Lender Processing Services, Inc. Reports Strong Fourth Quarter Earnings
Year-over-year revenues increase 28.3%
Adjusted EPS of 82 cents per diluted share
JACKSONVILLE, Fla., Feb. 8, 2010 /PRNewswire-FirstCall/ -- Lender Processing Services, Inc. (NYSE: LPS), a leading provider of integrated technology and services to the mortgage and real estate industries, today reported consolidated revenues of $608.1 million for the fourth quarter of 2009, an increase of 28.3% compared to the fourth quarter of 2008, and net earnings of $74.9 million or 77 cents per diluted share.
Adjusted net earnings for the fourth quarter of 2009 were $79.6 million, or 82 cents per diluted share, compared to $60.9 million, or 64 cents per diluted share in the fourth quarter of 2008. Adjusted net earnings in the current quarter include an adjustment for purchase price amortization of 5 cents per diluted share while the prior year quarter included a similar adjustment of 7 cents per diluted share.
"LPS had a strong fourth quarter despite challenging market conditions and a fragile macro-economic environment. LPS with its market-leading presence and its unique technology-driven solutions for the mortgage and real estate industries, remains well positioned to achieve its growth objectives in 2010 and beyond," said Lee A. Kennedy, Executive Chairman of LPS. "Our Loan Facilitation business posted record growth as it benefitted from a better year-over-year origination market while our Default Services business continued to deliver very strong results. Also, our Mortgage Processing and other technology businesses had another outstanding quarter. During 2009, we continued to strengthen our balance sheet and increase our financial flexibility by paying down $262 million in debt," added Jeff Carbiener, President and CEO of LPS.
Operating income of $140.9 million in the quarter compared to $121.6 million in the fourth quarter of 2008. Operating margins were below fourth quarter 2008 primarily due to certain one-time benefits in last year's quarter. Operating margins were however consistent with third quarter of 2009.
Full year 2009 revenues of $2.4 billion were a solid 29.0% above 2008 while net earnings of $275.7 million in 2009 compared to $230.9 million in the prior year. Adjusted net earnings for full year 2009 of $300.3 million were a record 30.2% higher than pro forma adjusted net earnings in 2008.
Adjusted free cash flow (net cash provided by operating activities minus certain non-recurring expenses and additions to property, equipment and computer software) for full year 2009 of $349.2 million was well above the $276.5 million for 2008 (which also reflects the impact of pro forma interest expense for the first six months of 2008) primarily due to strong operating results combined with greater efficiency in working capital management.
Technology, Data and Analytics (TD&A)
Revenues for the segment were $189.4 million compared to $149.1 million in the fourth quarter of 2008 while operating income of $63.5 million compared to $53.5 million in the prior year period. Mortgage Processing revenues of $104.2 million were 17.9% above the fourth quarter of 2008, primarily due to the addition of the JPMorgan Chase portfolio onto our mortgage servicing platform. Other TD&A revenues increased by 40.3% to $85.2 million compared to the same period last year, primarily due to strong growth in Data and Analytics services, our Desktop application, and the impact of the FNRES acquisition completed in the first quarter of 2009. Excluding the impact of FNRES, Other TD&A revenues were up a strong 23.6%. Overall operating income for TD&A grew mainly due to higher contributions from Mortgage Processing and Data & Analytics.
Loan Transaction Services (LTS)
Revenues for the segment increased by 28.7% to $421.6 million compared to the fourth quarter of 2008 while operating income of $97.2 million compared to $84.1 million in the prior year quarter. Loan Facilitation Services revenues of $142.9 million were up 70.3% compared to the prior year quarter, primarily due to higher settlement services and increased appraisal volumes. Default Services revenues of $278.6 million increased 14.3% over the fourth quarter of 2008, primarily due to growth in the default market and our ability to continue to gain market share. Overall operating income for LTS was higher mainly due to higher income in loan origination related offerings, such as settlement services and appraisal.
Corporate and Other
Net corporate expenses were $19.8 million compared to $16.1 million in the fourth quarter of 2008 and were higher primarily due to higher incentive compensation expenses in the current quarter driven by the strong operating results.
The company announced that its Board of Directors had authorized a share repurchase program of $150 million that replaced the previous authorization of $75 million. The company noted that it had repurchased 1.024 million shares for $39.2 million and $8.0 million of its public bonds under the previous authorization.
Outlook
"We had an exceptional year in 2009 and while the broader economy and the real estate market in particular remain challenging, LPS has a strong presence in each of its businesses and is well positioned to grow revenue and earnings in 2010," said Jeff Carbiener. "Building on the strong 2009 results, we expect first quarter 2010 adjusted earnings to be in the range of 78-80 cents per diluted share. For full year 2010, we expect revenues to grow 8%-10% compared to 2009 and adjusted earnings to be in the $3.49-$3.56 per diluted share range."
