Fidelity National Financial Inc (FNF) 2014 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Fidelity National Financial 2014 first-quarter earnings conference call.

(Operator Instructions)

As a reminder, this conference is being recorded.

I'd now like to turn the conference over to your host, Mr. Dan Murphy. Please go ahead.

Thank you and thank you, everyone, for joining us for first-quarter 2014 earnings conference call. Joining me today are our Chairman, Bill Foley; CEO, Randy Quirk; Brent Bickett; our President; and Tony Park, our CFO. We will begin with a brief strategic overview from Bill. Randy will then review the entire Title business, Brent will provide an overall of our significant portfolio of Company investments and Tony will finish with a review of the financials. We'll then take your questions and finish with some concluding remarks from Bill.

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 our expectations, hopes, intentions or strategies regarding the future are forward-looking statements. Those forward-looking statement 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 financial and operating results and are not statements of 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 which forward-looking statements are subject to include, but are not limited to, the risks and 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 www.fnf.com. It will also be available through phone replay beginning at 2:00 PM Eastern time today through next Thursday, May 8. The replay number is 800-475-6701 and the access code is 323968.

Let me turn all over to our Chairman, Bill Foley.

Thanks, Dan.

While there was a lot of noise, financial noise in the first quarter, we accomplished a number of things. Despite a seasonally slow real estate market and a very significant decline in refinance volumes from the prior year, we were still able to generate a 5.5% pretax margin in our Title business, simultaneously, integrating pieces of LPS into our Title operations. Overall, we made significant progress on both the full LPS integration effort and the implementation of growth strategies at Black Knight Financial Services, positioning ourselves for future revenue and margin growth.

Financially, we reported adjusted net earnings from our core real estate and mortgage transaction services businesses of $74 million, or $0.26 per diluted share. Those adjusted net earnings exclude $80 million of unusual or one-time items, including $117 million of costs and expenses associated with the LPS acquisition and $75 million in purchase price amortization less a $51 million non controlling interest credit related to the LPS items and $61 million in tax credits from the adjustments.

Black Knight Financial Services had a strong first quarter under our ownership, generating an adjusted EBITDA margin of 35.9%. We are experiencing strong demand for our industry standard loan origination and servicing technology products and are excited about the growing and recurring revenue, improving operating margins and strong free cash flow at Black Knight.

The integration of LPS has progressed smoothly and we uncovered further cost synergies during the first quarter. We are now confident in raising our total cost synergy target to $290 million, with $215 million of that target already achieved by the end of the first quarter. Overall, we expect operating margins to improve in all of our core businesses, as we move through the year, as the impact of increased synergies becomes apparent in those core businesses and we also enter the traditionally stronger spring and summer real estate seasons.

Finally, we continue to work through process of setting up FNFV as a tracking stock for our portfolio investments. The stockholder vote is set for June 18 and we hope to close the transaction and distribute shares of FNFV through FNF stockholders on a 1 for 3 basis on or near June 30. I'll now turn the call over to Randy Quirk, our CEO, to discuss Title Insurance business.

Thank you, Bill.

This was our first typical first quarter in the Title business in a number of years. Purchase orders increased approximately 1.5% for the first quarter of 2014 versus the prior-year quarter and increased more than 3% in the first three weeks of April, while refinance orders declined 48% from the prior-year first quarter. We generated a 5.5% adjusted pretax margin and we expect our Title business to benefit from continued improvement in the residential purchase market.

Total open order accounts per day increased each month during the quarter. For the first quarter, total open orders averaged 7,700 per day with January at 7,100, February at 7,900, March at nearly 8,100. Of the 7,700 orders per day, approximately 5,700 were at FNT and 2,000 were at ServiceLink. The mix continued to be weighted towards purchase transactions in the first quarter with 55% of first quarter open orders related to purchase transactions. 71% of FNT open orders were purchase related and 93% of ServiceLink open orders were refinance related.

We had our best first quarter in the commercial title insurance business in a number of years, generating $104 million in revenue, an 18% increase over the first quarter of 2013 as the fee per file of $10,200 grew 23%. And the closed orders of 10,200 declined by 4%.

We are also encouraged that open orders, commercial orders increased by 5% over the first quarter of 2013. The fee per file in the first quarter was positively impacted by the continued mix shift favoring purchase transactions, as well as home price appreciation and a strong commercial title quarter.

