Lender Processing Q2 Earnings In Line - Analyst Blog
August 12 2013 - 9:05AM
Zacks
Lender Processing Services,
Inc (LPS) reported second quarter 2013 net income of $19.1
million or 22 cents per share versus net loss of $37.9 million or
45 cents per share in the year-ago quarter. The rebound to profit
from the year-ago loss was primarily attributable to the successful
execution of its strategy and elevated refinance activity during
the quarter.
Excluding the non-recurring items, adjusted earnings for the
reported quarter were 65 cents per share versus 79 cents in the
year-earlier quarter. The quarterly adjusted earnings were in line
with the Zacks Consensus Estimate.
Total revenue decreased 8.7% year over year to $468.9 million. The
fall was primarily due to lower Default Services revenues,
partially offset by higher revenues from Technology, Data and
Analytics (TD&A), and Origination Services. The quarterly
revenues marginally missed the Zacks Consensus Estimate of $468
million. Adjusted operating income decreased 18.3% year over year
to $98.4 million owing to the decline in Default Services.
Segment Performance
Revenues for the TD&A segment stood at $194.0 million in the
reported quarter, up 5.8% year over year. While revenues from
Servicing Technology sub-segment climbed 5.4% on the back of growth
in loan portfolio, Origination Technology rose 14.7% on higher
industry origination volume. Default Technology sub-segment
revenues were down 1.8%, reflecting lower professional services
revenues and market share gains, partially offset by lower
foreclosure referral volumes. Revenues from Data and Analytics
increased 13.3%, primarily driven by higher demand for loan
products data and predictive analytics. Adjusted operating income
for the segment increased 6.5% year over year to $59.6 million.
Revenues for the Transaction segment fell 16.8% from the prior-year
quarter to $274.9 million. Origination Services revenues increased
4.4% to $157.4 million driven by higher refinance volumes. Default
Services revenues decreased 34.6% year over year to $117.4 million
due to lower foreclosure activity. Overall adjusted operating
income for the segment stood at $51.1 million, down 33.3% year over
year.
Liquidity
At quarter-end, Lender Processing had adequate liquidity with cash
and cash equivalents of $142.5 million and $398.1 million available
under its credit facility. Long-term debt (net of current portion)
was $1,041.4 million.
Net cash provided by operating activities aggregated $104.0 million
in the reported quarter compared with $127.8 million in the
year-ago quarter. Adjusted free cash flow for second quarter 2013
was $77.7 million.
Merger
On May 28, 2013, Lender Processing and Fidelity National
Financial, Inc. (FNF) entered into an agreement by virtue
of which Lender Processing would be acquired by Fidelity National
Financial.
Outlook
For the third quarter of 2013, management expects adjusted earnings
per share in the range of 51 cents – 55 cents and revenues of $415
million–$435 million.
Lender Processing is well positioned to enhance the mortgage value
chain and deliver innovative technology, data and expertise to its
clients. Going forward, the rapidly growing mortgage landscape
continues to create new requirements for its clients.
Lender Processing has a Zacks Rank #4 (Sell). Other stocks that
look promising and are worth considering now in the industry
include EVERTEC Inc (EVTC) and Heartland Payment
Systems, Inc (HPY), both carrying a Zacks Rank #2
(Buy)
EVERTEC INC (EVTC): Free Stock Analysis Report
FIDELITY NAT FI (FNF): Free Stock Analysis Report
HEARTLAND PAYMT (HPY): Free Stock Analysis Report
LENDER PROC SVC (LPS): Free Stock Analysis Report
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