Use of Non-GAAP Financial Information
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 "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" (adjusted net earnings divided by diluted weighted average shares), "pro forma adjusted net earnings" (adjusted net earnings less pro forma interest expense on our debt facilities for the first six months of 2008 as if such facilities had been outstanding as of January 1, 2008), "pro forma adjusted net earnings per diluted share" (pro forma adjusted net earnings divided by diluted weighted average shares), "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), and "pro forma adjusted free cash flow" (adjusted free cash flow less pro forma interest expense on our debt facilities for the first six months of 2008 as if such facilities had been outstanding as of January 1, 2008). LPS provides these measures because it believes that they are helpful to investors in comparing year-over-year performance in light of our 2008 spin-off from Fidelity National Information Services, Inc. (FIS), 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 net earnings. A reconciliation of these non-GAAP measures to related GAAP measures is included in the attachments to this release.
Conference Call and Webcast
LPS will host a conference call to discuss these results on Tuesday, February 9, 2010, at 8:00 a.m. Eastern time. Interested parties are invited to listen to the live webcast by logging on to the Investor Relations section at www.lpsvcs.com. Supplemental materials will be available on the website. Those wishing to participate via the conference call may do so by calling 866-823-5035. 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 conference call will be available through February 16, 2010 by dialing 888-203-1112 (access code: 6799466).
To access a printer friendly version of this release and accompanying exhibits, go to http://www.lpsvcs.com/investor.
About Lender Processing Services
Lender Processing Services, Inc. (LPS) is a leading provider of integrated technology and services to the mortgage and real estate industries. LPS offers solutions that span the mortgage continuum, including lead generation, origination, workflow automation (Desktop), servicing, portfolio retention and default, augmented by the company's award-winning customer support and professional services. Approximately 50 percent of all U.S. mortgages by dollar volume are serviced using LPS' Mortgage Servicing Package (MSP). In fact, many of the nation's top servicers rely on MSP, including eight of the top 10 and 14 of the top 20. LPS also offers proprietary mortgage and real estate data and analytics for the mortgage and capital markets industries. For more information about LPS, visit www.lpsvcs.com.
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 on demand for certain of our services; the elimination of existing and potential customers as a result of failures and consolidations in the banking and financial services industries; the effects of our substantial leverage on our ability to make acquisitions and invest in our business; 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; risks associated with our spin-off from Fidelity National Information Services, Inc., including limitations on our strategic and operating flexibility as a result of the tax-free nature of the spin-off; 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, the Company's subsequent reports on Form 10-Q and other filings with the Securities and Exchange Commission.
Exhibit A
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(Unaudited)
Three months ended Year ended
December 31, December 31,
-------------- ----------------
2009 2008 2009 2008
---- ---- ---- ----
(In thousands)
Processing and services
revenues $608,133 $473,921 $2,370,548 $1,837,590
Cost of revenues 403,174 294,069 1,571,003 1,176,479
------- ------- --------- ---------
Gross profit 204,959 179,852 799,545 661,111
Selling, general and
administrative expenses 64,059 58,298 267,339 229,875
------ ------ ------- -------
Operating income 140,900 121,554 532,206 431,236
Other income (expense):
Interest income 405 566 1,654 1,605
Interest expense (19,896) (25,306) (84,630) (49,927)
Other expense, net (31) (4) (248) 273
--- -- ---- ---
Total other income
(expense) (19,522) (24,744) (83,224) (48,049)
------- ------- ------- -------
Earnings from continuing
operations before income
taxes and equity in losses
of unconsolidated entity 121,378 96,810 448,982 383,187
Provision for income taxes 46,427 35,455 171,735 146,569
------ ------ ------- -------
Earnings from continuing
operations before
equity in losses of
unconsolidated entity 74,951 61,355 277,247 236,618
Equity in losses of
unconsolidated entity - (833) (37) (4,687)
------ ----- ------- -------
Earnings from continuing
operations 74,951 60,522 277,210 231,931
Discontinued operation,
net of tax - (6,045) (504) 158
------ ------ ------- -------
Net earnings 74,951 54,477 276,706 232,089
Noncontrolling minority
interest (50) (148) (977) (1,201)
------ ------ ------- -------
Net earnings
attributable to Lender
Processing Services,
Inc. $74,901 $54,329 $275,729 $230,888
======= ======= ======== ========
Exhibit B
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
December 31, December 31,
2009 2008
----------- -----------
(In thousands)
Assets
Current assets:
Cash and cash equivalents $70,528 $125,966
Trade receivables, net of
allowance for doubtful
accounts 401,333 344,848
Other receivables 3,770 17,393
Due from affiliates - 2,713
Prepaid expenses and
other current assets 26,985 22,030
Deferred income taxes 47,528 40,757
----------- ----------
Total current assets 550,144 553,707
----------- ----------
Property and equipment, net
of accumulated depreciation 113,108 95,542
Computer software, net of
accumulated amortization 185,376 157,539
Other intangible assets,
net of accumulated
amortization 72,796 83,489
Goodwill 1,166,142 1,091,056
Other non-current assets 109,738 122,300
----------- ----------
Total assets $2,197,304 $2,103,633
=========== ==========
Liabilities and Equity
Current liabilities:
Current portion of long-
term debt $40,100 $145,101
Trade accounts payable 38,166 31,720
Accrued salaries and
benefits 54,376 36,492
Recording and transfer
tax liabilities 15,208 14,639
Due to affiliates 3,321 1,573
Other accrued liabilities 151,601 101,612
Deferred revenues 66,602 51,628
---------- ----------
Total current
liabilities 369,374 382,765
---------- ----------
Deferred revenues 37,681 40,343
Deferred income taxes, net 65,215 36,557
Long-term debt, net of
current portion 1,249,250 1,402,350
Other non-current
liabilities 19,926 39,217
---------- ----------
Total liabilities 1,741,446 1,901,232
---------- ----------
Equity:
Lender Processing Services, Inc.
