Lender Processing Services June 2008
Jan 22, 2015
Lender Processing Services
June 2008
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Forward-Looking StatementsThis presentation will contain forward-looking statements that involve a number of risks and uncertainties.Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements are based on management’s beliefs, as well as assumptionsmade by, and information currently available to, management. Because such statements are based onexpectations as to future economic performance and are not statements of fact, actual results may differmaterially from those projected. We undertake no obligation to update any forward-looking statements, whetheras a result of new information, future events or otherwise. The risks and uncertainties which forward-lookingstatements are subject to include, but are not limited to: general political, economic, and business conditions,including the possibility of intensified international hostilities, acts of terrorism, and general volatility in capitalmarkets; failures to adapt our services to changes in technology or in the marketplace; consolidation in themortgage lending or banking industry; security breaches of our systems and computer viruses affecting oursoftware; a decrease in the volume of real estate transactions such as real estate sales and mortgagerefinancings, which can be caused by high or increasing interest rates, a shortage of mortgage funding, or aweak United States economy; the impact of competitive services and pricing; the ability to identify suitableacquisition candidates and the ability to finance such acquisitions, which depends upon the availability ofadequate cash reserves from operations or of acceptable financing terms and the variability of our stock price;our ability to integrate any acquired business’ operations, services, customers, personnel; the effect of oursubstantial leverage, which may limit the funds available to make acquisitions and invest in our business;changes in, or the failure to comply with, government regulations, including regulatory changes or reform relatedto RESPA, appraisal practices and privacy obligations; and other risks detailed in the Risk Factor section in theForm 10.
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Agenda
• Transaction Overview• LPS Overview• Business Review• Financial Review• Summary
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Transaction Overview• FIS and LPS have unique and distinct businesses
– Different customers, markets, management
• Current joint structure may not maximize full potential of both businesses
– limits ability to leverage operations, technology and product development
– leads to internal competition for investments and resources
– hinders strategic flexibility
• Spin-off from FIS creates an independent publicly traded company
– Market leading mortgage processor
– Over 1,000 financial institution clients, including 39 of the 50 largest banks in the US
• Pure play reduces complexity for investors
LPS is Well Positioned to Succeed as a Stand-Alone Public Company
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LPS OverviewInvestment Highlights
• One of the largest providers of technology, processing, data and outsourced services to mortgage lenders
• Leading market positions in technology based solutions:– #1 U.S. provider of Mortgage Processing Services– #1 U.S. provider of Centralized Settlement Services– #1 U.S. provider of Mortgage Default Solutions
• Industry’s most comprehensive range of integrated applications and services• Deep and long term relationships with nations top lenders
– On average, LPS top 10 customers have been with us for 18 years and utilize 17 of 29 services
• Strong organic growth and Free Cash Flow• Significant scale with 2007 pro forma revenue and EBITDA of $1,690.6 million and $526.7
million, respectively
Industry Leader with Growing Market Share
Enhanced flood and tax servicesEnhanced flood and tax services
Automated title decisioning tool– Streamlined Title
Automated title decisioning tool– Streamlined Title
Loan origination platform– Empower
Loan origination platform– Empower
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LPS OverviewEvolution of LPS
Electronic delivery of settlement services – ELSElectronic delivery of settlement services – ELS
