Fidelity National Q3 revenue rises over 3Q13

$1.7 billion in total revenue equals 2Q14

Fidelity National Financial (FNF) reported total revenue of approximately $1.7 billion in the third quarter of 2014, up from $1.6 billion in the third quarter of 2013.

Fidelity’s third quarter revenue equaled its second quarter revenue, which also came in at $1.7 billion and was also up from $1.6 billion in the second quarter of 2013.

The company’s adjusted third-quarter net earnings were $145 million versus adjusted net earnings of $115 million for the third quarter of 2013.

The company also reported an adjusted third-quarter core diluted earnings per share of $0.51 versus adjusted core diluted EPS of $0.50 in the third quarter of 2013.

The company’s title business remained flat over 2013, checking in at $1.5 billion in total revenue in both 2013 and 2014, although the company reported adjusted pre-tax earnings of $223 million and adjusted pre-tax title margin of 14.7% for the third quarter, versus approximately $1.5 billion in total revenue, adjusted pre-tax earnings of $220 million and an adjusted pre-tax title margin of 14.3% in the third quarter of 2013.

“This was a stable quarter for our title business as our consistent focus on operational efficiency metrics allowed us to generate a 14.7% pre-tax title margin, a 50 basis point sequential improvement over the second quarter of 2014,” said Chairman William Foley.

“We continue to believe that we can show further margin improvement in a stable order environment and even higher margins as mortgage credit becomes more readily available and the residential real estate market continues to improve.”

The company’s subsidiary, ServiceLink, generated $225 million in revenue, adjusted EBITDA of $34 million, an adjusted EBITDA margin of 15% adjusted, pre-tax earnings of $29 million and an adjusted pre-tax margin of 13%.

The company reported total revenue of $214 million for Black Knight in the third quarter, which was up 11% compared to the third quarter of 2013. The company attributes the growth to “RealEC and Data and Analytics, and factoring out the increase of $15 million during 2014 from the addition of Property Insight.”

The majority of Black Knight’s revenue was generated from mortgage servicing technology revenue of approximately $120 million.

“Black Knight had another strong quarter in both revenue growth and EBITDA margin improvement. We are also generating significant momentum in the business with recent contracts signed that will further contribute to future organic revenue growth,” Foley added.

“Additionally, the sales pipeline remains strong, with numerous MSP, Empower, Closing Insight and Data and Analytics contracts expected over the next several quarters. We expect a strong fourth quarter and are very excited about our revenue growth prospects for 2015 and 2016. Finally, the integration of LPS is effectively completed, as we have now realized nearly $296 million of cost synergies on a run-rate basis as of the end of the third quarter."

What was noticeably absent in Fidelity’s earnings statement was any mention of the 70% stake it purchased in LandCastle Title after “substantial escrow account misappropriations” were discovered within LandCastle’s parent company, the law firm of Morris Hardwick Schneider, in August.

The injection of funding was uncovered in a letter posted to the joint website for LandCastle and Morris Hardwick Schneider. The letter stated that the acquisition was “precipitated by a significant shortage in the accounts of MHS and LandCastle, of which Fidelity became informed by the partners of MHS.”

Shortly after the Fidelity stepped in and bailed out LandCastle, MHS and LandCastle Title filed a lawsuit in Fulton County Superior Court, alleging that the former managing partner of MHS and the chairman of the board and CEO of LandCastle Title, Nathan (Nat) Hardwick, embezzled at least $30 million from the companies’ own accounts and the companies’ trust accounts.

The lawsuit, which was obtained by HousingWire, said that Hardwick allegedly used the money to pay for private jets, cover real estate investment losses, cover millions in gambling debts and other investments.

“To allow LandCastle to fail would have been a calamity for the company’s employees, consumers, and the real estate industry, in general,” Fidelity said in a statement to HousingWire at the time. “As a result, we felt it was in the best interest of all parties to put the financial resources of FNTG behind LandCastle Title.”

The lawsuit between MHS, LandCastle Title and Hardwick is still pending. For much more of HousingWire’s coverage of LandCastle Title and Nat Hardwick, click here.

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