Fidelity National Financial, Inc.
Q4 2014 Earnings Call Transcript

Published: 19 Feb 2015

[Operator:]

Welcome to the FNF 2014 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session instructions will be given at that time. [Operator Instructions] As a reminder, today's call is being recorded. I'd now like to turn the conference over to Dan Murphy. Please go ahead.

[Dan Murphy:]

Thank you. Good morning everyone and thank you very much for joining us for our fourth quarter 2014 earnings conference call. Joining me today are Chairman, Bill Foley; CEO, Randy Quirk; President, Brent Bickett; CFO, Tony Park; and our Black Knight CEO, Tom Sanzone. We'll begin with the pre-strategic overview from Bill, Randy will review the title business and Tony 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. Please note that we only focus on FNF on this call and we'll take your questions related to FNF only. We will have a separate FNF call – FNFV call at noon Eastern Time today. This conference call may contain forward-looking statements that involve a number of risk and uncertainties. Statements that are not historical facts including statements about 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 information currently available to Management. Because such statements are based on expectations as to future financial and operating results and are not statements effects, 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 risk and uncertainties which forward-looking statements are subject to include but are not limited to the risk in 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 Web site at fnf.com and will also be available through phone replay beginning at 01

[Bill Foley:]

Thanks Dan. This is a strong finish to a great year for title insurance business, despite a continued sluggish real-estate market, we achieved 14.1% pretax title margin for the fourth quarter a 14.3% pretax title margin for the last three quarters of 2014 and 12.5% pretax title margin for the full year of 2014. Overall, we are proud of the financial results we posted in our title business in 2014 and we remain confident in our ability to generate a 15% to 20% pretax title margin in an improving real-estate market. Black Knight had another impressive quarter generating 12% revenue growth and an adjusted-EBITDA margin of 43%, a 70 basis point sequential margin improvement from the third quarter of 2014. Total revenue was 220 million led by servicing technology revenue of approximately 155 million. We remain excited about the organic revenue growth opportunity at Black Knight as the sales pipeline is strong across our technology and data and analytics business as we enter 2015. We also announced the initial filing of the Black Knight IPO registration statement with the SEC in December and are working towards having Black Knight operate as an FNF majority owned publicly traded company in 2015. I'll now turn the call over to Randy Quirk to discuss the title insurance business.

[Randy Quirk:]

Thank you, Bill. The fourth quarter was a strong finish to a very successful year for our title business. As Bill mentioned, we generated 14.1% title margin in the fourth quarter, our third straight quarter with better than 14% pretax title margin, despite closed order accounts declining sequentially in the fourth quarter. We do expect a normally seasonally weaker pretax title margin in the first quarter of 2015. For the fourth quarter, total open orders averaged 7,175 orders per day with October at 7,650, November at 7,400 and December declining to 6,500. Of the 7,175 total orders per day approximately 5,600 were at FMT and 1,600 were at ServiceLink. The mix towards purchase transactions declined sequentially from the third quarter, with 52% of fourth quarter open orders related to purchase transactions. At 60% of FMT open orders were purchase related and 77% of ServiceLink open orders were refinance related. In January, total open orders per day averaged more than 9,500 as refinancing volumes increased with the decline in mortgage rates. Additionally for the first two weeks of February, total open orders per day averaged more than 10,000. We had a strong finish to the year in our commercial business generating $166 million in national commercial revenue, a 14% increase over the fourth quarter of 2013 as the average fee per file of $13,100 grew 15% and closed order volume of sequentially commercial revenue grew by 22% from the third quarter. Additionally, we've began to capture the impact of local commercial volume for our direct operations in addition to the national commercial revenue we currently report. For the fourth quarter total combined direct commercial revenue was approximately $274 million. The fee per file in the fourth quarter was positively impacted by the continued mix favoring purchase transactions as well as the strong commercial title quarter. The total fee per file of $2,131 increased 2% versus the fourth quarter of 2013. The FNT fee per file of $2,382 increased by 5% over the fourth quarter of 2013 and ServiceLink's fee per file of $1,027 was a 1% increase over the prior year. Also excluding our national commercial revenue the total fee per file was $1,699 a 1% increase over the prior year quarter. As we progressed through the normally seasonal slowdown in the fourth quarter order counts, we reduced headcounts by approximately 240 positions with approximately 220 of those coming FNTG and 20 of those in ServiceLink. Despite the sharp increase in refinanced orders in January we've only added approximately 95 positions with 115 of those coming in FNTG and ServiceLink actually eliminated an additional 20 positions. Let me now turn the call over to Tony Park to review the financial highlights.

