Attached files
| file | filename |
|---|---|
| 8-K - Q2 2012 8K - Black Knight InfoServ, LLC | q220128k.htm |
| EX-99.2 - EXHIBIT 99.2 - Black Knight InfoServ, LLC | a2012q28kexhibit992.htm |
Exhibit 99.1
Press Release
Investors: | Media: | |
Nancy Murphy | Michelle Kersch | |
(904) 854-8640 | (904) 854-5043 | |
nancy.murphy@lpsvcs.com | michelle.kersch@lpsvcs.com | |
Lender Processing Services Reports Second Quarter 2012 Earnings
Adjusted EPS of $0.76, up 36%, and free cash flow of $115 million, up 41% from prior year
JACKSONVILLE, Fla. - August 2, 2012 - Lender Processing Services, Inc. (NYSE:LPS), a leading provider of integrated technology and services to the mortgage and real estate industries, today announced financial results for the second quarter of 2012.
Second Quarter Highlights
• | Revenue of $533.2 million, up 7% from prior year |
• | GAAP operating loss of $22.8 million and net loss of $37.9 million or $0.45 per diluted share, reflecting an increase to legal and regulatory reserve of $1.19 per diluted share |
• | Adjusted net earnings of $64.5 million, up 34% from prior year |
• | Adjusted earnings per diluted share of $0.76, up 36% from prior year |
• | Adjusted EBITDA margin of 27.3%, up 464 basis points from prior year |
• | Adjusted free cash flow of $114.9 million, up 41% from prior year |
“LPS' exceptional second quarter operating performance reflects the successful execution of our strategy to deliver superior technology-driven solutions to our customers,” said Hugh Harris, president and chief executive officer of LPS. “Today, LPS is an improved company with an ongoing commitment to achieve the Gold Standard for regulatory compliance in our industry and in support of our clients. We continue to move forward as a trusted provider of critical technology and business services for the mortgage industry.”
“We delivered operating results that exceeded our outlook while generating very strong free cash flow and further strengthening our balance sheet. Our adjusted EBITDA margin increased to 27%, up almost four percentage points sequentially,” said Tom Schilling, chief financial officer. “Strong performance in Origination Services, fueled by higher refinance volumes, and in Technology, Data and Analytics, combined with sequential improvement in Default Services, contributed to the positive
quarter.”
Added Schilling, “We continue to make progress toward resolving legal and regulatory matters related to past practices including our settlement with the Missouri Attorney General announced today. This progress enabled us to further refine our legal and regulatory reserve, which was increased in the second quarter. Our significant cash flow and liquidity allow us to continue to execute our capital allocation strategy while addressing these estimated legal costs.”
Second quarter 2012 adjusted results exclude the impact of an increase to the legal and regulatory reserve of $144.5 million, or $1.19 per diluted share. Second quarter 2011 adjusted results exclude a charge of $0.28 per diluted share primarily related to asset impairment charges on discontinued operations as well as the impact of cost reduction initiatives. Adjusted net earnings also include an add-back for the after-tax impact of purchase price amortization totaling $0.02 per diluted share in the current quarter and $0.03 per diluted share in the second quarter of 2011.
Second quarter 2012 adjusted operating income increased 34.4% to $121.7 million, adjusted net earnings increased 34.3% to $64.5 million and adjusted earnings per diluted share increased 35.7% to $0.76, compared to the prior year quarter.
Net cash provided by operating activities for the second quarter of 2012 increased to $141.2 million from $111.7 million in the same period in the prior year. Adjusted free cash flow for the second quarter of 2012 increased to $114.9 million from $81.8 million in the prior year primarily due to higher net earnings. Adjusted free cash flow is defined as net cash provided by operating activities minus certain non-recurring expenses and additions to property, equipment and computer software.
During the quarter, the company reduced debt by $54.1 million, paid regular quarterly dividends of $8.5 million and ended the second quarter with cash of $138.5 million, up $34.8 million from the prior quarter.
Technology, Data and Analytics Segment (TD&A)
Revenue for the Technology, Data and Analytics segment increased to $186.1 million in the second quarter 2012 from $170.6 million in the prior year quarter. The 9.1% increase was primarily driven by increases in Servicing Technology from higher recurring revenue and data access fees, in Origination Technology resulting from increased refinance volumes, and in Default Technology due to the annualization of new customer implementations from 2011. Adjusted operating income increased to $57.9 million from $56.1 million in the second quarter of 2011, primarily as a result of higher income from Servicing and Default Technology partially offset by lower income from Data and Analytics.
Transaction Services Segment
Revenue for the Transaction Services segment increased 5.1% to $347.4 million from $330.6 million in the second quarter 2011. Origination Services revenue increased 42.4% to $150.7 million from the prior year quarter as a result of higher refinance origination volumes. Default Services revenue decreased 12.5% to $196.6 million from the prior year quarter primarily reflecting lower transaction volumes. Adjusted operating income increased 41.6% to $76.0 million from $53.7 million in the second quarter of 2011, while adjusted operating margin increased to 21.9% from 16.2% reflecting higher Origination Services revenue and favorable revenue mix resulting in improved operating leverage.
