Fidelity National Financial, Inc.

Fidelity National Financial, Inc.

Press Release

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Feb 13, 2020

FNF Reports Fourth Quarter 2019 Diluted EPS of $1.22 and Adjusted Diluted EPS of $0.95, Pre-Tax Title Margin of 20.3% and Adjusted Pre-Tax Title Margin of 16.3%

JACKSONVILLE, Fla., Feb. 13, 2020 /PRNewswire/ -- Fidelity National Financial, Inc. (NYSE:FNF), a leading provider of title insurance and transaction services to the real estate and mortgage industries, today reported operating results for the three and twelve-month periods ended December 31, 2019.

  • Total revenue of approximately $2.4 billion in the fourth quarter versus $1.7 billion in the fourth quarter of 2018
  • Fourth quarter net earnings of $340 million and adjusted net earnings of $263 million versus net earnings of $44 million and adjusted net earnings of $175 million for the fourth quarter of 2018
  • Fourth quarter diluted EPS of $1.22 and adjusted diluted EPS of $0.95 versus diluted EPS of $0.16 and adjusted diluted EPS of $0.63 in the fourth quarter of 2018
  • Realized gains were $131 million in the fourth quarter versus realized losses of $144 million in the fourth quarter of 2018

Title

  • Total revenue of approximately $2.3 billion versus approximately $1.7 billion in total revenue in the fourth quarter of 2018
  • Pre-tax earnings of $468 million and adjusted pre-tax earnings of $355 million versus pre-tax earnings of $102 million and adjusted pre-tax earnings of $258 million in the fourth quarter of 2018
  • Pre-tax title margin of 20.3% and adjusted pre-tax title margin of 16.3% versus pre-tax title margin of 6.1% and adjusted pre-tax title margin of 14.2% in the fourth quarter of 2018
  • Fourth quarter purchase orders opened increased 3% on a daily basis and purchase orders closed increased 5% on a daily basis versus the fourth quarter of 2018
  • Total commercial revenue of $321 million, a 2% decline over total commercial revenue in the fourth quarter of 2018, driven by a 12% decline in fee per file partially offset by a 11% increase in closed orders; fourth quarter total commercial open orders increased 20% compared to the prior year
  • Overall fourth quarter average fee per file of $2,384, a 15% decrease versus the fourth quarter of 2018

Title Orders




Direct Orders Opened *



Direct Orders Closed *

Month



 / (% Purchase)



 / (% Purchase)

October 2019



195,000

50%



153,000

48%

November 2019



157,000

49%



127,000

49%

December 2019



140,000

51%



137,000

50%








Fourth Quarter 2019



492,000

50%



417,000

49%



















Direct Orders Opened *



Direct Orders Closed *

Month



 / (% Purchase)



 / (% Purchase)

October 2018



150,000

69%



111,000

68%

November 2018



123,000

68%



95,000

70%

December 2018



106,000

65%



95,000

68%








Fourth Quarter 2018



379,000

67%



301,000

69%


* Includes an immaterial number of non-purchase and non-refinance orders

 



Open



Closed



Commercial






Commercial



Commercial



Revenue



Commercial



Orders



Orders



(In millions)



Fee Per File

Fourth Quarter 2019 - Total Commercial



55,100




39,100




$321




$8,200

Fourth Quarter 2018 - Total Commercial



46,000




35,200




$328




$9,300

"Our strong fourth quarter results rounded out a banner year for our title business. In the quarter we generated adjusted pre-tax title earnings of $355 million and an adjusted pre-tax title margin of 16.3%. Total commercial revenues were $321 million for the quarter which compares favorably to the record breaking results that we posted in the 2018 fourth quarter where total commercial revenues were $328 million," commented Chairman William P. Foley, II.  "For the full year 2019, we generated adjusted pre-tax title earnings of $1.3 billion, a record year, and an adjusted pre-tax title margin of 16.3%, our best year since 2003.  Looking ahead to 2020, we expect mortgage originations to moderate through the year from the very strong levels enjoyed in 2019 as refinance volumes naturally ease.  We will remain vigilant on expenses as we manage this expected slowdown in volumes.