[Tony Park:]

Thank you, Andy. We generated $1.7 billion in revenue in the fourth quarter with Title generating approximately $1.5 billion in total revenue and Black Knight contributing $220 million in total revenue. Adjusted net earnings were $144 million or $0.50 per diluted share. The title segment generated nearly $1.5 billion in total revenue for the fourth quarter, a 7% increase over the fourth quarter of 2013. Direct title premiums increased 13% while agency premium is declined by 14%. Our direct operations received more of the commercial premiums than our agency operations and we had a very strong commercial fourth quarter also the centralized refinanced business that came with the LPS acquisition is in direct premiums this year and not in the prior year. ServiceLink produced revenue of $211 million, adjusted EBITDA of $27 million, and adjusted EBITDA margin of 13%, pretax earnings of $23 million and an adjusted pretax margin of 11%. Black Knight generated fourth quarter revenue of $220 million and adjusted EBITDA of $96 million and adjusted EBITDA margin of 43%, which is a 70 basis points sequential improvement from the third quarter of 2014. Debt outstanding declined to $2.7 billion as we repaid the remaining $100 under our credit facility during the fourth quarter. This leaves us with the $1.1 billion term loan outstanding from the original total of $1.4 billion borrowed for the LPS acquisition in January 2014. Our debt to total capital ratio on a consolidated basis was 30% at December 31. Total title claims paid were $78 million during the fourth quarter, a decrease of $22 million or 22% from the fourth quarter of 2013. Full year claims paid were approximately $304 million, a $99 million or 25% decrease from total claims paid in 2013. We have realized more than $312 million in LPS run rate synergies as of the end of December, were $283 million of those being expense synergies. We had more than $67 million benefits of pretax earnings from cost synergies in the fourth quarter. The synergy program has been, the synergy bonus program has been discontinued as of December 31, 2014. Finally, our core FNF investment portfolio, totaled nearly $4.3 billion at December 31, from a regulated standpoint we have $1.8 billion in statutory reserves, $1.5 billion in regulated cash and investments and approximately $700 million in secured trust deposits for a total of approximately $4 billion in regulated cash and investments. From an unregulated perspective we have approximately $180 million of unregulated cash at core FNF as of December 31. There is also approximately $140 million in consolidated cash and investments at Black Knight and ServiceLink and approximately $50 million in cash at subsidiaries that is restricted by minimum working capital or other requirements. Let me now turn the call back to our operator to allow for any questions.

[Operator:]

[Operator Instructions] One moment please for our first question. We'll welcome the line of Mark DeVries with Barclays. Please go ahead.

[Mark DeVries:]

First, I was just hoping Bill, you could comment on some of your interest in maintaining the majority ownership in BKFS both over the intermediate and longer-term following the IPO?

[Bill Foley:]

Yes Mark, the FNF right now is committed to being a majority owner and to consolidating BKFS even as even while it stands a public company. The technology assets and the interrelationship with ServiceLink our national business from both a loan origination or a refinance transactional support and also from default side is that too important to us. And so we really got the – it's really important for us to maintain that majority ownership. We can't speak for our partner, T.H. Lee there at some point we assume they will begin disposing their interest and increase the public float somewhat. We also understand that it's part of the IPO process, they will be selling a relatively small amount of their shares into the market. We don’t intend to offer any of our shares as part of the IPO process, so there'll be primarily new shares being issued.