Corporate and Other
Adjusted net corporate expenses in the second quarter of 2012 decreased to $12.2 million from $19.2 million in the same period last year primarily as a result of legal-related expenses incurred in 2011 prior to establishing a loss contingency reserve for ongoing legal and regulatory matters.
Outlook
Based on the current environment, the company expects third quarter 2012 revenue to be in the range of $500 million to $520 million and adjusted net earnings per diluted share to be in the range of $0.68 to $0.72.
Earnings Conference Call and Webcast
LPS will host a conference call tomorrow at 10:00 a.m. ET with a live webcast on the Investor Relations section of its website at www.lpsvcs.com. Earnings information including this press release and supplemental material is available on the website. A replay of the webcast will be available on the website shortly after the call where it will be archived for one month. A replay of the call will be available until August 10, 2012, by dialing 888-203-1112 (access code: 6080848).
About Lender Processing Services
Lender Processing Services (NYSE: LPS) delivers comprehensive technology solutions and services, as well as powerful data and analytics, to the nation's top mortgage lenders, servicers and investors. As a proven and trusted partner with deep client relationships, LPS offers the only end-to-end suite of solutions that provides major U.S. banks and many federal government agencies the technology and data needed to support mortgage lending and servicing operations, meet unique regulatory and compliance requirements and mitigate risk.
These integrated solutions support origination, servicing, portfolio retention and default servicing. LPS' servicing solutions include MSP, the industry's leading loan-servicing platform, which is used to service approximately 50 percent of all U.S. mortgages by dollar volume. The company also provides proprietary data and analytics for the mortgage, real estate and capital markets industries.
LPS is headquartered in Jacksonville, Fla., and employs approximately 8,000 professionals. The company is ranked as the 877th largest American company in the Fortune 1000 in 2012. For more information, please visit www.lpsvcs.com.
Use of Non-GAAP Financial Information
U.S. Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, LPS reports several non-GAAP measures, including “EBITDA” (GAAP operating income plus depreciation and amortization); “EBITDA, as adjusted” (EBITDA adjusted for the impact of certain non-recurring adjustments, if applicable); “EBIT, as adjusted” or “adjusted operating income” (GAAP operating income adjusted for the impact of certain non-recurring adjustments, if applicable); “adjusted net earnings” (GAAP net earnings
adjusted for the impact of certain non-recurring adjustments, if applicable, plus the after-tax purchase price amortization of intangible assets added through acquisitions); “adjusted net earnings per diluted share” or “adjusted EPS per diluted share” (adjusted net earnings divided by diluted weighted average shares); and “adjusted free cash flow” (net cash provided by operating activities less additions to property, equipment and computer software, as well as non-recurring adjustments, if applicable). LPS provides these measures because it believes that they are helpful to investors in comparing year-over-year performance in light of certain non-recurring and other charges, and to better understand our financial performance, competitive position and future prospects. Non-GAAP measures should be considered in conjunction with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP measures. A reconciliation of these non-GAAP measures to related GAAP measures is included in the attachments to this release.
Forward-Looking Statements
This press release contains forward-looking statements that involve a number of risks and uncertainties. Those forward-looking statements include all statements that are not historical facts, including statements about our beliefs and expectations. Forward-looking statements are based on management's beliefs, as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to future economic performance and are not statements of historical fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to: our ability to adapt our services to changes in technology or the marketplace; the impact of adverse changes in the level of real estate activity (including among others, loan originations and foreclosures) on demand for certain of our services; our ability to maintain and grow our relationships with our customers; the effects of our substantial leverage on our ability to make acquisitions and invest in our business; the level of scrutiny being placed on participants in the foreclosure process; risks associated with federal and state enforcement proceedings, inquiries and examinations currently underway or that may be commenced in the future with respect to our default management operations, and with civil litigation related to these matters; the impact of continued delays in the foreclosure process on the timing and collectability of our fees for certain of our services; changes to the laws, rules and regulations that regulate our businesses as a result of the current economic and financial environment; changes in general economic, business and political conditions, including changes in the financial markets; the impact of any potential defects, development delays, installation difficulties or system failures on our business and reputation; risks associated with protecting information security and privacy; and other risks and uncertainties detailed in the “Statement Regarding Forward-Looking Information,” “Risk Factors” and other sections of the Company's Form 10-K and other filings with the Securities and Exchange Commission.
