EXHIBIT 99.1
Contact: | ||||
Thomas A. Klemens | NEWS | FOR | ||
Sr. Executive Vice President & | IMMEDIATE | |||
Chief Financial Officer | RELEASE | |||
(714) 800-4401 |
THE FIRST AMERICAN CORPORATION REPORTS
RECORD RESULTS FOR THE THIRD QUARTER 2005
SANTA ANA, Calif., Oct. 26, 2005 – The First American Corporation (NYSE: FAF), the nation’s largest data provider, today announced results for the third quarter ended Sept. 30, 2005:
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||
Total revenues | $ | 2.17 billion | $ | 1.72 billion | $ | 5.86 billion | $ | 4.92 billion | ||||
Income before income taxes and minority interests | $ | 275.4 million | $ | 202.0 million | $ | 694.6 million | $ | 532.3 million | ||||
Net income | $ | 149.1 million | $ | 107.2 million | $ | 367.8 million | $ | 278.7 million | ||||
Net income per diluted share | $1.51 | $1.17 | $3.79 | $3.07 |
Summary of Operations
“The company posted record revenue and profits for the third quarter,” stated Parker S. Kennedy, chairman and chief executive officer of The First American Corporation. “The company’s positive performance was affected by strong mortgage origination volume, particularly from purchase activity, as well as our ongoing commitment to maximize operating efficiencies, reduce costs and improve market share.”
“During the third quarter, we contributed First American’s Credit Information Group (CIG) to First Advantage Corporation (NASDAQ: FADV). First American now owns 80 percent of First Advantage. With the addition of CIG, First Advantage’s market capitalization has grown to more than $1.4 billion, with an estimated $600 million in annual revenue. CIG also provides First Advantage with opportunities to grow through larger acquisitions and, organically, through new markets and cross-selling opportunities.”
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First American Reports Record Results for the Third Quarter 2005
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Quarterly Financial Highlights
Financial Services Group:
• | Revenues for the third quarter 2005 were $1.70 billion, an increase of 30.3 percent when compared with revenues of $1.30 billion for the third quarter of 2004. |
• | Pretax income was $209.2 million, an increase of 58.6 percent when compared with $131.8 million in the prior year quarter. |
• | Pretax margins increased to 12.3 percent compared with 10.1 percent for the third quarter 2004. |
Information Technology Group:
• | Revenues for the third quarter 2005 were $466.1 million, an increase of 12.2 percent compared with revenues of $415.3 million for the third quarter of 2004. |
• | Pretax income was $104.2 million, a decrease of 1.1 percent when compared with third quarter 2004 income of $105.3 million. |
• | Pretax margins decreased to 22.3 percent compared with 25.4 percent for the third quarter 2004. |
• | The current quarter included $9.1 million of pretax costs related to the company’s default division, which is included in the Mortgage Information Segment. These costs include expenses associated with relocating and consolidating operations, the write-down of certain software and other related expenses. The prior year quarter included a one-time benefit of $13.0 million for the Mortgage Information Segment. |
Strategic Focus and Outlook
Kennedy added: “We will continue our strategic initiatives of technology, centralization, bundling, offshore processing and analytics to maintain strong margins, particularly in title insurance. We will pursue strategic acquisitions that will enhance production efficiencies, increase market share and create opportunities to leverage our expansive real estate data to create unique products and services.”
Teleconference/Webcast
First American’s third quarter results will be discussed in more detail on Wednesday, Oct. 26, 2005, at 11 a.m. EDT, via teleconference. The dial-in number is (888) 955-3516 and the pass code is “FIRST AMERICAN.” The live audio webcast of the call will be available on First American’s Web site atwww.firstam.com/investor. An audio replay of the conference call will be available through Nov. 2, 2005, by dialing (203) 369-1008. An audio archive of the call will also be available for replay on First American’s Web site.
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First American Reports Record Results for the Third Quarter 2005
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First American Investor Day
First American will also host a full-day Company Update and Technology Expo at its office in New York City on Tuesday, Nov. 8, 2005, to provide analysts and investors with the opportunity to hear management’s strategy for continued growth and margin improvement. Attendance is by registration only; however, the media and general public are invited to listen via webcast beginning at 8:30 a.m. EST from the Investor Relations section of the company’s Web site atwww.firstam.com/investor. A replay of the webcast will also be made available on the company’s Web site shortly after the conclusion of the live presentation.
About First American
The First American Corporation (NYSE: FAF), a FORTUNE 500®company that traces its history to 1889, is the nation’s largest data provider. First American combines advanced analytics with its vast data resources to supply businesses and consumers with valuable information products to support the major economic events of people’s lives, such as getting a job, renting an apartment, buying a car or house, securing a mortgage and opening or buying a business. The First American Family of Companies, many of which command leading market share positions in their respective industries, operate within six primary business segments, including: Title Insurance and Services, Specialty Insurance, Mortgage Information, Property Information, Credit Information and Screening Information. With revenues of $6.72 billion in 2004, First American has approximately 2,000 offices throughout the United States and abroad. More information about the company and an archive of its press releases can be found atwww.firstam.com.
