FNF - Earnings call transcript Q3 2017 | Fidelity National Financial, Inc.

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Operator

Thank you for standing by. Welcome to the FNF 2017 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded. to conference like host, to now Murphy. Dan would turn over the your I ahead. go Please

Daniel Kennedy Murphy

and you, us XXXX third joining everyone, for quarter call. conference Thank earnings morning, our good and thanks for

Tony Foley; today me Quirk; Nolan; Brent are Bill Park; Joining CEO, EVP, and Chairman, President, Randy Mike Bickett. CFO,

Bill, financial Tony will with will from strategic a begin highlights. the review review brief a will We the finish title with of overview Randy business, and

concluding number some from We forward-looking that questions are and including open and our hopes, statements. facts, This will call Bill uncertainties. statements historical the your conference expectations, future with then forward-looking intentions Foley. for statements call finish that of Statements remarks strategies may contain or the about not involve are a risks regarding

also code be XXX-XXX-XXXX replay beginning the November in well phone of may webcast and financial call yesterday, at Time to sections X. based made new conference of is our forward not The to results the be risk Because such to risks at statements, at limited with result and statements statements Form Forward-looking the on assumptions release information available and today available the in uncertainties the other subject update statement expectations as forward-looking a on and results fact, future filings will based actual undertake are beliefs, It other and whether but Eastern or regarding management's as as to, as differ replay This currently any are to website of our no via obligation to operating which other statements dated projected. from management. XXXXXX. future and by, access factors for detailed will XX-K are through statements and information, The fnf.com. SEC. is risks available forward-looking events are otherwise. and number factors materially not include, information, We X:XX those PM press are replay and looking company’s

to turn Bill the now Chairman, our call Foley. Let me over

William Foley

you, Dan. Thank

we Happily on was quarter shares Black tax-free I earnings X.XXXXXXX FNF performance and a into XX, of with of received stock Black title the from now is let our business. title company, of on Black for own. more XX.X%. common as Knight Randy insurance adjusted third closed of distribution share Knight million The performance details an go of our we another of stand-alone shareholders each adjusted pre-tax margin stock generated will strong pre-tax title public $XXX business ownership. FNF September title they Knight no common as the

for quarter. agents the for stock. and be broker help including transaction. in and We stock the real the FNFV inclusion, made eligible more over Holdings was and fourth estate brokers FNF’s also service past our Holdings transaction tracking technology close during vote professionals management over to XXX, agents transaction index management exchange and acquisition XXXX digital is digital offerings a and The separate providing in covering leading made more year. set closing technology of of date suite XXX,XXX will at gain of is the FNF the Once to real estate S&P be progress the transactions on and potential SkySlope a majority FNFV again the real of cloud-based now the We initiate real company. SkySlope’s most by exchange million the X.X breed third a approximately November Cannae legally offices, two quarter exchange a customers shareholder of aimed recent strategy and for the the estate advance XXXX interest estate further markets brokerages of public of provider XX, agent solutions and covering broaden SkySlope, acquisitions and best estate significant transaction professionals. the have closing common platform completed, real and Cannae will efficiently will to used assets

and point. teams, on other to other valuable SaaS-based allow and us estate estate while focuses a United existing for estate is focuses acquisition provider believe relationship customers. price of to Real at Real our Real Geeks, business, Geeks for universe lower real of combined complement much a a We real management and in was solutions Canada. provide customer elite The States real technology solutions Geeks agents great single CINC internet a platform Real CINC marketing capabilities CINC Geeks professionals the on the larger of our elite will

convertible than leaving of million, During individually $XXX third for repurchase X.XX% quarter, face value the have more convertible the transactions. in total repurchased notes notes million $XXX price million approximately face X notes currently shares of stock. million million we of shares of a value the repurchased the negotiated million XXX XX of FNF Today for XX we of outstanding. the The represents purchase of approximately

an $X.XX, to Finally to to the the quarterly we title cash over X% as yesterday $X.XX, an increased previous continue from turn discuss now the call seek to to shareholders. ways Randy quarterly will business. to board increased our cash increase value I dividend return declared Quirk our dividend of

Raymond Quirk

Thank you Bill.