###
Exhibit A
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Revenues | $ | 533,207 | $ | 499,660 | $ | 1,039,228 | $ | 1,036,843 | |||||||
Expenses: | |||||||||||||||
Operating expenses | 387,713 | 386,480 | 775,189 | 770,958 | |||||||||||
Depreciation and amortization | 23,778 | 22,627 | 48,022 | 45,623 | |||||||||||
Legal and regulatory charges | 144,476 | — | 144,476 | — | |||||||||||
Exit costs, impairments and other charges | — | 9,887 | — | 29,198 | |||||||||||
Total expenses | 555,967 | 418,994 | 967,687 | 845,779 | |||||||||||
Operating income (loss) | (22,760 | ) | 80,666 | 71,541 | 191,064 | ||||||||||
Other income (expense): | |||||||||||||||
Interest income | 454 | 385 | 902 | 711 | |||||||||||
Interest expense | (16,455 | ) | (13,819 | ) | (32,857 | ) | (27,975 | ) | |||||||
Other income, net | 74 | (60 | ) | 159 | (46 | ) | |||||||||
Total other income (expense) | (15,927 | ) | (13,494 | ) | (31,796 | ) | (27,310 | ) | |||||||
Earnings (loss) from continuing operations before income taxes | (38,687 | ) | 67,172 | 39,745 | 163,754 | ||||||||||
Provision (benefit) for income taxes | (4,392 | ) | 24,706 | 24,863 | 61,408 | ||||||||||
Net earnings (loss) from continuing operations | (34,295 | ) | 42,466 | 14,882 | 102,346 | ||||||||||
Loss from discontinued operations, net of tax | (3,585 | ) | (21,101 | ) | (5,641 | ) | (25,052 | ) | |||||||
Net earnings (loss) | $ | (37,880 | ) | $ | 21,365 | $ | 9,241 | $ | 77,294 | ||||||
Net earnings (loss) per share - diluted from continuing operations | $ | (0.41 | ) | $ | 0.50 | $ | 0.17 | $ | 1.18 | ||||||
Net loss per share - diluted from discontinued operations | (0.04 | ) | (0.25 | ) | (0.06 | ) | (0.29 | ) | |||||||
Net earnings (loss) per share - diluted | $ | (0.45 | ) | $ | 0.25 | $ | 0.11 | $ | 0.89 | ||||||
Weighted average shares outstanding - diluted | 84,578 | 85,812 | 84,680 | 86,968 | |||||||||||
Exhibit B
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
June 30, 2012 | December 31, 2011 | ||||||
(In thousands) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 138,491 | $ | 77,355 | |||
Trade receivables, net of allowance for doubtful accounts | 308,353 | 345,048 | |||||
Other receivables | 5,832 | 1,423 | |||||
Prepaid expenses and other current assets | 35,135 | 33,004 | |||||
Deferred income taxes | 111,398 | 74,006 | |||||
Total current assets | 599,209 | 530,836 | |||||
Property and equipment, net | 116,356 | 121,245 | |||||
Computer software, net | 231,008 | 228,882 | |||||
Other intangible assets, net | 27,259 | 39,140 | |||||
Goodwill | 1,119,438 | 1,132,828 | |||||
Other non-current assets | 222,724 | 192,484 | |||||
Total assets | $ | 2,315,994 | $ | 2,245,415 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 2,500 | $ | 39,310 | |||
Trade accounts payable | 39,411 | 43,105 | |||||
Accrued salaries and benefits | 79,263 | 64,383 | |||||
Legal and regulatory reserve | 203,064 | 78,483 | |||||
Other accrued liabilities | 174,651 | 168,627 | |||||
Deferred revenues | 50,939 | 64,078 | |||||
Total current liabilities | 549,828 | 457,986 | |||||
Deferred revenues | 25,142 | 34,737 | |||||
Deferred income taxes, net | 143,238 | 122,755 | |||||
Long-term debt, net of current portion | 1,075,125 | 1,109,850 | |||||
Other non-current liabilities | 34,932 | 32,099 | |||||
Total liabilities | 1,828,265 | 1,757,427 | |||||
Stockholders' equity: | |||||||
Preferred stock $0.0001 par value; 50 million shares authorized, none issued at June 30, 2012 and December 31, 2011 | — | — | |||||
Common stock $0.0001 par value; 500 million shares authorized, 97.4 million shares issued at June 30, 2012 and December 31, 2011 | 10 | 10 | |||||
Additional paid-in capital | 249,741 | 250,533 | |||||
Retained earnings | 650,217 | 658,146 | |||||
Accumulated other comprehensive loss | (2,693 | ) | (1,783 | ) | |||
