Mortgage

Fidelity National reports $1.7 billion in revenue for third straight quarter

4th quarter earnings rise from $1.3 billion in 4Q13

The business of Fidelity National Financial (FNF) is nothing if not consistent. The title insurance giant reported total revenue of approximately $1.7 billion in the fourth quarter of 2014, making it the third straight quarter that company reported revenue of $1.7 billion.

In the third quarter, Fidelity’s $1.7 billion in revenue represented a slight year-over-year increase, rising 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.

For the fourth quarter, Fidelity’s $1.7 billion in revenue was up from its 2013 fourth quarter, when the company reported $1.4 billion in revenue.

According to Fidelity, the company’s adjusted fourth quarter net earnings were $144 million compared to adjusted net earnings of $81 million for the fourth quarter of 2013.

Additionally, the company’s adjusted fourth quarter core diluted earnings per share was $0.50 compared to adjusted core diluted EPS of $0.34 in the fourth quarter of 2013.

Fidelity’s chairman, William Foley, said that the strong finish to the year was due to the company’s title insurance business.

"Despite a continued sluggish real estate market, we achieved a 14.1% pre-tax title margin for the fourth quarter, more than a 14.3% pre-tax title margin for the last three quarters of 2014 and a 12.5% pre-tax title margin for the full-year 2014,” Foley said.

“Overall, we are proud of the financial results we posted in our title business in 2014 and we remain confident in our ability to generate a 15%-20% pre-tax title margin in an improving real estate market.”

Fidelity cited several factors that went into the robust performance of its title insurance business, including:

  • Approximately $1.5 billion in total revenue, adjusted pre-tax earnings of $207 million and adjusted pre-tax title margin of 14.1% for the fourth quarter versus approximately $1.4 billion in total revenue, adjusted pre-tax earnings of $147 million and an adjusted pre-tax title margin of 10.8% in the fourth quarter of 2013
  • Adjusted pre-tax title margin of 14.1% was a 330 basis point improvement over the fourth quarter 2013 adjusted pre-tax title margin of 10.8%
  • Open orders per day of 7,175 for the fourth quarter versus 6,206 open orders per day for the fourth quarter of 2013
  • Closed orders per day of 5,302 for the fourth quarter versus 4,873 closed orders per day for the fourth quarter of 2013
  • Overall fourth quarter average fee per file of $2,131, a 2% increase over the fourth quarter of 2013
  • Title claims paid of $78 million, a decrease of $22 million, or 22%, from the fourth quarter of 2013

Fidelity also noted the performance of its subsidiary, ServiceLink, as positive earnings driver. According to Fidelity, ServiceLink generated $211 million in revenue, adjusted EBITDA of $27 million, an adjusted EBITDA margin of 13%, adjusted pre-tax earnings of $23 million and an adjusted pre-tax margin of 11% for the fourth quarter.

Foley also recognized the strong results from Black Knight in the fourth quarter, including:

  • Total revenue of $220 million, led by Servicing Technology revenue of approximately $155 million
  • Revenue growth of 12% for the fourth quarter compared to the prior year period legacy LPS results, led by Data and Analytics, RealEC and Servicing Technology
  • Adjusted EBITDA of $96 million and adjusted EBITDA margin of 43.0%, a 70 basis point sequential margin improvement from the third quarter of 2014

"Black Knight had another impressive quarter, generating 12% revenue growth and an adjusted EBITDA margin of 43%, a 70 basis point sequential margin improvement from the third quarter of 2014,” Foley said.

“We remain excited about the organic revenue growth opportunity at Black Knight, as the sales pipeline is strong across our technology and data and analytics businesses as we enter 2015.”

Foley also said that the company is moving forward with its plans to spin off Black Knight into a publicly owned company.

“We also announced the initial filing of a Black Knight IPO registration statement with the SEC in December and are working towards having Black Knight operate as an FNF majority-owned, publicly-traded company in 2015.” Foley said.

When Fidelity announced its plans for the Black Knight IPO in December, the company said that the number of shares to be offered and price range of the offering is yet to be determined.

If approved, Black Knight would trade on the New York Stock Exchange under the ticker symbol “BKFS.”

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