Fidelity National Financial, Inc. (FNF) Q3 2012 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the FNF 2012 Third Quarter Earnings Call. [Operator Instructions] And as a reminder, today's conference call is being recorded. I would now like to turn the conference over to Mr. Dan Murphy. Please go ahead.

Thank you. Good morning, everyone, and thanks for joining us for our third quarter 2012 earnings conference call. Joining me today are Bill Foley, our Chairman; George Scanlon, CEO; Randy Quirk, President; and Tony Park, our CFO. We'll begin with a brief strategic overview from Bill Foley. George Scanlon will provide an update on the Title business and our other operating companies. And Tony Park 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 Foley. This conference call may contain forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our 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, 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 our website at fnf.com. It will also be available through phone replay beginning at 1:00 P.M. Eastern Time today through November 13. The replay number is (800) 475-6701 and the access code is 266992. Let me now turn the call over to our Chairman, Bill Foley.

Thanks, Dan. The third quarter is another solid performance from our Title Insurance business as we generated a 14.4% pretax margin for the second consecutive quarter. The last 2 quarters are evidence of significant earnings potential we have in a stronger real estate market. We acquired control of J. Alexander's on September 25, and closed the acquisition on October 29. We believe that J. Alexander's and its relative position upscale casual will be a great addition to our casual dining line up and look forward to its revenue and earnings contribution to our restaurant group. In August, we purchased an additional 1.5 million shares of Remy, giving us a 51% majority ownership stake in the company. Remy is also moving forward with its plan to have its stock, stock-listed on NASDAQ, undertaking certain initiatives to increase a number of round lot shareholders to meet the minimum NASDAQ listing requirements. We believe a move to NASDAQ will significantly increase liquidity of the stock and provide future financial flexibility for both Remy and its shareholders. Last quarter, we announced that Cascade has signed a definitive agreement to sell its landholdings. This particular transaction will not happen. We continue to look at other transactions, but are comfortable holding this investment for the longer-term if attractive alternatives are not presented. During August, we issued $400 million of tenure senior notes utilizing majority of the proceeds to redeem the $236 million of senior notes coming due in March 2013, and to repay $50 million borrowed under our credit facility. We now have no debt maturities until May 2017, and an unused $800 million credit facility providing significant financial flexibility over the next several years. In late July, we repurchased 1,015,000 shares of stock for a total purchase price of $19 million, including a $1 million share block at a price of $18.80. With the expiration of our current share authorization on July 31, our Board authorized a new 3-year $15 million share plan that currently has full authority available. Finally, last week, our Board approved a 14% increase on our quarterly cash dividend, moving it to $0.16 per share. We believe this dividend is a welcome return of capital for our shareholders, as a strong dividend is one of our main priorities in continually seeking to create value for our shareholders. Let me now turn the call over to our CEO, George Scanlon.

