Lender Processing Services Inc. (LPS) reported fourth-quarter 2010 adjusted earnings per share of 92 cents, a penny more than the Zacks Consensus Estimate and at the higher end of the company’s guidance range of 90 cents to 92 cents.
Results were also well ahead of the prior-year quarter’s earnings of 82 cents. Year-over-year improvement in results came on the back of growth in operating income, reduced interest expense and a lower share count.
On a GAAP basis, earnings per share were 78 cents, up from 77 cents recorded in the year-earlier quarter. Lender Processing also recorded total revenue of $638.8 million in the quarter under review, up 5.0% year over year.
The company’s full-year adjusted earnings per share were $3.50 versus $3.12 in full fiscal 2009. Revenues were $2.5 billion in full fiscal 2010, representing a year-over-year growth of 8.7%.
Technology, Data and Analytics Segment (TD&A)
Fourth-quarter revenues for the TD&A segment were $201.1 million, up 6.1% year over year. Mortgage processing revenues of $100.3 million fell 3.7% year over year. Other TD&A revenues grew 18.1% year over year to $100.7 million driven by higher Desktop revenues as well as strong growth in Other Software and Services offerings.
Adjusted Operating income for the segment was $60.4 million, dropping 4.9% year over year. The decline in the segment’s operating income was attributable to lower contributions from the Mortgage Processing business, partially offset by higher contributions from the Other Software and Services and the Desktop business.
Loan Transaction Services (LTS)
Fourth-quarter revenues for the LTS segment jumped 6.1% year over year to $439.7 million. The upside in the segment’s revenues was due to a 31.8% spike in revenues from Loan Facilitation Services, which was partially offset by a decrease of 9.8% in revenues from default services.
The performance of the Default Services segment was hit by the macroeconomic slowdown. In the reported quarter, loan facilitation and default services recorded revenues of $188.3 million and $261.3 million, respectively.
Adjusted Operating income for the segment expanded 8% year over year to $105.7 million.
Financial Position
At the end of 2010, cash balance of the company was $52.3 million while outstanding debt was $1.10 billion. During the quarter, company repurchased 2.6 million shares for $78.6 million.
Outlook
For the first quarter of 2011, management expects adjusted earnings per share to be within the range of 81 cents to 84 cents. For full-year 2011, management expects adjusted earnings in the range of $3.74 to $3.81 per share. The Zacks Consensus Estimates for the first quarter and 2011 are 90 cents and $3.81 respectively.
We expect estimates to move up in the coming days, based on better-than-expected results. Additionally, Lender Processing has a solid market presence in each of its businesses.
One of Lender Processing’s primary competitors, FTI Consulting Inc. (FCN) will report its fourth quarter earnings on February 21, 2011.
FTI CONSULTING (FCN): Free Stock Analysis Report
LENDER PROC SVC (LPS): Free Stock Analysis Report
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