Following the termination of the merger agreement with Stewart Information Services, the Board and management underwent a comprehensive review of FNF's capital allocation strategy and determined that expanding into the annuity market through the acquisition of FGL Holdings ("F&G"), announced subsequent to quarter end, would best maximize value for our shareholders.  After three years as a minority owner and with the advent of new leadership at F&G, we decided to acquire the remaining interest in F&G as a way to diversify our earnings and reduce the risk and volatility inherent in our stand-alone title operations. F&G offers an attractive return on our capital investment in an industry with strong secular growth tailwinds that will perform well in economic environments that may be more challenging for title insurance. FNF is excited to welcome F&G's employees and policy holders to the FNF family."

Mr. Foley concluded, "In 2019 the Board focused on returning capital to shareholders having increased our quarterly cash dividend 6.5% to $0.33 per share in addition to repurchasing 2,120,000 shares throughout the year.  FNF's share repurchase plan has 22.2 million shares remaining on the authorization.  The Board will continue to evaluate capital allocation including share repurchases, dividends, debt paydown and further investments in our business segments."

Conference Call
We will host a call with investors and analysts to discuss fourth quarter 2019 FNF results on Friday, February 14, 2020, 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 fnf.com.  The conference call replay will be available via webcast through the FNF Investor Relations website at fnf.com.  The telephone replay will be available from 3:00 p.m. Eastern Time on February 14, 2020, through February 21, 2020, by dialing 1-844-512-2921 (USA) or 1-412-317-6671.  The access code will be 13697834.

About Fidelity National Financial, Inc.
Fidelity National Financial, Inc. (NYSE: FNF) is a leading provider of title insurance 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.  More information about FNF can be found at 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, 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 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; 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 Securities and Exchange Commission ("SEC").

FNF-E

 

 

FIDELITY NATIONAL FINANCIAL, INC.
FOURTH QUARTER SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)



Three Months Ended
December 31, 2019
 


Consolidated


Title


Corporate and
Other

Direct title premiums


$

656



$

656



$


Agency title premiums


828



828




Escrow, title related and other fees


692



642



50


Total title and escrow


2,176



2,126



50









Interest and investment income


55



49



6


Realized gains and losses, net


131



135



(4)


Total revenue


2,362



2,310



52









Personnel costs


717



681



36


Agent commissions


628



628




Other operating expenses


455



428



27


Depreciation and amortization


46



39



7


Claim loss expense


66



66




Interest expense


11





11


Total expenses


1,923



1,842



81









Pre-tax earnings (loss)


$

439



$

468



$

(29)









Non-GAAP adjustments before taxes







  Realized (gains) and losses, net


(131)



(135)



4


  Purchase price amortization


27



22



5


  Severance costs


6





6


 Total non-GAAP adjustments before taxes


$

(98)



$

(113)



$

15









Adjusted pre-tax earnings (loss)


$

341



$

355



$

(14)


Adjusted pre-tax margin


15.3

%


16.3

%


%








Pre-tax earnings (loss)


$

439



$

468



$

(29)


  Income tax expense (benefit)


98



103



(5)


  Earnings from equity investments


3



2



1


  Non-controlling interests


4



5



(1)


Net earnings (loss) attributable to FNF, Inc. common shareholders


$

340



$

362



$

(22)









EPS attributable to FNF, Inc. common shareholders - basic


$

1.24






EPS attributable to FNF, Inc. common shareholders - diluted


$

1.22













FNF, Inc. weighted average shares - basic


274






FNF, Inc. weighted average shares - diluted


278






 

FIDELITY NATIONAL FINANCIAL, INC.
FOURTH QUARTER SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)










Three Months Ended
December 31, 2019


Consolidated


Title


Corporate and
Other

Net earnings (loss) attributable to FNF, Inc. common shareholders


$

340



$

362



$

(22)









 Total non-GAAP, pre-tax adjustments


$

(98)



$

(113)



$

15


  Income taxes on non-GAAP adjustments


24



28



(4)


  Noncontrolling interest on non-GAAP adjustments


(3)



(3)




Total non-GAAP adjustments


$

(77)



$

(88)



$

11









Adjusted net earnings (loss) attributable to FNF, Inc. common
shareholders


$

263



$

274



$

(11)









Adjusted EPS attributable to FNF, Inc. common shareholders - diluted


$

0.95













Direct orders opened (000's)


