Lender Processing Services Inc. (
reported third-quarter 2012 adjusted earnings per share of 71
cents, in line with the Zacks Consensus Estimate. Earnings per
share spiked 20% from the year-ago level.
FTI CONSULTING (FCN): Free Stock Analysis
LENDER PROC SVC (LPS): Free Stock Analysis
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On a GAAP basis, earnings per share were 69 cents, up from the
earnings of 48 cents recorded in the year-earlier quarter. The
increase was attributable to the rise in demand for company's
technology solutions, low interest rates ensuing strong refinance
activity and profit from ongoing expansion investments.
The company's total revenue decreased 1.3% year over year to
$512.7 million and missed the Zacks Consensus Estimate of $514.0
Operating income in the quarter increased 19.4% year over year to
Technology, Data and Analytics Segment
Third-quarter revenues for the TD&A segment were $192.0
million, up 11.2% year over year. The growth was attributable to
increase in revenues across all business lines, with major
contribution from Origination Technology and Default Technology.
The 28.3% increase in Default Technology revenue reflected the
strong demand during the quarter and market share gains in 2011.
Origination Technology revenue experienced 25.3% surge due to new
client implementation and increase in transaction volumes.
Adjusted operating income for the segment was $60.4 million, up
2.9% year over year. The upside can be credited to higher
contribution from growth in income across all sub-segments.
Transaction Services Segment
Revenues for the Transaction segment dipped 7.9% from the prior
year quarter to $320.7 million. The downside in the segment
revenues was primarily attributable to 22.5% dip in Default
Services revenue partially offset by 15.7% increase from
Default Services performance was hit by lower transaction volumes
while the performance of Origination Services was buoyed by
higher refinance origination volumes. In the reported quarter,
Origination Services and Default Services recorded revenues of
$154.1 million and $166.7 million, respectively.
Overall adjusted operating income for the segment upped 15.0% to
$64.2 million mainly due to favorable revenue mix, discreet cost
management and higher origination volumes.
At quarter end, cash balance of the company was $160.7 million
while long-term debt, net of current portion was $1,074.5
For the fourth quarter of 2012, management expects adjusted
earnings per share within 65 -69 cents. Management expects
revenues to remain in the range of $475 - $495 million.
We remain impressed with the continuous growth trajectory at
Lender Processing. Its origination business is also progressing.
Management is viewing its TD&A segment as a major growth
driver in future, on the back of its continuous strong
performance. Moreover, the company is focused on strengthening
the balance sheet position, as management initiated a senior debt
refinancing to reduce the interest rate in the reported quarter.
While 2012 looks to be another challenging year, management
remains focused on market share expansion, leverage strong cash
flow and position itself to capitalize on market recovery.
However, its Default services revenue continues to pose a
Lender Processing competes with
FTI Consulting Inc. (
, and currently carries a Zacks #2 Rank, which translates into a
short-term Buy rating. We maintain our long-term Outperform
recommendation on the stock.