Lender Processing Services, Inc. (



Q3 2011 Earnings Call

October 26, 2011 8:00 AM ET


Parag Bhansali – EVP, Corporate Development

Lee Kennedy – Chairman, Interim President and CEO

Thomas Schilling – EVP and CFO

Hugh Harris – President and CEO


Carter Malloy – Stephens

John Kraft – D.A. Davidson

Glenn Greene – Oppenheimer

Greg Smith – Sterne Agee

Kevin McVeigh – Macquarie Research

Dan Perlin – RBC Capital Markets



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Good morning and welcome to LPS Third Quarter 2011 Earnings Conference Call. Joining the call today are Lee Kennedy, Executive Chairman; Hugh Harris, President and CEO; and Tom Schilling, CFO. They will be using a slide presentation to facilitate today’s review of third-quarter results and guidance for the fourth quarter, as well as some qualitative comment about full-year 2011.

The slides are on the company’s website for easy reference. The discussion today will contain some references to non-GAAP results in an attempt to provide a more meaningful presentation and comparison to prior period financials. Reconciliations between GAAP and non-GAAP results have been provided in the earnings release, which is available on LPS website.

At this time, the company reminds you that some of the comments made on today’s call will contain forward-looking statements. These statements are subject to various risks and uncertainties as described in the earnings release, 10-K and other filings with the SEC. The company expressly disclaims any duty to update or revise those forward-looking statements, including quarterly guidance.

With that, I’ll turn the conference over to Mr. Kennedy.

Lee Kennedy

Thank you and good morning, everybody. Thanks for joining us today.

I first want to say that we are very pleased with the progress that we have made over the last 90 days, and with our third-quarter financial results. Tom will cover the detailed financial results in a few minutes, but revenue and EPS came in stronger than expected for the quarter.

In my last quarter call, I have reviewed my four most important priorities in my role as interim CEO. First and perhaps most importantly, we wanted to complete the search for a new CEO. Then I will cover more on that in just a moment. Second we wanted to ensure that our customer relationships were maintained and secure. Third to work towards speeding up the resolution of legal and regulatory issues and finally to make sure that we are operating LPS as efficiently and effectively as possible.

Our financial and operating [ph] performance in the third quarter demonstrate that we are making good progress with all objectives. Our key customer relationships continue to strengthen and grow, and Tom will provide more detail on this later in the call. We have also made good progress in working towards the resolution of our legal and regulatory challenges, and most importantly we have successfully recruited an outstanding chief executive officer to lead LPS. In conducting this search, our board was committed to taking as long as necessary to find the best executive to lead our company.

We thoroughly vetted over 20 interested and talented candidates. Each were evaluated on a number of important criteria, including industry knowledge, experience as a CEO of a successful public company, familiarity with the regulatory and compliance challenges facing our company and our industry today, knowledge of our customers and prospect base, and the candidate management philosophy and the leadership skills. Hugh Harris was our unanimous first choice, and we are pleased to have him head up our leadership team.

I have worked with Hugh in the past, and I continue to be impressed with his leadership skills, industry knowledge and strong commitment to excellence, and most importantly results. Our board of directors and the entire management team are excited to have him leading our company.

Before handing the call over to Hugh, I wanted to take a moment to thank LPS management for all the support and hard work during this transition period. I now have even a greater appreciation for talent, integrity and professionalism of our leadership teams, and I’m confident that LPS is on the right track and that it will play an increasingly important role in the future of the mortgage industry.

And now I will turn the call over to Hugh.

Hugh Harris

Thanks Lee, and good morning. As I have only been here a few weeks, Tom is going to discuss the details of our financial results and business highlights this morning. But I did want to take a couple of minutes to introduce myself and my plans for the future.

First let me say I’m very excited to be at LPS. I would not have joined LPS if I did not believe it was still a very strong organization with significant opportunities in the future. I know you have all seen the announcement about me joining the company, so I won’t spend a great deal of time discussing my background. I have been in the mortgage industry for more than 30 years and I have served in several senior level positions at publicly traded companies. So I will understand the need to ensure that we deliver a clear message to you that you can understand our business.

For the past few years, I have been actively working in the industry as a consultant, and I am very familiar with the changes that have taken place in the mortgage industry. I have also followed the progress and changes at LPS. Although the company faced a difficult economic environment when they spun off from FIS in 2008, I was very impressed with the growth and success the company achieved in that difficult environment. But I’m also well aware of the challenges it has faced since then.

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