FNF Reports First Quarter 2020 Diluted EPS of $(0.22) and Adjusted Diluted EPS of $0.73, Pre-Tax Title Margin of (3.3)% and Adjusted Pre-Tax Title Margin of 14.4%
- Total revenue of approximately
$1.6 billion in the first quarter versus$1.7 billion in the first quarter of 2019 - First quarter net losses of
$61 million and adjusted net earnings of$202 million versus net earnings of$206 million and adjusted net earnings of$118 million for the first quarter of 2019 - First quarter diluted EPS of
$(0.22) and adjusted diluted EPS of$0.73 versus diluted EPS of$0.74 and adjusted diluted EPS of$0.43 in the first quarter of 2019 - Realized losses were
$320 million in the first quarter versus realized gains of$142 million in the first quarter of 2019 primarily due to mark to market accounting treatment of equity and preferred stock securities whether the securities were disposed of in the quarter or continue to be held in our investment portfolio
Title
- Total revenue of approximately
$1.6 billion versus approximately$1.7 billion in total revenue in the first quarter of 2019 - Total revenue, excluding realized gains and losses, of approximately
$1.9 billion versus approximately$1.5 billion in the first quarter of 2019, an increase of 27% - Pre-tax losses of
$53 million and adjusted pre-tax earnings of$279 million versus pre-tax earnings of$292 million and adjusted pre-tax earnings of$172 million in the first quarter of 2019 - Pre-tax title margin of (3.3)% and adjusted pre-tax title margin of 14.4% versus pre-tax title margin of 17.6% and adjusted pre-tax title margin of 11.3% in the first quarter of 2019
- First quarter purchase orders opened increased 1% on a daily basis and purchase orders closed increased 3% on a daily basis versus the first quarter of 2019
- Total commercial revenue of
$245 million , a 6% increase versus total commercial revenue in the first quarter of 2019, driven by a 3% increase in closed orders and total commercial fee per file; first quarter total commercial orders opened increased 13% compared to the prior year - Overall first quarter average fee per file of
$2,224 , a 13% decrease versus the first quarter of 2019
Title Orders
Direct Orders Opened * |
Direct Orders Closed * |
|||||||
Month |
/ (% Purchase) |
/ (% Purchase) |
||||||
|
185,000 |
50% |
112,000 |
49% |
||||
|
211,000 |
45% |
118,000 |
47% |
||||
|
286,000 |
33% |
147,000 |
43% |
||||
First Quarter 2020 |
682,000 |
41% |
377,000 |
46% |
||||
Direct Orders Opened * |
Direct Orders Closed * |
|||||||
Month |
/ (% Purchase) |
/ (% Purchase) |
||||||
|
142,000 |
65% |
81,000 |
66% |
||||
|
135,000 |
66% |
81,000 |
65% |
||||
|
161,000 |
65% |
101,000 |
66% |
||||
First Quarter 2019 |
438,000 |
65% |
263,000 |
66% |
||||
* Includes an immaterial number of non-purchase and non-refinance orders |
Open |
Closed |
Commercial |
|||||||||||||
Commercial |
Commercial |
Revenue |
Commercial |
||||||||||||
Orders |
Orders |
(In millions) |
|
||||||||||||
First Quarter 2020 - Total Commercial |
56,300 |
31,000 |
|
|
|||||||||||
First Quarter 2019 - Total Commercial |
49,800 |
30,000 |
|
|
"While our first quarter volumes started strong and our initial outlook for the full year robust, the environment has rapidly changed with the spread of COVID-19 which has impacted how we work, live and socialize," commented Chairman
In the first quarter, we generated adjusted pre-tax title earnings of
Conference Call
We will host a call with investors and analysts to discuss first quarter 2020 FNF results on Thursday, April 23, 2020, beginning at
About
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, FNF 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 adjusted pre-tax earnings, adjusted pre-tax earnings as a percentage of adjusted revenue (adjusted pre-tax title margin), adjusted net earnings, and adjusted EPS.