Treasury stock at cost; 12.8 million and 13.0 million shares at June 30, 2012 and December 31, 2011, respectively | (409,546 | ) | (418,918 | ) | |||
Total stockholders' equity | 487,729 | 487,988 | |||||
Total liabilities and stockholders' equity | $ | 2,315,994 | $ | 2,245,415 | |||
Exhibit C
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended June 30, | |||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net earnings | $ | 9,241 | $ | 77,294 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 48,889 | 49,435 | |||||
Amortization of debt issuance costs | 2,231 | 2,317 | |||||
Asset impairment charges | 3,688 | 31,855 | |||||
Gain on sale of discontinued operation | (8,321 | ) | — | ||||
Deferred income taxes, net | (15,415 | ) | 3,553 | ||||
Stock-based compensation cost | 12,348 | 18,866 | |||||
Income tax effect of equity compensation | 1,034 | 213 | |||||
Changes in assets and liabilities, net of effects of acquisitions: | |||||||
Trade receivables | 26,911 | 53,412 | |||||
Other receivables | (2,296 | ) | 1,811 | ||||
Prepaid expenses and other assets | (14,053 | ) | (4,023 | ) | |||
Deferred revenues | 7,752 | (7,098 | ) | ||||
Accounts payable, accrued liabilities and other liabilities | 145,877 | (748 | ) | ||||
Net cash provided by operating activities | 217,886 | 226,887 | |||||
Cash flows from investing activities: | |||||||
Additions to property and equipment | (11,989 | ) | (19,261 | ) | |||
Additions to capitalized software | (37,988 | ) | (33,967 | ) | |||
Purchases of investments, net of proceeds from sales | (8,728 | ) | (9,390 | ) | |||
Acquisition of title plants and property records data | (22,613 | ) | (10,352 | ) | |||
Acquisitions, net of cash acquired | — | (9,802 | ) | ||||
Proceeds from sale of discontinued operations, net of cash distributed | 18,706 | — | |||||
Net cash used in investing activities | (62,612 | ) | (82,772 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings | — | 60,000 | |||||
Debt service payments | (71,457 | ) | (72,576 | ) | |||
Exercise of stock options and restricted stock vesting | (2,734 | ) | (2,358 | ) | |||
Income tax effect of equity compensation | (1,034 | ) | (213 | ) | |||
Dividends paid | (16,913 | ) | (17,444 | ) | |||
Treasury stock repurchases | — | (136,878 | ) | ||||
Bond Repurchases | — | (4,925 | ) | ||||
Payment of contingent consideration related to acquisitions | (2,000 | ) | — | ||||
Net cash used in financing activities | (94,138 | ) | (174,394 | ) | |||
Net increase (decrease) in cash and cash equivalents | 61,136 | (30,279 | ) | ||||
Cash and cash equivalents, beginning of period | 77,355 | 52,287 | |||||
Cash and cash equivalents, end of period | $ | 138,491 | $ | 22,008 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for interest | $ | 29,378 | $ | 26,789 | |||
Cash paid for taxes | $ | 21,589 | $ | 35,153 | |||
Exhibit D
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION - UNAUDITED
(In thousands)
YEAR ENDED | QUARTER | |||||||||||||||||||||||||||||||
Q2-2012 | Q2-2011 (1) | Q2-2012 | Q1-2012 | Q4-2011 (1) | Q3-2011 (1) | Q2-2011 (1) | Q1-2011 (1) | |||||||||||||||||||||||||
1. | Revenues - Continuing Operations | |||||||||||||||||||||||||||||||
Technology, Data and Analytics: | ||||||||||||||||||||||||||||||||
Technology | $ | 329,805 | $ | 303,919 | $ | 168,515 | $ | 161,290 | $ | 161,252 | $ | 156,414 | $ | 152,676 | $ | 151,243 | ||||||||||||||||
Servicing Technology | 219,635 | 206,976 | 111,284 | 108,351 | 107,103 | 107,273 | 103,676 | 103,300 | ||||||||||||||||||||||||
Default Technology | 65,627 | 58,351 | 34,051 | 31,576 | 33,752 | 28,185 | 29,201 | 29,150 | ||||||||||||||||||||||||
Origination Technology | 44,543 | 38,592 | 23,180 | 21,363 | 20,397 | 20,956 | 19,799 | 18,793 | ||||||||||||||||||||||||
Data and Analytics | 34,443 | 35,202 | 17,590 | 16,853 | 17,019 | 16,724 | 17,897 | 17,305 | ||||||||||||||||||||||||