Thank you, Bill. This quarter, again, highlights the strength of our Title business in an environment of steady, consistent order volumes. Opening closed orders were primarily refinance-driven and generally similar to the second quarter of this year and we generated another strong 14.4% pretax title margin. Additionally, we also saw a 7% increase in open resale orders versus the third quarter of 2011, continuing the improvement in purchase volume we have seen throughout 2012. Finally, we have also seen a continuing year-over-year decline in claim payments as our claims management initiatives drive lower costs and we work our way through the high claim years contributing to a significant improvement in company cash flow. Our company is well-positioned to take advantage of the emerging recovery in real estate. Title pretax earnings of $211 million grew by $73 million or 53% over the third quarter of 2011, and our title pretax margin of 14.4% improved by 220 basis points over the prior-year period. For the second consecutive quarter, we produced a 14.4% pretax title margin in a market that remains weighted toward refinance orders. Our commercial Title business continued to perform well despite a 7% decline in third quarter revenue versus the prior year. Open orders of 18,200 increased 2%, and closed orders of 12,000 improved by 3%. The revenue decline was driven by a 10% decline in commercial fee per file, which is solely a function of the size, type and mix of closed orders during the quarter. Overall, the Commercial business continues to perform very well for us and we expect another strong fourth quarter performance. Open order accounts were very strong during the quarter, growing 18% over the prior year and gaining momentum as the quarter ended and we entered the fourth quarter. Overall, open orders averaged more than 11,200 per day for the third quarter, with July averaging 11,400; August, 10,800; and September, 11,400. The month of October actually showed an increase to nearly 11,700 open orders per day, our strongest monthly open order performance of the year. Not surprisingly, the mix of third quarter business was weighted toward refinance orders as 67% of open orders and 63% of closed orders were refinance-related. As I mentioned earlier, we continue to see strength in the purchase market as we experienced a 7% increase in purchase order volumes opened in the third quarter versus the prior year, continuing the trend we have seen throughout this year. At ServiceLink, open orders increased 34% sequentially from the second quarter while closed orders declined by 3%. Harp orders constituted approximately 50% of total open orders at ServiceLink in the third quarter. A significant volume of Harp business has caused a backlog of major centralized lenders and we expect to see a significant increase in closed orders at ServiceLink in the fourth quarter as the backlog is worked through. We now have 2 consolidated operations in addition to the Title business. American Blue Ribbon produced operating revenue of $298 million, and adjusted EBITDA of more than $10 million. All 3 restaurants segments, Casual, Upscale Casual and Family Dining posted positive comparative sales figures for the third quarter. Of the 6 concepts, only 1, O'Charley's, trailed its competitive benchmarks. We are still in the early stages of the integration of the O'Charley's acquisition, and we have many specific plans in place to improve the performance of the O'Charley's concept. These include a revamped menu with a focus on everyday value and embarking on a test remodeling program in mid-November. We expect to make significant progress in improving the financial performance of the O'Charley's concept during 2013. We also reported a $48 million pretax gain related to tax attributes acquired in the O'Charley's acquisition. On an after-tax basis, this added $34 million or $0.15 per diluted share to FNF's third quarter earnings. Overall, ABRH produced pretax earnings of $43 million for the third quarter. Upon achieving majority ownership on August 15, we began consolidating Remy's financial results, so we are reporting about 6 weeks of operations this quarter and we'll report our first full quarter of financial results in the fourth quarter. For the partial quarter, Remy generated operating revenue of $143 million and adjusted EBITDA of nearly $20 million for an EBITDA margin of 13.6%. Remy continues to perform well against a challenging global macroeconomic backdrop and remains focused on cost savings initiatives during the difficult economic environment. We also reported a $79 million pretax gain on the consolidation of Remy, as accounting rules require that we mark our formally minority-owned investment to market. On an after-tax basis, this added $55 million or $0.24 per diluted share to FNF's third quarter earnings. Overall, Remy produced pretax earnings of $80 million for the third quarter. Additionally, we recognized $5.5 million in earnings from equity investments from Remy through the first half of the third quarter when we still owned a minority stake. Finally, our minority owned investment, Ceridian, generated third quarter revenue of $356 million, a 3% decline from the prior year quarter, but despite that revenue decline, EBITDA of $88 million actually increased 17%. The EBITDA margin was 25% for the quarter and our 33% share of Ceridian's quarterly loss was $2 million. Let me now turn the call over to Tony Park to review the financial highlights. Tony?

