Second-quarter generally accepted accounting principles (GAAP) net earnings for Lender Processing Services (LPS) came in at $19.1 million, or $0.22 per diluted share. This compares to a net loss of $37.9 million, or $0.45 per diluted share, in the prior year quarter.
"LPS' solid second-quarter operating results demonstrate our ongoing commitment to meeting our customers' technology and service needs in today's complex mortgage market," said Hugh Harris, president and chief executive officer of LPS.
LPS provides real estate and mortgage industry technology, as well as services to the mortgage industry.
"LPS' positive performance reflects solid demand for Technology Data & Analytics solutions and strong Origination Services volumes as we benefitted from continued low interest rates and elevated refinance activity during most of the quarter," commented chief financial officer Tom Schilling.
Refinance volumes were negatively impact in June and July as a result of rising mortgage interest rates.
“We expect Origination Services revenue to decrease sequentially in the third quarter based on these trends. As we have in prior market cycles, we will continue to rigorously manage expenses to reduce the impact of lower Origination and Default Services transaction volumes on profitability,” said Schilling.
For the second quarter, revenue was $468.9 million, an 8.7% drop from the previous quarter. This decline was due to lower Default Services revenue, partially offset by higher revenue in TD&A and Origination Services.
The GAAP operating income of $45.1 million compares to an operating loss of $24.1 million one-year prior. The second-quarter adjusting operating income was $98.4 million, down 18.3% from $120.4 million in the same quarter of 2012, mostly due to a drop in Default Services.
The adjusted net earnings in the second quarter from continuing operations was $0.65 per diluted share, compared to $0.79 per diluted share in the prior year quarter.
The adjusted results from continuing operations in the second quarter of 2013 exclude a pre-tax charge of $53.3 million, or $0.39 per diluted share, and include $0.35 per share for estimated legal and regulatory contingencies and $0.04 per share mostly due to transaction costs linked to the pending merger with Fidelity National Financial, as well as severance costs resulting from cost reduction initiatives.
Adjusted results from continuing operations exclude a pre-tax charge of $144.5 million, or $1.19 per diluted share, for estimated legal and regulatory contingencies. Adjusted net earnings from continuing operations also include an add-back for purchase account amortization of $0.01 per diluted share in the current quarter and $0.02 per diluted share in the second quarter 2012.
Compared to $127.8 million in the prior year period, net cash provided by operating activities for the second quarter of 2013 was $104.0 million, while adjusted free cash flow for the second quarter of 2013 was $77.7 million, versus $114.9 million in the prior year prior.
The drop was, in large, due to lower earnings and reduced contributions from working capital, primarily accounts receivable. Adjusted free cash flow is considered net cash provided by operating activities sans certain non-recurring expenses and additions to property, equipment and computer software.
LPS completed the second quarter with cash of $142.5 million and a credit facility availability of $398.1 million.