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Fidelity National Financial, Inc. Reports First Quarter 2007 EPS of $0.37
JACKSONVILLE, Fla., April 25 /PRNewswire-FirstCall/ -- Fidelity National Financial, Inc. (NYSE: FNF) , a leading provider of title insurance, specialty insurance and claims management services, today reported operating results for the three-month period ended March 31, 2007. Pro Forma
1st Quarter 1st Quarter 1st Quarter
2007 2006* 2006**
Total revenue $1.37 billion $2.35 billion $1.51 billion
Pre-tax margin 9.3% 9.3% 10.3%
Net earnings $83.4 million $106.4 million $98.8 million
Net earnings per
diluted share $0.37 $0.61 $0.45
Cash flow from
operations $85.1 million $8.0 million N/A
Return on average
equity 9.6% 11.3% N/A
* The 1st quarter 2006 figures include the results of Fidelity National
Information Services, Inc. ("FIS"), which was a majority-owned
subsidiary of FNF during the 1st quarter of 2006.
** A complete pro forma summary of earnings excluding FIS and the minority
interest expense related to Fidelity National Title Group, Inc. ("FNT")
for the 1st quarter 2006 is included later in this press release.
The following are summary financial and operational results for the current operating segments of FNF for the three-month periods ended March 31, 2007 and 2006: Fidelity National Title Group ("FNT")
1st Quarter 2007 1st Quarter 2006
Total revenue $1.25 billion $1.39 billion
Pre-tax earnings $114.8 million $132.5 million
Pre-tax margin 9.2% 9.5%
Direct Orders Direct Orders
Month Opened Closed Closing %
January 2007 212,900 128,700 60%
February 2007 202,000 120,300 60%
March 2007 237,500 141,400 60%
First Quarter 2007 652,400 390,400 60%
Direct Orders Direct Orders
Month Opened Closed Closing %
January 2006 215,000 134,200 62%
February 2006 213,200 133,500 63%
March 2006 255,600 168,600 66%
First Quarter 2006 683,800 436,300 64%
Open Closed Commercial
Commercial Commercial Revenue Commercial
Orders Orders (in thousands) Fee Per File
1st Quarter 2007 15,020 7,213 $74,504 $10,329
1st Quarter 2006 14,345 8,147 $65,339 $8,020
-- 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.
Specialty Insurance
1st Quarter 2007 1st Quarter 2006
Total revenue $99.0 million $110.4 million
Pre-tax earnings $25.4 million*** $32.5 million
Pre-tax margin 25.7% 29.4%
*** The 1st quarter 2007 Specialty Insurance results include a $12.2
million benefit from an adjustment related to the deferral and
amortization of certain costs over the life of a policy, consistent
with the recognition of the premiums. The adjustment represents costs
that should have been deferred as of March 31, 2007 on policies issued
over the prior twelve months. Excluding this adjustment, diluted net
earnings per share were $0.34 for the first quarter of 2007.
"The first quarter of 2007 was a period where we were primarily focused on managing our existing businesses as efficiently and profitably as possible," said Chairman and Chief Executive Officer William P. Foley, II. "The first quarter is normally the most difficult in the title business. Even with this seasonal lull, we were able to generate a 9.2% pre-tax margin in the title business by remaining focused on employee counts and efficiency metrics. This was nearly equal to the title pre-tax margin in the first quarter of 2006, despite a 10.5% decline in title segment revenue from the prior year. Additionally, all three specialty insurance businesses had successful quarters on a number of fronts. Flood insurance continues to provide a steady, recurring stream of revenue and earnings. Personal lines revenue grew by 12% with a 68% loss ratio, down from 85% in the fourth quarter of 2006, while home warranty continued to generate its consistent pre-tax margin of approximately 20%. Finally, Sedgwick, our 40% owned subsidiary, continues to grow profitably, generating $160 million in revenue and a 15% EBITDA margin during the first quarter." Fidelity National Financial, Inc. (NYSE: FNF) , is a leading provider of title insurance, specialty insurance and claims management services. FNF is one of the nation's largest title insurance companies through its title insurance underwriters - Fidelity National Title, Chicago Title, Ticor Title, Security Union Title and Alamo Title - that issue approximately 29 percent of all title insurance policies in the United States. FNF also provides flood insurance, personal lines insurance and home warranty insurance through its specialty insurance business. FNF also is a leading provider of outsourced claims management services to large corporate and public sector entities through its minority-owned subsidiary, Sedgwick CMS. More information about FNF can be found at http://www.fnf.com/. This press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our beliefs and expectations, 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 economic performance 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; 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 operating subsidiaries as a 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. FIDELITY NATIONAL FINANCIAL, INC.
