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Fidelity National Financial, Inc. Reports Second Quarter 2008 EPS of $0.03
JACKSONVILLE, Fla., July 23, 2008 /PRNewswire-FirstCall via COMTEX News Network/ --
Fidelity National
Financial, Inc. (NYSE: FNF), a leading provider of title insurance, specialty
insurance, claims management services and information services, today reported
operating results for the three-month and six-month periods ended June 30,
2008.
Three Months Ended Three Months Ended
June 30, 2008 June 30, 2007
Total revenue $1.18 billion $1.50 billion
Pre-tax margin 1.1 % 8.5 %
Net earnings $6.9 million $84.8 million
Net earnings per diluted share $0.03 $0.38
Cash flow from operations $12.6 million $144.6 million
Six Months Ended Six Months Ended
June 30, 2008 June 30, 2007
Total revenue $2.32 billion $2.86 billion
Pre-tax margin 2.2 % 8.8 %
Net earnings $34.2 million $168.2 million
Net earnings per diluted share $0.16 $0.75
Cash flow from (used in) operations ($62.3 million) $229.7 million
The following are summary financial and operational results for the
operating segments of FNF for the three-month and six-month periods ended June
30, 2008 and 2007:
Fidelity National Title Group ("FNT")
Three Months Ended Three Months Ended
June 30, 2008 June 30, 2007
Total revenue $1.04 billion $1.36 billion
Pre-tax earnings $5.1 million $130.0 million
Pre-tax margin 0.5 % 9.5 %
Six Months Ended Six Months Ended
June 30, 2008 June 30, 2007
Total revenue $2.05 billion $2.61 billion
Pre-tax earnings $58.2 million $244.2 million
Pre-tax margin 2.8 % 9.4 %
Direct Orders Direct Orders
Month Opened Closed Closing %
April 2008 168,900 113,200 67 %
May 2008 156,900 99,800 64 %
June 2008 136,800 94,500 69 %
Second Quarter 2008 462,600 307,500 66 %
Direct Orders Direct Orders
Month Opened Closed Closing %
April 2007 211,100 136,000 64 %
May 2007 215,700 141,200 65 %
June 2007 195,300 131,500 67 %
Second Quarter 2007 622,100 408,700 66 %
Open Closed Commercial
Commercial Commercial Revenue Commercial
Orders Orders (In thousands) Fee Per File
2nd Quarter 2008 16,200 9,400 $60,600 $6,400
2nd Quarter 2007 20,000 12,400 $97,300 $7,800
- 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
Three Months Ended Three Months Ended
June 30, 2008 June 30, 2007
Total revenue $97.1 million $103.8 million
Pre-tax earnings $13.2 million $13.9 million
Pre-tax margin 13.6 % 13.4 %
Six Months Ended Six Months Ended
June 30, 2008 June 30, 2007
Total revenue $185.6 million $202.8 million
Pre-tax earnings $22.6 million $39.3 million
Pre-tax margin 12.2 % 19.4 %
"We continued to navigate our way through an extremely challenging market
during the second quarter," said Chairman William P. Foley, II. "Order counts
weakened throughout the quarter, despite the fact that we were operating in
the normally seasonally strong spring and summer months. In the midst of this
difficult operating environment, we remained focused on the cost side of the
equation, eliminating more than 1,200 positions in our title field operations
and an additional 400 positions in other areas of the company. Nearly all of
those cuts came in June so our reported earnings do not reflect any real
benefit from those late quarter staffing reductions. Additionally, we
continued to close title and escrow offices throughout the quarter, incurring
$10 million in accelerated lease termination costs from the closing of nearly
90 branches. Finally, we decided to increase our provision for losses to 8.5%
for the full-year 2008, resulting in a 9.5% provision in the second quarter
that moves our provision up to that 8.5% target for the first six months of
the year. We expect to provide an 8.5% provision for the last two quarters of
2008. With respect to our other businesses, we continue to make progress on
monetizing the value of some of those assets, most notably the sale of a
portion of our investment in Sedgwick. In early June, we announced the sale
of 20% of our 40% ownership stake in Sedgwick to UnitedHealth Group, receiving
approximately $54 million in proceeds. Our investment related to this 20%
stake was approximately $29 million, which includes our share of income since
our original investment of $26 million in January 2006. This sale resulted in
more than a double on our original investment and we recorded a $25 million
pre-tax gain in the quarter. We believe the sale of this portion of our
Sedgwick ownership stake provides another example of our ability to create
significant value for our shareholders. Our ownership percentage in Sedgwick
is now 32%. We also continue to move through the process on the specialty
insurance sale, as multiple parties have expressed interest, and we expect to
be in a position to announce the signing of a definitive agreement in the
upcoming months. Finally, we continued to consistently repurchase stock
during the second quarter, buying 2.2 million shares from late April through
June at a total cost of approximately $33 million. As we move through the
second half of 2008, we will remain focused on maximizing the profitability of
our title business through continued cost reductions throughout our
operations, as well as monetizing the value of some of our other assets, most
notably the completion of the sale of our specialty insurance business."
