FNF Group Reports Third Quarter 2017 Diluted EPS of $0.62 and Adjusted Diluted EPS of $0.71, Pre-Tax Title Margin of 14.0% and Adjusted Pre-Tax Title Margin of 15.3%
Jacksonville, Fla. - (October 25, 2017) - Fidelity National Financial, Inc. today reported the operating results of FNF Group (NYSE:FNF), a leading provider of title insurance and transaction services to the real estate and mortgage industries, for the three and nine-month periods ended September 30, 2017.
| • | Total revenue of approximately $2.0 billion in the third quarter versus $1.9 billion in the third quarter of 2016 |
| • | Third quarter net earnings of $170 million and adjusted net earnings of $197 million versus net earnings of $163 million and adjusted net earnings of $192 million for the third quarter of 2016 |
| • | Third quarter diluted EPS of $0.62 and adjusted diluted EPS of $0.71 versus diluted EPS of $0.58 and adjusted diluted EPS of $0.69 in the third quarter of 2016 |
| • | Third quarter net cash flow provided by operations of $302 million versus net cash flow provided by operations of $360 million in the third quarter of 2016 |
Title
| • | Approximately $1.9 billion in total revenue, equal to the approximately $1.9 billion in total revenue in the third quarter of 2016 |
| • | Pre-tax earnings of $262 million and adjusted pre-tax earnings of $287 million versus pre-tax earnings of $263 million and adjusted pre-tax earnings of $295 million in the third quarter of 2016 |
| • | Pre-tax title margin of 14.0% and adjusted pre-tax title margin of 15.3% versus pre-tax title margin of 14.1% and adjusted pre-tax title margin of 15.8% in the third quarter of 2016 |
| • | Open orders per day of 7,952 for the third quarter versus 9,625 open orders per day for the third quarter of 2016 |
| • | Closed orders per day of 5,825 for the third quarter versus 6,766 closed orders per day for the third quarter of 2016 |
| • | Third quarter purchase orders opened and closed increased by 4% and 7%, respectively, versus the third quarter of 2016 |
| • | Total commercial revenue of $250 million, a 7% increase over total commercial revenue in the third quarter of 2016, driven by a 3% increase in total commercial fee per file and a 5% increase in closed orders; third quarter total commercial open orders decreased 4% compared to the prior year; third quarter national commercial title revenue of $138 million, a 6% increase from the third quarter of 2016, driven by a 12% increase in closed orders and a 5% decline in the national commercial fee per file; third quarter national commercial open orders decreased by 2% |
| • | Overall third quarter average fee per file of $2,368, an 18% increase versus the third quarter of 2016 |
Title Orders
| Direct Orders Opened * | Direct Orders Closed * | |||||||
| Month | / (% Purchase) | / (% Purchase) | ||||||
| July 2017 | 159,000 | 66% | 118,000 | 66% | ||||
| August 2017 | 181,000 | 61% | 131,000 | 65% | ||||
| September 2017 | 161,000 | 59% | 118,000 | 63% | ||||
| Third Quarter 2017 | 501,000 | 62% | 367,000 | 65% | ||||
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| Direct Orders Opened * | Direct Orders Closed * | |||||||
| Month | / (% Purchase) | / (% Purchase) | ||||||
| July 2016 | 203,000 | 48% | 130,000 | 58% | ||||
| August 2016 | 218,000 | 50% | 156,000 | 53% | ||||
| September 2016 | 195,000 | 50% | 147,000 | 52% | ||||
| Third Quarter 2016 | 616,000 | 50% | 433,000 | 54% | ||||
* 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 | ||||||||||||
| Third Quarter 2017 - Total Commercial | 48,300 | 33,400 | $250 | $7,500 | |||||||||||
| Third Quarter 2016 - Total Commercial | 50,400 | 31,900 | $233 | $7,300 | |||||||||||
| Third Quarter 2017 - National Commercial | 19,900 | 13,100 | $138 | $10,500 | |||||||||||
| Third Quarter 2016 - National Commercial | 20,400 | 11,700 | $130 | $11,100 | |||||||||||
“The third quarter was another strong performance for our title insurance business," said Chairman William P. Foley, II. "We generated adjusted pre-tax title earnings of $287 million and a 15.3% adjusted pre-tax title margin. The residential purchase and commercial markets continued to drive our performance in the third quarter, as residential open and closed purchase orders increased 4% and 7%, respectively, in the quarter and total commercial revenue grew by 7% versus the third quarter of 2016. We look forward to continued strong, industry-leading performance from our title insurance business.
"We closed the tax-free distribution of Black Knight on September 29, as FNF shareholders received 0.3066322 shares of Black Knight common stock for each share of FNF common stock. Black Knight is now a stand-alone public company, with no FNF ownership. We also made significant progress on the FNFV exchange transaction during the quarter and have now set a shareholder vote and closing date of November 17, 2017, for the exchange of the FNFV tracking stock for Cannae Holdings common stock. Once the exchange is completed, FNF will again be eligible for potential index inclusion, including the S&P 500, and Cannae Holdings will be a legally separate public company."
Conference Call
We will host a call with investors and analysts to discuss third quarter 2017 FNF Group results on Thursday, October 26, 2017, beginning at 11:30 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 1:30 p.m. Eastern time on October 26, 2017, through November 1, 2017, by dialing 800-475-6701 (USA) or 320-365-3844 (International). The access code will be 430331.
About Fidelity National Financial, Inc.