Total | 364,248 | 339,121 | 186,105 | 178,143 | 178,271 | 173,138 | 170,573 | 168,548 | ||||||||||||||||||||||||
Transaction Services: | ||||||||||||||||||||||||||||||||
Origination Services | 297,491 | 234,812 | 150,741 | 146,750 | 151,527 | 133,099 | 105,856 | 128,956 | ||||||||||||||||||||||||
Default Services | 379,487 | 465,893 | 196,625 | 182,862 | 205,326 | 214,996 | 224,744 | 241,149 | ||||||||||||||||||||||||
Total | 676,978 | 700,705 | 347,366 | 329,612 | 356,853 | 348,095 | 330,600 | 370,105 | ||||||||||||||||||||||||
Corporate | (1,998 | ) | (2,983 | ) | (264 | ) | (1,734 | ) | (1,292 | ) | (1,796 | ) | (1,513 | ) | (1,470 | ) | ||||||||||||||||
Total Revenues | $ | 1,039,228 | $ | 1,036,843 | $ | 533,207 | $ | 506,021 | $ | 533,832 | $ | 519,437 | $ | 499,660 | $ | 537,183 | ||||||||||||||||
Revenue Growth from Prior Year Period | ||||||||||||||||||||||||||||||||
Technology, Data and Analytics: | ||||||||||||||||||||||||||||||||
Technology | 8.5 | % | 4.7 | % | 10.4 | % | 6.6 | % | 4.6 | % | 0.1 | % | 2.7 | % | 6.9 | % | ||||||||||||||||
Servicing Technology | 6.1 | % | 2.9 | % | 7.3 | % | 4.9 | % | 5.8 | % | 4 | % | 0.7 | % | 5.3 | % | ||||||||||||||||
Default Technology | 12.5 | % | 9.8 | % | 16.6 | % | 8.3 | % | 1.9 | % | (14.7 | )% | 15.1 | % | 5 | % | ||||||||||||||||
Origination Technology | 15.4 | % | 7.2 | % | 17.1 | % | 13.7 | % | 3.4 | % | 4.7 | % | (2.7 | )% | 20.2 | % | ||||||||||||||||
Data and Analytics | (2.2 | )% | (6.2 | )% | (1.7 | )% | (2.6 | )% | (13.7 | )% | (8.1 | )% | (3.9 | )% | (8.5 | )% | ||||||||||||||||
Total | 7.4 | % | 3.5 | % | 9.1 | % | 5.7 | % | 2.5 | % | (0.7 | )% | 2.0 | % | 5 | % | ||||||||||||||||
Transaction Services: | ||||||||||||||||||||||||||||||||
Origination Services | 26.7 | % | (13.1 | )% | 42.4 | % | 13.8 | % | (15.5 | )% | (14.8 | )% | (19.5 | )% | (7.0 | )% | ||||||||||||||||
Default Services | (18.5 | )% | (16.6 | )% | (12.5 | )% | (24.2 | )% | (23.0 | )% | (22.5 | )% | (20.4 | )% | (12.9 | )% | ||||||||||||||||
Total | (3.4 | )% | (15.5 | )% | 5.1 | % | (10.9 | )% | (20.0 | )% | (19.7 | )% | (20.1 | )% | (10.9 | )% | ||||||||||||||||
Corporate | n/m | n/m | n/m | n/m | n/m | n/m | n/m | n/m | ||||||||||||||||||||||||
Total Revenues | 0.2 | % | (10.1 | )% | 6.7 | % | (5.8 | )% | (13.6 | )% | (14.3 | )% | (13.7 | )% | (6.3 | )% | ||||||||||||||||
Revenue Growth from Sequential Period | ||||||||||||||||||||||||||||||||
Technology, Data and Analytics: | ||||||||||||||||||||||||||||||||
Technology | 8.5 | % | 4.7 | % | 4.5 | % | — | % | 3.1 | % | 2.4 | % | 0.9 | % | (1.9 | )% | ||||||||||||||||
Servicing Technology | 6.1 | % | 2.9 | % | 2.7 | % | 1.2 | % | (0.2 | )% | 3.5 | % | 0.4 | % | 2 | % | ||||||||||||||||
Default Technology | 12.5 | % | 9.8 | % | 7.8 | % | (6.4 | )% | 19.8 | % | (3.5 | )% | 0.2 | % | (12 | )% | ||||||||||||||||
Origination Technology | 15.4 | % | 7.2 | % | 8.5 | % | 4.7 | % | (2.7 | )% | 5.8 | % | 5.4 | % | (4.8 | )% | ||||||||||||||||
Data and Analytics | (2.2 | )% | (6.2 | )% | 4.4 | % | (1 | )% | 1.8 | % | (6.6 | )% | 3.4 | % | (12.3 | )% | ||||||||||||||||
Total | 7.4 | % | 3.5 | % | 4.5 | % | (0.1 | )% | 3 | % | 1.5 | % | 1.2 | % | (3.1 | )% | ||||||||||||||||
Transaction Services: | ||||||||||||||||||||||||||||||||
Origination Services | 26.7 | % | (13.1 | )% | 2.7 | % | (3.2 | )% | 13.8 | % | 25.7 | % | (17.9 | )% | (28.1 | )% | ||||||||||||||||
Default Services | (18.5 | )% | (16.6 | )% | 7.5 | % | (10.9 | )% | (4.5 | )% | (4.3 | )% | (6.8 | )% | (9.6 | )% | ||||||||||||||||
Total | (3.4 | )% | (15.5 | )% | 5.4 | % | (7.6 | )% | 2.5 | % | 5.3 | % | (10.7 | )% | (17.1 | )% | ||||||||||||||||
Corporate | n/m | n/m | n/m | n/m | n/m | n/m | n/m | n/m | ||||||||||||||||||||||||
Total Revenues | 0.2 | % | (10.1 | )% | 5.4 | % | (5.2 | )% | 2.8 | % | 4.0 | % | (7.0 | )% | (13.1 | )% | ||||||||||||||||
Notes:
(1) 2011 revenues have been reclassified to conform to the current year presentation.