Automated end-to-end servicing and loan boarding– MSP and ELI
Automated end-to-end servicing and loan boarding– MSP and ELI
Appraisal, property valuation and title and closing – LSIAppraisal, property valuation and title and closing – LSIProcess, invoice and imaging management– Mortgage Desktop
Process, invoice and imaging management– Mortgage Desktop
Data delivery at POS technology– DecisionStream
Data delivery at POS technology– DecisionStream
Web services Web services
Web-based closing technology– ClosingStream
Web-based closing technology– ClosingStream
Lien release – DOCXLien release – DOCX
Analytics expertise – AFTAnalytics expertise – AFT
Comprehensive industry databases – McDash
Comprehensive industry databases – McDash
2001 2002 2003 2004 2005 2006 2007 2008
AcquireAcquire
BuildBuild
Strong Competitive Position & High Barriers to Entry
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LPS OverviewMarket Metrics
Originations(in millions)
Foreclosures(in thousands)
Mortgage Volume –Loans Outstanding
(in millions)
Lender Processing Services
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LPS OverviewGrowth Drivers
Leveraging Comprehensive Solutions
Leveraging Comprehensive Solutions
• Drive market share gains
• Extend product penetration
• Expand usage
Expanding Current Service Offerings
Expanding Current Service Offerings
• Capital markets
• Data and analytics
• Fraud solutions
Extending TechnologyLeadership Position
Extending TechnologyLeadership Position
Pursuing SelectedAcquisitions
Pursuing SelectedAcquisitions
• Desktop expansion
• DecisionStream and ClosingStream
• RealEC
• Watterson Prime
• Applied Financial Technology
• McDash
Focused on Strong Profitable Growth
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LPS OverviewFinancial Performance
Lender Processing Services
Strong, consistent revenue and EBITDA growth
Revenue Growth EBITDA Growth
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LPS OverviewOrganization
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Business Review
66%
34%
53%47%
Revenue: $1,690.6mm EBITDA: $526.7mm
Technology, Data and Analytics
Loan Transaction Services
TD&A segment overview• Mortgage processing services – automates all areas
including loan setup, ongoing processing, servicing, accounting and reporting
• Desktop System – workflow information system used primarily in connection with default management
• Other software applications – includes mortgage origination, real estate, and title insurance software
• Data and analytics businesses – includes alternative property valuations, property records business and advanced analytic services
LTS segment overview• Loan facilitation services – Settlement services
including title agency and closing services, traditional appraisal and appraisal management services, and other origination services such as real estate tax services and flood zone information
• Default management services – property preservation services, foreclosure services, and real estate owned (REO) services
RefinanceSale
Default
CollectionsLoss Mitigation
CollectionsLoss Mitigation ForeclosureForeclosure BankruptcyBankruptcy REO
ManagementREO
Management
ServicingQuality ControlLoan BoardingQuality ControlLoan Boarding
CustomerService
CustomerService
CashManagement
CashManagement
EscrowManagement
EscrowManagement
Origination
Lead ManagementLoan Sales
Lead ManagementLoan Sales
LoanProcessing
LoanProcessing
LoanUnderwriting
LoanUnderwriting
LoanClosingLoan
Closing
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Business ReviewEnd-to-End Mortgage Process
Lender Processing Services
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Business ReviewBalanced Business Model
Lender Processing Services
Technology, Data and Analytics
Cyclical Counter CyclicalNon-Cyclical
Origination Services
Property ValuationTitle
Closing Services
Origination Services
Property ValuationTitle
Closing Services
Default Services
Field ServicesForeclosure/Bankruptcy
REO ManagementTitle
Default Services
Field ServicesForeclosure/Bankruptcy
REO ManagementTitle
Mortgage Servicing PlatformLoan Origination Software
Process, Invoice and Imaging ManagementProperty / Loan Data and Analytics
LPS business mix results in balanced revenue stream across volatile mortgage markets.