Thank you, George. FNF generated more than $2 billion in revenue in the third quarter compared to $1.2 billion in the third quarter of 2011, as title revenue grew by $270 million or 23%. The consolidations of the restaurant group and Remy added $441 million in revenue and the realized gains from Remy and ABRH added $127 million in revenue this quarter. Net earnings were $233 million or $1.03 per diluted share and net earnings were $144 million or $0.64 per diluted share, excluding the Remy and American Blue Ribbon gains. Book value per share grew to $20.50. The Title segment generated more than $1.4 billion in operating revenue for the third quarter, a 23% increase from the third quarter of 2011. Direct title premiums grew by nearly 17%, driven by a 27% increase in closed orders, offset somewhat by a 5% decline in the fee per file due to a higher mix of refinance transactions. Agency premiums grew by 34% over the prior year, as our aggressive stance in reducing agency relationships and adjusting splits in New York have now taken place more than 12 months ago. Agency profitability grew as the third quarter agent split improved by nearly 60 basis points to 76%. Title segment personnel costs increased by $53 million or 14% versus the third quarter of 2011, and other operating expenses grew by $25 million or 9.5%. As we would expect, variable-based personnel cost increased more than the higher fixed-based other operating expenses, reflecting the operating leverage to improve order counts and the future mix shift toward more purchase transactions. The net effect was a 14.4% pretax title margin, an improvement of 220 basis points versus the third quarter of 2011. As Bill mentioned, we issued $400 million of senior notes during the quarter, and we used the majority of those proceeds to redeem $236 million of senior notes that were maturing in March 2013, and repay $50 million borrowed under our credit facility. FNF, excluding ABRH and Remy, has a total of $979 million in debt on the balance sheet at September 30, with no maturities until May 2017. Additionally, there were no borrowings under our credit facility as of September 30. The consolidation of Remy and ABRH added debt of $371 million, with $272 million from Remy, and $99 million from ABRH. FNF does not provide any corporate guarantee on the debt of either Remy or ABRH. Our debt-to-capital ratio was 23% at September 30, including the Remy and ABRH debt. Total title claims paid were $97.5 million during the third quarter and our reserve position remains within a reasonable range of our actuarial estimates. We will continue to provide for future claims at a 7% provision level for the remainder of 2012 and into 2013. We also continue to see encouraging results from the 2009 through 2012 policy years. Finally, our investment portfolio totaled $5.1 billion at September 30, an increase of approximately $90 million from June 30. From a regulated standpoint, we have more than $1.8 billion in statutory reserves, $1.7 billion in regulated cash and investments, and $530 million in secured trust deposits for a total of nearly $4.1 billion in regulated cash and investments. From an unregulated perspective, we have $370 million in a minority equity investments in Ceridian, and approximately $440 million in unregulated cash and investments, for a total of $810 million in unregulated cash and investments. There's also $112 million in consolidated cash at Remy and American Blue Ribbon that is necessary for their operations. Let me now turn the call back to our operator, Cynthia, to allow for any questions.

[Operator Instructions] Our first question will come from the line of Mark DeVries from Barclays.

Can you tell me any benefit we might expect to see for the Title margin in the fourth quarter as you work through that backlog of -- in ServiceLink that presumably had processing expenses upfront, but not necessarily revenues?

Yes, Mark, this is George. The ServiceLink performance in the fourth quarter will be better than the third quarter based on that order buildup in the third quarter closing in the fourth quarter and you noted correctly that we have to maintain a certain level of personnel to handle the order volumes and we saw that buildup during the quarter. It varies by bank and they can be sporadic, but when they come in, they come in heavy. So I would expect that there's some margin upside in our ServiceLink operations in the fourth quarter.

Okay. And then just more broadly, how much headcount did you add in the quarter?

This is Randy. We added 348 employees in the third quarter.

Okay. And I assume that you believe that puts you in a good position for the volume you would expect given the latest movement rates to handle anything in the fourth quarter and beyond?

Yes. It certainly, does. As George mentioned, a little bit of a backlog on the closing so even as the orders would flatten off, potentially with the seasonal effect as you go through the fourth quarter, we're going to have some real good closing volumes so we're watching it closely. We staff our company to productivity standards and metrics and we use it on the way up and we use it on the way down. So we think we're in actually a pretty good shape, but we need to open and close these deals and take care of our customers.

Okay. And then it looks like your agent premiums grew a lot faster year-over-year than direct this quarter. Can you just give us a little color on what you attribute that relative strength to?

I would say a lot of it has to do with maybe some of the noise of getting through the changes we made in New York. We talked about split adjustments that we made during the, I think, early second quarter of last year in New York. We've also been through a process, as you're very familiar, with reducing agent relationships that didn't make sense to us. So really getting through that and having some distance between those decisions and where we are today, I think, we're improving relationships with those agents that are still a big part of what we do and we're getting more remittance from them and so we're seeing a nice improvement year-over-year in agency volume.

Okay, great. And then finally, I think, George, you commented that the outlook for commercial volumes is good. Do you expect kind of the normal seasonality in fourth quarter volume with the pick up there?