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: the ability to consummate the proposed F&G transaction; the ability to obtain requisite regulatory, shareholder and stockholder approval and the satisfaction of other conditions to the consummation of the proposed F&G transaction; the ability of FNF to successfully integrate F&G's operations and employees; the potential impact of the announcement or consummation of the proposed F&G transaction on relationships, including with employees, suppliers, customers and competitors; changes in general economic, business, political and COVID-19 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; our dependence on distributions from our title insurance underwriters as a main source of cash flow; significant competition that F&G and 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 FNF's Form 10-K and other filings with the
FNF-E
FIRST QUARTER SEGMENT INFORMATION (In millions, except order information in thousands) (Unaudited) |
||||||||||||
Consolidated |
Title |
Corporate and Other |
||||||||||
Three Months Ended |
||||||||||||
|
||||||||||||
Direct title premiums |
$ |
546 |
$ |
546 |
$ |
— |
||||||
Agency title premiums |
732 |
732 |
— |
|||||||||
Escrow, title related and other fees |
601 |
610 |
(9) |
|||||||||
Total title and escrow |
1,879 |
1,888 |
(9) |
|||||||||
Interest and investment income |
53 |
48 |
5 |
|||||||||
Realized gains and losses, net |
(320) |
(313) |
(7) |
|||||||||
Total revenue |
1,612 |
1,623 |
(11) |
|||||||||
Personnel costs |
614 |
641 |
(27) |
|||||||||
Agent commissions |
560 |
560 |
— |
|||||||||
Other operating expenses |
411 |
380 |
31 |
|||||||||
Depreciation and amortization |
43 |
37 |
6 |
|||||||||
Claim loss expense |
58 |
58 |
— |
|||||||||
Interest expense |
12 |
— |
12 |
|||||||||
Total expenses |
1,698 |
1,676 |
22 |
|||||||||
Pre-tax loss |
$ |
(86) |
$ |
(53) |
$ |
(33) |
||||||
Non-GAAP adjustments before taxes |
||||||||||||
Realized (gains) and losses, net |
320 |
313 |
7 |
|||||||||
Purchase price amortization |
23 |
19 |
4 |
|||||||||
Transaction costs |
6 |
— |
6 |
|||||||||
Total non-GAAP adjustments before taxes |
$ |
349 |
$ |
332 |
$ |
17 |
||||||
Adjusted pre-tax earnings (loss) |
$ |
263 |
$ |
279 |
$ |
(16) |
||||||
Adjusted pre-tax margin |
13.6 |
% |
14.4 |
% |
— |
|||||||
Pre-tax loss |
$ |
(86) |
$ |
(53) |
$ |
(33) |
||||||
Income tax benefit |
(28) |
(19) |
(9) |
|||||||||
Earnings from equity investments |
1 |
1 |
— |
|||||||||
Non-controlling interests |
4 |
4 |
— |
|||||||||
Net loss attributable to common shareholders |
$ |
(61) |
$ |
(37) |
$ |
(24) |
||||||
EPS attributable to common shareholders - basic |
$ |
(0.22) |
||||||||||
EPS attributable to common shareholders - diluted |
$ |
(0.22) |
||||||||||
Weighted average shares - basic |
274 |
|||||||||||
Weighted average shares - diluted |
274 |
FIRST QUARTER SEGMENT INFORMATION (In millions, except order information in thousands) (Unaudited) |
||||||||||||
Consolidated |
Title |
Corporate and Other |
||||||||||
Three Months Ended |
||||||||||||
|
||||||||||||
Net loss attributable to common shareholders |
$ |
(61) |
$ |
(37) |
$ |
(24) |
||||||
Total non-GAAP, pre-tax adjustments |
$ |
349 |
$ |
332 |
$ |
17 |
||||||
Income taxes on non-GAAP adjustments |
(83) |
(79) |
(4) |
|||||||||
Noncontrolling interest on non-GAAP adjustments |
(3) |
(3) |
— |
|||||||||
Total non-GAAP adjustments |
$ |
263 |
$ |
250 |
$ |
13 |
||||||
