Lender Processing Services (LPS) reported earnings of $47.1 million for the quarter ended March 31, or 56 cents a share, on strong results in its technology and origination services segments amid what the company characterized as "a challenging environment."
First-quarter earnings were down 15.7% compared to the year-ago period, but beat the consensus estimate of analysts polled by Thomson Reuters, who expected earnings of 57 cents a share.
Adjusted net earnings for the Jacksonville, Fla.-based technology provider were $49.5 million, or 59 cents a share, compared to $71.1 million, or 81 cents a share, in the first quarter 2011. Adjusted net earnings include a purchase price amortization add-back and exclude a charge of 14 cents a share related to cost-reduction initiatives.
Revenue was $506 million for the quarter, a decrease of 5.8% from the same period in the prior year. Origination services revenue rose 13.8% to $146.8 million on higher refinance origination volumes, the company said.
But default services revenue declined 24.2% to $182.9 million, a 24.2% decrease from the first quarter of 2011, primarily due to the continued slowdown in the initiation of industry-wide mortgage foreclosure proceedings. Operating income for the transaction services segment was $51.5 million, a decrease of 38.8% from the same period in the prior year, primarily due to lower income from the default services business.
Despite headwinds in the company's default services business, origination technology revenue represented one of the biggest gainers for the quarter at the company, bringing in $21.4 million, a 13.7% increase versus one year ago.
"Although the operating environment remained challenging, we generated strong profitability, margins and cash flow," commented Tom Schilling, chief financial officer. "Our Technology, Data and Analytics segment had another solid quarter of revenue growth and our Origination Services benefited from strong refinance volumes, while Default Services continued to be negatively affected by industry-wide foreclosure delays."
LPS expects second quarter 2012 revenue to be in the range of $500 million to $520 million and adjusted net earnings in the range of 58 to 62 cents.