Segment EBITDA margin
Technology, Data & Analytics 45.7%
Loan Transaction Services 26.1%
Business ReviewHighly Diversified Revenue
Segment EBITDA margin
Technology, Data & Analytics 44.3%
Loan Transaction Services 29.7%
Revenue: $1,382.5 million
EBITDA: $ 430.6 million
EBITDA Margin: 31.1%
Revenue: $1,690.6 million
EBITDA: $ 526.7 million
EBITDA Margin: 31.2%
Loan Facilitation Services
Mortgage Processing
Other TD&A
Default Services
Lender Processing Services
44.9% 15.7%
23.3%16.1%
Loan Facilitation Services
Mortgage Processing
Other TD&A
Default Services
13.6%38.5%
27.9% 20.0%
Strong revenue growth, robust margins
FY2005 Revenue Mix FY2007 Revenue Mix
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Business ReviewCompetitive Landscape – Data and Services
Lender Processing Services
LPS FirstAmerican LandAM Fiserv Credit
Bureaus
Tax Data
Flood Services
Appraisal/Property Valuation
Title and Closing Services
Lien Release
AVM
Field Services
REO
Data Services
Title Underwriting
Default Management Outsource
Portfolio Analytics/ Due Diligence
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Business ReviewCompetitive Landscape – Technology
Lender Processing Services
LPS FirstAmerican LandAM Fiserv Credit
Bureaus
Loan Origination Technology
Automated End-to-End Loan Process
Web-Based Closing Solution
Data Delivery at Point of Sale
Automated Title Decisioning Tool
Electronic Delivery Technology
Automated Order, Track and Delivery
Mortgage Servicing Technology
Automated End-to-End Servicing
Electronic Loan Boarding
Web Services
Default Management Technology
Automated End-to-End Servicing
Process Invoice and Imaging Management
17Lender Processing Services
2007
138
$554mm
170
$692mm
2006
100
$463mm 2005
# of services
Revenue ($)
Breadth
Dep
th
Business ReviewKey client relationships
Bank of America
Barclays/HomEq CitiGroup Countrywide JPMorgan
ChaseJPMorgan
Chase/EMC
HSBC
Wilbur Ross/ Option
One
Washington Mutual
WellsFargo TOTAL
YE 2007Total LPS Services
(Out of 29)23 13 15 16 15 16 19 16 19 18 170
YE 2006Total LPS Services
(Out of 29)23 10 8 10 10 8 18 16 18 17 138
• No single customer accounted for more than 10% of FY2007 revenue
• Average length of relationship is 18 years
• Average number of LPS services utilized is 17
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Business ReviewMarket Size*
TD & A Loan Facilitation Default
19%
81%
25%
75%
Total Market = $2.2B Total Market = $2.4B
Lender Processing Services
83%
17%
* 2007 data; Source: company and industry estimates
LPS Market Share
Attractive growth opportunities in all areas
DefaultLoan FacilitationTD & A
Total Market = $2.7B
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Business ReviewFavorable Market Dynamics
Centralized Lending• Large banks are gaining market share• Increased direct lending versus wholesale
and correspondent channels
Low-Cost Provider• Scale• Domain expertise• Integrated data, technology and
services (MSP and Desktop)
Lender Processing Services
Need to Reduce Internal Costs• Focus on reducing servicing costs• Increase efficiency through technology
and integrated solutions
Increased Market Share• Trend to centralize and outsource
operations• Drives higher volumes to LPS
Flight to Quality• Changing credit market conditions are
driving lenders to focus on higher quality borrowers
• More stringent underwriting controls• Increased demand for better tools to mitigate
long-term risk
Streamlined Product Solutions• Good fit for automated solutions
in a centralized environment• Valuations, Streamlined Title,
Web-based closings• Development of predictive models and
indicators of future loan performance
Financial ReviewTechnology, Data & Analytics
• Mortgage processing services –automates all areas of loan servicing, including loan setup and ongoing processing, customer service, accounting and reporting.
• Desktop System – workflow information system that assists customers in managing business processes and connectivity used primarily in connection with default management.
• Other software applications – include mortgage origination, real estate, and title insurance software.
• Data and analytics businesses – includes alternative property valuations, property records business and advanced analytic services, which assists customers in their loan marketing or loss mitigation efforts.
• Mortgage processing services – Typically fee per month per loan on file. Recurring revenue, long-term contracts, high switching costs.
• Desktop System – Activity fees per foreclosure. To be expanded to other mortgage servicing business processes. High switching costs; clients typically use LPS exclusively.
• Other software applications – License, maintenance and professional service fees.
• Data and analytics businesses –Transaction, activity and subscription fees.