492



492




Direct orders closed (000's)


417



417




Fee per file


$

2,384



$

2,384




Actual title claims paid


$

53



$

53











Cash flows provided by operations


$

428






 

FIDELITY NATIONAL FINANCIAL, INC.
FOURTH QUARTER SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)










Three Months Ended
December 31, 2018


Consolidated


Title


Corporate and
Other

Direct title premiums


$

576



$

576



$


Agency title premiums


672



672




Escrow, title related and other fees


537



521



16


Total title and escrow


1,785



1,769



16









Interest and investment income


52



48



4


Realized gains and losses, net


(144)



(135)



(9)


Total revenue


1,693



1,682



11









Personnel costs


613



613




Agent commissions


513



513




Other operating expenses


394



360



34


Depreciation and amortization


44



38



6


Claim loss expense


56



56




Interest expense


12





12


Total expenses


1,632



1,580



52









Pre-tax earnings (loss)


$

61



$

102



$

(41)









Non-GAAP adjustments before taxes







  Realized (gains) and losses, net


144



135



9


  Purchase price amortization


27



21



6


  Transaction costs


4





4


 Total non-GAAP adjustments before taxes


$

175



$

156



$

19









Adjusted pre-tax earnings (loss)


$

236



$

258



$

(22)


Adjusted pre-tax margin


12.8

%


14.2

%


%








Pre-tax earnings (loss)


$

61



$

102



$

(41)









  Income tax expense (benefit)


16



26



(10)


  Earnings from equity investments


1



1




  Non-controlling interests


2



1



1









Net earnings (loss) attributable to FNF, Inc. common shareholders


$

44



$

76



$

(32)









EPS attributable to FNF, Inc. common shareholders - basic


$

0.16






EPS attributable to FNF, Inc. common shareholders - diluted


$

0.16













FNF, Inc. weighted average shares - basic


274






FNF, Inc. weighted average shares - diluted


277






 

 


FIDELITY NATIONAL FINANCIAL, INC.
FOURTH QUARTER SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)











Three Months Ended
December 31, 2018


Consolidated


Title


Corporate and
Other

Net earnings (loss) attributable to FNF, Inc. common shareholders


$

44



$

76



$

(32)









 Total non-GAAP, pre-tax adjustments


$

175



$

156



$

19


  Income taxes on non-GAAP adjustments


(40)



(36)



(4)


  Noncontrolling interest on non-GAAP adjustments


(4)



(3)



(1)


Total non-GAAP adjustments


$

131



$

117



$

14









Adjusted net earnings (loss) attributable to FNF, Inc. common shareholders


$

175



$

193



$

(18)









Adjusted EPS attributable to FNF, Inc. common shareholders - diluted


$

0.63













Direct orders opened (000's)


379



379




Direct orders closed (000's)


301



301




Fee per file


$

2,803



$

2,803




Actual title claims paid


$

58



$

58











Cash flows provided by operations


$

273






 

FIDELITY NATIONAL FINANCIAL, INC.
YTD SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)



Twelve Months Ended
December 31, 2019


Consolidated


Title


Corporate and
Other

Direct title premiums


$

2,381



$

2,381



$


Agency title premiums


2,961



2,961




Escrow, title related and other fees


2,584



2,389



195


Total title and escrow


7,926



7,731



195









Interest and investment income


225



202



23


Realized gains and losses, net


318



326



(8)


Total revenue


8,469



8,259



210









Personnel costs


2,696



2,562



134


Agent commissions


2,258



2,258




Other operating expenses


1,681



1,509



172


Depreciation and amortization


178



154



24


Claim loss expense


240



240




Interest expense


47





47


Total expenses


7,100



6,723



377









Pre-tax earnings (loss)


$

1,369



$

1,536



$

(167)









Non-GAAP adjustments before taxes







  Realized (gains) and losses, net


(318)



(326)



8


  Purchase price amortization


105



86



19


  Transaction costs


58





58


  Severance costs


6





6


  Other adjustments


1



1




 Total non-GAAP adjustments before taxes


$

(148)



$

(239)



$

91









Adjusted pre-tax earnings (loss)


$

1,221



$

1,297



$

(76)


Adjusted pre-tax margin


15.0

%


16.3

%


%








Pre-tax earnings (loss)