stockholders' equity:
Preferred stock $0.0001
par value; 50 million
shares authorized, none - -
issued at December 31, 2009
or 2008, respectively
Common stock $0.0001 par
value; 500 million shares
authorized, 97.0 million 10 9
and 95.3 million shares issued
at December 31, 2009 and
2008, respectively
Additional paid-in capital 173,424 111,849
Retained earnings 330,963 93,540
Accumulated other
comprehensive loss (7,630) (13,667)
Treasury stock $0.0001 par value;
1,209,920 and 19,870 shares at
December 31, 2009 and
2008, respectively (40,909) (582)
---------- ----------
Total Lender Processing
Services, Inc.
stockholders' equity 455,858 191,149
Noncontrolling minority
interest - 11,252
---------- ----------
Total equity 455,858 202,401
---------- ----------
Total liabilities and
equity $2,197,304 $2,103,633
========== ==========
Exhibit C
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Year ended December 31,
----------------------
2009 2008
---- ----
(In thousands)
Cash flows from operating activities:
Net earnings attributable to
Lender Processing Services, Inc. $275,729 $230,888
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 97,922 93,416
Amortization of debt issuance
costs 5,404 3,002
Gain on sale of discontinued
operation (2,574) -
Deferred income taxes, net 25,463 (28)
Stock-based compensation cost 28,042 21,513
Tax benefit associated with
equity compensation (2,921) (533)
Equity in losses of
unconsolidated entity 37 4,687
Noncontrolling minority
interest 977 1,201
Changes in assets and liabilities,
net of effects of
acquisitions:
Trade receivables (49,602) (57,918)
Other receivables 13,637 (9,423)
Prepaid expenses and other
assets (11,578) 11,666
Deferred revenues 11,316 10,501
Accounts payable and other
liabilities 51,836 54,888
-------- -----------
Net cash provided by
operating activities 443,688 363,860
-------- -----------
Cash flows from investing activities:
Additions to property and equipment (40,890) (23,012)
Additions to capitalized software (57,885) (39,276)
Acquisition of title plants (17,219) -
Acquisitions, net of cash acquired (31,103) (19,938)
Proceeds from sale of discontinued
operation, net of cash distributed (32,638) -
-------- -----------
Net cash used in investing
activities (179,735) (82,226)
-------- -----------
Cash flows from financing activities:
Borrowings - 25,700
Debt service payments (254,497) (63,272)
Stock options exercised 8,098 1,448
Tax benefit associated with equity
compensation 2,921 533
Cash dividends paid (38,306) (19,053)
Capitalized debt issuance costs - (25,735)
Repurchase of minority interests
in subsidiary (6,850) -
Net distributions to FIS - (114,855)
Treasury stock purchases (22,757) -
Bond repurchases (8,000) -
-------- -----------
Net cash used in financing
activities (319,391) (195,234)
Net (decrease) increase in
cash and cash equivalents (55,438) 86,400
Cash and cash equivalents, beginning
of period 125,966 39,566
-------- -----------
Cash and cash equivalents, end of
period $70,528 $125,966
======== ===========
Supplemental disclosures of cash flow
information:
Cash paid for interest $81,698 $32,330
======== ===========
Cash paid for taxes $154,595 $62,229
======== ===========
Non-cash contribution of stock
compensation by FIS $- $9,120
======== ===========
Non-cash redistribution of assets
to FIS $434 $(1,308)
======== ===========
Non-cash consideration received
from sale of discontinued
operation $40,310 $-
======== ===========
Non-cash consideration issued in
acquisition of business $(5,162) $-
======== ===========
Non-cash exchange of FIS note $- $(1,585,000)
======== ===========
Exhibit D
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION - UNAUDITED
(In thousands)
Year ended December 31,
-----------------------
2009 2008
---- ----
1. Revenues - Continuing Operations
Technology, Data and Analytics (TD&A):
Mortgage Processing $387,874 $334,184
Other TD&A 319,611 231,466
--------- ---------
Total 707,485 565,650
--------- ---------
Loan Transaction Services:
Loan Facilitation Services 547,300 431,673
Default Services 1,137,313 851,828
---------- ---------
Total 1,684,613 1,283,501
---------- ---------
Corporate and Other (21,550) (11,561)
---------- ----------
Total Revenue $2,370,548 $1,837,590
========== ==========
Revenue Growth from Prior Year Period
Technology, Data and Analytics:
Mortgage Processing 16.1% -1.6%
Other TD&A 38.1% 0.4%
---- ----
Total 25.1% -0.8%
---- ----
Loan Transaction Services:
