Lender Processing Services, Inc
) 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
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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.
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
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.
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.
On May 28, 2013, Lender Processing and
Fidelity National Financial, Inc.
) entered into an agreement by virtue of which Lender Processing
would be acquired by Fidelity National Financial.
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
Heartland Payment Systems, Inc
), both carrying a Zacks Rank #2 (Buy)