$XXX drive adjusted by quarter pre-tax continuing residential to adjusted was purchase quarter, X% operations. grew day the The respectively this X% earnings increased XX.X% approximately We we continued insurance title title in commission quarter of and opened in in orders strong per performance residential business. and a quarter and from margin. another purchase as closed look Bill our revenue to industry-leading performance our third forward title commercial and total versus markets strong by pre-tax generated the As title the X% Overall our mentioned and for third XXXX. million

open For the at at just nearly orders per September total with XXXX July at XXXX, over averaged and day, third quarter, August XXXX, XXXX.

October were for by increased direct as orders per weeks revenue the purchase orders X% and three under of from with day and the by opened the of by increased quarter. decrease percentage per in purchase open premiums the quarter first Direct fee even third offset over agency X% experienced of for October XXXX. orders. orders weeks channels orders, of premiums of day prior purchase a XXXX. the in We primarily over just XXXX XX% and by closed our stability mentioned, increase X% by Total driven direct day first grew the agency nearly opened benefited file year, per third I As three were XX% the per in higher closed

was X% $XXX closed increase orders a by per by January lost as of we future third revenue XXXX. premium closed subsequent the business nearly storms. per seeing did the revenue closed to as a million the are being to already On deferred as in revenue agents National XX% million, quarters days fee signed total X% of in million by quarter versus most in third over of into of $XXX have in the a of our Total increase by of XXXX, driven side, several quarter agent $XXX commercial generated quarter file be closings or those more the than anticipate file. agency in revenue third Texas We of increase offices XXXX. We impact the Florida we XX% to some orders increased third and will file quarter in increased decline hurricanes and orders as due October. due XX% of were that the in into from carryover offset by XX%, closed purchase-related that revenue of commercial over grew $X,XXX a per of XXXX of fee a by X% X%. XX% fee were X% The the

to the over financial highlights. the to Tony turn now review me Park Let call

Anthony Park

predominantly and title $XXX corporate the in which of total Thank quarter, from million, a for the $X.XX total generating per and the $X.X which diluted Knight. results or than discontinued quarter the Other in billion year. We operating expenses and ServiceLink in field Commissions share, real the X% valuations capital sales Inc. generated for to $X and increase over million those at with outstanding added third were the quarter $XXX billion with realignment declined Insight we net a higher generating million earnings quarter X% with third an staff revenue of purchase the personnel Adjusted the third The segment Adjusted Black volume title you, had total positions. Hudson was or the the XXX debt less and other and and million from quarter a includes XXXX. operations revenue. decrease $X.X with the third personnel of X% quarter, pre-tax increase record the recruiting in plant closed escrow title companies, is $XXX Randy. expenses generated year. services handle was and and prior in revenue at Property brokerage costs earnings other approximately in Marshall in end declined the flat $XXX were component of revenue operating transactions. and second Title title expenses the title biggest XXXX. XXXX. segment & Personnel quarter with third businesses in ratio recent $X nearly estate in as XX%. billion of decrease revenue beginning revenue million, acquisitions title success Hawaii essentially costs now total to and The producers as were we the our Guaranty Total also increased expenses of by X%. prior orders of variable by in hired XXXX, cost that of compared other the usage with Also of debt versus Knight opened of FNF Black related We've

of we million million $XX of QX. for $XX X% $X title premiums third for than lower the of quarter, loss our of our paid claims and Our were rate provision maintained provision million

regulated regulated secured and Finally, at as unregulated we investments, or by $X.X $X.X in regulated at XX. requirements From cash and regulatory which working ServiceLink and capital, other reserves, There's an in minimum have to billion $X.X cash portfolio have standpoint, investments are of restricted and our autonomously. million in at $XXX $XXX let $X.X statutory $XXX investment September unregulated and investments. equity perspective, From themselves $XXX billion trust in businesses total million we of million FNF deposits cash subsidiaries other September million approximately run of in a those FNF totaled in investments and cash XX. a billion for billion of all

operator allow for me questions. to turn the now back Let to call our any

Operator

line Instructions] Jaffray. Thank first the from Jason you. question Piper from Your ahead. Deleeuw [Operator go comes of Please