[Mark DeVries:]

Could you also talk about kind of post IPO thoughts on use of excess capital? I mean I guess after paying the intercompany note, you should still have some availability. How are you thinking about either buying back stock, increasing the dividend or potentially doing some M&A to supplement your platform?

[Bill Foley:]

In terms of on the FNF side with the IPO proceeds, we intend to repay the intercompany note which will generate about $690 million of proceeds up to FNF. We also have a plan that we're working on to reify the mirror note, so it becomes a – it'll become a Black Knight obligation as oppose to being a mirror note from FNF down to Black Knight. And that both of those the combination of those two factors will increase Black Knight's – reduce Black Knight's interest expense by about $60 million. With that $690 million we'll then be in the position to be aggressively looking at stock buybacks. I mean that we've felt for a long time with all the shares that we issued in conjunction with LPS acquisition and just others shares that were issued over the last several years is that, we just have too many shares outstanding. So you'll be seeing after the – assuming the Black Knight IPO successful and the repayment of the intercompany note occurs as we believe it will, you'll be seeing a pretty aggressive stock buyback program by FNF.

[Mark DeVries:]

And just one last thing I'm sorry if I missed this, but could you comment on how the January and February open order trends were?

[Randy Quirk:]

Yes I can give you that information, this is Randy. We certainly got surprised in January when the refinance orders really took off on us and so we went from about 6,000 orders per day at the end of 2014 up to 9,500 orders per day in January and now running through the first half pretty much into the third week of February, we're running in the 10,000 orders per day. Almost entirely driven by the refinance market and the purchase market on an order per day basis, we're up 9% from previous January, but if we remove ServiceLink from those numbers, the market is relatively flat.

[Mark DeVries:]

And what's the purchase reify mix in the January-February numbers?

[Randy Quirk:]

January we are opening 58% refinance and the same in February in fourth quarter we were to the resale side on the mix, so it's 58% refinance. So it's been a price swing and we don’t expect it to last forever, it should start to settle down. We think we seen that in the last week or two, but the mix is in the refinance side currently.

[Operator:]

We do have a question from Eric Beardsley with Goldman Sachs. Please go ahead.

[Eric Beardsley:]

Just on the ServiceLink purchase default orders, what's driving the strength there? Are you picking up more share of those orders?

[Bill Foley:]

Well we don’t know if we're picking up more share, we think that recently the banks have got little bit more active on the default sides. We're seeing with our current markets that we're getting with our current relationships, we're receiving more volume from them. So in that regard, I suppose it would be more share, but the banks are getting a little bit more active as what we've seen in the last couple of months.

[Eric Beardsley:]

And then on the term note, I guess what are your plans in between now and the Black Knight IPO? Are you looking to pay down any of that prior to receiving proceeds?

[Randy Quirk:]

We have $1.1 billion outstanding on the term loan. We have repaid the credit facility, so that's fully paid down. I guess to the extent we have excess cash generated, keep in mind Q1 typically are always the lightest in terms of cash generation at FNF because of annual incentives paid in the first quarter, so there are probably not a lot of repayment to the term loan in the first quarter.

[Operator:]

Your next question is from the line of Mr. George with KBW, please go ahead.

[Bose George:]

Hi guys. First, actually one on the title margin. In terms of if transaction activity is relatively stable in 2015 versus 2014, what do you guys expect in terms of the title margin? And also, in your presentation or in the release you note that 15% to 20% margins are attainable in an improving real estate market. Just curious if you can quantify what kind of market you would need to get to the high end of that range.