Adjusted net earnings (loss) attributable to common shareholders |
$ |
202 |
$ |
213 |
$ |
(11) |
||||||
Adjusted EPS attributable to common shareholders - diluted |
$ |
0.73 |
||||||||||
Direct orders opened (000's) |
682 |
682 |
||||||||||
Direct orders closed (000's) |
377 |
377 |
||||||||||
Fee per file |
$ |
2,224 |
$ |
2,224 |
||||||||
Actual title claims paid |
$ |
48 |
$ |
48 |
||||||||
Cash flows provided by operations |
$ |
105 |
FIRST QUARTER SEGMENT INFORMATION (In millions, except order information in thousands) (Unaudited) |
||||||||||||
Consolidated |
Title |
Corporate and Other |
||||||||||
Three Months Ended |
||||||||||||
|
||||||||||||
Direct title premiums |
$ |
440 |
$ |
440 |
$ |
— |
||||||
Agency title premiums |
552 |
552 |
— |
|||||||||
Escrow, title related and other fees |
534 |
481 |
53 |
|||||||||
Total title and escrow |
1,526 |
1,473 |
53 |
|||||||||
Interest and investment income |
54 |
48 |
6 |
|||||||||
Realized gains and losses, net |
142 |
142 |
— |
|||||||||
Total revenue |
1,722 |
1,663 |
59 |
|||||||||
Personnel costs |
592 |
551 |
41 |
|||||||||
Agent commissions |
421 |
421 |
— |
|||||||||
Other operating expenses |
344 |
315 |
29 |
|||||||||
Depreciation and amortization |
44 |
39 |
5 |
|||||||||
Claim loss expense |
45 |
45 |
— |
|||||||||
Interest expense |
12 |
— |
12 |
|||||||||
Total expenses |
1,458 |
1,371 |
87 |
|||||||||
Pre-tax earnings (loss) |
$ |
264 |
$ |
292 |
$ |
(28) |
||||||
Non-GAAP adjustments before taxes |
||||||||||||
Realized (gains) and losses, net |
(142) |
(142) |
— |
|||||||||
Purchase price amortization |
27 |
22 |
5 |
|||||||||
Transaction costs |
2 |
— |
2 |
|||||||||
Total non-GAAP adjustments before taxes |
$ |
(113) |
$ |
(120) |
$ |
7 |
||||||
Adjusted pre-tax earnings (loss) |
$ |
151 |
$ |
172 |
$ |
(21) |
||||||
Adjusted pre-tax margin |
9.6 |
% |
11.3 |
% |
— |
|||||||
Pre-tax earnings (loss) |
$ |
264 |
$ |
292 |
$ |
(28) |
||||||
Income tax expense (benefit) |
65 |
71 |
(6) |
|||||||||
Earnings from equity investments |
7 |
7 |
— |
|||||||||
Net earnings (loss) attributable to common shareholders |
$ |
206 |
$ |
228 |
$ |
(22) |
||||||
EPS attributable to common shareholders - basic |
$ |
0.75 |
||||||||||
EPS attributable to common shareholders - diluted |
$ |
0.74 |
||||||||||
Weighted average shares - basic |
273 |
|||||||||||
Weighted average shares - diluted |
277 |
FIRST QUARTER SEGMENT INFORMATION (In millions, except order information in thousands) (Unaudited) |
||||||||||||
Consolidated |
Title |
Corporate and Other |
||||||||||
Three Months Ended |
||||||||||||
|
||||||||||||
Net earnings (loss) attributable to common shareholders |
$ |
206 |
$ |
228 |
$ |
(22) |
||||||
Total non-GAAP, pre-tax adjustments |
$ |
(113) |
$ |
(120) |
$ |
7 |
||||||
Income taxes on non-GAAP adjustments |
28 |
30 |
(2) |
|||||||||
Noncontrolling interest on non-GAAP adjustments |
(3) |
(3) |
— |
|||||||||
Total non-GAAP adjustments |
$ |
(88) |
$ |
(93) |
$ |
5 |
||||||
Adjusted net earnings (loss) attributable to common shareholders |
$ |
118 |
$ |
135 |
$ |
(17) |
||||||
Adjusted EPS attributable to common shareholders - diluted |
$ |
0.43 |
||||||||||
Direct orders opened (000's) |
438 |
438 |
||||||||||
Direct orders closed (000's) |
263 |
263 |
||||||||||
Fee per file |
$ |
2,567 |
$ |
2,567 |
||||||||
Actual title claims paid |
$ |
49 |
$ |
49 |
||||||||
Cash flows used in operations |
$ |
(4) |
QUARTERLY OPERATING STATISTICS (Unaudited) |
||||||||||||||||||||||||||||||||
Q1 2020 |