Jason Deleeuw

could on Thanks on have the the Was where the for deposit right yet an you on on escrow us get if there rates? interest we I floors, the benefit higher update not what through benefits deposits, question. this was taking rates. amount from wondering you the update meaningful guess, I benefits those can just Are you – with stands? now quarter? that the a And

Anthony Park

billion. total, the the is exchange about think including $XX XXXX I business,

$X and So in I and billion title billion $X think about in exchange our escrow have business. business, our about XXXX you

so earning little that's see XXX a rate the a we – are higher earning another lift still moving. don't we probably We balances. better XXXX a meaningful escrow are still haven't the rates were movement in and a in rate exchange basis we short-term points or in currently, earning – until overall points. We're business We maybe much XX or basis so that's the above than short-term there rates seen

Jason Deleeuw

laid mean, ratio and debt of can what do increase actions I out you've to it. can your you the about cap would believe, when Thanks, capital about then we what targets, as lower you we think to use think for? And that? some the how than, I Got

William Foley

to time indebtedness the of of distribution balance our in into with and pass-through our debt terms those shares the Jason, the Black sheet. this of cap their is of ratio, lowered Well, – Knight up it

we we – of our acquisitions bond last paid We about if have line our replace looking off we're that some do need at out April of credit and that to we thinking were May. to or

of – our taken by balance April these of next debt. And course, of convertible that's get want care also, the to of retire We year. sometime

do us rating the some see agencies at see very have but to trying to through expect having bond our sheet point. balance and balance hard take look sheet. get at an a issuance look upgrade. can propose a simple at in these to come by work They're we you what we and a days, think can I so we're come and doing And and We're now strong we what fairly to if

So $XXX kind bond you bond see and or...? think that last a issuance expect to I million was could replacement of Brent at

Brent Bickett

$XXX million.

William Foley

a $XXX that million. cap keep debt still position. to us And will on strong

Jason Deleeuw

you. Thank it. Got

Operator

Associates. & go question [indiscernible] from line Please next from comes of Your Zelman ahead. the

Unidentified Analyst

Hi, good morning. guess, the Thanks for storms. taking the question first on question. I

there unwind that the You impact the in and mentioned might third quarter in fourth. you think was some

have quantify give already. the us way in how to the see of storm-impacted much a that to that sense You're Any starting been would business or areas?

Raymond Quirk

is Randy. been really We've difficult Sure. quantify This to that. it's –

Texas know, and of part you storms early then the mid-August As the came in in came through September. Florida through

agency We we're close end looked Florida, have – what And What the the or or impact That's pretty XX part running up $XX of an to revenue ballpark pretty XX% has but of areas, significant in XX% you the our difficult at market Texas could that. quantify some XX Texas. month be a it branches. more share. Also is off. what have at would was giving estimate been fallen little XX% a day side, per on We're we're be in really affected but side. direct in looked of or that We the it in might half XX% here, on the million. the on the basis, to of in

out, it's up parts storms. that anyhow, for out with that days We week. were a few a a these there were working to of their is moving flooded many had lot had closed ballpark We a of offices So few so really homes. a because employees

of a got lot so the And stalled. closings

back that already expected the seeing back has the in the and would October have they be October. to – where we're come back revenue openings Now snapped have closings actually, we in come

quarter what and we're but over spills hits fourth the we So don't the know what into playing in quarter. first catch-up

minimal don't In of that any going terms ultimately we of in the falloff, think be terms to transactions it's close.