I would expect the fourth quarter to be stronger than the third. As you can appreciate, Mark, commercial deals are large on a relative basis and can slip quarter-to-quarter. So it's hard for us to project exactly what's closing, but traditionally, the fourth quarter is the strongest and our inventory coming into fourth quarter is very strong. So as best as we can tell, we'd expect an up quarter, but it's subject to all those factors that can cause deals to get delayed.

Our next question comes from the line of Jordon Hymowitz with Michigan Financial.

Can you talk about the Harp loans for a minute. Is there any different pricing differential that you guys garner on HARP loans than non-HARP loans?

Jordon, this is George. No, it's really the same pricing. They're obviously managed by the banks on a centralized basis and they come into our operation and so there's some efficiencies we realize as the volumes pick up and we're able to leverage the headcount, but the rate is about the same that we get in other refi transactions.

Is the expenses any less or not really or?

No, not really. I mean, it all flows, for the most part, through our ServiceLink operations and the margins there are comparable to our other field operations and I think the challenge that ServiceLink has to monitor is their headcount levels relative to the order volumes which can be spiky. But as we indicated, there was a build in the third quarter and good momentum coming into the fourth and so we expect the closings to accelerate based on that build of inventory.

And last question on the topic is what percent of originations in the quarter were Harp and what percentage in the fourth quarter, on the backlog, so to speak?

Well, out of our total refi orders in the third quarter, 15% to 20%, Randy?

Pretty close to 20%.

20% were Harp-related. So we've talked about 67% of the orders in the quarter being refi-related. So the 20% of that is the Harp-related order volume.

And is it similar to the backlog?

Yes, I think that's probably about -- that's a good assumption to use, Jordon, as you project into fourth quarter.

Our next question comes from the line of Geoffrey Dunn with Dowling & Partners. Geoffrey M. Dunn - Dowling & Partners Securities, LLC: First, could you talk a little bit more about the commercial market. It's probably for Randy. Are we seeing any shift in the type of deals being done, meaning, are we shifting more back to traditional business versus some of the workout deals we've been seeing for the last few years? And is that affecting your fee per file on any kind of permanent basis?

Well, you're seeing a lot of multifamily work -- multifamily transactions right now. You're still seeing the large commercial properties known as the trophy properties coming through. So I think, again, in terms of a fee per file, it's a little bit of a product of timing of what transaction close and which quarter, but traditional back in the sense that you do have refinances of properties and how you are seeing that multistate and also just local pure sales. Geoffrey M. Dunn - Dowling & Partners Securities, LLC: Okay. And then kind of extending what we're talking about with ServiceLink. In general, I think, the sense in the market is that closing periods, particularly on refis, are extended across the board. So in modeling, we would normally think that openings in October would hit December or early January. What is your sense in the market these days? How low has that period been extended out?

Well, as George mentioned, in ServiceLink, we have more of the spikes in volume. You've seen some of this logjam within the lenders. So what used to be a refinanced transaction that could close potentially in 3 weeks to 4 weeks, you're now looking at 6 weeks and 7 weeks and when you get out into the direct operations, it's pretty much the same thing that there is such high-volume right now. It's taking longer to get from open to close. Geoffrey M. Dunn - Dowling & Partners Securities, LLC: Okay. And then last question is on the restaurant side. Obviously, a lot of integration going on right now with a couple of significant deals. Can you give us any insight into how we can judge your integration efforts over the next, let's say, through '13. I think you've talked about getting that EBITDA margin up to peer comps, I think, they're probably like 6%, 8%. Is that a fair hurdle to judge you on in the next 5 quarters?

Yes, I think that's a fair judgment to use. We're with O'Charley's, which is the major integration effort, O'Charley's and Stoney River and a little bit of 99. That really kicked off in May and June of this year. And we went to the process of actually moving the ABRH headquarters from Nashville, down to our -- I'm sorry, from Denver to Nashville, and the key management staff that was involved with ABRH actually have relocated and moved and there's been significant adjustments in personnel already in the ABRH group. And we're ahead of schedule and our minimum synergy number was $20 million, but the guys are incented to do better than that and we are confident that we'll do significantly better than the $20 million synergy number. But to date, with the restaurant closings and there'll be a little noise probably in the fourth quarter with regard to a couple of J. Alexander's closings, and then the booking of negative goodwill in fact, in the income. So we've just had noise the first 5 or 6 months of this acquisition program. That should be really behind us beginning in January or the first quarter of next year. And then you're going to start seeing these numbers fall into line and we'll be meeting your expectations as we go forward through 2013. Geoffrey M. Dunn - Dowling & Partners Securities, LLC: And Bill, is there -- now that you've had these various acquisitions, is there any particular type of restaurant area that there's a hole on the portfolio you've established or you just continue to be watching optimistically for deals that might complement?

