its title insurance underwriters - Fidelity National Title, Chicago Title, Commonwealth Land Title, Alamo Title and National Title of New York - that collectively issue more title insurance policies than any other title company in the United States. FNF also provides industry-leading mortgage technology solutions and transaction services, including MSP®, the leading residential mortgage servicing technology platform in the U.S., through its majority-owned subsidiaries, Black Knight Financial Services, LLC and ServiceLink Holdings, LLC. In addition, FNF owns majority and minority equity investment stakes in a number of entities, including American Blue Ribbon Holdings, LLC, J. Alexander's, LLC, Remy International, Inc., Ceridian HCM, Inc., Comdata Inc. and Digital Insurance, Inc. More information about FNF can be found at www.fnf.com.

Use of Non-GAAP Financial Information
Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, the Company has provided non-GAAP financial measures, which it believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. These non-GAAP measures include earnings before interest, taxes and depreciation and amortization (EBITDA), adjusted earnings before interest, taxes and depreciation and amortization (Adjusted EBITDA), adjusted earnings before interest, taxes and depreciation as a percent of adjusted revenue (Adjusted EBITDA margin), adjusted net earnings, adjusted EPS and free cash flow.

Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP net earnings. Further, FNF's non-GAAP measures may be calculated differently from similarly titled measures of other companies. Reconciliations of these non-GAAP measures to related GAAP measures are provided below.

Forward-Looking Statements
This press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements regarding our expectations, hopes, intentions or strategies regarding the future are forward-looking statements. Forward-looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: changes in general economic, business and political conditions, including changes in the financial markets; weakness or adverse changes in the level of real estate activity, which may be caused by, among other things, high or increasing interest rates, a limited supply of mortgage funding or a weak U. S. economy; our potential inability to find suitable acquisition candidates, acquisitions in lines of business that will not necessarily be limited to our traditional areas of focus, or difficulties in integrating acquisitions; our dependence on distributions from our title insurance underwriters as a main source of cash flow; significant competition that our operating subsidiaries face; compliance with extensive government regulation of our operating subsidiaries; and other risks detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of the Company's Form 10-K and other filings with the Securities and Exchange Commission.

SOURCE: Fidelity National Financial, Inc.
CONTACT: Daniel Kennedy Murphy, Senior Vice President and Treasurer, 904-854-8120, dkmurphy@fnf.com