Fidelity National Financial, Inc. is organized into two groups, FNF Group (NYSE: FNF) and FNFV Group (NYSE: FNFV). 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. FNFV holds majority and minority equity investment stakes in a number of entities, including American Blue Ribbon Holdings, LLC, Ceridian HCM, Inc. and Del Frisco's Restaurant Group, Inc. More information about FNF and FNFV 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
2
EBITDA), adjusted earnings before interest, taxes and depreciation as a percent of adjusted revenue (Adjusted EBITDA margin), adjusted pre-tax earnings from continuing operations, adjusted pre-tax earnings from continuing operations as a percentage of adjusted revenue (Adjusted pre-tax margin from continuing operations), 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: our ability to successfully achieve the conditions to and consummate the plans to redeem and exchange the FNFV tracking stock with the result being an independent, publicly-traded FNFV common stock; 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.
FNF-E
SOURCE: Fidelity National Financial, Inc.
CONTACT: Daniel Kennedy Murphy, Senior Vice President and Treasurer, 904-854-8120, dkmurphy@fnf.com
3
FNF GROUP
THIRD QUARTER SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
| Total FNF Group | Title | Corporate and Other | ||||||||||
| Three Months Ended | ||||||||||||
| September 30, 2017 | ||||||||||||
| Direct title premiums | $ | 558 | $ | 558 | $ | — | ||||||
| Agency title premiums | 719 | 719 | — | |||||||||
| Escrow, title related and other fees | 678 | 563 | 115 | |||||||||
| Total title and escrow | 1,955 | 1,840 | 115 | |||||||||
| Interest and investment income | 32 | 32 | — | |||||||||
| Realized gains and losses, net | (1 | ) | — | (1 | ) | |||||||
| Total revenue | 1,986 | 1,872 | 114 | |||||||||
| Personnel costs | 627 | 605 | 22 | |||||||||
| Agent commissions | 553 | 553 | — | |||||||||
| Other operating expenses | 443 | 348 | 95 | |||||||||
| Depreciation and amortization | 46 | 40 | 6 | |||||||||
| Claim loss expense | 64 | 64 | — | |||||||||
| Interest expense | 11 | — | 11 | |||||||||
| Total expenses | 1,744 | 1,610 | 134 | |||||||||
| Pre-tax earnings (loss) from continuing operations | $ | 242 | $ | 262 | $ | (20 | ) | |||||
| Non-GAAP adjustments before taxes | ||||||||||||
| Realized (gains) and losses, net | 1 | — | 1 | |||||||||
| Purchase price amortization | 29 | 24 | 5 | |||||||||
| Spin-off costs | 1 | — | 1 | |||||||||
| Other adjustments | 1 | 1 | — | |||||||||
| Total non-GAAP adjustments before taxes | $ | 32 | $ | 25 | $ | 7 | ||||||
| Adjusted pre-tax earnings (loss) from continuing operations | $ | 274 | $ | 287 | $ | (13 | ) | |||||
| Adjusted pre-tax margin from continuing operations | 13.8 | % | 15.3 | % | — | |||||||
| Purchase price amortization | (29 | ) | (24 | ) | (5 | ) | ||||||
| Depreciation and amortization | 46 | 40 | 6 | |||||||||
| Interest expense | 11 | — | 11 | |||||||||
| Adjusted EBITDA | $ | 302 | $ | 303 | $ | (1 | ) | |||||
| Adjusted EBITDA margin | 15.2 | % | 16.2 | % | — | |||||||
4
FNF GROUP
THIRD QUARTER SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
| Total FNF Group | Title | Corporate and Other | ||||||||||
| Three Months Ended | ||||||||||||
| September 30, 2017 | ||||||||||||
| Pre-tax earnings (loss) from continuing operations | $ | 242 | $ | 262 | $ | (20 | ) | |||||
| Income tax expense (benefit) | 88 | 98 | (10 | ) | ||||||||
| Earnings from equity investments | 3 | 3 | — | |||||||||
| Earnings from discontinued operations, net of tax | 31 | — | 31 | |||||||||
| Non-controlling interests | 18 | 1 | 17 | |||||||||
| Net earnings attributable to FNF Group common shareholders | $ | 170 | $ | 166 | $ | 4 | ||||||
| EPS attributable to FNF Group common shareholders - basic | $ | 0.63 | $ | 0.61 | $ | 0.02 | ||||||
| EPS attributable to FNF Group common shareholders - diluted | $ | 0.62 | $ | 0.60 | $ | 0.02 | ||||||
| FNF Group weighted average shares - basic | 272 | |||||||||||
| FNF Group weighted average shares - diluted | 276 | |||||||||||
| Net earnings attributable to FNF Group common shareholders | $ | 170 | $ | 166 | $ | 4 | ||||||
| Total non-GAAP, pre-tax adjustments | $ | 32 | $ | 25 | $ | 7 | ||||||