Lender Processing Services
Segment Overview Revenue Drivers
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Lender Processing Services
Financial ReviewTechnology, Data & Analytics
($MM)($MM)
Historical Revenue Historical EBITDA
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$525 $547$570
Mortgage Processing Other TD&A
Financial ReviewLoan Transaction Services
Lender Processing Services
Loan facilitation services:• Settlement services – title agency and
closing services• Appraisal services – traditional appraisal
and appraisal management services• Other origination services – real estate
tax services and flood zone information
Default management services:• Property preservation services – designed
to preserve value of properties securing defaulted loans
• Foreclosure services – includes access to a nationwide network of independent attorneys, document preparation and recording and other services
• REO services – covering real estate to which our customers take title and seek to sell following default
Loan facilitation services:• Transaction driven• Origination services paid by lender and
ultimately, primarily borne by customer
Default management services:• Transaction driven• Various services related to defaulted and
foreclosed properties, paid by lender or vendor
Segment Overview Revenue Drivers
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$820$901
$1,126
Loan Facilitation Services Default Services
($MM)($MM)
Lender Processing Services
Historical Revenue Historical EBITDA
Financial ReviewLoan Transaction Services
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Lender Processing Services
Revenue ($ millions)
Financial ReviewKey Statistics
$1,382.5 $1,485.0$1,690.6
2005 2006 2007
$180.3
$271.7$212.4
2005 2006 2007
* Net income plus depreciation and amortization less capital expenditures and changes in working capital and other assets & liabilities. As presented in Form 10; includes pro-forma after-tax interest expense of $55.8 million in 2007.
EBITDA ($ millions)
Free cash flow* ($ millions) Capital expenditures ($ millions)
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Lender Processing Services
Revenue ($ millions)
Financial ReviewHistorical pro forma quarterly data
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2006 2007 2008
Financial Review 2008 Adjusted Guidance
Lender Processing Services
2007 2008(amounts in millions except per share data) Carveout Guidance (1)
Revenue $1,690.6 7% – 9%
EBIT 424.1 6% – 8%
Net Earnings per Diluted Share $2.06 $2.10 – $2.22
Adjusted Earnings per Diluted Share $2.32 $2.34 – $2.46
Free Cashflow $156.6 $193 – $228
Diluted Shares (2) 97.7 97.0
Capital Expenditures $70.6 $65 – $75
Depreciation & Amortization $102.6 $95
Solid start as a stand-alone public company
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Financial ReviewLong Term Outlook
• Grow revenue 6–9% annually 2009–2011
• Expand operating margin on average by 50 bps per year
• Target $400–$500 million in debt reduction through 2011
• Indicated dividend of 40 cents/share
• Repurchase shares opportunistically
• Selectively pursue acquisitions
Lender Processing Services
Grow EPS by 12–15% annually 2009–2011
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Summary
• Leading market positions in:– Technology, Data and Analytics– Loan Transaction Services
• Revenue growth faster than market• Expanding margins• Attractive dividend• Strong free cash flow
Lender Processing Services
Focused on delivering above average returns to shareholders
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Appendix
GAAP to Non-GAAP Reconciliations
A. EBITDA
Consolidated TD&A LTS
Full Year Full Year Full Year Full Year Full Year Full Year Full Year Full Year Full Year
2007 2006 2005 2007 2006 2005 2007 2006 2005
Operating Income 424,062 327,520 317,925 191,629 179,533 162,142 265,573 206,356 210,798
Depreciation and Amortization 102,607 111,858 112,648 68,720 69,581 70,545 28,752 32,177 33,030
EBITDA 526,669 439,378 430,573 260,349 249,114 232,687 294,325 238,533 243,828
B. FREE CASH FLOW
Consolidated
Full Year Full Year Full Year
2007 2006 2005
Net Income 256,805 201,055 195,705
Add: Depreciation and Amortization 102,607 111,858 112,648
Less: Capital Expenditures (70,552) (70,248) (92,458)
(Decrease) Increase in Working Capital (76,418) 29,037 (35,561)
Free Cash Flow 212,442 271,702 180,334