JACKSONVILLE, Fla., Feb. 8, 2010 /PRNewswire-FirstCall/ -- Lender Processing Services, Inc. , a leading provider of integrated technology and services to the mortgage and real estate industries, today reported consolidated revenues of $608.1 million for the fourth quarter of 2009, an increase of 28.3% compared to the fourth quarter of 2008, and net earnings of $74.9 million or 77 cents per diluted share.
Adjusted net earnings for the fourth quarter of 2009 were $79.6 million, or 82 cents per diluted share, compared to $60.9 million, or 64 cents per diluted share in the fourth quarter of 2008. Adjusted net earnings in the current quarter include an adjustment for purchase price amortization of 5 cents per diluted share while the prior year quarter included a similar adjustment of 7 cents per diluted share.
"LPS had a strong fourth quarter despite challenging market conditions and a fragile macro-economic environment. LPS with its market-leading presence and its unique technology-driven solutions for the mortgage and real estate industries, remains well positioned to achieve its growth objectives in 2010 and beyond," said Lee A. Kennedy, Executive Chairman of LPS. "Our Loan Facilitation business posted record growth as it benefitted from a better year-over-year origination market while our Default Services business continued to deliver very strong results. Also, our Mortgage Processing and other technology businesses had another outstanding quarter. During 2009, we continued to strengthen our balance sheet and increase our financial flexibility by paying down $262 million in debt," added Jeff Carbiener, President and CEO of LPS.
Operating income of $140.9 million in the quarter compared to $121.6 million in the fourth quarter of 2008. Operating margins were below fourth quarter 2008 primarily due to certain one-time benefits in last year's quarter. Operating margins were however consistent with third quarter of 2009.
Full year 2009 revenues of $2.4 billion were a solid 29.0% above 2008 while net earnings of $275.7 million in 2009 compared to $230.9 million in the prior year. Adjusted net earnings for full year 2009 of $300.3 million were a record 30.2% higher than pro forma adjusted net earnings in 2008.
Adjusted free cash flow (net cash provided by operating activities minus certain non-recurring expenses and additions to property, equipment and computer software) for full year 2009 of $349.2 million was well above the $276.5 million for 2008 (which also reflects the impact of pro forma interest expense for the first six months of 2008) primarily due to strong operating results combined with greater efficiency in working capital management.
Technology, Data and Analytics (TD&A)
Revenues for the segment were $189.4 million compared to $149.1 million in the fourth quarter of 2008 while operating income of $63.5 million compared to $53.5 million in the prior year period. Mortgage Processing revenues of $104.2 million were 17.9% above the fourth quarter of 2008, primarily due to the addition of the JPMorgan Chase portfolio onto our mortgage servicing platform. Other TD&A revenues increased by 40.3% to $85.2 million compared to the same period last year, primarily due to strong growth in Data and Analytics services, our Desktop application, and the impact of the FNRES acquisition completed in the first quarter of 2009. Excluding the impact of FNRES, Other TD&A revenues were up a strong 23.6%. Overall operating income for TD&A grew mainly due to higher contributions from Mortgage Processing and Data & Analytics.
Loan Transaction Services (LTS)
Revenues for the segment increased by 28.7% to $421.6 million compared to the fourth quarter of 2008 while operating income of $97.2 million compared to $84.1 million in the prior year quarter. Loan Facilitation Services revenues of $142.9 million were up 70.3% compared to the prior year quarter, primarily due to higher settlement services and increased appraisal volumes. Default Services revenues of $278.6 million increased 14.3% over the fourth quarter of 2008, primarily due to growth in the default market and our ability to continue to gain market share. Overall operating income for LTS was higher mainly due to higher income in loan origination related offerings, such as settlement services and appraisal.
Corporate and Other
Net corporate expenses were $19.8 million compared to $16.1 million in the fourth quarter of 2008 and were higher primarily due to higher incentive compensation expenses in the current quarter driven by the strong operating results.
The company announced that its Board of Directors had authorized a share repurchase program of $150 million that replaced the previous authorization of $75 million. The company noted that it had repurchased 1.024 million shares for $39.2 million and $8.0 million of its public bonds under the previous authorization.
Outlook
"We had an exceptional year in 2009 and while the broader economy and the real estate market in particular remain challenging, LPS has a strong presence in each of its businesses and is well positioned to grow revenue and earnings in 2010," said Jeff Carbiener. "Building on the strong 2009 results, we expect first quarter 2010 adjusted earnings to be in the range of 78-80 cents per diluted share. For full year 2010, we expect revenues to grow 8%-10% compared to 2009 and adjusted earnings to be in the $3.49-$3.56 per diluted share range."