| Income taxes on non-GAAP adjustments | (10 | ) | (8 | ) | (2 | ) | ||||||
| Noncontrolling interest on non-GAAP adjustments | (3 | ) | (3 | ) | — | |||||||
| Adjustments related to discontinued operations | 8 | — | 8 | |||||||||
| Total non-GAAP adjustments | $ | 27 | $ | 14 | $ | 13 | ||||||
| Adjusted net earnings attributable to FNF Group common shareholders | $ | 197 | $ | 180 | $ | 17 | ||||||
| Adjusted EPS attributable to FNF Group common shareholders - diluted | $ | 0.71 | $ | 0.65 | $ | 0.06 | ||||||
| Direct orders opened (000's) | 501 | 501 | ||||||||||
| Direct orders closed (000's) | 367 | 367 | ||||||||||
| Fee per file | $ | 2,368 | $ | 2,368 | ||||||||
| Actual title claims paid | $ | 60 | $ | 60 | ||||||||
| Cash flows provided by operations | $ | 302 | ||||||||||
5
FNF GROUP
THIRD QUARTER SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
| Total FNF Group | Title | Corporate and Other | ||||||||||
| Three Months Ended | ||||||||||||
| September 30, 2016 | ||||||||||||
| Direct title premiums | $ | 556 | $ | 556 | $ | — | ||||||
| Agency title premiums | 713 | 713 | — | |||||||||
| Escrow, title related and other fees | 654 | 569 | 85 | |||||||||
| Total title and escrow | 1,923 | 1,838 | 85 | |||||||||
| Interest and investment income | 28 | 29 | (1 | ) | ||||||||
| Realized gains and losses, net | (3 | ) | (2 | ) | (1 | ) | ||||||
| Total revenue | 1,948 | 1,865 | 83 | |||||||||
| Personnel costs | 588 | 570 | 18 | |||||||||
| Agent commissions | 545 | 545 | — | |||||||||
| Other operating expenses | 439 | 379 | 60 | |||||||||
| Depreciation and amortization | 41 | 38 | 3 | |||||||||
| Claim loss expense | 70 | 70 | — | |||||||||
| Interest expense | 14 | — | 14 | |||||||||
| Total expenses | 1,697 | 1,602 | 95 | |||||||||
| Pre-tax earnings (loss) from continuing operations | $ | 251 | $ | 263 | $ | (12 | ) | |||||
| Non-GAAP adjustments before taxes | ||||||||||||
| Realized (gains) and losses, net | 3 | 2 | 1 | |||||||||
| Purchase price amortization | 26 | 24 | 2 | |||||||||
| Other legal accruals | 6 | 6 | — | |||||||||
| Total non-GAAP adjustments before taxes | $ | 35 | $ | 32 | $ | 3 | ||||||
| Adjusted pre-tax earnings (loss) from continuing operations | $ | 286 | $ | 295 | $ | (9 | ) | |||||
| Adjusted pre-tax margin from continuing operations | 14.7 | % | 15.8 | % | — | |||||||
| Purchase price amortization | (26 | ) | (24 | ) | (2 | ) | ||||||
| Depreciation and amortization | 41 | 38 | 3 | |||||||||
| Interest expense | 14 | — | 14 | |||||||||
| Adjusted EBITDA | $ | 315 | $ | 309 | $ | 6 | ||||||
| Adjusted EBITDA margin | 16.1 | % | 16.6 | % | 7.1 | % | ||||||
6
FNF GROUP
THIRD QUARTER SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
| Total FNF Group | Title | Corporate and Other | ||||||||||
| Three Months Ended | ||||||||||||
| September 30, 2016 | ||||||||||||
| Pre-tax earnings (loss) from continuing operations | $ | 251 | $ | 263 | $ | (12 | ) | |||||
| Income tax expense (benefit) | 95 | 100 | (5 | ) | ||||||||
| Earnings from equity investments | 4 | 3 | 1 | |||||||||
| Earnings from discontinued operations, net of tax | 17 | — | 17 | |||||||||
| Non-controlling interests | 14 | 2 | 12 | |||||||||
| Net earnings (loss) attributable to FNF Group common shareholders | $ | 163 | $ | 164 | $ | (1 | ) | |||||
| EPS attributable to FNF Group common shareholders - basic | $ | 0.60 | $ | 0.61 | $ | (0.01 | ) | |||||
| EPS attributable to FNF Group common shareholders - diluted | $ | 0.58 | $ | 0.59 | $ | (0.01 | ) | |||||
| FNF Group weighted average shares - basic | 271 | |||||||||||
| FNF Group weighted average shares - diluted | 279 | |||||||||||
| Net earnings (loss) attributable to FNF Group common shareholders | $ | 163 | $ | 164 | $ | (1 | ) | |||||
| Total non-GAAP, pre-tax adjustments | $ | 35 | $ | 32 | $ | 3 | ||||||
| Income taxes on non-GAAP adjustments | (11 | ) | (10 | ) | (1 | ) | ||||||
| Noncontrolling interest on non-GAAP adjustments | (5 | ) | (5 | ) | — | |||||||
| Adjustments related to discontinued operations | 10 | — | 10 | |||||||||
| Total non-GAAP adjustments | $ | 29 | $ | 17 | $ | 12 | ||||||
| Adjusted net earnings attributable to FNF Group common shareholders | $ | 192 | $ | 181 | $ | 11 | ||||||