Loan Facilitation Services 26.8% -28.2%
Default Services 33.5% 80.1%
---- ----
Total 31.3% 19.5%
---- ----
Corporate and Other n/m n/m
---- ----
Total Revenue 29.0% 12.1%
==== ====
2. Depreciation and Amortization
- Continuing Operations
Depreciation and Amortization $61,331 $51,075
Purchase Price Amortization 30,749 40,018
Other Amortization 5,837 2,244
------- -------
Total Depreciation and Amortization $97,917 $93,337
======= =======
3. Stock Compensation Expense (1)
Stock Compensation Expense,
Excluding Acceleration Charges $27,243 $21,375
Stock Acceleration Expense 799 138
------ ------
Total Stock Compensation Expense $28,042 $21,513
======= =======
4. EBIT - Discontinued Operations (2)
Revenue $296 $24,319
Cost of Sales 503 6,379
Selling, General and Administrative Expenses 499 8,982
------ -------
Operating Income (706) 8,958
Less Non-recurring Charges:
Restructuring Costs - -
LPS Spin Related Costs - -
Acceleration of Performance-Based Shares - -
----- ------
EBIT, as adjusted $(706) $8,958
----- ------
Depreciation and Amortization $5 $79
===== ======
Quarter ended
-------------
12/31/2009 9/30/2009 6/30/2009 3/31/2009
---------- --------- --------- ---------
1. Revenues
- Continuing Operations
Technology, Data and
Analytics (TD&A):
Mortgage Processing $104,184 $102,973 $89,567 $91,150
Other TD&A 85,247 83,313 82,322 68,729
------- ------- ------ ------
Total 189,431 186,286 171,889 159,879
------- ------- ------- -------
Loan Transaction Services:
Loan Facilitation
Services 142,919 136,657 148,510 119,214
Default Services 278,647 303,823 299,534 255,309
------- ------- ------- -------
Total 421,566 440,480 448,044 374,523
------- ------- ------- -------
Corporate and Other (2,864) (7,339) (6,762) (4,585)
------ ------ ------ ------
Total Revenue $608,133 $619,427 $613,171 $529,817
======== ======== ======== ========
Revenue Growth from Prior
Year Period
Technology, Data and
Analytics:
Mortgage Processing 17.9% 23.2% 9.1% 13.7%
Other TD&A 40.3% 50.5% 37.9% 23.5%
---- ---- ---- ----
Total 27.0% 34.1% 21.3% 17.7%
---- ---- ---- ----
Loan Transaction Services:
Loan Facilitation Services 70.3% 55.9% 25.8% -16.1%
Default Services 14.3% 25.6% 51.9% 51.0%
---- ---- ---- ----
Total 28.7% 33.7% 42.1% 20.4%
---- ---- ---- ----
Corporate and Other 0.6% 338.1% n/m n/m
---- ----- ---- ----
Total Revenue 28.3% 32.7% 35.3% 19.4%
==== ==== ==== ====
2. Depreciation and Amortization
- Continuing Operations
Depreciation and
Amortization $15,932 $15,894 $15,431 $14,074
Purchase Price
Amortization 7,654 7,608 7,404 8,083
Other Amortization 1,713 1,542 753 1,829
------ ------ ------ ------
Total Depreciation and
Amortization $25,299 $25,044 $23,588 $23,986
======= ======= ======= =======
3. Stock Compensation Expense (1)
Stock Compensation Expense,
Excluding Acceleration
Charges $7,678 $7,062 $6,459 $6,044
Stock Acceleration Expense - - - 799
----- ----- ----- -----
Total Stock Compensation
Expense $7,678 $7,062 $6,459 $6,843
====== ====== ====== ======
4. EBIT – Discontinued
Operations (2)
Revenue $- $- $- $296
Cost of Sales - - - 503
Selling, General and
Administrative Expenses - - - 499
----- ----- ----- -----
Operating Income - - - (706)
----- ----- ----- -----
Less Non-recurring Charges:
Restructuring Costs - - - -
LPS Spin Related Costs - - - -
Acceleration of
Performance-Based Shares - - - -
----- ----- ----- -----
EBIT, as adjusted $- $- $- $(706)
----- ----- ----- -----
Depreciation and Amortization $- $- $- $5
===== ===== ===== =====
Quarter ended
-------------
12/31/2008 9/30/2008 6/30/2008 3/31/2008
---------- --------- --------- ---------
1. Revenues
- Continuing Operations
Technology, Data and
Analytics (TD&A):
Mortgage Processing $88,364 $83,592 $82,062 $80,166
Other TD&A 60,754 55,372 59,682 55,658
-------- -------- -------- --------
Total 149,118 138,964 141,744 135,824
-------- -------- ------- --------
Loan Transaction Services:
Loan Facilitation
Services 83,914 87,629 118,091 142,039
Default Services 243,736 241,844 197,223 169,025
-------- -------- -------- --------
Total 327,650 329,473 315,314 311,064
-------- -------- -------- --------
Corporate and Other (2,847) (1,675) (3,711) (3,328)
-------- -------- -------- --------
Total Revenue $473,921 $466,762 $453,347 $443,560
======== ======== ======== ========
Revenue Growth from
Prior Year Period
Technology, Data and
Analytics:
Mortgage Processing -4.9% 2.9% -1.4% -2.6%
Other TD&A 14.6% -5.5% 1.5% -7.4%