Use of Non-GAAP Financial Information
Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, LPS reports several non-GAAP measures, including "adjusted net earnings" (GAAP net earnings adjusted for the impact of certain non-recurring adjustments, if applicable, plus the after-tax purchase price amortization of intangible assets added through acquisitions), "adjusted net earnings per diluted share" (adjusted net earnings divided by diluted weighted average shares), "pro forma adjusted net earnings" (adjusted net earnings less pro forma interest expense on our debt facilities for the first six months of 2008 as if such facilities had been outstanding as of January 1, 2008), "pro forma adjusted net earnings per diluted share" (pro forma adjusted net earnings divided by diluted weighted average shares), "adjusted free cash flow" (net cash provided by operating activities less additions to property, equipment and computer software, as well as non-recurring adjustments, if applicable), and "pro forma adjusted free cash flow" (adjusted free cash flow less pro forma interest expense on our debt facilities for the first six months of 2008 as if such facilities had been outstanding as of January 1, 2008). LPS provides these measures because it believes that they are helpful to investors in comparing year-over-year performance in light of our 2008 spin-off from Fidelity National Information Services, Inc. (FIS), and to better understand our financial performance, competitive position and future prospects. Non-GAAP measures should be considered in conjunction with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP net earnings. A reconciliation of these non-GAAP measures to related GAAP measures is included in the attachments to this release.
Conference Call and Webcast
LPS will host a conference call to discuss these results on Tuesday, February 9, 2010, at 8:00 a.m. Eastern time. Interested parties are invited to listen to the live webcast by logging on to the Investor Relations section at http://www.lpsvcs.com/. Supplemental materials will be available on the website. Those wishing to participate via the conference call may do so by calling 866-823-5035. A replay of the webcast will be available on the website shortly after the call where it will be archived for one month. A replay of the conference call will be available through February 16, 2010 by dialing 888-203-1112 (access code: 6799466).
To access a printer friendly version of this release and accompanying exhibits, go to http://www.lpsvcs.com/investor.
About Lender Processing Services
Lender Processing Services, Inc. (LPS) is a leading provider of integrated technology and services to the mortgage and real estate industries. LPS offers solutions that span the mortgage continuum, including lead generation, origination, workflow automation (Desktop), servicing, portfolio retention and default, augmented by the company's award-winning customer support and professional services. Approximately 50 percent of all U.S. mortgages by dollar volume are serviced using LPS' Mortgage Servicing Package (MSP). In fact, many of the nation's top servicers rely on MSP, including eight of the top 10 and 14 of the top 20. LPS also offers proprietary mortgage and real estate data and analytics for the mortgage and capital markets industries. For more information about LPS, visit http://www.lpsvcs.com/.
Forward-Looking Statements
This press release contains forward-looking statements that involve a number of risks and uncertainties. Those forward-looking statements include all statements that are not historical facts, including statements about our beliefs and expectations. 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 economic performance and are not statements of historical 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 to which forward-looking statements are subject include, but are not limited to: our ability to adapt our services to changes in technology or the marketplace; the impact of adverse changes in the level of real estate activity on demand for certain of our services; the elimination of existing and potential customers as a result of failures and consolidations in the banking and financial services industries; the effects of our substantial leverage on our ability to make acquisitions and invest in our business; changes to the laws, rules and regulations that regulate our businesses as a result of the current economic and financial environment; changes in general economic, business and political conditions, including changes in the financial markets; the impact of any potential defects, development delays, installation difficulties or system failures on our business and reputation; risks associated with protecting information security and privacy; risks associated with our spin-off from Fidelity National Information Services, Inc., including limitations on our strategic and operating flexibility as a result of the tax-free nature of the spin-off; and other risks and uncertainties detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of the Company's Form 10-K, the Company's subsequent reports on Form 10-Q and other filings with the Securities and Exchange Commission.