| Adjusted EPS attributable to FNF Group common shareholders - diluted | $ | 0.69 | $ | 0.65 | $ | 0.04 | ||||||
| Direct orders opened (000's) | 616 | 616 | ||||||||||
| Direct orders closed (000's) | 433 | 433 | ||||||||||
| Fee per file | $ | 2,015 | $ | 2,015 | ||||||||
| Actual title claims paid | $ | 57 | $ | 57 | ||||||||
| Cash flows provided by operations | $ | 360 | ||||||||||
7
FNF GROUP
YTD SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
| Total FNF Group | Title | Corporate and Other | ||||||||||
| Nine Months Ended | ||||||||||||
| September 30, 2017 | ||||||||||||
| Direct title premiums | $ | 1,598 | $ | 1,598 | $ | — | ||||||
| Agency title premiums | 2,028 | 2,028 | — | |||||||||
| Escrow, title related and other fees | 1,969 | 1,634 | 335 | |||||||||
| Total title and escrow | 5,595 | 5,260 | 335 | |||||||||
| Interest and investment income | 93 | 93 | — | |||||||||
| Realized gains and losses, net | — | 6 | (6 | ) | ||||||||
| Total revenue | 5,688 | 5,359 | 329 | |||||||||
| Personnel costs | 1,822 | 1,755 | 67 | |||||||||
| Agent commissions | 1,557 | 1,557 | — | |||||||||
| Other operating expenses | 1,312 | 1,042 | 270 | |||||||||
| Depreciation and amortization | 133 | 117 | 16 | |||||||||
| Claim loss expense | 181 | 181 | — | |||||||||
| Interest expense | 39 | — | 39 | |||||||||
| Total expenses | 5,044 | 4,652 | 392 | |||||||||
| Pre-tax earnings (loss) from continuing operations | $ | 644 | $ | 707 | $ | (63 | ) | |||||
| Non-GAAP adjustments before taxes | ||||||||||||
| Realized (gains) and losses, net | — | (6 | ) | 6 | ||||||||
| Management fee | 1 | 1 | — | |||||||||
| Purchase price amortization | 82 | 69 | 13 | |||||||||
| Spin-off costs | 3 | — | 3 | |||||||||
| Other adjustments | 1 | 1 | — | |||||||||
| Total non-GAAP adjustments before taxes | $ | 87 | $ | 65 | $ | 22 | ||||||
| Adjusted pre-tax earnings (loss) from continuing operations | $ | 731 | $ | 772 | $ | (41 | ) | |||||
| Adjusted pre-tax margin from continuing operations | 12.9 | % | 14.4 | % | — | |||||||
| Purchase price amortization | (82 | ) | (69 | ) | (13 | ) | ||||||
| Depreciation and amortization | 133 | 117 | 16 | |||||||||
| Interest expense | 39 | — | 39 | |||||||||
| Adjusted EBITDA | $ | 821 | $ | 820 | $ | 1 | ||||||
| Adjusted EBITDA margin | 14.4 | % | 15.3 | % | 0.3 | % | ||||||
8
FNF GROUP
YTD SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
| Total FNF Group | Title | Corporate and Other | ||||||||||
| Nine Months Ended | ||||||||||||
| September 30, 2017 | ||||||||||||
| Pre-tax earnings (loss) from continuing operations | $ | 644 | $ | 707 | $ | (63 | ) | |||||
| Income tax expense (benefit) | 258 | 290 | (32 | ) | ||||||||
| Earnings from equity investments | 7 | 7 | — | |||||||||
| Earnings from discontinued operations, net of tax | 59 | — | 59 | |||||||||
| Non-controlling interests | 36 | — | 36 | |||||||||
| Net earnings (loss) attributable to FNF Group common shareholders | $ | 416 | $ | 424 | $ | (8 | ) | |||||
| EPS attributable to FNF Group common shareholders - basic | $ | 1.54 | $ | 1.56 | $ | (0.02 | ) | |||||
| EPS attributable to FNF Group common shareholders - diluted | $ | 1.50 | $ | 1.52 | $ | (0.02 | ) | |||||
| FNF Group weighted average shares - basic | 271 | |||||||||||
| FNF Group weighted average shares - diluted | 277 | |||||||||||
| Net earnings (loss) attributable to FNF Group common shareholders | $ | 416 | $ | 424 | $ | (8 | ) | |||||
| Total non-GAAP, pre-tax adjustments | $ | 87 | $ | 65 | $ | 22 | ||||||
| Income taxes on non-GAAP adjustments | (29 | ) | (21 | ) | (8 | ) | ||||||
| Noncontrolling interest on non-GAAP adjustments | (10 | ) | (10 | ) | — | |||||||
| Nondeductible income taxes on litigation and regulatory settlements | 21 | 21 | — | |||||||||
| Adjustments related to discontinued operations | 37 | — | 37 | |||||||||
| Total non-GAAP adjustments | $ | 106 | $ | 55 | $ | 51 | ||||||
| Adjusted net earnings attributable to FNF Group common shareholders | $ | 522 | $ | 479 | $ | 43 | ||||||
| Adjusted EPS attributable to FNF Group common shareholders - diluted | $ | 1.88 | $ | 1.73 | $ | 0.15 | ||||||
| Direct orders opened (000's) | 1,497 | 1,497 | ||||||||||
| Direct orders closed (000's) | 1,071 | 1,071 | ||||||||||