The total fee per file of $1,858 increased 35% versus the first quarter 2013 fee per file of $1,373. The FNT fee per file of $2,151, increased by 40% over the first quarter of 2013. And the ServiceLink fee per file of $1,009 was an 8% increase over the prior year. Also, excluding our national commercial revenue, the total fee per file was $1,559, a 28% increase over the prior-year quarter.

With the combination of the LPS acquisition closing on January 2 and the lower order volumes in the first quarter, we remain focused on staffing levels. We reduced headcount in our operations by more than 550 positions, with about 290 of those reductions in our FNT operation and approximately 260 of those reductions in our ServiceLink business. As we enter the normally seasonally stronger spring and summer months, and the impact of the cost synergies is realized, we expect margins in our Title business to improve.

Let me now turn the call over to Brent Bickett to review our portfolio investment companies.

Thank you, Randy. The Restaurant Group produced operating revenue of $354 million, equal to the prior-year first quarter and it generated adjusted EBITDA of $24 million, a 41% increase over the prior year. The 6.8% adjusted EBITDA margin was a 200 basis point improvement from the first quarter of 2013.

Despite the widespread weather challenges, same-store sales and profitability increased over the first quarter of 2013 with O'Charley's experiencing same-store sales growth of 2.8% in the first quarter, providing further evidence of the positive progress we are making on the O'Charley's revitalization play.

Remy generated operating revenue of $302 million, a 6% increase over the prior year and adjusted EBITDA of $30 million for the quarter. The first-quarter adjusted EBITDA margin was 9.9%, a 130-basis point decline from the first quarter of 2013. Remy stock price is currently trading at approximately $25 per share, valuing FNF investment at approximately $410 million or more than $1.45 per share to FNF.

On a combined basis, Ceridian and Comdata generated quarterly revenue of $366 million, an 8% decrease from the first quarter of 2013. EBITDA was approximately $117 million, an increase of 13% and the EBITDA margin was 32%. Our 32% share of Ceridian, Comdata's net loss was $30 million primarily due to a one-time legal settlement at Comdata.

Finally, Digital Insurance had strong quarter and generated revenue of nearly $23 million, an increase of $7 million, or 44% over the first quarter of 2013. First quarter EBITDA was more than $5 million, an increase of 20% over the prior year.

Let me now turn the call over to Tony Park to review the financial highlights.

Thank you, Brent.

Our core operations generated $1.4 billion in revenue in the first quarter with Title generating $1.2 billion in total revenue and Black Knight contributing $187 million in total revenue. Adjusted core net earnings were $74 million, or $0.26 per diluted share.

Reflected in our core results were a number of nonrecurring pretax charges, including $41 million in LPS merger transaction cost, $39 million in severance costs, $32 million in synergy bonus accruals and $5 million in deferred revenue adjustments. Our pretax results by segment have been adjusted to exclude these items. And you'll find that in the segment tables in the back of our earnings release.

The Title segment generated $1.2 billion in title and escrow revenue for the first quarter, a 12% decrease from first quarter of 2013. Direct Title premiums declined by 15% and agency premiums declined by 23%, while escrow, title related and other fees actually increased by 4%, assisted primarily by the non Title premium revenue from the LPS acquisition.

ServiceLink, which is included in our Title segment, produced revenue of $215 million and adjusted pretax earnings of $10 million for an adjusted pretax margin of 4.7%. Black Knight, our mortgage technology company, generated first-quarter revenue of $187 million and adjusted EBITDA of $69 million, an adjusted EBITDA margin of 35.9%.

Core debt outstanding was $3 billion with no core FNF maturities until May 2017. FNF V debt was $341 million with $274 million at Remy and $67 million from the Restaurant Group. FNF does not provide any corporate guarantee on debt of either Remy or the Restaurant Group. Our overall total debt to capital ratio was 33% at March 31.

Total Title claims paid were $67 million during the first quarter, a decrease of $24 million, or 26% from the first quarter of 2013. We continue to experience favorable trends in our claims payments and will again review our carried position at the end of the second quarter with an eye toward lowering our current year provision rate if these favorable trends continue.