So there's being – both close the a we're back normal. to it in is states, feeling that to pretty

Unidentified Analyst

great. Okay. That's

fourth On been year and number the the that next rough done on between the can then how have segments? might quarter could into contribution acquisitions thus as in revenue and us you far, split give if a you filter that just well just

Anthony Park

Guaranty Title use. a $XX Hudson to of or a I Marshall, run probably not Do that's million million think Hawaii sure. you? of number $XX at annually, so rate & is good I'm

Michael Nolan

$XX million million annually $XX million to annually. $XX –

Anthony Park

those significant the Yes. segment. were in title And the ones

Unidentified Analyst

Knight see of you kind the last Okay. about and issuance the complete? spending any we just repurchases then Black update And there, refinancing with question, mentioned how might might think debt on share you now

William Foley

to shareholders is dividend. the the value consistently play always return Yes. Recession. repurchasing we're of pretty program of of would certain we've market, now repurchase and large make a try purchases the I X, shares. I've mean, and been one day to we there's seller to something years and start that's the shares X, daily raised and an last of Great over try per doing amount market. a large ways we've That's advocate it of going the the unless a not not once been happens be to consistent disrupt sort that time our X through got And

and period evaluating blackout repurchases which at in I over. engaging over, think Monday, daily just period blackout start we'd think as now right on share looking is of our is we're the So I the level

as us you repurchase so Monday. the can as begin And expect early see to program

Unidentified Analyst

I appreciate Thank it you. guys.

Operator

next And from the comes Barclays. Please DeVries of your from Mark go line ahead. question

Mark DeVries

Hi, thanks.

future First with increases dividend of question with of and, ratio any kind a this kind of new of expect? consistent you would we payout that dividend. earnings therefore, growth or is any the new Should consider feel be proportionate comfortable you'd on kind kind

William Foley

of at Well, dividend that's the certainly we ways one the program. look

completely investments those longer public with investment assets And with fund we've the a course, company utilization space of any really of distributed, for estate out need being recast profile public being a it I is independent – as won't there mean, has a we're Knight FNFV of for FNF. kind any some about. an With but separate insurance the platform happened, that considerably. real is in be now Black developing of talked technology company, having the One been company that's changed our distributed things title

where are. that's of kind So we

to we see year payout of have increase ratio our So quarter normally to consistently, time $X.XX we thought But a ahead going look We more. next was have a we'll had a and earnings want if shareholders. never back. we'll ourselves. and next We a are October, meeting our in is it larger good didn't continue return year, re-evaluate get we is take We certainly could a our board goal you this see the might forward. payout, per dividend. little to when the and the the done shareholders step to take at increase to how again And return so dividend our

Mark DeVries

you Would out interest cash consider in ServiceLink own? excess don't your buy some that's minority helpful. that using the you Okay, of to

William Foley

partner. we an and ServiceLink refi turned on great got and – the Black pretty ongoing the That's And quickly. Knight on return turning loan bought frankly, return our negotiation ServiceLink, But the with down Knight immediately great our origination business business business, down, a Black got partner a started when we under investment.

So But a it's in care that need their our valuation have is something to for question XX% have and a we that. we interest have we on side. XXX% own we is It – of, time XX.X% of should ServiceLink. or value would we take actually to should negotiated –

Mark DeVries

enough. fair Okay,

is missed an Sorry just could if on the update business? the you provide this, looking commercial I pipeline but us for how

Michael Nolan

Yes. year is months side We've open year, nine years up strong. that's had months. the two and through and for year-over-year. commercial Mark. We're carried It's really Mike, first now the very on X% Pipeline a variance order far. the less than so of X% is great And for the nine

off going finish Can't years. those should line year right in the we year, think finish commercial, close. darn second the this in with I going two it's that good two you best to up So about be quite We're year, pipeline year tell coming years if be it'll pretty and is the best we to best feel our the strong. but

Mark DeVries

great. ever That Knights. decided to it to just Golden congratulate also Bill early guys of you do is you suggest want host And in day Okay, from the on questions; Vegas. success an that it my the phenomenonal although investor again that

William Foley

and actually great idea, is That [indiscernible]. a

Mark DeVries

Thanks.