| Fee per file | $ | 2,320 | $ | 2,320 | ||||||||
| Actual title claims paid | $ | 168 | $ | 168 | ||||||||
| Cash flows provided by operations: | $ | 691 | ||||||||||
9
FNF GROUP
YTD SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
| Total FNF Group | Title | Corporate and Other | ||||||||||
| Nine Months Ended | ||||||||||||
| September 30, 2016 | ||||||||||||
| Direct title premiums | $ | 1,518 | $ | 1,518 | $ | — | ||||||
| Agency title premiums | 1,934 | 1,934 | — | |||||||||
| Escrow, title related and other fees | 1,796 | 1,587 | 209 | |||||||||
| Total title and escrow | 5,248 | 5,039 | 209 | |||||||||
| Interest and investment income | 93 | 94 | (1 | ) | ||||||||
| Realized gains and losses, net | (6 | ) | 1 | (7 | ) | |||||||
| Total revenue | 5,335 | 5,134 | 201 | |||||||||
| Personnel costs | 1,680 | 1,633 | 47 | |||||||||
| Agent commissions | 1,473 | 1,473 | — | |||||||||
| Other operating expenses | 1,216 | 1,064 | 152 | |||||||||
| Depreciation and amortization | 116 | 109 | 7 | |||||||||
| Claim loss expense | 190 | 190 | — | |||||||||
| Interest expense | 47 | — | 47 | |||||||||
| Total expenses | 4,722 | 4,469 | 253 | |||||||||
| Pre-tax earnings (loss) from continuing operations | $ | 613 | $ | 665 | $ | (52 | ) | |||||
| Non-GAAP adjustments before taxes | ||||||||||||
| Realized (gains) and losses, net | 6 | (1 | ) | 7 | ||||||||
| Purchase price amortization | 69 | 66 | 3 | |||||||||
| Other legal accruals | 6 | 6 | — | |||||||||
| Management fee | 1 | 1 | — | |||||||||
| Total non-GAAP adjustments before taxes | $ | 82 | $ | 72 | $ | 10 | ||||||
| Adjusted pre-tax earnings (loss) from continuing operations | $ | 695 | $ | 737 | $ | (42 | ) | |||||
| Adjusted pre-tax margin from continuing operations | 13.0 | % | 14.4 | % | — | |||||||
| Purchase price amortization | (69 | ) | (66 | ) | (3 | ) | ||||||
| Depreciation and amortization | 116 | 109 | 7 | |||||||||
| Interest expense | 47 | — | 47 | |||||||||
| Adjusted EBITDA | $ | 789 | $ | 780 | $ | 9 | ||||||
| Adjusted EBITDA margin | 14.8 | % | 15.2 | % | 4.3 | % | ||||||
10
FNF GROUP
YTD SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
| Total FNF Group | Title | Corporate and Other | ||||||||||
| Nine Months Ended | ||||||||||||
| September 30, 2016 | ||||||||||||
| Pre-tax earnings (loss) from continuing operations | $ | 613 | $ | 665 | $ | (52 | ) | |||||
| Income tax expense (benefit) | 223 | 251 | (28 | ) | ||||||||
| Earnings from equity investments | 10 | 9 | 1 | |||||||||
| Earnings from discontinued operations, net of tax | 54 | — | 54 | |||||||||
| Non-controlling interests | 31 | (4 | ) | 35 | ||||||||
| Net earnings (loss) attributable to FNF Group common shareholders | $ | 423 | $ | 427 | $ | (4 | ) | |||||
| EPS attributable to FNF Group common shareholders - basic | $ | 1.56 | $ | 1.57 | $ | (0.01 | ) | |||||
| EPS attributable to FNF Group common shareholders - diluted | $ | 1.51 | $ | 1.53 | $ | (0.02 | ) | |||||
| FNF Group weighted average shares - basic | 272 | |||||||||||
| FNF Group weighted average shares - diluted | 280 | |||||||||||
| Net earnings (loss) attributable to FNF Group common shareholders | $ | 423 | $ | 427 | $ | (4 | ) | |||||
| Total non-GAAP, pre-tax adjustments | $ | 82 | $ | 72 | $ | 10 | ||||||
| Income taxes on non-GAAP adjustments | (27 | ) | (23 | ) | (4 | ) | ||||||
| Noncontrolling interest on non-GAAP adjustments | (12 | ) | (12 | ) | — | |||||||
| Adjustments related to discontinued operations | 27 | — | 27 | |||||||||
| Total non-GAAP adjustments | $ | 70 | $ | 37 | $ | 33 | ||||||
| Adjusted net earnings attributable to FNF Group common shareholders | $ | 493 | $ | 464 | $ | 29 | ||||||
| Adjusted EPS attributable to FNF Group common shareholders - diluted | $ | 1.76 | $ | 1.66 | $ | 0.10 | ||||||
| Direct orders opened (000's) | 1,708 | 1,708 | ||||||||||
| Direct orders closed (000's) | 1,156 | 1,156 | ||||||||||
| Fee per file | $ | 2,055 | $ | 2,055 | ||||||||
| Actual title claims paid | $ | 169 | $ | 169 | ||||||||
| Cash flows provided by operations: | $ | 709 | ||||||||||
11
FNF GROUP
QUARTERLY OPERATING STATISTICS
(Unaudited)
| Q3 2017 | Q2 2017 | Q1 2017 | Q4 2016 | Q3 2016 | Q2 2016 | Q1 2016 | Q4 2015 | |||||||||||||||||||||||||