Exhibit E
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL INFORMATION - UNAUDITED
(In thousands, except per share data)
QUARTER (1) | QUARTER (1) | YEAR ENDED | ||||||||||||||||||||||||||||||||||
Q2-2012 | Q2-2011 | Q2-2012 | Q1-2012 | Q4-2011 | Q3- 2011 | Q2-2011 | Q1 - 2011 | 12/31/2011 | ||||||||||||||||||||||||||||
1. | Operating Results - Continuing Operations | |||||||||||||||||||||||||||||||||||
Consolidated | ||||||||||||||||||||||||||||||||||||
Revenues | $ | 1,039,228 | $ | 1,036,843 | $ | 533,207 | $ | 506,021 | $ | 533,832 | $ | 519,437 | $ | 499,660 | $ | 537,183 | $ | 2,090,112 | ||||||||||||||||||
Operating Income (Loss), as reported | 71,541 | 191,064 | (22,760 | ) | 94,301 | 4,926 | 94,192 | 80,666 | 110,398 | 290,182 | ||||||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||
Legal and Regulatory Charge (1) | 144,476 | — | 144,476 | — | 78,484 | — | — | — | 78,484 | |||||||||||||||||||||||||||
Exit costs, Impairments and Other Charges (2) | — | 29,198 | — | — | 27,714 | — | 9,887 | 19,311 | 56,912 | |||||||||||||||||||||||||||
Operating Income, as adjusted | 216,017 | 220,262 | 121,716 | 94,301 | 111,124 | 94,192 | 90,553 | 129,709 | 425,578 | |||||||||||||||||||||||||||
Depreciation and Amortization | 48,022 | 45,623 | 23,778 | 24,244 | 23,931 | 20,822 | 22,627 | 22,996 | 90,376 | |||||||||||||||||||||||||||
EBITDA, as adjusted | $ | 264,039 | $ | 265,885 | $ | 145,494 | $ | 118,545 | $ | 135,055 | $ | 115,014 | $ | 113,180 | $ | 152,705 | $ | 515,954 | ||||||||||||||||||
Operating Margin, as adjusted | 20.8 | % | 21.2 | % | 22.8 | % | 18.6 | % | 20.8 | % | 18.1 | % | 18.1 | % | 24.1 | % | 20.4 | % | ||||||||||||||||||
EBITDA Margin, as adjusted | 25.4 | % | 25.6 | % | 27.3 | % | 23.4 | % | 25.3 | % | 22.1 | % | 22.7 | % | 28.4 | % | 24.7 | % | ||||||||||||||||||
Technology, Data and Analytics | ||||||||||||||||||||||||||||||||||||
Revenues | $ | 364,248 | $ | 339,121 | $ | 186,105 | $ | 178,143 | $ | 178,271 | $ | 173,138 | $ | 170,573 | $ | 168,548 | $ | 690,530 | ||||||||||||||||||
Operating Income, as reported | 111,867 | 103,848 | 57,901 | 53,966 | 51,341 | 58,715 | 49,526 | 54,322 | 213,904 | |||||||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||
Exit costs, Impairments and Other Charges (2) | — | 8,887 | — | — | 7,971 | — | 6,585 | 2,302 | 16,858 | |||||||||||||||||||||||||||
Operating Income, as adjusted | 111,867 | 112,735 | 57,901 | 53,966 | 59,312 | 58,715 | 56,111 | 56,624 | 230,762 | |||||||||||||||||||||||||||
Depreciation and Amortization | 36,620 | 34,114 | 18,036 | 18,584 | 18,105 | 15,120 | 16,881 | 17,233 | 67,339 | |||||||||||||||||||||||||||
EBITDA, as adjusted | $ | 148,487 | $ | 146,849 | $ | 75,937 | $ | 72,550 | $ | 77,417 | $ | 73,835 | $ | 72,992 | $ | 73,857 | $ | 298,101 | ||||||||||||||||||
Operating Margin, as adjusted | 30.7 | % | 33.2 | % | 31.1 | % | 30.3 | % | 33.3 | % | 33.9 | % | 32.9 | % | 33.6 | % | 33.4 | % | ||||||||||||||||||
EBITDA Margin, as adjusted | 40.8 | % | 43.3 | % | 40.8 | % | 40.7 | % | 43.4 | % | 42.6 | % | 42.8 | % | 43.8 | % | 43.2 | % | ||||||||||||||||||
Transaction Services | ||||||||||||||||||||||||||||||||||||
Revenues | $ | 676,978 | $ | 700,705 | $ | 347,366 | $ | 329,612 | $ | 356,853 | $ | 348,095 | $ | 330,600 | $ | 370,105 | $ | 1,405,653 | ||||||||||||||||||
Operating Income, as reported | 127,464 | 133,743 | 76,010 | 51,454 | 70,752 | 55,824 | 52,610 | 81,133 | 260,319 | |||||||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||
Exit costs, Impairments and Other Charges (2) | — | 4,052 | — | — | (236 | ) | — | 1,074 | 2,978 | 3,816 | ||||||||||||||||||||||||||
Operating Income, as adjusted | 127,464 | 137,795 | 76,010 | 51,454 | 70,516 | 55,824 | 53,684 | 84,111 | 264,135 | |||||||||||||||||||||||||||
Depreciation and Amortization | 9,386 | 9,258 | 4,694 | 4,692 | 4,850 | 4,726 | 4,650 | 4,608 | 18,834 | |||||||||||||||||||||||||||
EBITDA, as adjusted | $ | 136,850 | $ | 147,053 | $ | 80,704 | $ | 56,146 | $ | 75,366 | $ | 60,550 | $ | 58,334 | $ | 88,719 | $ | 282,969 | ||||||||||||||||||
Operating Margin, as adjusted | 18.8 | % | 19.7 | % | 21.9 | % | 15.6 | % | 19.8 | % | 16.0 | % | 16.2 | % | 22.7 | % | 18.8 | % | ||||||||||||||||||