[Bill Foley:]

Well, what we do need is a purchase market 2015, we're very strong with our multiple brands on the commercial side we expect to have to continue in 2015 and 2016 and potentially beyond. The refinances we've seen go off in the back into '13 to most of '14 we've got this bit of surge but the real cornerstone of this margin improvement will be an increase in the purchase market. The MBA is projecting at least 15% increase in purchase in 2015 over '14 and we've got the footprint, we're ready to go we just need a larger market. MBAs when they were at -- 2 trillion last year that looking for 1.1 trillion this year we could use a little help there in the overall volume but when the purchase moves and the commercial stays where it is, we can get into that 15 to 20 range.

[Bose George:]

Okay, great. And then actually to switching to Black Knight. Actually during you Investor Day you guys had shown kind of the addressable market and Black Knight's share of that. In terms of the market as a whole can you discuss how fast that could grow? And then I think you had Black Knight at kind of 27% of that addressable market and how big Black Knight could get over the next few years.

[Bill Foley:]

The particular growth areas for Black Knight are going to be data and analytics which is showing strong growth right now, our RealEC platform, our Empower loan origination platform. We really – we have great software and technology and what we had a very good organic growth quarter in the fourth quarter of 12%. We don't expect that same 12% to occur in the first half of this year we really believe we're going to be mid to high single digits then as we start following through on number of implementations that will be finalize in August, we should start seeing some significant growth again organically. So, specific numbers I can't give them to you, we're taking share, we're taking business every day from our competitors, we've an excellent management group in place. So, that's kind of the way to answer the question.

[Bose George:]

Actually in terms of the changes are happening in August, I guess that's the new disclosures, can you just -- is there any impact on the title side? Are they compliance-related costs that we have to think about there as well?

[Randy Quirk:]

No, I don't see so, not -- not any measure.

[Bose George:]

Okay. And then the benefit from that piece of it, is that really going to be coming in through closing Insight?

[Bill Foley:]

I don't know Tom, you're on the phone you want to address that?

[Tom Sanzone:]

Yes, I mean basically we're going to head down on major deliveries for closing insight for August that’s going to automate the process we're working with most many of the significant players in the industry to kind of standardize on the platform as much as we can and hopefully a combination of working with the top lenders and all the agents we'll be able to automate as much as the process as we can to help make it more efficient. If you didn't have the automation it would be significantly higher cost to do it manually.

[Bose George:]

Okay. Actually just one follow-up on that. And in terms of revenues for closing Insight, do a lot of that come in after the August 1 deadline or is it already coming in?

[Tom Sanzone:]

There is some coming in for some of that actually earlier deals but most of it hits in August.

[Operator:]

We will go to the line of John Campbell with Stephens Inc., please go ahead.

[John Campbell:]

Thanks guys, congrats on a good quarter. Just back to the question just relating to the rest of -- deadline in August and as we think about Black Knight in the pipeline. Are some of the mega lenders, the Bank of America's and the Citi's of the world, are they just laser focused on the pending cases and that might be extending the Black Knight sales cycle?

[Bill Foley:]

John, I don't really feel there that's happening I mean we've got our sales in place we now were really are implementing as oppose to selling right now through August then we'll start to sell cycle aggressively again but our plate is pretty full right now that's why we're really thinking that we're going to be that mid to high single digits in terms of organic growth for the first six or nine months of this year and then we'll be able to start cranking it up.

[Randy Quirk:]

Yes, I think Bill that's right and the way it kind of lays out right now is the large players are -- really there are two areas of focus right now that the consent order being number one and getting out of the consent order. And then two, they're focused on the RESPA-TILA changes that are coming in August which predominantly affects their origination business and so that's their priority. We're obviously right in the middle of it with closing insight on the RESPA-TILA, but I do think that as they come out of the consent order then it opens up opportunities for us in other areas of the business like servicing and other areas like that.

[John Campbell:]

And then just curious about your thoughts around just the agency strategy in '15 and '16 and don't get me wrong, the direct rev growth outpacing agency that I mean that's great for margins, so we are happy to see that, but direct outpacing agency throughout '14 was a little surprising just given the decline in refi's. Is that more a product of direct just outperforming? Are you guys shutting agents? And then just related to that and you guys talked at Investor Day about growing that agency market share by about I think you said 3% or so. Is that still the case? And how quickly would you like -- you guys like to see that done?