---- ---- ---- ----
Total 2.2% -0.6% -0.2% -4.6%
---- ---- ---- ----
Loan Transaction Services:
Loan Facilitation
Services -39.6% -42.8% -28.3% -1.3%
Default Services 68.3% 97.1% 89.7% 66.5%
---- ---- ---- ----
Total 15.4% 19.4% 17.3% 26.7%
---- ---- ---- ----
Corporate and Other n/m n/m n/m n/m
--- --- --- ---
Total Revenue 11.0% 13.3% 10.0% 14.4%
==== ==== ==== ====
2. Depreciation and Amortization
- Continuing Operations
Depreciation and
Amortization $13,697 $12,594 $11,286 $13,498
Purchase Price
Amortization 10,711 10,627 8,980 9,700
Other Amortization 596 579 594 475
------- ------- ------- -------
Total Depreciation and
Amortization $25,004 $23,800 $20,860 $23,673
======= ======= ======= =======
3. Stock Compensation
Expense (1)
Stock Compensation Expense,
Excluding Acceleration
Charges $6,603 $5,790 $4,295 $4,687
Stock Acceleration Expense - - 138 -
----- ------ ------ ------
Total Stock Compensation
Expense $6,603 $5,790 $4,433 $4,687
====== ====== ====== ======
4. EBIT – Discontinued
Operations (2)
Revenue $2,204 $5,916 $7,033 $9,166
Cost of Sales 1,571 1,521 1,499 1,788
Selling, General and
Administrative Expenses 1,814 1,837 2,212 3,119
------ ------ ------ ------
Operating Income (1,181) 2,558 3,322 4,259
------ ------ ------ ------
Less Non-recurring Charges:
Restructuring Costs - - - -
LPS Spin Related Costs - - - -
Acceleration of
Performance-Based Shares - - - -
------- ------ ------ ------
EBIT, as adjusted $(1,181) $2,558 $3,322 $4,259
------- ------ ------ ------
Depreciation and
Amortization $17 $19 $20 $23
======= ====== ====== ======
(1) As the Company does not allocate stock compensation expense to the
individual business units, there is no related expense associated
with the discontinued operation.
(2) The business unit included in discontinued operations has
historically been reported as a component of Loan Facilitation
Services in the Loan Transaction Services reporting segment.
Exhibit E
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL INFORMATION - UNAUDITED
(In thousands, except per share data)
Year ended December 31,
-----------------------
2009 2008
---- ----
1. EBIT - Continuing Operations
Consolidated
Revenue $2,370,548 $1,837,590
Cost of Sales 1,571,003 1,176,479
Selling, General and Administrative
Expenses 267,339 229,875
------- -------
Operating Income 532,206 431,236
Less Non-recurring Charges:
Restructuring Costs 8,186 2,353
LPS Spin Related Costs - 2,963
Acceleration of Performance-Based Shares 799 138
-------- --------
EBIT, as adjusted $541,191 $436,690
-------- --------
EBIT Margin, as adjusted 22.8% 23.8%
==== ====
Depreciation and Amortization $97,917 $93,337
======= =======
Technology, Data and Analytics
Revenue $707,485 $565,650
Cost of Sales 402,411 309,969
Selling, General and Administrative Expenses 70,717 64,640
------ ------
Operating Income 234,357 191,041
Less Non-recurring Charges:
Restructuring Costs - 2,178
LPS Spin Related Costs - -
Acceleration of Performance-Based Shares - -
-------- --------
EBIT, as adjusted $234,357 $193,219
-------- --------
EBIT Margin, as adjusted 33.1% 34.2%
==== ====
Depreciation and Amortization $69,477 $61,205
======= =======
Loan Transaction Services
Revenue $1,684,613 $1,283,501
Cost of Sales 1,190,238 879,031
Selling, General and Administrative Expenses 107,769 105,299
------- -------
Operating Income 386,606 299,171
Less Non-recurring Charges:
Restructuring Costs - 163
LPS Spin Related Costs - -
Acceleration of Performance-Based Shares - -
-------- --------
EBIT, as adjusted $386,606 $299,334
-------- --------
EBIT Margin, as adjusted 22.9% 23.3%
==== ====
Depreciation and Amortization $20,310 $25,132
======= =======
Corporate and Other
Revenue $(21,550) $(11,561)
Cost of Sales (21,646) (12,521)
Selling, General and Administrative Expenses 88,853 59,936
------ ------
Operating Income (88,757) (58,976)
Less Non-recurring Charges:
Restructuring Costs 8,186 12
LPS Spin Related Costs - 2,963
Acceleration of Performance-Based Shares 799 138
-------- --------
EBIT, as adjusted $(79,772) $(55,863)
-------- --------
Depreciation and Amortization $8,130 $7,000
====== ======
2. Net Earnings - Reconciliation
Net Earnings $275,729 230,888
Less Non-recurring Charges:
Restructuring Costs, net of tax 5,055 1,440
LPS Spin Related Costs, net of tax - 1,814
Acceleration of Performance-Based Shares,
net of tax 493 84
Impact of change in tax rate on
non-recurring items - (223)
--- ----