| Quarterly Open Orders ('000's except % data) | ||||||||||||||||||||||||||||||||
| Total open orders* | 501 | 524 | 472 | 474 | 616 | 577 | 517 | 441 | ||||||||||||||||||||||||
| Total open orders per day* | 8.0 | 8.2 | 7.6 | 7.6 | 9.6 | 9.0 | 8.3 | 7.0 | ||||||||||||||||||||||||
| Purchase % of open orders | 62 | % | 66 | % | 64 | % | 53 | % | 50 | % | 57 | % | 55 | % | 55 | % | ||||||||||||||||
| Refinance % of open orders | 38 | % | 34 | % | 36 | % | 47 | % | 50 | % | 43 | % | 45 | % | 45 | % | ||||||||||||||||
| Total closed orders* | 367 | 370 | 334 | 419 | 433 | 401 | 322 | 341 | ||||||||||||||||||||||||
| Total closed orders per day* | 5.8 | 5.8 | 5.4 | 6.8 | 6.8 | 6.3 | 5.2 | 5.4 | ||||||||||||||||||||||||
| Purchase % of closed orders | 65 | % | 67 | % | 58 | % | 51 | % | 54 | % | 58 | % | 55 | % | 58 | % | ||||||||||||||||
| Refinance % of closed orders | 35 | % | 33 | % | 42 | % | 49 | % | 46 | % | 42 | % | 45 | % | 42 | % | ||||||||||||||||
| Commercial (millions, except orders in '000's) | ||||||||||||||||||||||||||||||||
| Total commercial revenue | $ | 250 | $ | 261 | $ | 224 | $ | 285 | $ | 233 | $ | 244 | $ | 211 | $ | 303 | ||||||||||||||||
| Total commercial open orders | 48.3 | 50.8 | 49.4 | 45.9 | 50.4 | 49.9 | 48.5 | 46.3 | ||||||||||||||||||||||||
| Total commercial closed orders | 33.4 | 33.6 | 30.0 | 34.7 | 31.9 | 33.6 | 30.7 | 36.3 | ||||||||||||||||||||||||
| National commercial revenue | $ | 138 | $ | 148 | $ | 127 | $ | 167 | $ | 130 | $ | 144 | $ | 121 | $ | 183 | ||||||||||||||||
| National commercial open orders | 19.9 | 22.0 | 21.1 | 17.9 | 20.4 | 20.3 | 19.3 | 18.1 | ||||||||||||||||||||||||
| National commercial closed orders | 13.1 | 13.3 | 11.2 | 12.8 | 11.7 | 11.6 | 10.6 | 13.4 | ||||||||||||||||||||||||
| Total Fee Per File | ||||||||||||||||||||||||||||||||
| Fee per file | $ | 2,368 | $ | 2,428 | $ | 2,148 | $ | 2,091 | $ | 2,015 | $ | 2,116 | $ | 2,032 | $ | 2,272 | ||||||||||||||||
| Residential and local commercial fee per file | $ | 2,066 | $ | 2,104 | $ | 1,829 | $ | 1,746 | $ | 1,762 | $ | 1,809 | $ | 1,713 | $ | 1,806 | ||||||||||||||||
| Residential fee per file | $ | 1,856 | $ | 1,895 | $ | 1,623 | $ | 1,538 | $ | 1,594 | $ | 1,645 | $ | 1,522 | $ | 1,548 | ||||||||||||||||
| Total commercial fee per file | $ | 7,500 | $ | 7,800 | $ | 7,500 | $ | 8,200 | $ | 7,300 | $ | 7,300 | $ | 6,900 | $ | 8,300 | ||||||||||||||||
| National commercial fee per file | $ | 10,500 | $ | 11,100 | $ | 11,300 | $ | 13,000 | $ | 11,100 | $ | 12,400 | $ | 11,400 | $ | 13,600 | ||||||||||||||||
| Total Staffing | ||||||||||||||||||||||||||||||||
| Total field operations employees | 11,700 | 11,300 | 11,000 | 11,100 | 11,400 | 10,900 | 10,900 | 10,700 | ||||||||||||||||||||||||
| FNTG Only Quarterly Operating Statistics ('000's except fee per file and staffing) | ||||||||||||||||||||||||||||||||
| Total open orders* | 434 | 457 | 407 | 395 | 518 | 484 | 429 | 360 | ||||||||||||||||||||||||
| Total open orders per day* | 7.0 | 7.2 | 6.6 | 6.4 | 8.1 | 7.5 | 6.9 | 5.7 | ||||||||||||||||||||||||
| Purchase % of open orders | 68 | % | 72 | % | 69 | % | 59 | % | 55 | % | 63 | % | 61 | % | 62 | % | ||||||||||||||||
| Refinance % of open orders | 32 | % | 28 | % | 31 | % | 41 | % | 45 | % | 37 | % | 39 | % | 38 | % | ||||||||||||||||
| Total closed orders* | 325 | 324 | 277 | 352 | 369 | 338 | 265 | 285 | ||||||||||||||||||||||||
| Total closed orders per day* | 5.1 | 5.1 | 4.5 | 5.7 | 5.8 | 5.3 | 4.3 | 4.5 | ||||||||||||||||||||||||
| Purchase % of closed orders | 70 | % | 72 | % | 63 | % | 55 | % | 58 | % | 63 | % | 60 | % | 63 | % | ||||||||||||||||
| Refinance % of closed orders | 30 | % | 28 | % | 37 | % | 45 | % | 42 | % | 37 | % | 40 | % | 37 | % | ||||||||||||||||
| Fee per file | $ | 2,543 | $ | 2,618 | $ | 2,395 | $ | 2,313 | $ | 2,205 | $ | 2,337 | $ | 2,261 | $ | 2,521 | ||||||||||||||||
| Total title field operations employees | 10,800 | 10,300 | 9,900 | 10,000 | 10,200 | 9,600 | 9,700 | 9,500 | ||||||||||||||||||||||||
| ServiceLink Only Quarterly Operating Statistics ('000's except fee per file and staffing) | ||||||||||||||||||||||||||||||||
| Revenue (millions) | $ | 184 | $ | 191 | $ | 192 | $ | 198 | $ | 205 | $ | 203 | $ | 195 | $ | 198 | ||||||||||||||||