Exhibit A LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES Consolidated Statements of Earnings (Unaudited) Three months ended Year ended December 31, December 31, -------------- ---------------- 2009 2008 2009 2008 ---- ---- ---- ---- (In thousands) Processing and services revenues $608,133 $473,921 $2,370,548 $1,837,590 Cost of revenues 403,174 294,069 1,571,003 1,176,479 ------- ------- --------- --------- Gross profit 204,959 179,852 799,545 661,111 Selling, general and administrative expenses 64,059 58,298 267,339 229,875 ------ ------ ------- ------- Operating income 140,900 121,554 532,206 431,236 Other income (expense): Interest income 405 566 1,654 1,605 Interest expense (19,896) (25,306) (84,630) (49,927) Other expense, net (31) (4) (248) 273 --- -- ---- --- Total other income (expense) (19,522) (24,744) (83,224) (48,049) ------- ------- ------- ------- Earnings from continuing operations before income taxes and equity in losses of unconsolidated entity 121,378 96,810 448,982 383,187 Provision for income taxes 46,427 35,455 171,735 146,569 ------ ------ ------- ------- Earnings from continuing operations before equity in losses of unconsolidated entity 74,951 61,355 277,247 236,618 Equity in losses of unconsolidated entity - (833) (37) (4,687) ------ ----- ------- ------- Earnings from continuing operations 74,951 60,522 277,210 231,931 Discontinued operation, net of tax - (6,045) (504) 158 ------ ------ ------- ------- Net earnings 74,951 54,477 276,706 232,089 Noncontrolling minority interest (50) (148) (977) (1,201) ------ ------ ------- ------- Net earnings attributable to Lender Processing Services, Inc. $74,901 $54,329 $275,729 $230,888 ======= ======= ======== ======== Exhibit B LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) December 31, December 31, 2009 2008 ----------- ----------- (In thousands) Assets Current assets: Cash and cash equivalents $70,528 $125,966 Trade receivables, net of allowance for doubtful accounts 401,333 344,848 Other receivables 3,770 17,393 Due from affiliates - 2,713 Prepaid expenses and other current assets 26,985 22,030 Deferred income taxes 47,528 40,757 ----------- ---------- Total current assets 550,144 553,707 ----------- ---------- Property and equipment, net of accumulated depreciation 113,108 95,542 Computer software, net of accumulated amortization 185,376 157,539 Other intangible assets, net of accumulated amortization 72,796 83,489 Goodwill 1,166,142 1,091,056 Other non-current assets 109,738 122,300 ----------- ---------- Total assets $2,197,304 $2,103,633 =========== ========== Liabilities and Equity Current liabilities: Current portion of long- term debt $40,100 $145,101 Trade accounts payable 38,166 31,720 Accrued salaries and benefits 54,376 36,492 Recording and transfer tax liabilities 15,208 14,639 Due to affiliates 3,321 1,573 Other accrued liabilities 151,601 101,612 Deferred revenues 66,602 51,628 ---------- ---------- Total current liabilities 369,374 382,765 ---------- ---------- Deferred revenues 37,681 40,343 Deferred income taxes, net 65,215 36,557 Long-term debt, net of current portion 1,249,250 1,402,350 Other non-current liabilities 19,926 39,217 ---------- ---------- Total liabilities 1,741,446 1,901,232 ---------- ---------- Equity: Lender Processing Services, Inc. stockholders' equity: Preferred stock $0.0001 par value; 50 million shares authorized, none - - issued at December 31, 2009 or 2008, respectively Common stock $0.0001 par value; 500 million shares authorized, 97.0 million 10 9 and 95.3 million shares issued at December 31, 2009 and 2008, respectively Additional paid-in capital 173,424 111,849 Retained earnings 330,963 93,540 Accumulated other comprehensive loss (7,630) (13,667) Treasury stock $0.0001 par value; 1,209,920 and 19,870 shares at December 31, 2009 and 2008, respectively (40,909) (582) ---------- ---------- Total Lender Processing Services, Inc. stockholders' equity 455,858 191,149 Noncontrolling minority interest - 11,252 ---------- ---------- Total equity 455,858 202,401 ---------- ---------- Total liabilities and equity $2,197,304 $2,103,633 ========== ========== Exhibit C LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) Year ended December 31, ---------------------- 2009 2008 ---- ---- (In thousands) Cash flows from operating activities: Net earnings attributable to Lender Processing Services, Inc. $275,729 $230,888 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 97,922 93,416 Amortization of debt issuance costs 5,404 3,002 Gain on sale of discontinued operation (2,574) - Deferred income taxes, net 25,463 (28) Stock-based compensation cost 28,042 21,513 Tax benefit associated with equity compensation (2,921) (533) Equity in losses of unconsolidated entity 37 4,687 Noncontrolling minority interest 977 1,201 Changes in assets and liabilities, net of effects of