Net Earnings, excluding non-recurring
items 281,277 234,003
Pro Forma Interest Expense, net of tax (1) - 28,131
--- ------
Pro Forma Net Earnings 281,277 205,872
Purchase Price Amortization, net of tax (2) 18,987 24,751
-------- --------
Pro Forma Adjusted Net Earnings $300,264 $230,623
======== ========
Pro Forma Net Earnings Per Share $2.93 $2.15
===== =====
Pro Forma Adjusted Net Earnings Per Share (3) $3.12 $2.41
===== =====
Pro Forma Diluted Weighted Average Shares (3) 96,152 95,754
====== ======
3. Cashflow - Reconciliation
Cash Flows from Operating Activities:
Net Earnings $275,729 $230,888
Less Non-recurring Charges:
Restructuring Costs, net of tax 4,304 1,440
LPS Spin Related Costs, net of tax - 1,814
Impact of change in tax rate on
non-recurring items - (223)
--- ----
Net Earnings, excluding non-recurring
items 280,033 233,919
Pro Forma Interest Expense, net of tax - 28,131
--- ------
Pro Forma Adjusted Net Earnings 280,033 205,788
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Non-cash adjustments 152,350 123,258
Working capital adjustments 15,609 9,714
------ ------
Net cash provided by operating
activities 447,992 338,760
------- -------
Capital expenditures included in investing
activities (98,775) (62,288)
------- -------
Pro Forma Adjusted Net Free Cash Flow $349,217 $276,472
======== ========
Quarter ended
-------------
12/31/2009 9/30/2009 6/30/2009 3/31/2009
---------- --------- --------- ---------
1. EBIT - Continuing Operations
Consolidated
Revenue $608,133 $619,427 $613,171 $529,817
Cost of Sales 403,174 409,113 404,014 354,702
Selling, General and
Administrative Expenses 64,059 66,671 65,431 71,178
------ ------ ------ ------
Operating Income 140,900 143,643 143,726 103,937
Less Non-recurring Charges:
Restructuring Costs - - - 8,186
LPS Spin Related Costs - - - -
Acceleration of Performance-
Based Shares - - - 799
-------- -------- -------- --------
EBIT, as adjusted $140,900 $143,643 $143,726 $112,922
-------- -------- -------- --------
EBIT Margin, as adjusted 23.2% 23.2% 23.4% 21.3%
==== ==== ==== ====
Depreciation and
Amortization $25,299 $25,044 $23,588 $23,986
======= ======= ======= =======
Technology, Data and Analytics
Revenue $189,431 $186,286 $171,889 $159,879
Cost of Sales 107,368 105,651 98,929 90,463
Selling, General and
Administrative Expenses 18,571 18,256 17,824 16,066
------ ------ ------ ------
Operating Income 63,492 62,379 55,136 53,350
Less Non-recurring Charges:
Restructuring Costs - - - -
LPS Spin Related Costs - - - -
Acceleration of Performance-
Based Shares - - - -
------- ------- ------- -------
EBIT, as adjusted $63,492 $62,379 $55,136 $53,350
------- ------- ------- -------
EBIT Margin, as adjusted 33.5% 33.5% 32.1% 33.4%
======= ======= ======= =======
Depreciation and
Amortization $18,066 $17,595 $16,441 $17,375
======= ======= ======= =======
Loan Transaction Services
Revenue $421,566 $440,480 $448,044 $374,523
Cost of Sales 298,723 311,230 311,349 268,936
Selling, General and
Administrative Expenses 25,681 27,665 27,064 27,359
------- ------- ------- -------
Operating Income 97,162 101,585 109,631 78,228
Less Non-recurring Charges:
Restructuring Costs - - - -
LPS Spin Related Costs - - - -
Acceleration of
Performance-Based Shares - - - -
------ ------- ------- -------
EBIT, as adjusted $97,162 $101,585 $109,631 $78,228
------- -------- -------- -------
EBIT Margin, as adjusted 23.0% 23.1% 24.5% 20.9%
======= ======== ======== =======
Depreciation and
Amortization $5,281 $5,295 $5,126 $4,608
====== ====== ====== ======
Corporate and Other
Revenue $(2,864) $(7,339) $(6,762) $(4,585)
Cost of Sales (2,917) (7,768) (6,264) (4,697)
Selling, General and
Administrative Expenses 19,807 20,750 20,543 27,753
------ ------ ------ ------
Operating Income (19,754) (20,321) (21,041) (27,641)
Less Non-recurring Charges:
Restructuring Costs - - - 8,186
LPS Spin Related Costs - - - -
Acceleration of
Performance-Based Shares - - - 799
----- ------ ------ ------
EBIT, as adjusted $(19,754) $(20,321) $(21,041) $(18,656)
-------- -------- -------- --------
Depreciation and
Amortization $1,952 $2,154 $2,021 $2,003
====== ====== ====== ======
2. Net Earnings - Reconciliation
Net Earnings $74,901 $75,542 $75,240 $50,046
Less Non-recurring
Charges:
Restructuring Costs,
net of tax - - - 5,055
LPS Spin Related Costs,
net of tax - - - -
Acceleration of
Performance-Based Shares,
net of tax - - - 493
Impact of change in tax