Finally, our core investment portfolio totaled nearly $4.3 billion at March 31. From a regulated standpoint, we have $1.8 billion in statutory reserves, $1.5 billion in regulated cash and investments, and approximately $500 million in secured trust deposits, for a total of nearly $3.8 billion in regulated cash and investments.

From an unregulated perspective, we have approximately $150 million of unregulated cash at core FNF as of March 31. There was also approximately $200 million in consolidated cash and investments at Black Knight and ServiceLink and approximately $100 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 Instructions)

Mark DeVries, Barclays.

Could you talk a little bit about opportunities you see to expand your businesses in Black Knight, particularly around mortgage technology? I know that BofA business was out there as a potential target, any color you could provide on that as well would be helpful.

We're continuing to work with our existing customers and clients to expand the business relationships that we have with companies like BofA, JPMorgan Chase, Citibank, Wells Fargo. We have a number of initiatives underway. We're working hard with BofA on the mortgage servicing business to help them with regard to their future servicing platform or future servicing business.

I really can't say much more than that right now. We believe we'll have some announcements relative to expansion of our customer base over the next 60 days. But no contracts have been signed at this time other than smaller contracts with Wells, which are very interesting, and some JPMorgan Chase contracts. I think that's all I can say about the BofA servicing business right now.

And if I can add to that, we are experiencing strong interest from existing and new clients from the marketplace for our loan origination systems and the mortgaging servicing platform. There is a lot of need to have an industry standard platform that is compliant with the new rules and regulations. So for those entities out there that have custom-made loan origination systems or still have internal servicing platforms that are not compliant -- and the cost of making them compliant could be prohibitive -- they're driving interesting discussions for us. So as Bill said, nothing to announce yet but we're having some very good conversations.

Okay, that's helpful. Stepping back at a higher level, now that you've got about four months under your belt now with the combined Company, how would you assess the revenue synergy opportunities relative to what you might have been thinking or hoping for going into this?

We believe there are going to be significant revenue synergy opportunities, particularly between ServiceLink business and the Black Knight businesses. The cross-selling -- LPS never cross-sold any products between any of their divisions; they were basically siloed. We have broken down or are breaking down all of those silos to ensure that we're getting our fair share of business from all the major lenders, whether it be ServiceLink business and title close or default business or it's Black Knight-related business relative to data and analytics or servicing business or loan origination business or really C business.

So we have a very aggressive campaign to cross-sell underway. And that's why we're very confident that you're going to see some fairly good margin expansion and revenue growth in Black Knight and in ServiceLink.

Got it. Turning to expense synergies, is there still room to increase that $290 million target? Or does that feel like the final destination there?

We don't think it's over till it's over.

So it's still $290 million and counting at this point?

It's $290 million and counting.

Okay, got it. And then just one last question.

Tony, is it still appropriate to think that the consolidated tax rate should be around 35% for this year?

Yes, Mark, I would guide you this way. I know it's unusual because we had the Comdata settlement in the numbers, which caused a 47% effective rate for the quarter. I would guide you toward a full-year forecast on a consolidated basis to 32%. And if you broke that down between core and FNFV, I would guide you toward about 36% to 37% in core. And the rest basically a negative in FNFV due to the results of that settlement, the Ceridian business, and some tax credits that we have available to us in the Restaurant business.

Okay. Great, thank you.

Geoffrey Dunn, Dowling & Partners.

First, a number question. Tony, where do you see CapEx trending on a quarterly basis going forward?

I think our number was about $30 million in the quarter. And I would guess that that's probably a pretty good run rate. So it's down substantially from what the pro forma results were in prior years, especially on the LPS side.

Okay. And obviously a lot of this is honestly comparable to what we saw at LPS. Can you talk a little bit about where you think a stable, sustainable margin is for Black Knight?

Well, we certainly should be able to achieve the margins that LPS had in the past on their technology business, which was around 40%. So as these synergies start taking hold and start flowing through the P&L, I would be disappointed if we weren't a 40% margin Company or better.

And then, Bill, my last question, can you talk a little bit strategically about Black Knight? I think coming into the deal, thoughts about DNA operations were up in the air. Obviously a big market, a lot of different opportunities out there but also a lot of people in that business.

Have you come to a directional decision on whether or not that's a business you want to stay in, or if it makes sense to focus on the other technology businesses?