Operator

of go question comes Partners. from the ahead. from & line Dowling next Please Your Dunn Geoffrey

Geoffrey Dunn

are good FNFV? you investment still Bill, morning. contemplating into Thanks, an guys

William Foley

Do you Tony? We are. the have number,

Anthony Park

to equity to in get existing distribution we Yes. line million make At going And $XXX or and based rate. the then and million is that's that average FNF three two upon also the the of as day FNF a X.X% it's closing materials, interest date. maintain at a a will credit, undrawn investment $XXX

Geoffrey Dunn

at Okay. holdco that And is the or being opco? done investment

Anthony Park

We it stock. have our underwriters capacity a because common in is

So we're do come little both. still probably a bit determining of cash we where But from. maybe can that intend to

Geoffrey Dunn

the Tony, expectation then, is opco And Okay. the for what quarter? dividend fourth

Anthony Park

I think call it $XXX it's XXX and about million. –

dividend mean You a parent? to upstream

Geoffrey Dunn

Correct.

Anthony Park

million. $XXX About

Geoffrey Dunn

question, the we last on then Bill. And is the you're plan know would expectation the that your I previous saw? Okay. a evaluating buyback, XXk day that systematic still but exceed

William Foley

the least It least day day. the a be XXk at a will be at XXk or

Geoffrey Dunn

Thanks.

Operator

of You line a George from from question [Operator have Bose Instructions] go the KBW. Please ahead.

Bose George

to $XX business already you sort – the place we of guys. commentary mean, revenues, at were revenue? Good assume the on that in morning. know, Actually in million XXX% that margin I Hi, mentioned on the you impact, comes expenses up direct on of just when earlier kind follow hurricane can

Raymond Quirk

on with profitability work an transactions – has done that The revenue. figuring those that or with We're XX% associated absolutely. margin already. Sure, been it's

Bose George

could could in Okay, there? something – size time? there estate over over professionals, become we segment opportunities acquisition of help real meaningful are Is great. other more us see of opportunities data to switching And just the sort that then this you the

William Foley

the That of of was a more platform. build-out

closing integrating is real CRM matter pieces integrated customers in And and place. with We our a solution it's that a have in estate the of our and having completely system. now solutions SkySlope most escrow our with front-to-back kind of and of for title ties seamlessly

set being that's utilized. So software to a going doc prep of we developed have be and

seven year a to to going last that the kind full solution. we have develop the over end-to-end this So six bought needed platform. needed we've or we – months last pieces that really or of But we're

Bose George

and just great. – segment Okay, the on then Thanks corporate one earnings going earnings forward.

Just a had with this Black on be basis to Knight earnings noisy rate the we so to number. It's a make quarter, little corporate that sure going run going what's wanted spend forward?

Anthony Park

you the or piece after-tax noise. most some discontinued our that it's segment, noise non-controlling look the the of about million Black related right, there's Bose, Black $X.XX the corporate pre-tax operations after was at Yes. about $XX earnings, Knight if the Tony. and Yes, But add-back is so interest discontinued to impact be operations, adjusted Knight. then you're would

They that Now results different those tax have that same don't assume Knight noncontrolling add-backs. and They have obviously, different different Black interest are reports. the rates, a number.

Knight and $X.XX Black number, is per quarters second pretty a we without their the Qs when It's third pre-tax is earnings and our is have it's a in at a That pre-tax, real adjusted estate brokerage the the adjusted $XX peak. basis, least – earnings X share. strength So at of good million kind less that On seasonal for businesses smaller X. of business.

– pre-tax say I loss probably So you. that a for $XX good is $XX adjusted million $XX somewhere, pretty run million to rate that would million

Bose George

Okay, great. Thanks.

Operator

go of Deleeuw Jaffray. from follow-up And from Jason ahead. Please a the Piper you have line

Jason Deleeuw

the at within to And Thanks, build of some title expect simply revenue share, as and should a expenses? or some operations technology and the point and platforms. on margins than Should to possibly think FNF? enhance the following business on designed in investments we the with to guess, non-title-related the rather also kind or title we I up of enhancements the real then market those just the estate then new benefit trying

William Foley

integrated be to to kind to fully is we're of our estate with and our with real mean, operations. customers going seamlessly and be that. we're a doing very competitors, integrated to And I title platform Well, disrupting close believe with our goal escrow our we

migrate of that the CINC Chicago a start additional use or flow Title the year utilizing a of We upon are CINC and based of business and customers Fidelity development then Title National a business platform acquisition ago over partner. as seeing the our that already

haven't defined So we it.

it believe We – our going it's to know market believe be significant to happening. be we it's haven't separately. We terms we're of if successful, share. it's going tracked in But we increasing

Jason Deleeuw

Great. Thank you.