acquisitions: Trade receivables (49,602) (57,918) Other receivables 13,637 (9,423) Prepaid expenses and other assets (11,578) 11,666 Deferred revenues 11,316 10,501 Accounts payable and other liabilities 51,836 54,888 -------- ----------- Net cash provided by operating activities 443,688 363,860 -------- ----------- Cash flows from investing activities: Additions to property and equipment (40,890) (23,012) Additions to capitalized software (57,885) (39,276) Acquisition of title plants (17,219) - Acquisitions, net of cash acquired (31,103) (19,938) Proceeds from sale of discontinued operation, net of cash distributed (32,638) - -------- ----------- Net cash used in investing activities (179,735) (82,226) -------- ----------- Cash flows from financing activities: Borrowings - 25,700 Debt service payments (254,497) (63,272) Stock options exercised 8,098 1,448 Tax benefit associated with equity compensation 2,921 533 Cash dividends paid (38,306) (19,053) Capitalized debt issuance costs - (25,735) Repurchase of minority interests in subsidiary (6,850) - Net distributions to FIS - (114,855) Treasury stock purchases (22,757) - Bond repurchases (8,000) - -------- ----------- Net cash used in financing activities (319,391) (195,234) Net (decrease) increase in cash and cash equivalents (55,438) 86,400 Cash and cash equivalents, beginning of period 125,966 39,566 -------- ----------- Cash and cash equivalents, end of period $70,528 $125,966 ======== =========== Supplemental disclosures of cash flow information: Cash paid for interest $81,698 $32,330 ======== =========== Cash paid for taxes $154,595 $62,229 ======== =========== Non-cash contribution of stock compensation by FIS $- $9,120 ======== =========== Non-cash redistribution of assets to FIS $434 $(1,308) ======== =========== Non-cash consideration received from sale of discontinued operation $40,310 $- ======== =========== Non-cash consideration issued in acquisition of business $(5,162) $- ======== =========== Non-cash exchange of FIS note $- $(1,585,000) ======== =========== Exhibit D LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL INFORMATION - UNAUDITED (In thousands) Year ended December 31, ----------------------- 2009 2008 ---- ---- 1. Revenues - Continuing Operations Technology, Data and Analytics (TD&A): Mortgage Processing $387,874 $334,184 Other TD&A 319,611 231,466 --------- --------- Total 707,485 565,650 --------- --------- Loan Transaction Services: Loan Facilitation Services 547,300 431,673 Default Services 1,137,313 851,828 ---------- --------- Total 1,684,613 1,283,501 ---------- --------- Corporate and Other (21,550) (11,561) ---------- ---------- Total Revenue $2,370,548 $1,837,590 ========== ========== Revenue Growth from Prior Year Period Technology, Data and Analytics: Mortgage Processing 16.1% -1.6% Other TD&A 38.1% 0.4% ---- ---- Total 25.1% -0.8% ---- ---- Loan Transaction Services: Loan Facilitation Services 26.8% -28.2% Default Services 33.5% 80.1% ---- ---- Total 31.3% 19.5% ---- ---- Corporate and Other n/m n/m ---- ---- Total Revenue 29.0% 12.1% ==== ==== 2. Depreciation and Amortization - Continuing Operations Depreciation and Amortization $61,331 $51,075 Purchase Price Amortization 30,749 40,018 Other Amortization 5,837 2,244 ------- ------- Total Depreciation and Amortization $97,917 $93,337 ======= ======= 3. Stock Compensation Expense (1) Stock Compensation Expense, Excluding Acceleration Charges $27,243 $21,375 Stock Acceleration Expense 799 138 ------ ------ Total Stock Compensation Expense $28,042 $21,513 ======= ======= 4. EBIT - Discontinued Operations (2) Revenue $296 $24,319 Cost of Sales 503 6,379 Selling, General and Administrative Expenses 499 8,982 ------ ------- Operating Income (706) 8,958 Less Non-recurring Charges: Restructuring Costs - - LPS Spin Related Costs - - Acceleration of Performance-Based Shares - - ----- ------ EBIT, as adjusted $(706) $8,958 ----- ------ Depreciation and Amortization $5 $79 ===== ====== Quarter ended ------------- 12/31/2009 9/30/2009 6/30/2009 3/31/2009 ---------- --------- --------- --------- 1. Revenues - Continuing Operations Technology, Data and Analytics (TD&A): Mortgage Processing $104,184 $102,973 $89,567 $91,150 Other TD&A 85,247 83,313 82,322 68,729 ------- ------- ------ ------ Total 189,431 186,286 171,889 159,879 ------- ------- ------- ------- Loan Transaction Services: Loan Facilitation Services 142,919 136,657 148,510 119,214 Default Services 278,647 303,823 299,534 255,309 ------- ------- ------- ------- Total 421,566 440,480 448,044 374,523 ------- ------- ------- ------- Corporate and Other (2,864) (7,339) (6,762) (4,585) ------ ------ ------ ------ Total Revenue $608,133 $619,427 $613,171 $529,817 ======== ======== ======== ======== Revenue Growth from Prior Year Period Technology, Data and Analytics: Mortgage Processing 17.9% 23.2% 9.1% 13.7% Other TD&A 40.3% 50.5% 37.9% 23.5% ---- ---- ---- ---- Total 27.0% 34.1% 21.3% 17.7% ---- ---- ---- ---- Loan Transaction Services: Loan Facilitation Services 70.3% 55.9% 