Fidelity National Financial, Inc. (FNF)

FNF 
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Fidelity National Financial (FNF)

Q4 2011 Earnings Call

February 09, 2012 10:00 am ET

Executives

Daniel Kennedy Murphy - Senior Vice President of Finance and Investor Relations of Fidelity National Financial

William P. Foley - Executive Chairman, Chairman of Executive Committee and Chairman of FNF Holding

George Scanlon - Chief Executive Officer and Chief Operating Officer

Anthony J. Park - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Raymond R. Quirk - President

Analysts

Mark C. DeVries - Barclays Capital, Research Division

Douglas Mewhirter - Ferris, Baker Watts, Research Division

Brett Huff - Stephens Inc., Research Division

Unknown Analyst

Geoffrey Dunn - Dowling & Partners Securities, LLC

Presentation

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Fidelity National Financial 2011 Fourth Quarter Earnings Conference. [Operator Instructions] As a reminder, today's conference call is being recorded. And at this time, I'd like to turn the call over to our first speaker, Dan Murphy. Please go ahead, sir.

Daniel Kennedy Murphy

Thanks. Good morning, everyone, and thanks for joining us for our fourth quarter 2011 earnings conference call. Joining me today are Bill Foley, our Chairman; George Scanlon, our CEO; Randy Quirk, President; and Tony Park, our CFO.

We'll begin with a brief strategic overview from Bill Foley. George Scanlon will provide an update on the Title business and our operating companies, and Tony Park will finish with a review of the financial highlights. We'll then take your questions and finish with some concluding remarks from Bill Foley.

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 replay via webcast at our website at fnf.com. It will also be available through phone replay beginning at noon, Eastern Time today through February 16. The replay number is (800) 475-6701 with an access code of 231930.

Let me now turn the call over to our Chairman, Bill Foley.

William P. Foley

Thanks, Dan. 2011 was another successful year for our company despite a continued challenging environment for our Title business. We were able to improve our title pre-tax margin, excluding realized gains and losses by 320 basis points versus 2010. Our Commercial business was particularly strong producing a 25% revenue growth over 2010.

We were also successful in closing the sale of our Flood Insurance business in November. The total sale price was approximately $210 million, generating a $95 million after-tax gain or $0.43 per diluted share in the fourth quarter results. We also signed a definitive agreement to sell an 85% interest in our Personal Lines business in late December for approximately $119 million, which resulted in $9 million net loss or $0.04 per diluted share. We expect to close this transaction in the first half of 2012.

These 2 divestitures will produce total sale proceeds of approximately $329 million, including $254 million in cash and $75 million in an 18-month note receivable, allowing us to redeploy the capital into other uses that we expect to generate higher future returns and greater value for our shareholders.

On Monday, we announced the signing of a definitive agreement to acquire all of the outstanding common stock of O'Charley's that we do not currently own for $9.85 per share. We expect to commence a tender offer on or about February 24 and complete that process on about April 2, assuming the majority of the outstanding shares including our 9.5% ownership position are tendered. We have been seeking an investment in a larger scalable strategic restaurant operating company to complement our successful investment in American Blue Ribbon Holdings. With more than 340 restaurants and over $800 million in revenue, O'Charley's is an attractive company with 3 proven restaurant concepts in O'Charley's, the Ninety Nine and Stoney River Steakhouse. There is a real opportunity to continue to improve the operating performance at O'Charley's and to build on their current momentum. We look forward to having the ABRH and O'Charley's teams working toward that end. ABRH operates more than 220 company-owned restaurants, nearly 140 franchise restaurants and generates approximately $455 million in annual revenue. We also look forward to the successful completion of the tender offer and to welcoming all of O'Charley's concepts employees to the FNF restaurant family.

Finally, yesterday, we announced that our Board approved an increased quarterly dividend of $0.14 per share, an increased of 17% from the previous quarterly dividend -- cash dividend of $0.12 per share.

I'll now turn this call over to our CEO, George Scanlon.

George Scanlon

Thank you, Bill, and good morning, everyone. We are very pleased to report strong fourth quarter results with continued strength in the Commercial business, a strong pre-tax title margin and a significant gain from the sale of our Flood Insurance business.

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