Forward Looking Statements
Certain statements made in this press release, including those related to First Advantage’s revenues, strategic initiatives and strategic acquisitions, are forward looking. Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements include: interest rate fluctuations; changes in the performance of the real estate markets; limitations on access to public records and other data; general volatility in the capital markets; changes in applicable government regulations; consolidation among the company’s significant customers and competitors; the company’s continued ability to identify businesses to be acquired; changes in the company’s ability to integrate businesses which it acquires; and other factors described in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2004, as filed with the Securities and Exchange Commission. The forward-looking statements speak only as of the date they are made. The company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.
(Additional Financial Data Follows)
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First American Reports Record Results for the Third Quarter 2005
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Summary of Earnings
(in thousands, except per share amounts)
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||
Total revenues | $ | 2,168,182 | $ | 1,721,485 | $ | 5,856,641 | $ | 4,919,309 | ||||
Income before income taxes and minority interests | $ | 275,361 | $ | 202,005 | $ | 694,623 | $ | 532,326 | ||||
Income taxes | $ | 101,100 | $ | 70,800 | $ | 255,600 | $ | 187,500 | ||||
Minority interests | $ | 25,139 | $ | 23,990 | $ | 71,246 | $ | 66,129 | ||||
Net income | $ | 149,122 | $ | 107,215 | $ | 367,777 | $ | 278,697 | ||||
Net income per share: | ||||||||||||
Basic | $ | 1.56 | $ | 1.21 | $ | 3.92 | $ | 3.27 | ||||
Diluted | $ | 1.51 | $ | 1.17 | $ | 3.79 | $ | 3.07 | ||||
Weighted average shares outstanding: | ||||||||||||
Basic | 95,341 | 88,595 | 93,852 | 85,330 | ||||||||
Diluted | 98,768 | 91,594 | 97,307 | 91,431 |
Summary Balance Sheet Information
(in thousands, except per share amounts)
September 30 | December 31 | |||||
2005 | 2004 | |||||
Total stockholders’ equity | $ | 2,951,879 | $ | 2,463,564 | ||
Book value per share | $ | 30.84 | $ | 27.36 |
Summary Title Insurance Order Counts
From Direct Operations
Three Months Ended September 30 | ||||
2005 | 2004 | |||
Title orders opened: | ||||
July | 236,400 | 214,500 | ||
August | 257,300 | 219,200 | ||
September | 231,300 | 217,800 | ||
Third quarter total | 725,000 | 651,500 | ||
Title orders closed: | ||||
July | 177,300 | 164,100 | ||
August | 199,900 | 167,700 | ||
September | 178,400 | 162,300 | ||
Third quarter total | 555,600 | 494,100 | ||
(Additional Financial Data Follows)
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First American Reports Record Results for the Third Quarter 2005
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Selected Financial Data
(unaudited, in thousands)
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||
RESULTS OF OPERATIONS | ||||||||||||
Revenues | ||||||||||||
Operating revenues | $ | 2,103,153 | $ | 1,680,887 | $ | 5,691,610 | $ | 4,811,518 | ||||
Investment and other income | 58,196 | 35,541 | 152,527 | 98,685 | ||||||||
Net realized investment gains | 6,833 | 5,057 | 12,504 | 9,106 | ||||||||
2,168,182 | 1,721,485 | 5,856,641 | 4,919,309 | |||||||||
Expenses | ||||||||||||
Salaries and other personnel costs | 628,559 | 545,294 | 1,778,531 | 1,553,691 | ||||||||
Premiums retained by agents | 607,239 | 458,750 | 1,632,863 | 1,341,486 | ||||||||
Other operating expenses | 460,366 | 358,694 | 1,237,713 | 1,071,971 | ||||||||
Provision for title losses and other claims | 126,186 | 97,975 | 316,820 | 255,082 | ||||||||
Depreciation and amortization | 38,049 | 32,981 | 110,998 | 93,677 | ||||||||
Premium taxes | 16,954 | 13,324 | 45,897 | 38,954 | ||||||||
Interest | 15,468 | 12,462 | 39,196 | 32,122 | ||||||||
1,892,821 | 1,519,480 | 5,162,018 | 4,386,983 | |||||||||
Income before income taxes and minority interests | $ | 275,361 | $ | 202,005 | $ | 694,623 | $ | 532,326 | ||||
