FNF Core Reports Third Quarter 2014 Adjusted EPS of $0.51; Adjusted Pre-Tax Title Margin of 14.7%, a 50 Basis Point Sequential Improvement From the Second Quarter of 2014; Black Knight Adjusted EBITDA Margin of 42.3%
Jacksonville, Fla. - (October 29, 2014) - Fidelity National Financial, Inc. today reported the operating results of its core segment (NYSE:FNF), a leading provider of title insurance, technology and transaction services to the real estate and mortgage industries, for the three and nine-month periods ended September 30, 2014.
- Total revenue of approximately $1.7 billion in the third quarter versus $1.6 billion in the third quarter of 2013
- Adjusted third quarter net earnings of $145 million versus adjusted net earnings of $115 million for the third quarter of 2013
- Adjusted third quarter core diluted EPS of $0.51 versus adjusted core diluted EPS of $0.50 in the third quarter of 2013
- Third quarter core free cash flow provided of $292 million versus $94 million provided in the third quarter of 2013
Title
- Approximately $1.5 billion in total revenue, adjusted pre-tax earnings of $223 million and adjusted pre-tax title margin of 14.7% for the third quarter versus approximately $1.5 billion in total revenue, adjusted pre-tax earnings of $220 million and an adjusted pre-tax title margin of 14.3% in the third quarter of 2013
- Adjusted pre-tax title margin of 14.7%, a 50 basis point improvement over the revised second quarter adjusted pre-tax title margin of 14.2%; second quarter 2014 was revised due to an immaterial payroll accrual correction
- ServiceLink generated $225 million in revenue, adjusted EBITDA of $34 million, an adjusted EBITDA margin of 15%, adjusted pre-tax earnings of $29 million and an adjusted pre-tax margin of 13%
- Open orders per day of 7,516 for the third quarter versus 7,406 open orders per day for the third quarter of 2013
- Closed orders per day of 5,438 for the third quarter versus 6,406 closed orders per day for the third quarter of 2013
- Third quarter purchase orders opened and closed increased by 7% and 2%, respectively, versus the third quarter of 2013; purchase orders opened and closed declined by 1% and 5%, respectively, excluding ServiceLink default related purchase orders
- Third quarter national commercial title revenue of $136 million, a 13% increase from the third quarter of 2013, driven by a 12% improvement in the commercial fee per file and a 2% increase in closed orders; open commercial orders increased by 8% over the prior year
- Overall third quarter average fee per file of $2,066, a 14.3% increase over the third quarter of 2013
- Title claims paid of $81 million, a decrease of $22 million, or 21%, from the third quarter of 2013
Title Orders
- The preceding table only includes commercial activity from FNF's commercial offices in the national commercial division and does not attempt to capture potential commercial activity in our local offices.
Black Knight
- Total revenue of $214 million, led by MSP revenue of approximately $120 million
- Revenue growth of 11% compared to the prior year period legacy LPS results, led by RealEC and Data and Analytics, and factoring out the increase of $15 million during 2014 from the addition of Property Insight
- Recent significant customer contracts that include Green Tree signing a multi-year MSP contract, Stearns and Synovus signing multi-year Empower contracts and RealEC signing contracts for Closing Insight with three of the nation's top five lenders
- Adjusted EBITDA of $91 million and adjusted EBITDA margin of 42.3%, a 130 basis point sequential improvement from the second quarter of 2014 and an 830 basis point improvement over the prior year
"This was a stable quarter for our title business as our consistent focus on operational efficiency metrics allowed us to generate a 14.7% pre-tax title margin, a 50 basis point sequential improvement over the second quarter of 2014," said Chairman William P. Foley, II. "We continue to believe that we can show further margin improvement in a stable order environment and even higher margins as mortgage credit becomes more readily available and the residential real estate market continues to improve.
"Black Knight had another strong quarter in both revenue growth and EBITDA margin improvement. We are also generating significant momentum in the business with recent contracts signed that will further contribute to future organic revenue growth. Additionally, the sales pipeline remains strong, with numerous MSP, Empower, Closing Insight and Data and Analytics contracts expected over the next several quarters. We expect a strong fourth quarter and are very excited about our revenue growth prospects for 2015 and 2016. Finally, the integration of LPS is effectively completed, as we have now realized nearly $296 million of cost synergies on a run-rate basis as of the end of the third quarter."
Conference Call
We will host a call with investors and analysts to discuss third quarter 2014 FNF Core results on Thursday, October 30, 2014, beginning at 9:00 a.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 11:00 a.m. Eastern time on October 30, 2014, through November 6, 2014, by dialing 800-475-6701 (USA) or 320-365-3844 (International). The access code will be 338005.
About FNF
Fidelity National Financial, Inc. (FNF) is organized into two groups, FNF Core (NYSE: FNF) and FNF Ventures (NYSE: FNFV). Through our Core operations, 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, in our FNFV group, we own majority and minority equity investment stakes in a number of entities, including American Blue Ribbon Holdings, LLC ("ABRH"), J. Alexander's, LLC ("J. Alexander's"), Remy International, Inc. ("Remy"), Ceridian HCM, Inc. and Comdata Inc. (collectively "Ceridian") and Digital Insurance, Inc. ("Digital Insurance"). 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 and Risk Factors
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.
This press release should be read in conjunction with the press release filed for the results of FNFV on this same date as well as the risks detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of the Company's Form 10-Q,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