$

1,369



$

1,536



$

(167)









  Income tax expense (benefit)


308



363



(55)


  Earnings from equity investments


15



13



2


  Non-controlling interests


14



15



(1)









Net earnings (loss) attributable to FNF, Inc. common shareholders


$

1,062



$

1,171



$

(109)









EPS attributable to FNF, Inc. common shareholders - basic


$

3.89






EPS attributable to FNF, Inc. common shareholders - diluted


$

3.83













FNF, Inc. weighted average shares - basic


273






FNF, Inc. weighted average shares - diluted


277






 

FIDELITY NATIONAL FINANCIAL, INC.
YTD SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)



Twelve Months Ended
December 31, 2019


Consolidated


Title


Corporate and
Other

Net earnings (loss) attributable to FNF, Inc. common shareholders


$

1,062



$

1,171



$

(109)









 Total non-GAAP, pre-tax adjustments


$

(148)



$

(239)



$

91


  Income taxes on non-GAAP adjustments


38



60



(22)


  Noncontrolling interest on non-GAAP adjustments


(12)



(11)



(1)


Total non-GAAP adjustments


$

(122)



$

(190)



$

68









Adjusted net earnings (loss) attributable to FNF, Inc. common
shareholders


$

940



$

981



$

(41)









Adjusted EPS attributable to FNF, Inc. common shareholders - diluted


$

3.39













Direct orders opened (000's)


2,066



2,066




Direct orders closed (000's)


1,448



1,448




Fee per file


$

2,511



$

2,511




Actual title claims paid


$

220



$

220











Cash flows provided by operations


$

1,121






 

FIDELITY NATIONAL FINANCIAL, INC.
YTD SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)



Twelve Months Ended
December 31, 2018


Consolidated


Title


Corporate and
Other

Direct title premiums


$

2,221



$

2,221



$


Agency title premiums


2,690



2,690




Escrow, title related and other fees


2,615



2,204



411


Total title and escrow


7,526



7,115



411









Interest and investment income


177



170



7


Realized gains and losses, net


(109)



(110)



1


Total revenue


7,594



7,175



419









Personnel costs


2,538



2,444



94


Agent commissions


2,059



2,059




Other operating expenses


1,801



1,421



380


Depreciation and amortization


182



154



28


Claim loss expense


221



221




Interest expense


43





43


Total expenses


6,844



6,299



545









Pre-tax earnings (loss)


$

750



$

876



$

(126)









Non-GAAP adjustments before taxes







  Realized (gains) and losses, net


109



110



(1)


  Purchase price amortization


109



87



22


  Transaction costs


17





17


  Sales tax contingency


6



6




  Other adjustments


3



1



2


 Total non-GAAP adjustments before taxes


$

244



$

204



$

40









Adjusted pre-tax earnings (loss)


$

994



$

1,080



$

(86)


Adjusted pre-tax margin


12.9

%


14.8

%


%








Pre-tax earnings (loss)


$

750



$

876



$

(126)









  Income tax expense (benefit)


120



163



(43)


  Earnings from equity investments


5



4



1


  Non-controlling interests


7



8



(1)









Net earnings attributable to FNF, Inc. common shareholders


$

628



$

709



$

(81)









EPS attributable to FNF, Inc. common shareholders - basic


$

2.30






EPS attributable to FNF, Inc. common shareholders - diluted


$

2.26













FNF, Inc. weighted average shares - basic


273






FNF, Inc. weighted average shares - diluted


278






 

FIDELITY NATIONAL FINANCIAL, INC.
YTD SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)



Twelve Months Ended
December 31, 2018


Consolidated


Title


Corporate and
Other

Net earnings (loss) attributable to FNF, Inc. common shareholders


$

628



$

709



$

(81)









 Total non-GAAP, pre-tax adjustments


$

244



$

204



$

40


  Income taxes on non-GAAP adjustments


(55)



(46)



(9)


  Noncontrolling interest on non-GAAP adjustments


(14)



(11)



(3)


  Change in tax estimate


(45)



(45)




  Black Knight tax contingency


(8)





(8)


Total non-GAAP adjustments


$

122



$

102



$

20









Adjusted net earnings (loss) attributable to FNF, Inc. common
shareholders


$

750



$

811



$

(61)