SUMMARY OF EARNINGS
(In thousands, except per share amounts and order information)
Three months ended
March 31,
2007 2006
(Unaudited)
Direct title premiums $418,597 $468,922
Agency title premiums 542,146 606,054
Total title premiums 960,743 1,074,976
Escrow and other title-related fees 244,806 253,527
Total title and escrow 1,205,549 1,328,503
Transaction processing services -- 843,199
Specialty insurance 94,998 106,743
Interest and investment income 49,959 51,363
Realized gains and losses 6,382 11,930
Other 12,174 12,761
Total revenue 1,369,062 2,354,499
Personnel costs 435,260 877,931
Other operating expenses 234,441 493,344
Agent commissions 420,157 469,707
Depreciation and amortization 29,354 124,631
Claim loss expense 110,986 114,492
Interest expense 11,977 54,645
Total expenses 1,242,175 2,134,750
Earnings before income taxes 126,887 219,749
Income tax expense 45,045 81,747
Minority interest (1,557) 31,631
Net earnings $83,399 $106,371
Net earnings per share - basic $0.38 $0.61
Net earnings per share - diluted $0.37 $0.61
Weighted average shares - basic 219,014 173,473
Weighted average shares - diluted 222,912 173,654
Direct operations orders opened 652,400 831,400
Direct operations orders closed 390,400 526,700
Fee per file $1,557 $1,337
FIDELITY NATIONAL FINANCIAL, INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited)
Three Months Ended Specialty Corporate
March 31, 2007 Consolidated FNT Insurance and Other
Gross operating revenue $1,312,721 $1,200,916 $94,998 16,807
Interest and investment
income 49,959 42,009 4,003 3,947
Realized gains and losses 6,382 3,161 (31) 3,252
Total revenue 1,369,062 1,246,086 98,970 24,006
Personnel costs 435,260 410,573 11,599 13,088
Other operating expenses 234,441 198,40 21,052 14,981
Agent commissions 420,157 420,051 -- 106
Depreciation and
amortization 29,354 26,917 1,558 879
Claim loss expense 110,986 72,056 38,930 --
Interest expense 11,977 3,309 405 8,263
Total expenses 1,242,175 1,131,314 73,544 37,317
Pretax earnings 126,887 114,77 25,426 (13,311)
Pretax margin 9.3% 9.2% 25.7% --
Open orders 652,400 652,400 -- --
Closed orders 390,400 390,400 -- --
Three Months Ended
March 31, 2006
Gross operating revenue
Specialty Corporate
Consolidated Eliminations FNT FIS Insurance and Other
Gross
operating
revenue $2,291,206 ($57,736) $1,340,746 $900,935 $106,743 $518
Interest and
investment
income 51,363 -- 38,617 1,709 3,656 7,381
Realized gains
and losses 11,930 -- 12,629 1,023 (4)(1,718)
Total
revenue 2,354,499 (57,736) 1,391,992 903,667 110,395 6,181
Personnel
costs 877,931 (5,235) 452,435 413,220 11,315 6,196
Other operating
expenses 493,344 (33,886) 209,621 286,064 31,027 518
Agent
commissions 469,707 (18,615) 488,368 -- -- (46)
Depreciation
and
amortization 124,631 -- 26,237 96,795 1,470 129
Claim loss
expense 114,492 -- 80,721 65 33,869 (163)
Interest
expense 54,645 -- 2,082 43,268 256 9,039
Total
expenses 2,134,750 (57,736) 1,259,464 839,412 77,937 15,673
Pretax
earnings 219,749 -- 132,528 64,255 32,458 (9,492)
Pretax margin 9.3% -- 9.5% 7.1% 29.4% --
Open orders 831,400 -- 683,800 147,600 -- --
Closed orders 526,700 -- 436,300 90,400 -- --
FIDELITY NATIONAL FINANCIAL, INC.