Fidelity National Financial, Inc. (NYSE: FNF), is a leading provider of
title insurance, specialty insurance, claims management services and
information 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 27 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.
FNF is also a leading information services company in the human resource,
retail and transportation markets through another minority-owned subsidiary,
Ceridian Corporation. More information about FNF can be found at 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 Six months ended
June 30, June 30,
2008 2007 2008 2007
(Unaudited) (Unaudited)
Direct title premiums $321,040 $448,504 $625,819 $867,101
Agency title premiums 423,915 597,862 847,351 1,140,008
Total title premiums 744,955 1,046,366 1,473,170 2,007,109
Escrow, title-related and
other fees 292,838 299,476 566,459 556,456
Total title and escrow 1,037,793 1,345,842 2,039,629 2,563,565
Specialty insurance 94,161 99,731 178,988 194,729
Interest and investment
income 30,053 45,528 72,073 93,505
Realized gains and losses 17,791 3,899 26,268 10,281
Total revenue 1,179,798 1,495,000 2,316,958 2,861,880
Personnel costs 366,254 452,752 728,132 888,012
Other operating expenses 319,856 296,221 587,726 530,662
Agent commissions 328,800 462,876 656,809 883,033
Depreciation and
amortization 34,716 31,192 71,611 60,546
Claim loss expense 100,427 113,083 187,932 224,069
Interest expense 16,218 12,435 34,854 24,412
Total expenses 1,166,271 1,368,559 2,267,064 2,610,734
Earnings before income
taxes 13,527 126,441 49,894 251,146
Income tax expense 1,167 40,471 13,342 85,516
Earnings before equity
investments and
minority interest 12,360 85,970 36,552 165,630
Earnings from equity
investments (6,349) (323) (4,668) 1,859
Minority interest (914) 812 (2,286) (745)
Net earnings $6,925 $84,835 $34,170 $168,234
Net earnings per share
- basic $0.03 $0.39 $0.16 $0.77
Net earnings per share
- diluted $0.03 $0.38 $0.16 $0.75
Weighted average shares
- basic 210,814 218,707 210,962 218,860
Weighted average shares
- diluted 213,107 222,968 213,318 222,940
Direct operations orders
opened 462,600 622,100 1,024,800 1,274,500
Direct operations orders
closed 307,500 408,700 615,300 799,100
Fee per file $1,484 $1,627 $1,466 $1,593
Actual title claims paid $67,488 $72,938 $143,163 $128,213
FIDELITY NATIONAL FINANCIAL, INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited)
Three Months Ended Specialty Corporate
June 30, 2008 Consolidated FNT Insurance and Other
Gross operating revenue $1,131,954 $1,013,073 $94,161 $24,720
Interest and investment
income 30,053 26,397 3,425 231
Realized gains and losses 17,791 (2,414) (452) 20,657
Total revenue 1,179,798 1,037,056 97,134 45,608
Personnel costs 366,254 340,521 11,347 14,386
Other operating expenses 319,856 260,656 41,075 18,125
Agent commissions 328,800 328,800 -- --
Depreciation and
amortization 34,716 30,058 1,508 3,150
Claim loss expense 100,427 70,605 29,822 --
Interest expense 16,218 1,345 155 14,718
Total expenses 1,166,271 1,031,985 83,907 50,379
Earnings before income
taxes 13,527 5,071 13,227 (4,771)
Income tax expense 1,167 284 4,685 (3,802)
Earnings before equity
investments and
minority interest 12,360 4,787 8,542 (969)
Earnings from equity
investments (6,349) 471 -- (6,820)
Minority interest (914) 320 -- (1,234)
Net earnings $6,925 $4,938 $8,542 ($6,555)
Open orders 462,600 462,600 -- --
Closed orders 307,500 307,500 -- --
Pretax margin 1.1 % 0.5 % 13.6 % --
Three Months Ended Specialty Corporate
June 30, 2007 Consolidated FNT Insurance and Other
Gross operating revenue $1,445,573 $1,320,761 $99,731 $25,081
Interest and investment
income 45,528 41,395 4,071 62
Realized gains and losses 3,899 137 3 3,759