[Randy Quirk:]

Well yes if that is the case, we are growing our agency footprint in 2014 we signed over 300 new agents and of course it takes a while for that revenue to hit the pipeline and come into play, so that's part of the commitment that that we made in terms of agency growth. And you're also correct is in that particularly the impact of the commercial revenue at the back-end of 2014 most of that falls into our direct operation, so you saw the spike in revenue there, but you don’t necessarily get the same percentage over on the agency side. And then we have a very significant centralized refinance play in our national agency solutions, the services national agents and when the refi's fell off through 2014, that revenue dropped also, it's a very significant part of our agency play. But we're very committed to growing our agents, we're aggressive in that regard as I said we're continuing to sign agents by cancellation program we've kind of left that behind over the last year or two. We're looking that our agents are not just based on some metrics relative to claims potentials. And so we're continuing to build that footprint, we're very committed to continuing to grow it.

[Operator:]

We do have a question from the line of Mark Hughes with SunTrust. Please go ahead.

[Mark Hughes:]

The EBITDA profitability within the Black Knight business, how should we think about that in the first half, if organic is slowing a little bit as you ramp up some of these new initiatives, will that have an impact on profitability? And is there any meaningful seasonality to that in the first quarter?

[Bill Foley:]

There's not really seasonality, we'll continue to grow our EBITDA even through this first six months or nine months, while we're doing these implementations. We have a lot of deferred revenue and now some of that deferred rolls into recognizable revenue and also EBITDA, so we have an aggressive budget for next year and it's going to end up with a pretty significant EBITDA expansion. And the other thing that happened last year was we had our synergy bonus plan which was expensive, but we did get a lot of cost out of Black Knight and that synergy bonus plan is now been terminated or is at an end, so that stops – that's actually an advantage to us in the increase EBITDA. So we're looking for EBITDA growth every quarter and we don't – we really aren’t seasonal, we're kind of recurring revenue model.

[Mark Hughes:]

And then, one final one, the corporate and other category, the personnel and other operating expenses, any notable trend that we should look for, it looks like those were down in Q4? How should we think about that for 2015?

[Randy Quirk:]

Yes I think 2015 you can expect it to look a lot like what you see in the fourth quarter, there's really as you can see as we carve out non-GAAP there's very little noise in the corporate and other and so we're running it about $30 million loss on a quarterly basis, pretax loss which is 21 of which is interest expense. So you can expect that to be a pretty good run-rate for 2015.

[Operator:]

We'll go to the line of Chris Gamaitoni with Autonomous Research.

[Chris Gamaitoni:]

On Black Knight the service business it was mentioned, revenue was 150 million versus 120 million last quarter. Did you win a big contract or was there a change in the definition?

[Bill Foley:]

No well we added – Tom we had – what we added.

[Tom Sanzone:]

We did add some deals quarter-to-quarter, but significant ones we announced.

[Dan Murphy:]

Chris this is Dan, what we did Black Knight reports that servicing revenue internally and so I wanted to be consistent with that. Last quarter it was only MSP, so a comparable number last quarter was a couple of million dollars less than that. In the future, we're going to continue to stick to that internal definition, so it will be better comparison, but in the third quarter sequentially I think it was about 152 million or 153 million versus that 155 and you'll see us reporting it that way in the future.

[Chris Gamaitoni:]

Okay. So, you base -- probably consolidate a lot of the default-related service technology?

[Dan Murphy:]

Exactly.

[Chris Gamaitoni:]

Oh, perfect. That is what I thought, I just wanted to make sure. Is there any update on when we might to get additional clarity on the other revenue line items besides servicing for Black Knight?

[Bill Foley:]

I mean we really got data and analytics and we've got servicing and you've got – and we're not breaking down Empower and –

[Tony Park:]

We can look at that in the future the maybe post IPL.