I don't know. Brent, how would you --

I'd say that you're right that we were disappointed in the progress that LPS had made given the amount of capital that they've put into the business. But it is a core set of offerings that we think there are strong marketplaces for, and we have the customer relationships.

So we put new leadership in there. We've made necessary changes to stabilize the business. We're now, as Bill says, starting to cross-sell to both our servicing customers -- which is a no-brainer given the strength of those customer relationships -- as well as our ServiceLink customers and to kick out some of the incumbents there. So, no, frankly we view that as one of the bigger growth opportunities.

Now, when that growth will take hold, it might be a little bit slower. But we think that has some good potential to grow, and I think we have right leadership in there to execute on the plan.

And as far as M&A, I would assume that's an area that could greatly benefit from that, given what's out there in the market. Is that a fair assumption?

Yes. I'd say from M&A perspective, that would be an area that we're obviously looking at assets to see if they bring some products and solutions that we could then deliver to our strength, which is our customer relationships. So, yes, certainly in that area that's where we're looking.

All right, great. Thank you.

Bose George, KBW.

First, what's your target for debt to capital? And do you have some sort of time frame in terms of getting there?

Yes, I'll take that one. We told the agencies -- obviously we levered up to do the LPS deal. We're at 33% now. We made a commitment to drop that into the 20%s. We think if we meet our plan this year, we should be right around the 30%, maybe slightly better.

Once we get below into the 20%s, I think we'll naturally attrit to around 25%. But we should have ample free cash flow to enable us, at that moment in time, to continue to repay debt; if there are attractive acquisitions, execute on those. But we want to get into the 20%s and then see where to go from there.

Great. And then actually do your goals on leverage impact in any way potential growth at Black Knight? What if something meaningful opens up relatively soon?

We see no opportunities that would be that big that we don't think we could execute against. So, no, if there are attractive opportunities in what we see in the marketplace, if it's priced right and we think it could be additive to what we're trying to accomplish there, we do have the financial strength to execute on them.

Great, thanks. Let me go back to the cost synergies. So you noted $215 million by the end of first quarter. Can you give us a time frame for the remaining $75 million? And when you think of a year-over-year benefit, what would it be -- 2015 over 2014?

We believe we'll have the other $75 million by year end. So it'll roll in. There are a fair amount of synergies that will be realized in the second quarter, probably at least half. And then the balance, the other half, will come over the next six months.

But we're continuing to find opportunities. And for example, we just had a data center synergy at FNF that incurred in the first quarter, which we really hadn't budgeted for.

That was $17 million; wasn't it, Tony?

It turned out to be $24 million.

$24 million. So that wasn't even budgeted. We have another example, we've hired a Senior Purchasing Officer in the Company who's has got people working for him. And now we're consolidating purchasing for both FNF and the Title group and Black Knight and ServiceLink.

And simple things, such as phone services and hardware acquisition. We're just at the front end of that, and we don't even have a good number yet on what that purchasing synergy may be. And that will come in over this year as well.

So we have a lot of prospects on synergies. And we've got everyone focused on attaining the maximum synergies possible because there's a bonus plan associated with it. And so people are focused on it, and they're working hard on it.

And is there a good way to think about the year-over-year benefit? Because a lot of these will be impacting part of 2014. And I guess by 2015, all of the synergies -- or all the ones you've talked about so far -- will be in. Is there a way to think about in 2015 you'll get the benefit of the full $290 million? How much of that benefit do you get in 2014?

Yes, a bit of the synergies occurred prior to closing that we've worked on in anticipation of closing the transaction. I'm not exactly sure what that number was.

It was about $50 million prior, and then we did have some substantial day-one synergies as well. But rough numbers are about $30 million of actual cost synergies were realized in the first quarter. And that sounds light. If you annualize that, obviously it's $120 million, which is well short of $215 million. But keep in mind that if you had some significant synergies at the end of March, which we did, for instance the $24 million in IT savings, none of that benefited the first quarter.

So the second quarter should ramp up substantially from the first quarter's $30 million. And you'll see it get into the numbers pretty quickly. I don't know the exact benefit that you'll see for all of 2014, but it'll ramp up pretty quickly from here on out.

We also had the negative in the first quarter, although it's in the numbers. But we had significant severance charges in the first quarter as we moved through LPS executive staff and some senior management and sales people that were very high priced and high paid. And so that's behind us now in large part. There are still a few more, but it's pretty much behind us.

