LENDER PROCESSING SERVICES INC WI (LPS, Financial) filed Quarterly Report for the period ended 2009-03-31.
LENDER PROCESSING SERVICES INC. is a leading provider of integrated technology and services to the mortgage industry. LPS offers solutions that span the mortgage continuum including lead generation origination servicing portfolio retention and default augmented by the company's award- winning customer support and professional services. Approximately fifty percent of all U.S. mortgages are serviced using LPS' Mortgage Servicing Package. In fact many of the nation's top servicers rely on MSP including seven of the top ten and sixteen of the top twenty. LPS also offers proprietary mortgage and real estate data and analytics for the mortgage and capital markets industries. LENDER PROCESSING SERVICES INC WI has a market cap of $2.59 billion; its shares were traded at around $27.14 with a P/E ratio of 10.7 and P/S ratio of 1.4. The dividend yield of LENDER PROCESSING SERVICES INC WI stocks is 1.5%.
Our results during the first quarter of 2008 and 2009 demonstrate the extent to which rising default management revenues can offset declines in loan facilitation revenues. In the first quarter of 2008, our revenues from loan facilitation and default management (excluding Desktop revenues) were approximately $142.0 million and $169.0 million, respectively; and in the first quarter of 2009 they were approximately $119.2 million and $255.3 million, respectively.
Historically, some of our default management businesses have had lower margins than our loan facilitation businesses. However, as our default volumes have increased, our margins have improved significantly on the incremental sales during the first quarter of 2008 and 2009. Because we are often not paid for our default services until completion of the foreclosure, default does not contribute as quickly to our cash flow from operations as it does to our revenues. Our trade receivables balance increased by approximately $30.5 million from December 31, 2007 to March 31, 2008 and approximately $25.9 million from December 31, 2008 to March 31, 2009, largely due to the increase in our default business.
We have approximately $1,475 million in long-term debt outstanding as of March 31, 2009, of which approximately $1,114 million bears interest at a fixed rate ($735 million through interest rate swaps), while the remaining portion bears interest at a floating rate. As a result, we are highly leveraged and subject to risk from changes in interest rates. Having this amount of debt also makes us more susceptible to negative economic changes, as a large portion of our cash is committed to servicing our debt. Therefore, in a bad economy or if interest rates rise, it will be harder for us to attract executive talent, invest in acquisitions or new ventures, or develop new services.
Read the The complete ReportLPS is in the portfolios of Ronald Muhlenkamp of Muhlenkamp Fund, Lee Ainslie, George Soros of Soros Fund Management LLC, John Keeley of Keeley Fund Management.
LENDER PROCESSING SERVICES INC. is a leading provider of integrated technology and services to the mortgage industry. LPS offers solutions that span the mortgage continuum including lead generation origination servicing portfolio retention and default augmented by the company's award- winning customer support and professional services. Approximately fifty percent of all U.S. mortgages are serviced using LPS' Mortgage Servicing Package. In fact many of the nation's top servicers rely on MSP including seven of the top ten and sixteen of the top twenty. LPS also offers proprietary mortgage and real estate data and analytics for the mortgage and capital markets industries. LENDER PROCESSING SERVICES INC WI has a market cap of $2.59 billion; its shares were traded at around $27.14 with a P/E ratio of 10.7 and P/S ratio of 1.4. The dividend yield of LENDER PROCESSING SERVICES INC WI stocks is 1.5%.
Highlight of Business Operations:
Prior to July 2, 2008, the Company was a wholly-owned subsidiary of FIS. In October 2007, the board of directors of FIS approved a plan of restructuring pursuant to which FIS would spin off its lender processing services segment to its shareholders in a tax free distribution. Pursuant to this plan of restructuring, on June 16, 2008, FIS contributed to us all of its interest in the assets, liabilities, businesses and employees related to FISs lender processing services operations in exchange for shares of our common stock and $1,585.0 million aggregate principal amount of our debt obligations. On July 2, 2008, FIS distributed to its shareholders a dividend of one-half share of our common stock, par value $0.0001 per share, for each issued and outstanding share of FIS common stock held on June 24, 2008, which we refer to as the spin-off. Also on July 2, 2008, FIS exchanged 100% of our debt obligations for a like amount of FISs existing Tranche B Term Loans issued under its Credit Agreement dated as of January 18, 2007. The spin-off was tax-free to FIS and its shareholders, and the debt-for-debt exchange undertaken in connection with the spin-off was tax-free to FIS.Our results during the first quarter of 2008 and 2009 demonstrate the extent to which rising default management revenues can offset declines in loan facilitation revenues. In the first quarter of 2008, our revenues from loan facilitation and default management (excluding Desktop revenues) were approximately $142.0 million and $169.0 million, respectively; and in the first quarter of 2009 they were approximately $119.2 million and $255.3 million, respectively.
Historically, some of our default management businesses have had lower margins than our loan facilitation businesses. However, as our default volumes have increased, our margins have improved significantly on the incremental sales during the first quarter of 2008 and 2009. Because we are often not paid for our default services until completion of the foreclosure, default does not contribute as quickly to our cash flow from operations as it does to our revenues. Our trade receivables balance increased by approximately $30.5 million from December 31, 2007 to March 31, 2008 and approximately $25.9 million from December 31, 2008 to March 31, 2009, largely due to the increase in our default business.
We have approximately $1,475 million in long-term debt outstanding as of March 31, 2009, of which approximately $1,114 million bears interest at a fixed rate ($735 million through interest rate swaps), while the remaining portion bears interest at a floating rate. As a result, we are highly leveraged and subject to risk from changes in interest rates. Having this amount of debt also makes us more susceptible to negative economic changes, as a large portion of our cash is committed to servicing our debt. Therefore, in a bad economy or if interest rates rise, it will be harder for us to attract executive talent, invest in acquisitions or new ventures, or develop new services.
Read the The complete ReportLPS is in the portfolios of Ronald Muhlenkamp of Muhlenkamp Fund, Lee Ainslie, George Soros of Soros Fund Management LLC, John Keeley of Keeley Fund Management.