25.8% -16.1% Default Services 14.3% 25.6% 51.9% 51.0% ---- ---- ---- ---- Total 28.7% 33.7% 42.1% 20.4% ---- ---- ---- ---- Corporate and Other 0.6% 338.1% n/m n/m ---- ----- ---- ---- Total Revenue 28.3% 32.7% 35.3% 19.4% ==== ==== ==== ==== 2. Depreciation and Amortization - Continuing Operations Depreciation and Amortization $15,932 $15,894 $15,431 $14,074 Purchase Price Amortization 7,654 7,608 7,404 8,083 Other Amortization 1,713 1,542 753 1,829 ------ ------ ------ ------ Total Depreciation and Amortization $25,299 $25,044 $23,588 $23,986 ======= ======= ======= ======= 3. Stock Compensation Expense (1) Stock Compensation Expense, Excluding Acceleration Charges $7,678 $7,062 $6,459 $6,044 Stock Acceleration Expense - - - 799 ----- ----- ----- ----- Total Stock Compensation Expense $7,678 $7,062 $6,459 $6,843 ====== ====== ====== ====== 4. EBIT - Discontinued Operations (2) Revenue $- $- $- $296 Cost of Sales - - - 503 Selling, General and Administrative Expenses - - - 499 ----- ----- ----- ----- Operating Income - - - (706) ----- ----- ----- ----- Less Non-recurring Charges: Restructuring Costs - - - - LPS Spin Related Costs - - - - Acceleration of Performance-Based Shares - - - - ----- ----- ----- ----- EBIT, as adjusted $- $- $- $(706) ----- ----- ----- ----- Depreciation and Amortization $- $- $- $5 ===== ===== ===== ===== Quarter ended ------------- 12/31/2008 9/30/2008 6/30/2008 3/31/2008 ---------- --------- --------- --------- 1. Revenues - Continuing Operations Technology, Data and Analytics (TD&A): Mortgage Processing $88,364 $83,592 $82,062 $80,166 Other TD&A 60,754 55,372 59,682 55,658 -------- -------- -------- -------- Total 149,118 138,964 141,744 135,824 -------- -------- ------- -------- Loan Transaction Services: Loan Facilitation Services 83,914 87,629 118,091 142,039 Default Services 243,736 241,844 197,223 169,025 -------- -------- -------- -------- Total 327,650 329,473 315,314 311,064 -------- -------- -------- -------- Corporate and Other (2,847) (1,675) (3,711) (3,328) -------- -------- -------- -------- Total Revenue $473,921 $466,762 $453,347 $443,560 ======== ======== ======== ======== Revenue Growth from Prior Year Period Technology, Data and Analytics: Mortgage Processing -4.9% 2.9% -1.4% -2.6% Other TD&A 14.6% -5.5% 1.5% -7.4% ---- ---- ---- ---- Total 2.2% -0.6% -0.2% -4.6% ---- ---- ---- ---- Loan Transaction Services: Loan Facilitation Services -39.6% -42.8% -28.3% -1.3% Default Services 68.3% 97.1% 89.7% 66.5% ---- ---- ---- ---- Total 15.4% 19.4% 17.3% 26.7% ---- ---- ---- ---- Corporate and Other n/m n/m n/m n/m --- --- --- --- Total Revenue 11.0% 13.3% 10.0% 14.4% ==== ==== ==== ==== 2. Depreciation and Amortization - Continuing Operations Depreciation and Amortization $13,697 $12,594 $11,286 $13,498 Purchase Price Amortization 10,711 10,627 8,980 9,700 Other Amortization 596 579 594 475 ------- ------- ------- ------- Total Depreciation and Amortization $25,004 $23,800 $20,860 $23,673 ======= ======= ======= ======= 3. Stock Compensation Expense (1) Stock Compensation Expense, Excluding Acceleration Charges $6,603 $5,790 $4,295 $4,687 Stock Acceleration Expense - - 138 - ----- ------ ------ ------ Total Stock Compensation Expense $6,603 $5,790 $4,433 $4,687 ====== ====== ====== ====== 4. EBIT - Discontinued Operations (2) Revenue $2,204 $5,916 $7,033 $9,166 Cost of Sales 1,571 1,521 1,499 1,788 Selling, General and Administrative Expenses 1,814 1,837 2,212 3,119 ------ ------ ------ ------ Operating Income (1,181) 2,558 3,322 4,259 ------ ------ ------ ------ Less Non-recurring Charges: Restructuring Costs - - - - LPS Spin Related Costs - - - - Acceleration of Performance-Based Shares - - - - ------- ------ ------ ------ EBIT, as adjusted $(1,181) $2,558 $3,322 $4,259 ------- ------ ------ ------ Depreciation and Amortization $17 $19 $20 $23 ======= ====== ====== ====== (1) As the Company does not allocate stock compensation expense to the individual business units, there is no related expense associated with the discontinued operation. (2) The business unit included in discontinued operations has historically been reported as a component of Loan Facilitation Services in the Loan Transaction Services reporting segment. Exhibit E LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES NON-GAAP FINANCIAL INFORMATION - UNAUDITED (In thousands, except per share data) Year ended December 31, ----------------------- 2009 2008 ---- ---- 1. EBIT - Continuing Operations Consolidated Revenue $2,370,548 $1,837,590 Cost of Sales 1,571,003 1,176,479 Selling, General and Administrative Expenses 267,339 229,875 ------- ------- Operating Income 532,206 431,236 Less Non-recurring Charges: Restructuring Costs 8,186 2,353 LPS Spin Related Costs - 2,963 Acceleration of Performance-Based Shares 799 138 -------- -------- EBIT, as adjusted $541,191 $436,690 -------- -------- EBIT Margin, as adjusted 22.8% 23.8% ==== ==== Depreciation and Amortization $97,917 $93,337 ======= ======= Technology, Data and Analytics Revenue $707,485 $565,650 Cost of