Operator

of question next John Campbell from go from Stephens. comes Your the Please line ahead.

John Campbell

definitely analyst that for of Hi, Vegas. guys end-to-end to to have day in you the out That I second Can Why you seemed on they're just an platform. want Bill, how build recommendation there's in going to the like be will trying think yours industry might nice. Jason's thanks a the yours you know, I of edge there, piggyback is couple same and digital be to – kind But guys, of kind question us tell over different? an theirs? just maybe

William Foley

can we purchase competitors to component, escrow And listings, do they and estate forming out really listing, really we ordered same our integrating for be CINC to that with the with have also off Geeks. and the this or certain directly inspection, from integrated – that SkySlope real within they but we're managing and we service the going you can and integrate which our if time the have competitors have. don't offering receipt, services to and DocuSign have product real that really non-RESPA-related in started with completely seamlessly having their I have our we the the other We customers estate businesses, transaction mean, the title customers that's embedded an do have. for not by Well, the contract end intend to are escrow, completely to be own going our that, termite platform. pool DocuSign, point Real that that to

technology the acquisition just of we're already with have gets so they the piece other the gives real estate these and for that this SkySlope business. the us all really the equivalent but at integrated DocuSign of edge businesses And front platform a

now it's a of the title matter side. just So

and trying we're we accomplished So And assets that we've have trying to with integrate. and we want the we're We to I sure could the it had that believe the believe companies that for then on the go make an right companies that. we not would out build bought and plan program, board just we to really but be all that buy internally. management edge,

kind place. ahead we take I that's on all in – year because to thought another actually so actually schedule it of might we got of had early before So the where but we're this we're or pieces point

John Campbell

helpful. And mortgage that can direct connection to as be then in like that it, side think is you Black system? origination mean, of that's connect power? where a I kind into I going the about into origination any Or of Okay, a agnostic is Knight's

William Foley

was... this that we Well, – is have

Raymond Quirk

eLynx.

William Foley

that eLynx mortgage has – that And that's owned seamlessly to be we they going also Knight can the on by then integrate. they Black is can that mortgage – platform. a also with origination they're are component if be eLynx, integrated the entire

to we're includes probably agnostic be customers. mortgage then application, so it many broad But to the be to eLynx use the as in we going piece based to of connectivity want we industry. wanted mortgage So terms our different

John Campbell

got and want Tony, interesting. I to that's I then And this. – Okay, sure make

was like from think in versus this, was the flattish or the or up year-over-year I think you've I Black of X% Knight? Property that cost rev, was of total so commented kind that but personnel it on distribution title, Insight

Anthony Park

activity expense. buying a in Well, for third operating service were to third about heavy going we an of of those there we've was business we've year's Property were business the taken expenses from it's refi-driven change And a FNF, realigned quarters. the number in that about and And back a the a to of Hawaii piece, purchase-driven expense. when operating of personnel Black Insight and We quarter this in Title which flip Guaranty success between business, talked We last Marshall. had year. mix Knight, about now second employees and Hudson that it was more that talked the recruiting & acquisitions We of a really pieces. talked the

So really other it's and flip about $X of personnel. between a operating million

John Campbell

That makes sense.

guys. Okay, thanks

Operator

time, to call to now I'd And this turn there further no the back Mr. questions. like at are Foley.

William Foley

you. Thank

performance strong in another third our quarter title was The business.

we we XXXX joining As country. remainder maximize to profitable continue to and us XXXX, company our title and for through from the today. remain Thanks strive into of the earnings the in most move operations will insurance

Operator

that conference for executive does today. conclude teleconference. for and and gentlemen, Ladies using for your AT&T your Thank you participation

You may now disconnect.

Fidelity National Financial (FNF) 27 Oct 172017 Q3 Earnings call transcript