SUMMARY BALANCE SHEET INFORMATION
(In thousands, except per share amounts)
March 31, December 31,
2007 2006
(Unaudited)
Cash and investment portfolio $4,489,527 $4,798,195
Goodwill 1,201,832 1,154,298
Title Plant 328,494 324,155
Total assets 7,015,576 7,259,559
Notes payable 502,132 491,167
Reserve for claim losses 1,237,496 1,220,636
Secured trust deposits 756,264 905,461
Total stockholders' equity 3,493,773 3,474,368
Book value per share 15.77 15.75
FIDELITY NATIONAL FINANCIAL, INC.
UNAUDITED PRO FORMA SUMMARY OF EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 2006
(In thousands except per share amounts)
FNF Capital
Historical FIS pro forma pro forma
FNF adjustments(1) adjustments(2)
Total title and escrow $1,328,503 ($18,615) --
Transaction processing 843,199 (882,320) --
Specialty insurance 106,743 -- --
Interest and investments
income 51,363 (1,709) (19)
Realized gains and losses 11,930 (1,023) --
Other income 12,761 -- (2,263)
Total revenue $2,354,499 ($903,667) (2,282)
Personnel costs 877,931 (413,220) (870)
Other operating expenses 493,344 (286,064) (163)
Agent commissions 469,707 -- --
Depreciation and
amortization 124,631 (96,795) (7)
Provision for claim losses 114,492 (65) --
Interest expense 54,645 (43,268) (843)
Total expenses 2,134,750 (839,412) (1,883)
Earnings before income
taxes 219,749 (64,255) (399)
Income tax expense 81,747 (24,586) (172)
Minority interest 31,631 (311) --
Net income $106,371 ($39,358) (227)
Other Pro Forma FNF
Adjustments Notes Pro Forma
Total title and escrow $18,615 (3) $1,328,503
Transaction processing 39,121 (3) --
Specialty insurance -- 106,743
Interest and investments
income -- 49,635
Realized gains and losses -- 10,907
Other income -- 10,498
Total revenue $57,736 $1,506,286
Personnel costs 5,235 (4) 469,076
Other operating expenses 33,886 (4) 241,003
Agent commissions 18,615 (5) 488,322
Depreciation and
amortization -- 27,829
Provision for claim losses -- 114,427
Interest expense 159 (6) 10,693
Total expenses 57,895 1,351,350
Earnings before income
taxes (159) 154,936
Income tax expense (1,987) 55,002
Minority interest (30,214) (7) 1,106
Net income $32,042 $98,828
Net income per share-basic $0.45
Pro forma weighted average
shares-basic 219,000(8)
Net income per share-diluted $0.45
Pro forma weighted average
shares-diluted 222,000(8)
FIDELITY NATIONAL FINANCIAL, INC.
NOTES TO UNAUDITED PRO FORMA SUMMARY OF EARNINGS
Notes to Unaudited Pro Forma Summary of Earnings for the Three-Month Period Ended March 31, 2006 This pro forma summary of earnings includes the historical statements of continuing operations of FNF and removes the results of operations of FIS and FNF minority interest expense relating to FIS and FNT as though the reorganization transaction had occurred on January 1, 2006. (1) This column represents the historical results of operations of FIS as
included in FNF's consolidated results of operations for the period
presented.
(2) This column represents the historical results of operations of FNF
Capital as included in FNF's consolidated results of operations for
the period presented.
(3) This represents the intercompany revenues relating to various
agreements recorded on FIS' income statement that had already been
eliminated from the consolidated results of operations of FNF. These
revenues amounted to $57.7 million for the three-month period ended
March 31, 2006.
(4) This represents the intercompany expenses related to various
agreements that were eliminated in the consolidated results of
operations of FNF, but are third-party expenses subsequent to the
reorganization transaction. These expenses amounted to $39.1 million
for the three-month period ended March 31, 2006.
(5) This represents the additional agent commissions paid by FNF to FIS
that were previously eliminated in the consolidated results of FNF,
but are a third-party expense subsequent to the reorganization
transaction. These commissions amounted to $18.6 million for the
three-month period ended March 31, 2006.
(6) This represents intercompany interest expense that is a third-party
expense subsequent to the reorganization transaction. These expenses
amounted to $0.2 million for the three-month period ended March 31,
2006.
(7) This represents the elimination of the minority interest expense
recorded by FNF relating to its earnings in FIS and FNT. Minority
interest expense relating to FIS was $16.4 million for the three-month
period ended March 31, 2006. Minority interest relating to FNT was
$13.8 million for the three-month period ended March 31, 2006.
(8) Amounts presented approximate the actual number of basic and diluted
weighted average shares outstanding subsequent to the reorganization
transaction.
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