EBITDA Margin, as adjusted | 20.2 | % | 21.0 | % | 23.2 | % | 17.0 | % | 21.1 | % | 17.4 | % | 17.6 | % | 24.0 | % | 20.1 | % | ||||||||||||||||||
Corporate and Other | ||||||||||||||||||||||||||||||||||||
Revenues | $ | (1,998 | ) | $ | (2,983 | ) | $ | (264 | ) | $ | (1,734 | ) | $ | (1,292 | ) | $ | (1,796 | ) | $ | (1,513 | ) | $ | (1,470 | ) | $ | (6,071 | ) | |||||||||
Operating Loss, as reported | (167,790 | ) | (46,527 | ) | (156,671 | ) | (11,119 | ) | (117,167 | ) | (20,347 | ) | (21,470 | ) | (25,057 | ) | (184,041 | ) | ||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||
Legal and Regulatory Charge (1) | 144,476 | — | 144,476 | — | 78,484 | — | — | — | 78,484 | |||||||||||||||||||||||||||
Exit costs, Impairments and Other Charges (2) | — | 16,259 | — | — | 19,979 | — | 2,228 | 14,031 | 36,238 | |||||||||||||||||||||||||||
Operating Loss, as adjusted | (23,314 | ) | (30,268 | ) | (12,195 | ) | (11,119 | ) | (18,704 | ) | (20,347 | ) | (19,242 | ) | (11,026 | ) | (69,319 | ) | ||||||||||||||||||
Depreciation and Amortization | 2,016 | 2,251 | 1,048 | 968 | 976 | 976 | 1,096 | 1,155 | 4,203 | |||||||||||||||||||||||||||
EBITDA, as adjusted | $ | (21,298 | ) | $ | (28,017 | ) | $ | (11,147 | ) | $ | (10,151 | ) | $ | (17,728 | ) | $ | (19,371 | ) | $ | (18,146 | ) | $ | (9,871 | ) | $ | (65,116 | ) | |||||||||
2. | Net Earnings - Reconciliation | |||||||||||||||||||||||||||||||||||
Net Earnings (Loss) | $ | 9,241 | $ | 77,294 | $ | (37,880 | ) | $ | 47,121 | $ | (21,201 | ) | $ | 40,450 | $ | 21,365 | $ | 55,929 | $ | 96,543 | ||||||||||||||||
Adjustments - Continuing Operations: | ||||||||||||||||||||||||||||||||||||
Legal and Regulatory Charge (1) | 100,624 | — | 100,624 | — | 53,086 | — | — | — | 53,086 | |||||||||||||||||||||||||||
Exit costs, Impairments and Other Charges (2) | — | 18,177 | — | — | 16,822 | — | 6,204 | 11,973 | 34,999 | |||||||||||||||||||||||||||
Total EBIT Adjustments to Continuing Operations | 100,624 | 18,177 | 100,624 | — | 69,908 | — | 6,204 | 11,973 | 88,085 | |||||||||||||||||||||||||||
Adjustments - Discontinued Operations: | ||||||||||||||||||||||||||||||||||||
Impairment and Restructuring Charges, net | — | 17,797 | — | — | 16,454 | — | 17,759 | 38 | 34,251 | |||||||||||||||||||||||||||
(Gain)/Loss on Disposal of Operations, net | — | — | — | — | (928 | ) | 1,486 | — | — | 558 | ||||||||||||||||||||||||||
Total Adjustments to Discontinued Operations | — | 17,797 | — | — | 15,526 | 1,486 | 17,759 | 38 | 34,809 | |||||||||||||||||||||||||||
Adjustments - Non-operating: | ||||||||||||||||||||||||||||||||||||
Write-off of Debt Issuance Costs, net (3) | — | — | — | — | — | 4,978 | — | — | 4,978 | |||||||||||||||||||||||||||
Prior Year Tax Benefit | — | — | — | — | (6,458 | ) | — | — | — | (6,458 | ) | |||||||||||||||||||||||||
Total Non-operating Adjustments | — | — | — | — | (6,458 | ) | 4,978 | — | — | (1,480 | ) | |||||||||||||||||||||||||
Net Earnings, as adjusted | 109,865 | 113,268 | 62,744 | 47,121 | 57,775 | 46,914 | 45,328 | 67,940 | 217,957 | |||||||||||||||||||||||||||
Purchase Price Amortization, net (4) | 4,154 | 5,802 | 1,733 | 2,421 | 2,655 | 2,495 | 2,674 | 3,128 | 10,952 | |||||||||||||||||||||||||||
Adjusted Net Earnings | $ | 114,019 | $ | 119,070 | $ | 64,477 | $ | 49,542 | $ | 60,430 | $ | 49,409 | $ | 48,002 | $ | 71,068 | $ | 228,909 | ||||||||||||||||||
Adjusted Net Earnings Per Diluted Share | $ | 1.35 | $ | 1.37 | $ | 0.76 | $ | 0.59 | $ | 0.72 | $ | 0.59 | $ | 0.56 | $ | 0.81 | $ | 2.68 | ||||||||||||||||||
Diluted Weighted Average Shares | 84,680 | 86,968 | 84,578 | 84,567 | 84,430 | 84,415 | 85,812 | 88,134 | 85,685 | |||||||||||||||||||||||||||
3. | Cash Flow - Reconciliation | |||||||||||||||||||||||||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||||||||||||||||||||||
Net Earnings (Loss) | $ | 9,241 | $ | 77,294 | $ | (37,880 | ) | $ | 47,121 | $ | (21,201 | ) | $ | 40,450 | $ | 21,365 | $ | 55,929 | $ | 96,543 | ||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||
Cash Related Restructuring Costs, net | 15,688 | 9,372 | 13,335 | 2,353 | (3,302 | ) | 2,107 | 5,220 | 4,152 | 8,177 | ||||||||||||||||||||||||||
