Year-over-year revenues increase 35.3%
Adjusted EPS of 83 cents per diluted share
JACKSONVILLE, Fla., July 29 /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 $613.2 million for the second quarter of 2009, an increase of 35.3% compared to the second quarter of 2008, and net earnings of $75.2 million or 78 cents per diluted share.
Pro forma adjusted net earnings for the second quarter of 2009 were $79.8 million, or 83 cents per share, compared to $57.8 million, or 61 cents per share, in the second quarter of 2008. Pro forma adjusted net earnings in the current quarter include $2.6 million in after-tax incremental public company costs incurred as a result of LPS being spun-off on July 2, 2008. Also, these results include an adjustment for purchase amortization of 5 cents per share for the second quarter of 2009 while adjustments for the prior year quarter included pro forma interest expense of 15 cents per share, purchase amortization of 6 cents per share and excluded certain non-recurring charges that accounted for 3 cents per share.
"LPS had a very strong second quarter despite a challenging macroeconomic environment. LPS, with its comprehensive end-to-end solutions for the mortgage and real estate industries, remains well positioned for an outstanding year in 2009 and to continue to grow profitably in 2010 and beyond," said Lee A. Kennedy, Chairman of LPS. "Second quarter earnings were very solid across all our businesses. Our Default Services business continued to deliver strong results while our Loan Facilitation Services benefitted from the improved origination environment. Also, our Mortgage Processing and other technology businesses had an excellent quarter," added Jeff Carbiener, President and CEO of LPS.
Operating income was $143.7 million in the quarter compared to $101.3 million in the second quarter of 2008. Adjusting for certain non-recurring charges in the second quarter of 2008, operating income increased 35.9% year-over-year.
Pro forma adjusted free cash flow (net cash provided by operating activities including the pro forma interest expense noted earlier, minus additions to property and equipment and capitalized software) for the first half of 2009 of $160.2 million compared to $86.7 million for the first half of 2008.
Technology, Data and Analytics
Revenues for the segment were $171.9 million compared to $141.7 million in the second quarter of 2008 while operating income of $55.1 million compared to adjusted operating income of $45.1 million in the prior year quarter. Mortgage Processing revenues of $89.6 million were 9.1% above the second quarter of 2008, primarily due to higher activity based fees. Other TD&A revenues increased by 37.9% to $82.3 million compared to the prior year quarter, mainly 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 20.8%. Overall operating income for the segment was higher primarily due to higher contributions from Data & Analytics and higher activity based fees.
Loan Transaction Services
Revenues for the segment increased by 42.1% to $448.0 million compared to the second quarter of 2008 while operating income of $109.6 million compared to adjusted operating income of $72.5 million in the prior year period. Loan Facilitation Services revenues of $148.5 million were up 25.8% compared to the same period last year, mainly due to higher settlement services and increased appraisal volumes. Default Services revenues of $299.5 million increased 51.9% over the second quarter of 2008, primarily due to ongoing strength in the default market and our ability to continue to gain market share. Overall operating income for the segment grew due to higher income in loan origination related offerings, like settlement services, and across all major services in Default.
Other Items
Net corporate expenses were $21.0 million compared to net adjusted corporate expenses of $11.8 million in the second quarter of 2008 and were higher primarily due to the incremental public company costs and higher incentive compensation expenses in the current quarter.
Outlook
"Second quarter and first half 2009 results were very solid and while some of our markets and the broader economy in general pose challenges, LPS with its market leading presence is well positioned for a strong second half in 2009 and to continue to grow revenue and earnings in 2010," said Jeff Carbiener. "Building on the strong first half of the year, we expect third quarter adjusted earnings to be in the range of $0.72-$0.78 per diluted share. For full year 2009, we now expect revenues to grow 20%-22% compared to 2008 and adjusted earnings to be in the $2.91-$3.01 per diluted share range."
Use of Non-GAAP Financial Information
LPS reports several non-GAAP measures, including pro forma adjusted net earnings and pro forma adjusted free cash flow. The adjusted results exclude acquisition related amortization costs and include pro forma debt related interest expenses. 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 Thursday, July 30, 2009, 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 August 6, 2009 by dialing 888-203-1112 (access code: 4385628).
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 55 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: changes in general economic, business and political conditions, including changes in the financial markets; the effects of our substantial leverage on our ability to make acquisitions and invest in our business; the elimination of existing and potential customers as a result of failures and consolidations in the banking and financial services industries; changes to the laws, rules and regulations that regulate our businesses as a result of the current economic and financial environment; the impact of adverse changes in the level of real estate activity on demand for certain of our services; our ability to adapt our services to changes in technology or the marketplace; risks associated with protecting information security and privacy; the impact of any potential defects, development delays, installation difficulties or system failures on our business and reputation; risks associated with our spin-off from Fidelity National Information Services, Inc., including those relating to our new stand-alone public company status and 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 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 Six months ended
June 30, June 30,
2009 2008 2009 2008
(In thousands)
Processing and services
revenues $613,171 $453,347 $1,142,988 $896,907
Cost of revenues 404,014 293,464 758,716 581,850
Gross profit 209,157 159,883 384,272 315,057
Selling, general and
administrative expenses 65,431 58,570 136,609 113,668
Operating income 143,726 101,313 247,663 201,389
Other income (expense):
Interest income 442 303 966 563
Interest expense (21,625) (38) (43,539) (56)
Other expense, net (13) 282 (14) 282
Total other income (expense) (21,196) 547 (42,587) 789
Earnings from continuing
operations before income
taxes and equity in losses
of unconsolidated entity 122,530 101,860 205,076 202,178
Provision for income taxes 46,866 39,522 78,441 78,445
Earnings from continuing
operations before equity in
losses of unconsolidated
entity 75,664 62,338 126,635 123,733
Equity in losses of
unconsolidated entity - (413) (37) (2,370)
Earnings from continuing
operations 75,664 61,925 126,598 121,363
Discontinued operation, net of
tax - 2,032 (504) 4,638
Net earnings 75,664 63,957 126,094 126,001
Noncontrolling minority interest (424) (411) (808) (723)
Net earnings attributable to
Lender Processing Services,
Inc. $75,240 $63,546 $125,286 $125,278
Exhibit B
LENDER PROCESSING SERVICES, INC.