rate on non-recurring items - - - -
---- ---- ---- ----
Net Earnings, excluding
non-recurring items 74,901 75,542 75,240 55,594
Pro Forma Interest Expense,
net of tax (1) - - - -
------ ------ ------ ------
Pro Forma Net Earnings 74,901 75,542 75,240 55,594
Purchase Price
Amortization,
net of tax (2) 4,726 4,698 4,572 4,991
------- ------- ------- -------
Pro Forma Adjusted
Net Earnings $79,627 $80,240 $79,812 $60,585
======= ======= ======= =======
Pro Forma Net
Earnings Per Share $0.77 $0.78 $0.78 $0.58
===== ===== ===== =====
Pro Forma Adjusted Net
Earnings Per Share (3) $0.82 $0.83 $0.83 $0.64
===== ===== ===== =====
Pro Forma Diluted
Weighted Average
Shares (3) 96,781 96,399 96,133 95,284
====== ====== ====== ======
3. Cashflow - Reconciliation
Cash Flows from
Operating Activities:
Net Earnings $74,901 $75,542 $75,240 $50,046
Less Non-recurring
Charges:
Restructuring Costs,
net of tax - - - 4,304
LPS Spin Related
Costs, net of tax - - - -
Impact of change in tax
rate on non-recurring
items - - - -
- - - -
Net Earnings,
excluding
non-recurring
items 74,901 75,542 75,240 54,350
Pro Forma Interest
Expense, net of tax - - - -
------ ------ ------ ------
Pro Forma Adjusted
Net Earnings 74,901 75,542 75,240 54,350
Adjustments to
reconcile net earnings
to net cash provided
by operating activities:
Non-cash
adjustments 60,281 32,279 31,700 28,090
Working capital
adjustments 13,369 (16,954) 21,957 (2,763)
------ ------- ------ ------
Net cash provided
by operating
activities 148,551 90,867 128,897 79,677
------- ------ ------- ------
Capital expenditures
included in investing
activities (30,913) (19,455) (25,836) (22,571)
------- ------- ------- -------
Pro Forma Adjusted
Net Free Cash Flow $117,638 $71,412 $103,061 $57,106
======== ======= ======== =======
Quarter ended
-------------
12/31/2008 9/30/2008 6/30/2008 3/31/2008
---------- --------- --------- ---------
1. EBIT - Continuing Operations
Consolidated
Revenue $473,921 $466,762 $453,347 $443,560
Cost of Sales 294,069 300,560 293,464 288,386
Selling, General and
Administrative Expenses 58,298 57,909 58,570 55,098
------ ------ ------ ------
Operating Income 121,554 108,293 101,313 100,076
Less Non-recurring
Charges:
Restructuring Costs - - 2,353 -
LPS Spin Related Costs - - 1,960 1,003
Acceleration of
Performance-Based Shares - - 138 -
------ ------- ------- -------
EBIT, as adjusted $121,554 $108,293 $105,764 $101,079
-------- -------- -------- --------
EBIT Margin, as adjusted 25.6% 23.2% 23.3% 22.8%
======== ======== ======== ========
Depreciation and
Amortization $25,004 $23,800 $20,860 $23,673
======= ======= ======= =======
Technology, Data and
Analytics
Revenue $149,118 $138,964 $141,744 $135,824
Cost of Sales 80,482 73,980 81,397 74,110
Selling, General and
Administrative Expenses 15,121 15,790 17,471 16,258
------ ------ ------ ------
Operating Income 53,515 49,194 42,876 45,456
Less Non-recurring Charges:
Restructuring Costs - - 2,178 -
LPS Spin Related Costs - - - -
Acceleration of
Performance-Based Shares - - - -
------ ------- ------- -------
EBIT, as adjusted $53,515 $49,194 $45,054 $45,456
------- ------- ------- -------
EBIT Margin, as adjusted 35.9% 35.4% 31.8% 33.5%
======= ======= ======= =======
Depreciation and
Amortization $15,990 $15,229 $13,971 $16,015
======= ======= ======= =======
Loan Transaction Services
Revenue $327,650 $329,473 $315,314 $311,064
Cost of Sales 217,242 228,283 215,838 217,668
Selling, General and
Administrative Expenses 26,314 26,487 27,154 25,344
------ ------ ------ ------
Operating Income 84,094 74,703 72,322 68,052
Less Non-recurring Charges:
Restructuring Costs - - 163 -
LPS Spin Related Costs - - - -
Acceleration of
Performance-Based Shares - - - -
------- ------- ------- -------
EBIT, as adjusted $84,094 $74,703 $72,485 $68,052
------- ------- ------- -------
EBIT Margin, as adjusted 25.7% 22.7% 23.0% 21.9%
======= ======= ======= =======
Depreciation and
Amortization $7,028 $6,651 $5,290 $6,163
====== ====== ====== ======
Corporate and Other
Revenue $(2,847) $(1,675) $(3,711) $(3,328)
Cost of Sales (3,655) (1,703) (3,771) (3,392)
Selling, General and
Administrative Expenses 16,863 15,632 13,945 13,496
------ ------ ------ ------
Operating Income (16,055) (15,604) (13,885) (13,432)
Less Non-recurring Charges:
Restructuring Costs - - 12 -
LPS Spin Related Costs - - 1,960 1,003
Acceleration of
Performance-Based Shares - - 138 -
------ ------- ------- -------