[Chris Gamaitoni:]

Okay, perfect. And then just some clarity on the Black Knight IPO. It was mentioned the proceeds, $600 million-some. So since you're not selling shares I'm a little confused. I thought the offering amount was going to be about $100 million of new issue.

[Randy Quirk:]

No, it's going to be larger than probably about 15% of these dilution about 15% to our interest in [PHO] will sell a very small portion of their ownership interest 2% to 3%.

[Chris Gamaitoni:]

Okay.

[Bill Foley:]

That proceeds then will go to pay down -- repay intercompany note and allow us to refinance the mirror note down at Black Knight so the Black Knight interest expense is going to really drop significantly.

[Chris Gamaitoni:]

That makes a lot more sense to me now. And then finally, I just missed this, how much of the synergies were in the quarterly run rate? I know you said it, I just missed it.

[Randy Quirk:]

Yes, it was $67 million in pretax synergies.

[Chris Gamaitoni:]

And pre- -- and how much of that was cost related?

[Bill Foley:]

That's all with the personnel, all of it cost related.

[Operator:]

Jason Deleeuw with Piper Jaffray, please go ahead.

[Jason Deleeuw:]

Hey thanks, congrats on good quarter. First on Black Knight, could you give us a little bit more color on the pipeline. Is the pipeline -- is it mostly cross-selling opportunities? Any color on new clients in that pipeline? And also are you getting more midsize clients there? And then also can you give us an update on the timing of when Walter is going to board onto MSP?

[Bill Foley:]

Well Tom, we've had a number of large contracts that was executed and are continue to execute particularly in the data and analytics area but are at liberty to disclose the names, they are significant names in the industry and we are taking this business from our competitors that were trying to get a little careful about disclosing those names are but one particular contract that was executed in the fourth quarter was $7 million and that's going to be terrific run rate contract going forward. Tom, I don't know if you want to talk about the pipeline since we've a strong pipeline -- every category that every one of our technology categories.

[Randy Quirk:]

Well, actually that's right Bill, it's pretty much strong across the board. If you take our servicing business obviously we take that some big clients we're still going after some big clients in the servicing space. We see a great opportunity in servicing and the consumer loan space and we're making a lot of progress there. So, we have strong pipeline there, we've a strong pipeline in origination technology, the way I think about that, that's loan origination platform and I really see business really see is got the closing inside platform. The way that shaping up is we've a lot to deliver for August but I actually think that as I see the market evolving a lot of the player who got on top of the changes quickly are going to convert in August but I do see a lot of demand for those products post August as well. And our data and analytics business is growing at double digit rates, we expect that to continue as Bill mentioned we had a very significant deal in the fourth quarter and we expect that there will be others as well. So, I'd say pipeline across the board is strong as far as Walter, which is Green Tree, either Q4 of this year or Q1 of next year.

[Jason Deleeuw:]

And then on the incremental margins and just the margin profile for Black Knight, it sounds like you guys are still targeting the mid-40%s. Why can't it be higher going forward? I mean do we stop at mid-40%s or can we keep going higher from there? Any thoughts on that front.

[Bill Foley:]

We're never going to stop because our first goal is to get to those mid-40s or to get to 45 or so but you'll see continued margin expansion and continued revenue growth as move through 2015, we have a lot of exciting things going on at Black Knight.

[Jason Deleeuw:]

Okay. And then on the title side with commercial, the -- can you speak about the mix of higher-priced properties versus lower priced? Because the refi fee per file or the fee per file in commercial is up meaningfully but the orders are kind of flattish year over year. So if you get something kind of unique this fourth quarter why the fee was so much higher and can you talk about how you see things progressing going forward?

[Randy Quirk:]

Well, typically at the end of the year a lot of the large large transactions close and I think that's what we see in every four quarter and then pay a little bit of price for it in the first quarter of the following year, but we just see a lot of large transactions and then the small and medium commercial market is very bright vibrant also that lot of activity in the multifamily and the office segments and refinances now are beginning to play a larger role on the commercial side, but really as the trend goes when you get towards the back-end of the year you just grow some real-real large transactions.