Total revenue 1,495,000 1,362,293 103,805 28,902
Personnel costs 452,752 425,707 11,814 15,231
Other operating expenses 296,221 233,324 41,565 21,332
Agent commissions 462,876 462,852 -- 24
Depreciation and
amortization 31,192 28,172 1,512 1,508
Claim loss expense 113,083 78,478 34,605 --
Interest expense 12,435 3,723 449 8,263
Total expenses 1,368,559 1,232,256 89,945 46,358
Earnings before income
taxes 126,441 130,037 13,860 (17,456)
Income tax expense 40,471 42,362 5,340 (7,231)
Earnings before equity
investments and
minority interest 85,970 87,675 8,520 (10,225)
Earnings from equity
investments (323) 1,064 -- (1,387)
Minority interest 812 1,003 -- (191)
Net earnings $84,835 $87,736 $8,520 ($11,421)
Open orders 622,100 622,100 -- --
Closed orders 408,700 408,700 -- --
Pretax margin 8.5 % 9.5 % 13.4 % --
FIDELITY NATIONAL FINANCIAL, INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited)
Six Months Ended Specialty Corporate
June 30, 2008 Consolidated FNT Insurance and Other
Gross operating revenue $2,218,617 $1,983,790 $178,988 $55,839
Interest and investment
income 72,073 63,825 7,004 1,244
Realized gains and losses 26,268 39 (359) 26,588
Total revenue 2,316,958 2,047,654 185,633 83,671
Personnel costs 728,132 674,842 22,687 30,603
Other operating expenses 587,726 468,731 74,229 44,766
Agent commissions 656,809 656,809 -- --
Depreciation and
amortization 71,611 60,147 3,018 8,446
Claim loss expense 187,932 125,218 62,714 --
Interest expense 34,854 3,755 339 30,760
Total expenses 2,267,064 1,989,502 162,987 114,575
Earnings before income
taxes 49,894 58,152 22,646 (30,904)
Income tax expense 13,342 17,578 7,446 (11,682)
Earnings before equity
investments and
minority interest 36,552 40,574 15,200 (19,222)
Earnings from equity
investments (4,668) 1,435 -- (6,103)
Minority interest (2,286) 400 -- (2,686)
Net earnings $34,170 $41,609 $15,200 ($22,639)
Open orders 1,024,800 1,024,800 -- --
Closed orders 615,300 615,300 -- --
Pretax margin 2.2 % 2.8 % 12.2 % --
Six Months Ended Specialty Corporate
June 30, 2007 Consolidated FNT Insurance and Other
Gross operating revenue $2,758,294 $2,521,677 $194,729 $41,888
Interest and investment
income 93,305 82,769 8,074 2,462
Realized gains and losses 10,281 3,298 (28) 7,011
Total revenue 2,861,880 2,607,744 202,775 51,361
Personnel costs 888,012 836,280 23,413 28,319
Other operating expenses 530,662 431,732 62,617 36,313
Agent commissions 883,033 882,903 -- 130
Depreciation and
amortization 60,546 55,089 3,070 2,387
Claim loss expense 224,069 150,534 73,535 --
Interest expense 24,412 7,032 854 16,526
Total expenses 2,610,734 2,363,570 163,489 83,675
Earnings before income
taxes 251,146 244,174 39,286 (32,314)
Income tax expense 85,516 83,105 14,909 (12,498)
Earnings before equity
investments and
minority interest 165,630 161,069 24,377 (19,816)
Earnings from equity
investments 1,859 1,699 -- 160
Minority interest (745) 932 -- (1,677)
Net earnings $168,234 $161,836 $24,377 ($17,979)
Open orders 1,274,500 1,274,500 -- --
Closed orders 799,100 799,100 -- --
Pretax margin 8.8 % 9.4 % 19.4 % --
FIDELITY NATIONAL FINANCIAL, INC.
SUMMARY BALANCE SHEET INFORMATION
(In thousands, except per share amounts)
June 30, December 31,
2008 2007
(Unaudited)
Cash and investment portfolio $4,262,494 $4,671,383
Goodwill 1,338,274 1,339,705
Title Plant 334,629 331,888
Total assets 7,248,136 7,587,853
Notes payable 1,196,907 1,167,739
Reserve for claim losses 1,394,921 1,419,910
Secured trust deposits 643,916 689,935
Total stockholders' equity 3,109,661 3,244,088
Book value per share 14.66 15.23
SOURCE Fidelity National Financial, Inc.
http://www.fnf.com
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