EBIT, as adjusted $(16,055) $(15,604) $(11,775) $(12,429)
-------- -------- -------- --------
Depreciation and
Amortization $1,986 $1,920 $1,599 $1,495
====== ====== ====== ======
2. Net Earnings - Reconciliation
Net Earnings $54,329 $51,281 $63,546 $61,732
Less Non-recurring Charges:
Restructuring Costs,
net of tax - - 1,440 -
LPS Spin Related Costs,
net of tax - - 1,200 614
Acceleration of
Performance-Based Shares,
net of tax - - 84 -
Impact of change in tax rate
on non-recurring items (223) - - -
---- ---- ---- ----
Net Earnings, excluding
non-recurring items 54,106 51,281 66,270 62,346
Pro Forma Interest Expense,
net of tax (1) - - 13,951 14,180
------ ------ ------ ------
Pro Forma Net Earnings 54,106 51,281 52,319 48,166
Purchase Price
Amortization,
net of tax (2) 6,815 6,504 5,496 5,936
------- ------- ------- -------
Pro Forma Adjusted Net
Earnings $60,921 $57,785 $57,815 $54,102
======= ======= ======= =======
Pro Forma Net Earnings
Per Share $0.57 $0.54 $0.55 $0.49
===== ===== ===== =====
Pro Forma Adjusted Net
Earnings Per Share (3) $0.64 $0.61 $0.61 $0.55
===== ===== ===== =====
Pro Forma Diluted
Weighted Average
Shares (3) 95,126 95,223 95,070 97,597
====== ====== ====== ======
3. Cashflow - Reconciliation
Cash Flows from Operating Activities:
Net Earnings $54,329 $51,281 $63,546 $61,732
Less Non-recurring
Charges:
Restructuring Costs,
net of tax - - 1,440 -
LPS Spin Related Costs,
net of tax - - 1,200 614
Impact of change in tax
rate on non-recurring
items (223) - - -
---- ---- ---- ----
Net Earnings,
excluding
non-recurring items 54,106 51,281 66,186 62,346
Pro Forma Interest Expense,
net of tax - - 13,951 14,180
------ ------ ------ ------
Pro Forma Adjusted Net
Earnings 54,106 51,281 52,235 48,166
Adjustments to reconcile
net earnings to net cash
provided by operating
activities:
Non-cash adjustments 30,081 32,420 18,262 42,495
Working capital
adjustments 32,158 26,908 (91,474) 42,122
------ ------ ------- ------
Net cash provided
by operating
activities 116,345 110,609 (20,977) 132,783
------- ------- ------- -------
Capital expenditures
included in investing
activities (23,946) (13,205) (14,344) (10,793)
------- ------- ------- -------
Pro Forma Adjusted Net
Free Cash Flow $92,399 $97,404 $(35,321) $121,990
======= ======= ======== ========
Notes:
(1) Pro forma interest expense for each of the two quarters in the period
ended June 30, 2008 represents the interest expense associated with the
$1,610.7 million in debt incurred by us in connection with the spin-off
assuming the spin-off occurred on January 1, 2007. Our new bank debt
bears interest at a floating rate which we estimate would have been 4.96%
on the revolving credit agreement, Term Loan A and Term Loan B based on
the one month LIBOR rate on June 30, 2008 (2.46%) plus a spread of 2.5%.
Our new senior notes bear interest at a fixed rate of 8.125%.
Amortization of capitalized debt issuance costs in connection with the
borrowings included in pro forma interest expense total approximately
$2.7 million for the six months ended June 30, 2008. These projections
also reflect principal paydowns of approximately $36.3 million ($35
million of Term Loan A, $1.3 million of Term Loan B) per quarter under
the credit agreement (other than in the first quarter after closing, in
which only $1.3 million is payable) and the paydown of the revolver of
$25.7 million during the first quarter of 2007.
(2) Purchase price amortization, net of tax represents the periodic
amortization of intangible assets acquired through business acquisitions
primarily relating to customer lists, trademarks and non-compete
agreements.
(3) Pro forma earnings per share and pro forma diluted weighted average
shares for the quarter ended June 30, 2008 are provided based on the
94,611 shares of Lender Processing Services, Inc. common stock issued to
FIS shareholders on the July 2, 2008 spin date along with dilutive
common stock equivalents calculated under the treasury stock method using
the $33 per share closing price of LPS on July 2, 2008 as the average
market price and the number of LPS options and awards issued to our
employees per the terms of the spin-off. Pro forma earnings per share and
pro forma diluted weighted average shares for all other periods presented
above are based on the pro forma diluted shares as included in the
Company’s Form 10 filed on June 20, 2008.
SOURCE Lender Processing Services, Inc.
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