Net Earnings (Loss), as adjusted | 24,929 | 86,666 | (24,545 | ) | 49,474 | (24,503 | ) | 42,557 | 26,585 | 60,081 | 104,720 | |||||||||||||||||||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||||||||||||||||||||||||||
Non-cash adjustments | 44,454 | 106,239 | 7,022 | 37,432 | 62,763 | 50,508 | 61,260 | 44,979 | 219,510 | |||||||||||||||||||||||||||
Working capital adjustments | 164,191 | 43,354 | 158,693 | 5,498 | 106,696 | 11,756 | 23,822 | 19,532 | 161,806 | |||||||||||||||||||||||||||
Net cash provided by operating activities | 233,574 | 236,259 | 141,170 | 92,404 | 144,956 | 104,821 | 111,667 | 124,592 | 486,036 | |||||||||||||||||||||||||||
Capital expenditures included in investing activities | (49,977 | ) | (53,228 | ) | (26,258 | ) | (23,719 | ) | (23,408 | ) | (28,243 | ) | (29,907 | ) | (23,321 | ) | (104,879 | ) | ||||||||||||||||||
Adjusted Net Free Cash Flow | $ | 183,597 | $ | 183,031 | $ | 114,912 | $ | 68,685 | $ | 121,548 | $ | 76,578 | $ | 81,760 | $ | 101,271 | $ | 381,157 | ||||||||||||||||||
4. | Discontinued Operations - Reconciliation | |||||||||||||||||||||||||||||||||||
Net Loss, as reported | $ | (5,641 | ) | $ | (25,052 | ) | $ | (3,585 | ) | $ | (2,056 | ) | $ | (17,017 | ) | $ | (4,194 | ) | $ | (21,101 | ) | $ | (3,951 | ) | $ | (46,263 | ) | |||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||
Impairment and Restructuring Charges, net (5) | — | 17,797 | — | — | 16,454 | — | 17,759 | 38 | 34,251 | |||||||||||||||||||||||||||
(Gain)/Loss on Disposal of Operations, net (6) | — | — | — | — | (928 | ) | 1,486 | — | — | 558 | ||||||||||||||||||||||||||
Net Loss, as adjusted | (5,641 | ) | (7,255 | ) | (3,585 | ) | (2,056 | ) | (1,491 | ) | (2,708 | ) | (3,342 | ) | (3,913 | ) | (11,454 | ) | ||||||||||||||||||
Purchase Price Amortization, net (4) | 152 | 534 | 38 | 114 | 201 | 122 | 272 | 262 | 857 | |||||||||||||||||||||||||||
Adjusted Net Loss | $ | (5,489 | ) | $ | (6,721 | ) | $ | (3,547 | ) | $ | (1,942 | ) | $ | (1,290 | ) | $ | (2,586 | ) | $ | (3,070 | ) | $ | (3,651 | ) | $ | (10,597 | ) | |||||||||
Adjusted Net Loss Per Diluted Share | $ | (0.06 | ) | $ | (0.08 | ) | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.04 | ) | $ | (0.04 | ) | $ | (0.13 | ) | |||||||||
Diluted Weighted Average Shares | 84,680 | 86,968 | 84,578 | 84,567 | 84,430 | 84,415 | 85,812 | 88,134 | 85,685 | |||||||||||||||||||||||||||
Notes:
(1) During Q4-2011 and Q2-2012, we recognized pre-tax legal and regulatory contingency accruals of $78.5 million and $144.5 million ($53.1 million and $100.6 million, net of tax), respectively, for estimated settlement and third-party legal expenses related to various ongoing legal and regulatory matters.
(2) Includes the impact of various severance, asset impairment and restructuring charges. Severance charges reflect the departure of certain executives including our former chief executive officer, co-chief operating officer and chief financial officer, as well as the impact of other personnel restructuring programs. In connection with these initiatives, during 2011, we recorded severance charges, including equity acceleration, of $33.4 million ($20.6 million net of tax). Asset impairment and restructuring charges, which totaled $23.5 million during 2011 ($14.4 million net of tax) primarily reflects the write-down of various assets as well as provisions for operating lease impairments.
(3) During 2011, we recorded a charge totaling $8.0 million ($5.0 million net of tax) related to the write-off of certain debt issuance costs in connection with the refinancing of our senior credit facilities.
(4) Purchase price amortization, net represents the periodic amortization of intangible assets acquired through business acquisitions primarily relating to customer lists, trademarks and non-compete agreements.
(5) Fiscal 2011 reflects charges totaling $57.0 million ($34.3 million net of tax) relating to severance accruals and the write-down of net assets for businesses that have been classified as discontinued operations.
(6) Fiscal 2011 reflects the (gain) or loss, net of tax, included in "Total Other Income (Expense)" above, recognized upon the disposition of business units that have been sold or shutdown.