Adjusted EPS attributable to FNF, Inc. common shareholders - diluted


$

2.70













Direct orders opened (000's)


1,818



1,818




Direct orders closed (000's)


1,315



1,315




Fee per file


$

2,585



$

2,585




Actual title claims paid


$

223



$

223











Cash flows provided by operations


$

943







 

FIDELITY NATIONAL FINANCIAL, INC.
QUARTERLY OPERATING STATISTICS
(Unaudited)





Q4 2019


Q3 2019


Q2 2019


Q1 2019


Q4 2018


Q3 2018


Q2 2018


Q1 2018

Quarterly Opened Orders ('000's except % data)

Total opened orders*


492



592



544



438



379



456



505



478


Total opened orders per day*


7.8



9.3



8.5



7.2



6.0



7.2



7.9



7.7


Purchase % of opened orders


50

%


52

%


61

%


65

%


67

%


69

%


71

%


66

%

Refinance % of opened orders


50

%


48

%


39

%


35

%


33

%


31

%


29

%


34

%

Total closed orders*


417



409



359



263



301



339



362



313


Total closed orders per day*


6.6



6.4



5.6



4.3



4.8



5.4



5.7



5.0


Purchase % of closed orders


49

%


55

%


65

%


66

%


69

%


71

%


71

%


62

%

Refinance % of closed orders


51

%


45

%


35

%


34

%


31

%


29

%


29

%


38

%


















Commercial (millions, except orders in '000's)

Total commercial revenue


$

321



$

301



$

286



$

231



$

328



$

276



$

280



$

235


Total commercial opened orders


55.1



56.0



58.6



49.8



46.0



48.9



54.2



52.8


Total commercial closed orders


39.1



36.4



34.0



30.0



35.2



31.2



35.1



31.5



















National commercial revenue


$

188



$

173



$

165



$

123



$

197



$

157



$

155



$

128


National commercial opened orders


22.6



23.8



25.3



20.6



19.1



19.8



23.0



21.1


National commercial closed orders


16.2



14.1



12.7



10.5



13.2



12.0



12.9



11.2



















Total Fee Per File

Fee per file


$

2,384



$

2,459



$

2,677



$

2,567



$

2,803



$

2,623



$

2,579



$

2,344


Residential fee per file


$

1,792



$

1,928



$

2,075



$

1,964



$

2,003



$

2,032



$

2,051



$

1,816


Total commercial fee per file


$

8,200



$

8,300



$

8,400



$

7,700



$

9,300



$

8,800



$

8,000



$

7,500


National commercial fee per file


$

11,600



$

12,300



$

13,000



$

11,700



$

14,900



$

13,100



$

12,000



$

11,400



















Total Staffing

Total field operations employees**


12,300



12,200



12,000



11,700



11,800



12,400



12,500



12,400



* Includes an immaterial number of non-purchase and non-refinance orders

**During Q4 2019 we established an automated payroll data feed, based on hours worked, as a new process to determine number of field operation employees. This new process
captures shared services and other operational employees that were not previously included. All previous periods have been restated using the new method.

 

FIDELITY NATIONAL FINANCIAL, INC.
SUMMARY BALANCE SHEET INFORMATION
(In millions)





FNF, Inc.
December 31,
2019


FNF, Inc.
December 31,
2018



(Unaudited)


(Unaudited)

Cash and investment portfolio



$

5,760




$

4,806


Goodwill



2,727




2,726


Title plant



404




405


Total assets



10,677




9,301


Notes payable



838




836


Reserve for title claim losses



1,509




1,488


Secured trust deposits



791




822


Redeemable non-controlling interests



344




344


Non-redeemable non-controlling interests



(17)




(2)


Total equity and non-controlling interests



5,709




4,972


Total equity attributable to common shareholders



5,382




4,630


 

 

Cision View original content:http://www.prnewswire.com/news-releases/fnf-reports-fourth-quarter-2019-diluted-eps-of-1-22-and-adjusted-diluted-eps-of-0-95--pre-tax-title-margin-of-20-3-and-adjusted-pre-tax-title-margin-of-16-3-301004782.html

SOURCE Fidelity National Financial, Inc.

Jamie Lillis, Managing Director, Solebury Trout, 203-428-3223, jlillis@soleburytrout.com