| Total open orders* | 67 | 67 | 65 | 79 | 98 | 93 | 87 | 81 | ||||||||||||||||||||||||
| Total open orders per day* | 1.0 | 1.0 | 1.0 | 1.2 | 1.5 | 1.5 | 1.4 | 1.3 | ||||||||||||||||||||||||
| Purchase % of open orders | 23 | % | 25 | % | 25 | % | 21 | % | 17 | % | 22 | % | 24 | % | 22 | % | ||||||||||||||||
| Refinance % of open orders | 77 | % | 75 | % | 75 | % | 79 | % | 83 | % | 78 | % | 76 | % | 78 | % | ||||||||||||||||
| Total closed orders* | 42 | 46 | 57 | 67 | 64 | 63 | 57 | 56 | ||||||||||||||||||||||||
| Total closed orders per day* | 0.7 | 0.7 | 0.9 | 1.1 | 1.0 | 1.0 | 0.9 | 0.9 | ||||||||||||||||||||||||
| Purchase % of closed orders | 24 | % | 28 | % | 30 | % | 24 | % | 27 | % | 27 | % | 28 | % | 31 | % | ||||||||||||||||
| Refinance % of closed orders | 76 | % | 72 | % | 70 | % | 76 | % | 73 | % | 73 | % | 72 | % | 69 | % | ||||||||||||||||
| Fee per file | $ | 1,040 | $ | 1,047 | $ | 950 | $ | 932 | $ | 916 | $ | 940 | $ | 972 | $ | 1,003 | ||||||||||||||||
| Total ServiceLink operations employees | 900 | 1,000 | 1,100 | 1,100 | 1,200 | 1,300 | 1,200 | 1,200 | ||||||||||||||||||||||||
* Includes an immaterial number of non-purchase and non-refinance orders
12
FNF GROUP
SUMMARY BALANCE SHEET INFORMATION
(In millions)
FNF Group September 30, 2017 | FNF Group December 31, 2016 | |||||||||
| (Unaudited) | (Unaudited) | |||||||||
| Cash and investment portfolio | $ | 4,555 | $ | 4,831 | ||||||
| Goodwill | 2,683 | 2,555 | ||||||||
| Title plant | 398 | 395 | ||||||||
| Total assets | 9,190 | 13,063 | ||||||||
| Notes payable | 762 | 987 | ||||||||
| Reserve for title claim losses | 1,496 | 1,487 | ||||||||
| Secured trust deposits | 923 | 860 | ||||||||
| Redeemable non-controlling interests | 344 | 344 | ||||||||
| Non-redeemable non-controlling interests | — | 786 | ||||||||
| Total equity and redeemable non-controlling interests | 4,599 | 6,210 | ||||||||
| Total equity attributable to common shareholders | 4,255 | 5,080 | ||||||||
FNF Group September 30, 2017 | FNFV September 30, 2017 | Consolidated September 30, 2017 | Consolidated December 31, 2016 | |||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||
| Cash and investment portfolio | $ | 4,555 | $ | 807 | $ | 5,362 | $ | 5,473 | ||||||||||||
| Goodwill | 2,683 | 101 | 2,784 | 2,761 | ||||||||||||||||
| Title plant | 398 | — | 398 | 395 | ||||||||||||||||
| Total assets | 9,190 | 1,311 | 10,501 | 14,463 | ||||||||||||||||
| Notes payable | 762 | 128 | 890 | 1,220 | ||||||||||||||||
| Reserve for title claim losses | 1,496 | — | 1,496 | 1,487 | ||||||||||||||||
| Secured trust deposits | 923 | — | 923 | 860 | ||||||||||||||||
| Redeemable non-controlling interests | 344 | — | 344 | 344 | ||||||||||||||||
| Non-redeemable non-controlling interests | — | 99 | 99 | 902 | ||||||||||||||||
| Total equity and redeemable non-controlling interests | 4,599 | 1,114 | 5,713 | 7,242 | ||||||||||||||||
| Total equity attributable to common shareholders | 4,255 | 1,015 | 5,270 | 5,996 | ||||||||||||||||
13
Fidelity National Financial, Inc.
CONSOLIDATED SUMMARY OF EARNINGS
(In millions)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| September 30, 2017 | September 30, 2017 | |||||||||||||||||||||||
| Consolidated | Core | FNFV | Consolidated | Core | FNFV | |||||||||||||||||||
| Direct title premiums | $ | 558 | $ | 558 | $ | — | $ | 1,598 | $ | 1,598 | $ | — | ||||||||||||
| Agency title premiums | 719 | 719 | — | 2,028 | 2,028 | — | ||||||||||||||||||
| Total title premiums | 1,277 | 1,277 | — | 3,626 | 3,626 | — | ||||||||||||||||||
| Escrow, title-related and other fees | 689 | 678 | 11 | 2,071 | 1,969 | 102 | ||||||||||||||||||
| Total title and escrow and other | 1,966 | 1,955 | 11 | 5,697 | 5,595 | 102 | ||||||||||||||||||
| Restaurant revenue | 269 | — | 269 | 830 | — | 830 | ||||||||||||||||||
| Interest and investment income | 34 | 32 | 2 | 97 | 93 | 4 | ||||||||||||||||||
| Realized gains and losses, net | (4 | ) | (1 | ) | (3 | ) | 277 | — | 277 | |||||||||||||||
| Total revenue | 2,265 | 1,986 | 279 | 6,901 | 5,688 | 1,213 | ||||||||||||||||||
| Personnel costs | 646 | 627 | 19 | 1,958 | 1,822 | 136 | ||||||||||||||||||
| Other operating expenses | 468 | 443 | 25 | 1,392 | 1,312 | 80 | ||||||||||||||||||