Q4 2019 |
Q3 2019 |
Q2 2019 |
Q1 2019 |
Q4 2018 |
Q3 2018 |
Q2 2018 |
|||||||||||||||||||||||||
Quarterly Opened Orders ('000's except % data) |
||||||||||||||||||||||||||||||||
Total opened orders* |
682 |
492 |
592 |
544 |
438 |
379 |
456 |
505 |
||||||||||||||||||||||||
Total opened orders per day* |
11.0 |
7.8 |
9.3 |
8.5 |
7.2 |
6.0 |
7.2 |
7.9 |
||||||||||||||||||||||||
Purchase % of opened orders |
41 |
% |
50 |
% |
52 |
% |
61 |
% |
65 |
% |
67 |
% |
69 |
% |
71 |
% |
||||||||||||||||
Refinance % of opened orders |
59 |
% |
50 |
% |
48 |
% |
39 |
% |
35 |
% |
33 |
% |
31 |
% |
29 |
% |
||||||||||||||||
Total closed orders* |
377 |
417 |
409 |
359 |
263 |
301 |
339 |
362 |
||||||||||||||||||||||||
Total closed orders per day* |
6.1 |
6.6 |
6.4 |
5.6 |
4.3 |
4.8 |
5.4 |
5.7 |
||||||||||||||||||||||||
Purchase % of closed orders |
46 |
% |
49 |
% |
55 |
% |
65 |
% |
66 |
% |
69 |
% |
71 |
% |
71 |
% |
||||||||||||||||
Refinance % of closed orders |
54 |
% |
51 |
% |
45 |
% |
35 |
% |
34 |
% |
31 |
% |
29 |
% |
29 |
% |
||||||||||||||||
Commercial (millions, except orders in '000's) |
||||||||||||||||||||||||||||||||
Total commercial revenue |
$ |
245 |
$ |
321 |
$ |
301 |
$ |
286 |
$ |
231 |
$ |
328 |
$ |
276 |
$ |
280 |
||||||||||||||||
Total commercial opened orders |
56.3 |
55.1 |
56.0 |
58.6 |
49.8 |
46.0 |
48.9 |
54.2 |
||||||||||||||||||||||||
Total commercial closed orders |
31.0 |
39.1 |
36.4 |
34.0 |
30.0 |
35.2 |
31.2 |
35.1 |
||||||||||||||||||||||||
National commercial revenue |
$ |
132 |
$ |
186 |
$ |
172 |
$ |
163 |
$ |
122 |
$ |
195 |
$ |
155 |
$ |
153 |
||||||||||||||||
National commercial opened orders |
21.5 |
22.6 |
23.8 |
25.3 |
20.6 |
19.1 |
19.8 |
23.0 |
||||||||||||||||||||||||
National commercial closed orders |
10.7 |
16.2 |
14.1 |
12.7 |
10.5 |
13.2 |
12.0 |
12.9 |
||||||||||||||||||||||||
Total |
||||||||||||||||||||||||||||||||
Fee per file |
$ |
2,224 |
$ |
2,384 |
$ |
2,459 |
$ |
2,677 |
$ |
2,567 |
$ |
2,803 |
$ |
2,623 |
$ |
2,579 |
||||||||||||||||
Residential fee per file |
$ |
1,744 |
$ |
1,792 |
$ |
1,928 |
$ |
2,075 |
$ |
1,964 |
$ |
2,003 |
$ |
2,032 |
$ |
2,051 |
||||||||||||||||
Total commercial fee per file |
$ |
7,900 |
$ |
8,200 |
$ |
8,300 |
$ |
8,400 |
$ |
7,700 |
$ |
9,300 |
$ |
8,800 |
$ |
8,000 |
||||||||||||||||
National commercial fee per file |
$ |
12,300 |
$ |
11,500 |
$ |
12,200 |
$ |
12,900 |
$ |
11,600 |
$ |
14,800 |
$ |
13,000 |
$ |
11,800 |
||||||||||||||||
Total Staffing |
||||||||||||||||||||||||||||||||
Total field operations employees |
12,500 |
12,300 |
12,200 |
12,000 |
11,700 |
11,800 |
12,400 |
12,500 |
||||||||||||||||||||||||
* Includes an immaterial number of non-purchase and non-refinance orders |
SUMMARY BALANCE SHEET INFORMATION (In millions) |
||||||||||
|
|
|||||||||
(Unaudited) |
(Unaudited) |
|||||||||
Cash and investment portfolio |
$ |
5,378 |
$ |
5,760 |
||||||
|
2,726 |
2,727 |
||||||||
Title plant |
404 |
404 |
||||||||
Total assets |
10,204 |
10,677 |
||||||||
Notes payable |
839 |
838 |
||||||||
Reserve for title claim losses |
1,518 |
1,509 |
||||||||
Secured trust deposits |
826 |
791 |
||||||||
Redeemable non-controlling interests |
344 |
344 |
||||||||
Non-redeemable non-controlling interests |
(16) |
(17) |
||||||||
Total equity and non-controlling interests |
5,460 |
5,709 |
||||||||
Total equity attributable to common shareholders |
5,132 |
5,382 |
SOURCE
Jamie Lillis, Managing Director, Solebury Trout, 203-428-3223, jlillis@soleburytrout.com