OPERATING REVENUES | ||||||||||||
Financial Services | ||||||||||||
Title Insurance and Services: | ||||||||||||
Direct operations | $ | 820,186 | $ | 645,203 | $ | 2,172,406 | $ | 1,820,654 | ||||
Agency operations | 756,868 | 569,956 | 2,037,969 | 1,661,104 | ||||||||
1,577,054 | 1,215,159 | 4,210,375 | 3,481,758 | |||||||||
Specialty Insurance | 74,678 | 61,617 | 198,972 | 159,956 | ||||||||
1,651,732 | 1,276,776 | 4,409,347 | 3,641,714 | |||||||||
Information Technology | ||||||||||||
Mortgage Information | 150,117 | 171,698 | 443,089 | 494,282 | ||||||||
Property Information | 132,994 | 100,181 | 371,421 | 291,683 | ||||||||
Credit Information | 83,854 | 60,322 | 228,549 | 185,686 | ||||||||
Screening Information | 84,456 | 71,910 | 239,204 | 198,153 | ||||||||
451,421 | 404,111 | 1,282,263 | 1,169,804 | |||||||||
Total operating revenues | $ | 2,103,153 | $ | 1,680,887 | $ | 5,691,610 | $ | 4,811,518 | ||||
INCOME BEFORE INCOME TAXES AND | ||||||||||||
Financial Services | ||||||||||||
Title Insurance and Services | $ | 195,549 | $ | 123,509 | $ | 467,490 | $ | 322,583 | ||||
Specialty Insurance | 13,605 | 8,334 | 36,463 | 32,431 | ||||||||
209,154 | 131,843 | 503,953 | 355,014 | |||||||||
Information Technology | ||||||||||||
Mortgage Information | 34,933 | 52,690 | 107,158 | 131,029 | ||||||||
Property Information | 42,698 | 30,309 | 120,288 | 90,782 | ||||||||
Credit Information | 21,000 | 15,172 | 60,431 | 42,192 | ||||||||
Screening Information | 5,544 | 7,177 | 14,450 | 13,816 | ||||||||
104,175 | 105,348 | 302,327 | 277,819 | |||||||||
Total before corporate expenses and | 313,329 | 237,191 | 806,280 | 632,833 | ||||||||
Corporate expense | 37,968 | 35,186 | 111,657 | 100,507 | ||||||||
Income before income taxes and minority interests | $ | 275,361 | $ | 202,005 | $ | 694,623 | $ | 532,326 | ||||
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Segment Margins
(unaudited)
(in thousands, except percentages)
Three Months Ended September 30 | ||||||||||||||||||
Total revenues | Pretax (A) | Margins | ||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2005 | 2004 | |||||||||||||
Financial Services | ||||||||||||||||||
Title Insurance and Services | $ | 1,618,340 | $ | 1,237,763 | $ | 195,549 | $ | 123,509 | 12.1 | % | 10.0 | % | ||||||
Specialty Insurance | 78,873 | 64,838 | 13,605 | 8,334 | 17.2 | % | 12.9 | % | ||||||||||
$ | 1,697,213 | $ | 1,302,601 | $ | 209,154 | $ | 131,843 | 12.3 | % | 10.1 | % | |||||||
Information Technology | ||||||||||||||||||
Mortgage Information | $ | 153,616 | $ | 174,508 | $ | 34,933 | $ | 52,690 | 22.7 | % | 30.2 | % | ||||||
Property Information | 142,269 | 106,396 | 42,698 | 30,309 | 30.0 | % | 28.5 | % | ||||||||||
Credit Information | 85,264 | 62,450 | 21,000 | 15,172 | 24.6 | % | 24.3 | % | ||||||||||
Screening Information | 84,984 | 71,936 | 5,544 | 7,177 | 6.5 | % | 10.0 | % | ||||||||||
$ | 466,133 | $ | 415,290 | $ | 104,175 | $ | 105,348 | 22.3 | % | 25.4 | % | |||||||
Nine Months Ended September 30 | ||||||||||||||||||
Total revenues | Pretax (A) | Margins | ||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2005 | 2004 | |||||||||||||
Financial Services | ||||||||||||||||||
Title Insurance and Services | $ | 4,316,718 | $ | 3,542,755 | $ | 467,490 | $ | 322,583 | 10.8 | % | 9.1 | % | ||||||
Specialty Insurance | 210,421 | 170,556 | 36,463 | 32,431 | 17.3 | % | 19.0 | % | ||||||||||
$ | 4,527,139 | $ | 3,713,311 | $ | 503,953 | $ | 355,014 | 11.1 | % | 9.6 | % | |||||||
Information Technology | ||||||||||||||||||
Mortgage Information | $ | 450,277 | $ | 501,214 | $ | 107,158 | $ | 131,029 | 23.8 | % | 26.1 | % | ||||||
Property Information | 396,813 | 310,266 | 120,288 | 90,782 | 30.3 | % | 29.3 | % | ||||||||||
Credit Information | 234,236 | 192,709 | 60,431 | 42,192 | 25.8 | % | 21.9 | % | ||||||||||
Screening Information | 240,735 | 198,295 | 14,450 | 13,816 | 6.0 | % | 7.0 | % | ||||||||||
$ | 1,322,061 | $ | 1,202,484 | $ | 302,327 | $ | 277,819 | 22.9 | % | 23.1 | % | |||||||
(A) - Income before income tax, minority interest and corporate expenses
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