Sales 402,411 309,969 Selling, General and Administrative Expenses 70,717 64,640 ------ ------ Operating Income 234,357 191,041 Less Non-recurring Charges: Restructuring Costs - 2,178 LPS Spin Related Costs - - Acceleration of Performance-Based Shares - - -------- -------- EBIT, as adjusted $234,357 $193,219 -------- -------- EBIT Margin, as adjusted 33.1% 34.2% ==== ==== Depreciation and Amortization $69,477 $61,205 ======= ======= Loan Transaction Services Revenue $1,684,613 $1,283,501 Cost of Sales 1,190,238 879,031 Selling, General and Administrative Expenses 107,769 105,299 ------- ------- Operating Income 386,606 299,171 Less Non-recurring Charges: Restructuring Costs - 163 LPS Spin Related Costs - - Acceleration of Performance-Based Shares - - -------- -------- EBIT, as adjusted $386,606 $299,334 -------- -------- EBIT Margin, as adjusted 22.9% 23.3% ==== ==== Depreciation and Amortization $20,310 $25,132 ======= ======= Corporate and Other Revenue $(21,550) $(11,561) Cost of Sales (21,646) (12,521) Selling, General and Administrative Expenses 88,853 59,936 ------ ------ Operating Income (88,757) (58,976) Less Non-recurring Charges: Restructuring Costs 8,186 12 LPS Spin Related Costs - 2,963 Acceleration of Performance-Based Shares 799 138 -------- -------- EBIT, as adjusted $(79,772) $(55,863) -------- -------- Depreciation and Amortization $8,130 $7,000 ====== ====== 2. Net Earnings - Reconciliation Net Earnings $275,729 230,888 Less Non-recurring Charges: Restructuring Costs, net of tax 5,055 1,440 LPS Spin Related Costs, net of tax - 1,814 Acceleration of Performance-Based Shares, net of tax 493 84 Impact of change in tax rate on non-recurring items - (223) --- ---- Net Earnings, excluding non-recurring items 281,277 234,003 Pro Forma Interest Expense, net of tax (1) - 28,131 --- ------ Pro Forma Net Earnings 281,277 205,872 Purchase Price Amortization, net of tax (2) 18,987 24,751 -------- -------- Pro Forma Adjusted Net Earnings $300,264 $230,623 ======== ======== Pro Forma Net Earnings Per Share $2.93 $2.15 ===== ===== Pro Forma Adjusted Net Earnings Per Share (3) $3.12 $2.41 ===== ===== Pro Forma Diluted Weighted Average Shares (3) 96,152 95,754 ====== ====== 3. Cashflow - Reconciliation Cash Flows from Operating Activities: Net Earnings $275,729 $230,888 Less Non-recurring Charges: Restructuring Costs, net of tax 4,304 1,440 LPS Spin Related Costs, net of tax - 1,814 Impact of change in tax rate on non-recurring items - (223) --- ---- Net Earnings, excluding non-recurring items 280,033 233,919 Pro Forma Interest Expense, net of tax - 28,131 --- ------ Pro Forma Adjusted Net Earnings 280,033 205,788 Adjustments to reconcile net earnings to net cash provided by operating activities: Non-cash adjustments 152,350 123,258 Working capital adjustments 15,609 9,714 ------ ------ Net cash provided by operating activities 447,992 338,760 ------- ------- Capital expenditures included in investing activities (98,775) (62,288) ------- ------- Pro Forma Adjusted Net Free Cash Flow $349,217 $276,472 ======== ======== Quarter ended ------------- 12/31/2009 9/30/2009 6/30/2009 3/31/2009 ---------- --------- --------- --------- 1. EBIT - Continuing Operations Consolidated Revenue $608,133 $619,427 $613,171 $529,817 Cost of Sales 403,174 409,113 404,014 354,702 Selling, General and Administrative Expenses 64,059 66,671 65,431 71,178 ------ ------ ------ ------ Operating Income 140,900 143,643 143,726 103,937 Less Non-recurring Charges: Restructuring Costs - - - 8,186 LPS Spin Related Costs - - - - Acceleration of Performance- Based Shares - - - 799 -------- -------- -------- -------- EBIT, as adjusted $140,900 $143,643 $143,726 $112,922 -------- -------- -------- -------- EBIT Margin, as adjusted 23.2% 23.2% 23.4% 21.3% ==== ==== ==== ==== Depreciation and Amortization $25,299 $25,044 $23,588 $23,986 ======= ======= ======= ======= Technology, Data and Analytics Revenue $189,431 $186,286 $171,889 $159,879 Cost of Sales 107,368 105,651 98,929 90,463 Selling, General and Administrative Expenses 18,571 18,256 17,824 16,066 ------ ------ ------ ------ Operating Income 63,492 62,379 55,136 53,350 Less Non-recurring Charges: Restructuring Costs - - - - LPS Spin Related Costs - - - - Acceleration of Performance- Based Shares - - - - ------- ------- ------- ------- EBIT, as adjusted $63,492 $62,379 $55,136 $53,350 ------- ------- ------- ------- EBIT Margin, as adjusted 33.5% 33.5% 32.1% 33.4% ======= ======= ======= ======= Depreciation and Amortization $18,066 $17,595 $16,441 $17,375 ======= ======= ======= ======= Loan Transaction Services Revenue $421,566 $440,480 $448,044 $374,523 Cost of Sales 298,723 311,230 311,349 268,936 Selling, General and Administrative Expenses 25,681 27,665 27,064 27,359 ------- ------- ------- ------- Operating Income 97,162 101,585 109,631 78,228 Less Non-recurring Charges: Restructuring Costs - - - - LPS Spin Related Costs - - - - Acceleration of Performance-Based Shares - - - - ------ ------- ------- ------- EBIT, as adjusted $97,162 $101,585 $109,631 $78,228 ------- -------- -------- ------- EBIT Margin, as adjusted 23.0% 23.1% 24.5% 20.9% ======= ======== ======== ======= Depreciation and Amortization $5,281 $5,295 $5,126 $4,608 ====== ====== ====== ====== Corporate and Other Revenue $(2,864) $(7,339) $(6,762) $(4,585) Cost of Sales (2,917) (7,768) (6,264) (4,697) Selling, General and Administrative Expenses 19,807 20,750 20,543 27,753 ------ ------ ------ ------ Operating Income (19,754) (20,321) (21,041) (27,641) Less Non-recurring Charges: Restructuring Costs - - - 8,186 LPS Spin Related Costs - - - - Acceleration of Performance-Based Shares - - - 799 ----- ------ ------ ------ EBIT, as adjusted $(19,754) $(20,321) $(21,041) $(18,656) -------- -------- -------- -------- Depreciation and Amortization $1,952 $2,154 $2,021 $2,003 ====== ====== ====== ====== 2. Net Earnings - Reconciliation Net Earnings $74,901 $75,542 $75,240 $50,046 Less Non-recurring Charges: Restructuring Costs, net of tax - - - 5,055 LPS Spin Related Costs, net of tax - - - - Acceleration of Performance-Based Shares, net of tax - - - 493 Impact of change in tax rate on non-recurring items - - - - ---- ---- ---- ---- Net Earnings, excluding non-recurring items 74,901 75,542 75,240 55,594 Pro Forma Interest Expense, net of tax (1) - - - - ------ ------ ------ ------ Pro Forma Net Earnings 74,901 75,542 75,240 55,594 Purchase Price Amortization, net of tax (2) 4,726 4,698 4,572 4,991 ------- ------- ------- ------- Pro Forma Adjusted Net Earnings $79,627 $80,240 $79,812 $60,585 ======= ======= ======= ======= Pro Forma Net Earnings Per Share $0.77 $0.78 $0.78 $0.58 ===== ===== ===== ===== Pro Forma Adjusted Net Earnings Per Share (3) $0.82 $0.83 $0.83 $0.64 ===== ===== ===== ===== Pro Forma Diluted Weighted Average Shares (3) 96,781 96,399 96,133 95,284 ====== ====== ====== ====== 3. Cashflow - Reconciliation Cash Flows from Operating Activities: Net Earnings $74,901 $75,542 $75,240 $50,046 Less Non-recurring Charges: Restructuring Costs, net of tax - - - 4,304 LPS Spin Related Costs, net of tax - - - - Impact of change in tax rate on non-recurring items - - - - - - - - Net Earnings, excluding non-recurring items 74,901 75,542 75,240 54,350 Pro Forma Interest Expense, net of tax - - - - ------ ------ ------ ------ Pro Forma Adjusted Net Earnings 74,901 75,542 75,240 54,350 Adjustments to reconcile net earnings to net cash provided by operating activities: Non-cash adjustments 60,281 32,279 31,700 28,090 Working capital adjustments 13,369 (16,954) 21,957 (2,763) ------ ------- ------ ------ Net cash provided by operating activities 148,551 90,867 128,897 79,677 ------- ------ ------- ------ Capital expenditures included in investing activities (30,913) (19,455) (25,836) (22,571) ------- ------- ------- ------- Pro Forma Adjusted Net Free Cash Flow $117,638 $71,412 $103,061 $57,106 ======== ======= ======== ======= Quarter ended ------------- 12/31/2008 9/30/2008 6/30/2008 3/31/2008 ---------- --------- --------- --------- 1. EBIT - Continuing Operations Consolidated Revenue $473,921 $466,762 $453,347 $443,560 Cost of Sales 294,069 300,560 293,464 288,386 Selling, General and Administrative Expenses 58,298 57,909 58,570 55,098 ------ ------ ------ ------ Operating Income 121,554 108,293 101,313 100,076 Less Non-recurring Charges: Restructuring Costs - - 2,353 - LPS Spin Related Costs - - 1,960 1,003 Acceleration of Performance-Based Shares - - 138 - ------ ------- ------- ------- EBIT, as adjusted $121,554 $108,293 $105,764 $101,079 -------- -------- -------- -------- EBIT Margin, as adjusted 25.6% 23.2% 23.3% 22.8% ======== ======== ======== ======== Depreciation and Amortization $25,004 $23,800 $20,860 $23,673 ======= ======= ======= ======= Technology, Data and Analytics Revenue $149,118 $138,964 $141,744 $135,824 Cost of Sales 80,482 73,980 81,397 74,110 Selling, General and Administrative Expenses 15,121 15,790 17,471 16,258 ------ ------ ------ ------ Operating Income 53,515 49,194 42,876 45,456 Less Non-recurring Charges: Restructuring Costs - - 2,178 - LPS Spin Related Costs - - - - Acceleration of Performance-Based Shares - - - - ------ ------- ------- ------- EBIT, as adjusted $53,515 $49,194 $45,054 $45,456 ------- ------- ------- ------- EBIT Margin, as adjusted 35.9% 35.4% 31.8% 33.5% ======= ======= ======= ======= Depreciation and Amortization $15,990 $15,229 $13,971 $16,015 ======= ======= ======= ======= Loan Transaction Services Revenue $327,650 $329,473 $315,314 $311,064 Cost of Sales 217,242 228,283 215,838 217,668 Selling, General and Administrative Expenses 26,314 26,487 27,154 25,344 ------ ------ ------ ------ Operating Income 84,094 74,703 72,322 68,052 Less Non-recurring Charges: Restructuring Costs - - 163 - LPS Spin Related Costs - - - - Acceleration of Performance-Based Shares - - - - ------- ------- ------- ------- EBIT, as adjusted $84,094 $74,703 $72,485 $68,052 ------- ------- ------- ------- EBIT Margin, as adjusted 25.7% 22.7% 23.0% 21.9% ======= ======= ======= ======= Depreciation and