So we're excited about what's going to happen in the second, third and fourth quarter. We're very excited about it.

Okay, great. And actually one unrelated question. Do you know the percentage of your purchase open orders over cash purchases?

The cash purchases over probably the last year, year-and-a-half, in the neighborhood of about one-third. So I'd call it 30% to 35%, is a cash purchase.

Okay. Great, thanks.

Eric Beardsley, Goldman Sachs.

On the synergies, where do you expect to see those come in across the segments as you think about the businesses?

Let's see. Tony, do you have -- we've got about $130 million at Black Knight. We've got --

$130 million at ServiceLink.

$130 million at ServiceLink, and we've got some corporate and some FNF synergies. So that's how it breaks down right now. What is encouraging to us is that in the Black Knight organization, we weren't really combining two organizations. We were just taking over a company and making it more efficient, where ServiceLink was combined with the LPS's LSI business. So the synergies might have been a bit easier to obtain in the ServiceLink business.

We're really excited about what we're finding at Black Knight -- not only revenue opportunities, but the synergies that we obtained. And that's why synergy numbers moved up pretty significantly over the last four months or so.

Got it. So that was $130 million at ServiceLink. And sorry, what was the Black Knight number?

$130 million also.

That was $130 million also, okay. And then on ServiceLink, as you start to roll through these synergies, obviously you still have some headwinds from refi coming down. Where do you see the margin stabilizing in that business?

We're going to work our way back toward 10%; aren't we, Randy?

Yes, our minimum target is always 10%. And it's going to take a little longer to get it stabilized. There have been a lot of reductions in the first quarter. The refies have started too settle down for us. We'll get a better look at that as we move through the second quarter.

We've made some reductions in the second quarter in the Title group itself. We eliminated 550 positions; half of those came out of ServiceLink. So it's still a work in progress. But our minimum target is 10%.

Okay. And when can we start to see revenue grow there again, and what would drive that?

We've combined what we think is the best of both worlds in our sales effort. And we're out working with our existing customers to expand the relationships. We're also applying some additional focus in the mid-tier lenders that are looking for centralized services.

So we're going to build the revenue through the second, third and fourth quarter, as long as this refinance market continues to stabilize and isn't impacted severely by a quick rate increase. But we're going to be aggressive in the marketplace and build our sales team and build our relationships.

Great, thank you.

Brett Huff, Stephens Inc.

Bill, the question I wanted to ask you was I know that you're focused a lot on Black Knight. Can you just give us a couple of examples of how those conversations are going when you're having the cross-sale conversation with the lender? You mentioned LOS and things like that.

Are there specific products that are even a little more nuanced than that, or is it all LOS, is it all the data? Is there any color you can give us there?

It's every piece of Black Knight's business that was siloed that wasn't cross-sold. And so we have significant new opportunities on the MSP, the mortgage servicing platform, with customers moving onto the platform. And then we're cross-selling our loan origination systems. We're trying to get people that aren't on [Release E] on Release E, which is a transaction-based business.

And then we have our data and analytics. And so for some reason, LPS never cross-sold data and analytics with the servicing business. And it's just a natural. So it's only four months, and really the first 90 days was just hammering and getting synergies and getting things organized.

So we're starting to get to the point now that we can move through these cross-sales. We believe we'll have some pretty good things to talk about at the end of the next quarter when we have our conference call.

Okay, that's helpful. And then. Randy, I wonder if you could talk a little bit about, we're trying to understand the trends in Title just macro-wise and wondering what your experience is. As we look at the purchase environment, you've got regular purchase environment. And then you've got the distress purchase environment, which seems to be trending down as players get out of the market, even as regular purchase side of it trends up a little bit.

And similar bifurcation in refi, where you have rate driven refies which are probably flattish. And then you have some of the HARP and special programs, which I would expect at this point are starting to taper off. Can you talk about how that plays out in your business? Is that the right way to look at the world?

Yes, I can touch on a few of those things. The HARP business was primarily centralized over in the ServiceLink business. And we saw that fall off over the back end of 2013 through the first quarter of 2014 in some parts of the ServiceLink origination side. Relative to HARP, the market was off 65%, 70%. So we've already paid a price there.

