Fidelity National Financial (FNF)
Q1 2011 Earnings Call
April 29, 2011 11:00 am ET
Raymond Quirk - President
Daniel Murphy - Senior Vice President of Finance and Investor Relations of Fidelity National Financial
Anthony Park - Chief Financial Officer, Principal Accounting Officer and Executive Vice President
George Scanlon - Chief Executive Officer and Chief Operating Officer
William Foley - Executive Chairman, Chairman of Executive Committee and Chairman of FNF Holding
Brett Huff - Stephens Inc.
Ben Hunt - Iridian Asset Management
Robert Napoli - Piper Jaffray Companies
Nathaniel Otis - Keefe, Bruyette, & Woods, Inc.
Doug Mewhirter - FBW
Mark DeVries - Barclays Capital
Previous Statements by FNF
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» Fidelity National Financial, Inc. Q2 2010 Earnings Call Transcript
Thanks, and good morning, everyone, and thanks for joining us for our first quarter 2011 earnings conference call. Joining me today are Bill Foley, our Chairman; George Scanlon, CEO; Randy Quirk, President; and Tony Park, our CFO. We will begin with a brief strategic overview from Bill Foley, George will provide an update on the Title business and our operating companies, and Tony will finish with a review of the financial highlights. We'll then take your questions and finish with some concluding remarks from Bill.
This conference call may contain forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our expectations, hopes, intentions or strategies regarding the future are forward-looking statements. 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, financial and operating results and are not statements of 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 which forward-looking statements are subject to include but are not limited to the risks and other factors detailed in our press release dated yesterday and in the statement regarding forward-looking information, risk factors and other sections of the company's Form 10-K and other filings with the SEC.
This conference call will be available for a replay via webcast at our website at fnf.com. It will also be available through phone replay beginning at 1 p.m. Eastern Time today through May 6. The replay number is (800) 475-6701 and the access code is 199329. Let me now turn the call over to our Chairman, Bill Foley.
Thanks, Dan. This is our strongest first quarter in a number of years as our direct operations benefited from strong refinance closings early in the quarter and consistent closings throughout February and March. Open order accounts were relatively stable throughout the quarter although they showed some seasonal strength in the month of March, increasing more than 8% over the average for January and February.
The Commercial business continued to be robust as Commercial revenue grew by 35% over the first quarter of 2010. This quarter shows that with generally steady order volumes, although at historic low levels, we can generate the 8% to 10% margins we target in difficult markets through our focus on strong expense management.
During the quarter, we eliminated more than 600 positions in our Title operations and made significant progress on our previously stated $50 million cost-savings project, identifying nearly $55 million in run-rate cost savings. Our quarterly results also included one-time expenses of $9 million, or $0.04 per diluted share, representing our portion of the costs related to the Remy debt restructuring in late 2010 and early 2011. Overall, this is a very positive start to what most experts have predicted will be a very difficult year in the mortgage and real estate markets. We believe we have our company positioned for strong performance for the remainder of 2011.
We made modest stock repurchases during the quarter, repurchasing approximately 800,000 shares at an average price of $13.84 for total proceeds of $11 million. We have a bond payment due in August of this year of approximately $165 million and, therefore, are conserving some cash to ensure that could be made on a timely basis.
Under our current authorization, we can still repurchase up to 9.2 million shares through July of 2012. We will continue to monitor the market and repurchase shares from time to time. Additionally, Remy filed an S-1 registration statement in March to begin the process of selling common stock and becoming a publicly traded company. Remy intends to sell up to $100 million in common stock at a public offering. Because of rules surrounding an IPO, we are restricted from discussing any of the potential details of the transaction at this time.
Let me now turn the call over to our CEO, George Scanlon.
Thank you, Bill, and good morning, everybody. We are pleased with our performance to start the year in what is normally our most challenging quarter of the year. While total revenue for the company was flat, we were able to almost double our pretax profits over the prior year. This resulted from a combination of favorable revenue mix and ongoing disciplined cost management and also highlights the upside earnings leverage in our business when Title volumes normalize in the future.
We work hard to maintain our industry-leading margins even in the face of cyclical headwinds, and this quarter is a reflection of the success of those efforts. Despite forecast to the contrary as we entered the year, refinance open order volumes continued to be strong into the first quarter. Refinance orders were 52% of open orders for the entire quarter. Overall, open orders averaged 7,900 per day for the first quarter, with January averaging 7,700, February 7,600 and March 8,300.