| Cost of restaurant revenue | 243 | — | 243 | 728 | — | 728 | ||||||||||||||||||
| Agent commissions | 553 | 553 | — | 1,557 | 1,557 | — | ||||||||||||||||||
| Depreciation and amortization | 58 | 46 | 12 | 177 | 133 | 44 | ||||||||||||||||||
| Title claim loss expense | 64 | 64 | — | 181 | 181 | — | ||||||||||||||||||
| Interest expense | 12 | 11 | 1 | 47 | 39 | 8 | ||||||||||||||||||
| Total expenses | 2,044 | 1,744 | 300 | 6,040 | 5,044 | 996 | ||||||||||||||||||
| Earnings (loss) from continuing operations before taxes | 221 | 242 | (21 | ) | 861 | 644 | 217 | |||||||||||||||||
| Income tax expense (benefit) | 74 | 88 | (14 | ) | 355 | 258 | 97 | |||||||||||||||||
| Earnings (loss) from continuing operations before equity investments | 147 | 154 | (7 | ) | 506 | 386 | 120 | |||||||||||||||||
| (Loss) earnings from equity investments | (3 | ) | 3 | (6 | ) | (7 | ) | 7 | (14 | ) | ||||||||||||||
| Net earnings (loss) from continuing operations | 144 | 157 | (13 | ) | 499 | 393 | 106 | |||||||||||||||||
| Earnings from discontinued operations, net of tax | 31 | 31 | — | 59 | 59 | — | ||||||||||||||||||
| Net earnings (loss) | 175 | 188 | (13 | ) | 558 | 452 | 106 | |||||||||||||||||
| Non-controlling interests | 10 | 18 | (8 | ) | 25 | 36 | (11 | ) | ||||||||||||||||
| Net earnings (loss) attributable to common shareholders | $ | 165 | $ | 170 | $ | (5 | ) | $ | 533 | $ | 416 | $ | 117 | |||||||||||
| Cash flows provided by (used in) operations | 274 | 302 | (28 | ) | 566 | 691 | (125 | ) | ||||||||||||||||
14
Fidelity National Financial, Inc.
CONSOLIDATED SUMMARY OF EARNINGS
(In millions)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| September 30, 2016 | September 30, 2016 | |||||||||||||||||||||||
| Consolidated | Core | FNFV | Consolidated | Core | FNFV | |||||||||||||||||||
| Direct title premiums | $ | 556 | $ | 556 | $ | — | $ | 1,518 | $ | 1,518 | $ | — | ||||||||||||
| Agency title premiums | 713 | 713 | — | 1,934 | 1,934 | — | ||||||||||||||||||
| Total title premiums | 1,269 | 1,269 | — | 3,452 | 3,452 | — | ||||||||||||||||||
| Escrow, title-related and other fees | 700 | 654 | 46 | 1,920 | 1,796 | 124 | ||||||||||||||||||
| Total title and escrow and other | 1,969 | 1,923 | 46 | 5,372 | 5,248 | 124 | ||||||||||||||||||
| Restaurant revenue | 273 | — | 273 | 858 | — | 858 | ||||||||||||||||||
| Interest and investment income | 29 | 28 | 1 | 96 | 93 | 3 | ||||||||||||||||||
| Realized gains and losses, net | (4 | ) | (3 | ) | (1 | ) | 5 | (6 | ) | 11 | ||||||||||||||
| Total revenue | 2,267 | 1,948 | 319 | 6,331 | 5,335 | 996 | ||||||||||||||||||
| Personnel costs | 630 | 588 | 42 | 1,800 | 1,680 | 120 | ||||||||||||||||||
| Other operating expenses | 464 | 439 | 25 | 1,296 | 1,216 | 80 | ||||||||||||||||||
| Cost of restaurant revenue | 237 | — | 237 | 727 | — | 727 | ||||||||||||||||||
| Agent commissions | 545 | 545 | — | 1,473 | 1,473 | — | ||||||||||||||||||
| Depreciation and amortization | 56 | 41 | 15 | 161 | 116 | 45 | ||||||||||||||||||
| Title claim loss expense | 70 | 70 | — | 190 | 190 | — | ||||||||||||||||||
| Interest expense | 18 | 14 | 4 | 55 | 47 | 8 | ||||||||||||||||||
| Total expenses | 2,020 | 1,697 | 323 | 5,702 | 4,722 | 980 | ||||||||||||||||||
| Earnings (loss) from continuing operations before taxes | 247 | 251 | (4 | ) | 629 | 613 | 16 | |||||||||||||||||
| Income tax expense (benefit) | 88 | 95 | (7 | ) | 218 | 223 | (5 | ) | ||||||||||||||||
| Earnings from continuing operations before equity investments | 159 | 156 | 3 | 411 | 390 | 21 | ||||||||||||||||||
| (Loss) earnings from equity investments | (7 | ) | 4 | (11 | ) | (6 | ) | 10 | (16 | ) | ||||||||||||||
| Net earnings (loss) from continuing operations | 152 | 160 | (8 | ) | 405 | 400 | 5 | |||||||||||||||||
| Earnings from discontinued operations, net of tax | 17 | 17 | — | 54 | 54 | — | ||||||||||||||||||
| Net earnings (loss) | 169 | 177 | (8 | ) | 459 | 454 | 5 | |||||||||||||||||
| Non-controlling interests | 13 | 14 | (1 | ) | 32 | 31 | 1 | |||||||||||||||||
| Net earnings (loss) attributable to common shareholders | $ | 156 | $ | 163 | $ | (7 | ) | $ | 427 | $ | 423 | $ | 4 | |||||||||||
| Cash flows provided by operations | 372 | 360 | 12 | 745 | 709 | 36 | ||||||||||||||||||
###
15