Amortization $7,028 $6,651 $5,290 $6,163 ====== ====== ====== ====== Corporate and Other Revenue $(2,847) $(1,675) $(3,711) $(3,328) Cost of Sales (3,655) (1,703) (3,771) (3,392) Selling, General and Administrative Expenses 16,863 15,632 13,945 13,496 ------ ------ ------ ------ Operating Income (16,055) (15,604) (13,885) (13,432) Less Non-recurring Charges: Restructuring Costs - - 12 - LPS Spin Related Costs - - 1,960 1,003 Acceleration of Performance-Based Shares - - 138 - ------ ------- ------- ------- EBIT, as adjusted $(16,055) $(15,604) $(11,775) $(12,429) -------- -------- -------- -------- Depreciation and Amortization $1,986 $1,920 $1,599 $1,495 ====== ====== ====== ====== 2. Net Earnings - Reconciliation Net Earnings $54,329 $51,281 $63,546 $61,732 Less Non-recurring Charges: Restructuring Costs, net of tax - - 1,440 - LPS Spin Related Costs, net of tax - - 1,200 614 Acceleration of Performance-Based Shares, net of tax - - 84 - Impact of change in tax rate on non-recurring items (223) - - - ---- ---- ---- ---- Net Earnings, excluding non-recurring items 54,106 51,281 66,270 62,346 Pro Forma Interest Expense, net of tax (1) - - 13,951 14,180 ------ ------ ------ ------ Pro Forma Net Earnings 54,106 51,281 52,319 48,166 Purchase Price Amortization, net of tax (2) 6,815 6,504 5,496 5,936 ------- ------- ------- ------- Pro Forma Adjusted Net Earnings $60,921 $57,785 $57,815 $54,102 ======= ======= ======= ======= Pro Forma Net Earnings Per Share $0.57 $0.54 $0.55 $0.49 ===== ===== ===== ===== Pro Forma Adjusted Net Earnings Per Share (3) $0.64 $0.61 $0.61 $0.55 ===== ===== ===== ===== Pro Forma Diluted Weighted Average Shares (3) 95,126 95,223 95,070 97,597 ====== ====== ====== ====== 3. Cashflow - Reconciliation Cash Flows from Operating Activities: Net Earnings $54,329 $51,281 $63,546 $61,732 Less Non-recurring Charges: Restructuring Costs, net of tax - - 1,440 - LPS Spin Related Costs, net of tax - - 1,200 614 Impact of change in tax rate on non-recurring items (223) - - - ---- ---- ---- ---- Net Earnings, excluding non-recurring items 54,106 51,281 66,186 62,346 Pro Forma Interest Expense, net of tax - - 13,951 14,180 ------ ------ ------ ------ Pro Forma Adjusted Net Earnings 54,106 51,281 52,235 48,166 Adjustments to reconcile net earnings to net cash provided by operating activities: Non-cash adjustments 30,081 32,420 18,262 42,495 Working capital adjustments 32,158 26,908 (91,474) 42,122 ------ ------ ------- ------ Net cash provided by operating activities 116,345 110,609 (20,977) 132,783 ------- ------- ------- ------- Capital expenditures included in investing activities (23,946) (13,205) (14,344) (10,793) ------- ------- ------- ------- Pro Forma Adjusted Net Free Cash Flow $92,399 $97,404 $(35,321) $121,990 ======= ======= ======== ======== Notes: (1) Pro forma interest expense for each of the two quarters in the period ended June 30, 2008 represents the interest expense associated with the $1,610.7 million in debt incurred by us in connection with the spin-off assuming the spin-off occurred on January 1, 2007. Our new bank debt bears interest at a floating rate which we estimate would have been 4.96% on the revolving credit agreement, Term Loan A and Term Loan B based on the one month LIBOR rate on June 30, 2008 (2.46%) plus a spread of 2.5%. Our new senior notes bear interest at a fixed rate of 8.125%. Amortization of capitalized debt issuance costs in connection with the borrowings included in pro forma interest expense total approximately $2.7 million for the six months ended June 30, 2008. These projections also reflect principal paydowns of approximately $36.3 million ($35 million of Term Loan A, $1.3 million of Term Loan B) per quarter under the credit agreement (other than in the first quarter after closing, in which only $1.3 million is payable) and the paydown of the revolver of $25.7 million during the first quarter of 2007. (2) Purchase price amortization, net of tax represents the periodic amortization of intangible assets acquired through business acquisitions primarily relating to customer lists, trademarks and non-compete agreements. (3) Pro forma earnings per share and pro forma diluted weighted average shares for the quarter ended June 30, 2008 are provided based on the 94,611 shares of Lender Processing Services, Inc. common stock issued to FIS shareholders on the July 2, 2008 spin date along with dilutive common stock equivalents calculated under the treasury stock method using the $33 per share closing price of LPS on July 2, 2008 as the average market price and the number of LPS options and awards issued to our employees per the terms of the spin-off. Pro forma earnings per share and pro forma diluted weighted average shares for all other periods presented above are based on the pro forma diluted shares as included in the Company's Form 10 filed on June 20, 2008.
Lender Processing Services, Inc.
CONTACT: Investors: Parag Bhansali, +1-904-854-8640, or Media: Michelle
Kersch, +1-904-854-5043
Web Site: http://www.lpsvcs.com/