[Jason Deleeuw:]

And then on the free cash flow, it looks like it's running roughly in line with adjusted net income now and about 50% of EBITDA. Are those the correct metrics or ways to think about FNF's free cash flow generation going forward?

[Randy Quirk:]

I think generally speaking that's pretty close it's going to move around from quarter-to-quarter, but probably in that range. If you look at adjusted cash flows from operations, we generated $177 million in the quarter less 38 million in CapEx gets you to a free cash flow of 139, so 177 adjusted cash flow is consistent with our pretax earnings.

[Jason Deleeuw:]

And the last thing on the refi activity you are seeing to start the year, is that mostly on the FHA side with the premium reduction, can you guys tell? And what's your -- are you seeing or are you hearing from any of your customers any potential benefits on the purchase side with the FHA premium reductions?

[Bill Foley:]

Well we don’t really have that information, we did seen a couple of weeks in the beginning of the year here that as the refinances came up quickly, it did bring along the resale market coming back quickly. So even though we're not far ahead from where we were last January in terms of the open orders. The orders came back more quickly here in January into February, so maybe that has that effect that you're asking about.

[Operator:]

We do have a question from the line of Kevin Kaczmarek with Zelman Associates. Please go ahead.

[Kevin Kaczmarek:]

I just had a quick question on the title refinance orders. The FNT orders seem to be gaining some share relative to some other companies that have reported and I was wondering, if there were any special items that drove that and should we be expecting that going forward?

[Bill Foley:]

You're talking about the overall refinance orders in our account?

[Kevin Kaczmarek:]

Yes, within Fidelity National Title, the FNT, so excluding ServiceLink, the refi's were up significantly.

[Bill Foley:]

Well we have a real large network, we have multiple brands, we got a very aggressive sales team and we have great relationships with these national lenders as well as the regional bank, so we like what we see and they've come back pretty quickly and the interest rates and particularly in these markets where we have our multiple brands, we're able to take advantage of these large markets that have come back maybe more aggressively than some of the smaller markets. So that might be the answer, I hope I was able to answer that for you.

[Operator:]

[Operator Instructions] You do have a follow-up with Chris. Please go ahead.

[Chris Gamaitoni:]

Can you give us some clarity on the progress of selling Empower and RealEC down to the midmarket? I know you don't always very much strength at the enterprise level, but I think that was a goal laid out in your Investor Day.

[Bill Foley:]

We continue to make progress in that area although right now we're kind of focused on getting everything done for August. I would see us making more sales and deliveries in that space post August of this year, but there's definitely interest in that market. We are in dialog with a number of firms in that segment and I do expect that we will do deals with them, but post August.

[Chris Gamaitoni:]

And those types of clients, do you see them switching from more installed software platforms or kind of how do you -- are they going from in house to out of house? Or are they switching providers generally?

[Bill Foley:]

No really I mean it's a mixed bag right I mean some of that is in house developed software period. Other are vendor product that they actually customize on their own, so in essence they made it a customized platform, it's really not, even though it started as a vendor product it's really customized. I would say those are the two most common scenarios, sometimes it's a one-for-one take out with another vendor, but most of it is unique customized platforms in the business.

[Operator:]

There are no additional questions at this time. Please continue.

[Bill Foley:]

The last three quarters of 2014 highlighted our ability to generate strong margins in the title business in a somewhat sluggish real-estate environment. We continue to believe that we can generate even higher margins as mortgage credit becomes more regularly available and that residential real-estate market continues to improve. We also expect strong financial performance from Black Knight as we enter 2015. Thanks for being with us this morning.

[Operator:]

Ladies and gentlemen that does conclude our conference for today. Thank you for your participation and for using AT&T executive teleconference service. You may now disconnect.