Fidelity National Financial Management Discusses Q3 2012 Results - Earnings Call Transcript

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Fidelity National Financial (FNF)

Q3 2012 Earnings Call

November 06, 2012 11:00 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 P. Scanlon - Chief Executive 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

Jordon Neil Hymowitz - Philadelphia Financial Management of San Francisco, LLC

Geoffrey M. Dunn - Dowling & Partners Securities, LLC

Bose George - Keefe, Bruyette, & Woods, Inc., Research Division

Brett Huff - Stephens Inc., Research Division

DeForest R. Hinman - Walthausen & Co., LLC

Presentation

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the FNF 2012 Third Quarter Earnings Call. [Operator Instructions] And as a reminder, today's conference call is being recorded. I would now like to turn the conference over to Mr. Dan Murphy. Please go ahead.

Daniel Kennedy Murphy

Thank you. Good morning, everyone, and thanks for joining us for our third quarter 2012 earnings conference call. Joining me today are Bill Foley, our Chairman; George Scanlon, 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 other operating companies. And Tony Park will finish with a review of the financial highlights. We'll then open the call for 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 1:00 P.M. Eastern Time today through November 13. The replay number is (800) 475-6701 and the access code is 266992.

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

William P. Foley

Thanks, Dan. The third quarter is another solid performance from our Title Insurance business as we generated a 14.4% pretax margin for the second consecutive quarter. The last 2 quarters are evidence of significant earnings potential we have in a stronger real estate market.

We acquired control of J. Alexander's on September 25, and closed the acquisition on October 29. We believe that J. Alexander's and its relative position upscale casual will be a great addition to our casual dining line up and look forward to its revenue and earnings contribution to our restaurant group.

In August, we purchased an additional 1.5 million shares of Remy, giving us a 51% majority ownership stake in the company. Remy is also moving forward with its plan to have its stock, stock-listed on NASDAQ, undertaking certain initiatives to increase a number of round lot shareholders to meet the minimum NASDAQ listing requirements. We believe a move to NASDAQ will significantly increase liquidity of the stock and provide future financial flexibility for both Remy and its shareholders.

Last quarter, we announced that Cascade has signed a definitive agreement to sell its landholdings. This particular transaction will not happen. We continue to look at other transactions, but are comfortable holding this investment for the longer-term if attractive alternatives are not presented.

During August, we issued $400 million of tenure senior notes utilizing majority of the proceeds to redeem the $236 million of senior notes coming due in March 2013, and to repay $50 million borrowed under our credit facility. We now have no debt maturities until May 2017, and an unused $800 million credit facility providing significant financial flexibility over the next several years.

In late July, we repurchased 1,015,000 shares of stock for a total purchase price of $19 million, including a $1 million share block at a price of $18.80. With the expiration of our current share authorization on July 31, our Board authorized a new 3-year $15 million share plan that currently has full authority available.

Finally, last week, our Board approved a 14% increase on our quarterly cash dividend, moving it to $0.16 per share. We believe this dividend is a welcome return of capital for our shareholders, as a strong dividend is one of our main priorities in continually seeking to create value for our shareholders.

Let me now turn the call over to our CEO, George Scanlon.

George P. Scanlon

Thank you, Bill. This quarter, again, highlights the strength of our Title business in an environment of steady, consistent order volumes. Opening closed orders were primarily refinance-driven and generally similar to the second quarter of this year and we generated another strong 14.4% pretax title margin.

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