In the decentralized world with the refinances that come in through the field, those orders are down now on the refinance side in that our distributed model -- it's really a 70% purchase, 30% refinance market. And I think that trend will continue as we move through the back end of the year. And really that's to our advantage because of the increased fee per file on the purchase side.

In terms of the default, that's in a centralized environment sitting in our ServiceLink business on the default side. That market's been off maybe 25%, 30% but seems to be settling down. And we're actually having some wins with some additional client relationships. So we should be able to fill in any downside in the marketplace as we go through the back end of 2014.

That's helpful.

There's still the situation that we have in the judicial foreclosure states; everything is very slow. It could take four to five years to actually go through a foreclosure versus two years in a non-judicial foreclosure state. So where you have a dealer trust sale -- for example California, Arizona, Nevada -- those states have all come back pretty strongly. The fault rates are generally below 5% in those kind of Western states.

In Florida, New York, New Jersey, the delinquency rates are still over 10%. And so there is work to be done in these judicial foreclosure states, working our way through the houses that are going through the process before they can probably get a really vibrant resale market.

But the West is vibrant, and it's going well. Sometimes there are multiple offers on houses now. So there are a lot of positives now on the resale side, but it is impacted by judicial foreclosures and the delay in bringing something to market.

And then, Bill, one last question for you. People have talked about different acquisitions potentially for the next step for Black Knight or maybe even the ServiceLink business.

Which parts do you feel you're looking really for scale in anything? Or is it you want potentially to buy a broader set of products? And can you pick and choose those, give us color on those?

Well, I'd say that we have a lot of opportunity in the HELOC space and consumer loan space, auto loan space, in terms of our servicing platform and adapting that. And that's an area that would be interesting.

We're continuing to evolve our loan origination systems, as Brent said. The major lenders that are originators want a common platform. They are not interested in having the regulation risk, supervisory risk of having a homegrown platform.

So we feel like we have a lot of tailwinds in the Black Knight business of selling existing systems and enhanced systems to our current customer base and, as Randy said, an expanded customer base. That number 25 lender to number 75 lender. So we feel very positive about the whole Black Knight business and the integration of ServiceLink with it. And I hope I answered the question.

Yes, that's helpful. Thanks for your time.

Ryan Byrnes, Janney Capital.

Most of mine have already been asked. But had a quick question, I think you noted a little bit about potentially improving loss ratio on the Title side. Wanted to see, again, you are on 7%; I think others are around 6% or so. Wanted to see where you guys think you can get that down to where it can trend to?

Yes, $67 million is what we paid in first quarter, which is the lowest quarter we've seen in several years. And it's really been like that, trending that way, for 18 months or so. We'll look at it again, as we do every quarter, as we get through the second quarter. The thinking though is that at some point, and probably some point soon, we do make an adjustment.

And my expectation would be that we'd move probably to a 6% loss ratio. Our experience in the last four or five years in actual ratios has been closer to 5% to 5.5%. So even 6% might be a little conservative, but that's probably the right first step. And again, that could happen soon.

Okay, great. And then while I have the opportunity of asking one of those non-core -- I was a little surprised on the Restaurant side to see EBITDA margins improve a little bit year over year obviously in the face of some pretty poor weather. Wanted to say if you could quantify the impact, if there was a negative impact from weather. And how to think about that business and what kind of EBITDA margins it could be in a normalized environment?

I'll tackle some of that. Yes, weather absolutely impacted our businesses. If you look at our Restaurant footprint, it's predominantly in the Southeast of the Upper Atlantic, the Northeast. So, yes, we were impacted just as much as anybody else. The margins would've been that much higher.

I think it impacted our casual dining business by probably $3 million of profitability. And even our upscale casual business -- it's a smaller business -- but maybe by about $0.5 million. So, yes, our margins would have been better. Our same-store sales growth would have been even better.

Great. Thanks for taking my question.

(Operator Instructions)

And at this time, there are no questions in queue. Mr. Foley, I'll turn it back to you.

Thanks.

The first quarter was a solid start to 2014. We look forward to an improving purchase market, the positive margin impact from the cost synergies and the recurring revenue and earnings impact from the Black Knight business. As always, we will look to maximize profitability in all of our business and continue to strive to create as much value as possible for our shareholders.

Thanks for joining us today.

Thank you, ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.