No, I believe actually what we're focusing on -- well, I know what we're focusing on now is kind of upscale casual. If we brought a management team along in terms of the operations group with J. Alexander's that's very skilled and they're going to get involved with our Stoney River chain, which is upscale casual. And we're taking a look in the marketplace for upscale casual chains, could be integrated into that division. So we really have 3 divisions now of kind of a family dining segment, a casual group, which would be O'Charley's, 99, Max & Ermas and upscale casual, which is J. Alexander's, Stoney River. And there's a lot of capacity to add to that third leg. On the O'Charley's leg or O'Charley's restaurant chain, I was just out at Nashville a couple of weeks ago and we have an excellent outside image enhancement and inside image enhancement program that will be kicking off, with the first one being finished around November 15. And it's exciting, the way it's going to redesign the way O'Charley's looks and make it present itself in a different way to the consumer, plus it's a complete food, a complete menu modification and change and it's a change in terms of the training and the dress and the attitude of the employees. So I walked away from that experience in Nashville, a couple of O'Charley's having really a lot of confidence in the direction we're taking with O'Charley's. And I would encourage you, in the first or second quarter of next year, to take a trip to where some of the stores have been remodeled and just take a look and try the food because it's outstanding. And this is going to be not just a fun investment for FNF, but a very profitable one.

Our next question comes from the line of Bose George with KBW. Bose George - Keefe, Bruyette, & Woods, Inc., Research Division: Just going back to the title margin, if we leave aside ServiceLink, do we need the purchase market to come back a little more to see the Title margin go up from here?

Bose, it's George. I'd say that, that's always a function of volume, right? And our margins, as you've seen in the last couple of quarters, are in the mid-teens. And despite an overall market, that's still pretty lousy. I would say that as we begin the transition to a more normalized mix where we're maybe 70%-30% purchase to refi along with a continued strong commercial market, you'll see our ability to expand margins. And obviously, the market will be going through a transition next year, but in the meantime, we're enjoying the refi volumes and we're able to generate market-leading margins. Bose George - Keefe, Bruyette, & Woods, Inc., Research Division: It makes sense. And just switching over to capital management, you guys obviously raised the dividend nicely, but just going forward, the shares remain a little bit above book. How do you just balance the difference, uses for your excess capital?

Well, paying a strong dividend is a priority of ours and we've been raising it over the last couple of years, 17% coming into this year and now 14%. And it's a respectable yield on our book value. And as you indicated, we're trading marginally above book today. We've added, I think, about $4 per share to book value this year so far. And as we look at buybacks, we were active in the third quarter. There was an opportunistic situation that allowed us to take out a chunk of shares. We will periodically be back in the market doing buybacks as well. As Tony indicated, our balance sheet is in great shape. We've got an $800 million revolver that's not drawn on. Targets for growth will probably be to augment the restaurant business. We see opportunities as we've complete the integration of O'Charley's to further expand that. And we also look at small niche-type transactions in the Title business that can strengthen our offerings through our ServiceLink programs. So those are where we're going. We're still mindful of a market that's transitioning so we want to be on the conservative side, but as you saw from our cash flow, we're encouraged about the directions that claims are going. And hopefully, we could see a sustainable trend there and over time, that will obviously allow us to take down our provision rate and enhance our margins that way as well. So those are probably the order of priority I would place on it.

Our next question comes from the line of Brett Huff with Stephens, Inc.

A couple of quick questions. George, just to follow-up on your provision comment just a minute ago, it sounds like when Tony -- or maybe Tony can comment on this too. Tony, you said that 7% through '12 and then into '13, does that imply you guys are sort of thinking about a reduction in provision once we get in the back half of '13 or what visibility can you give us on that?

Well, we've seen favorable trends, Brett, as we're starting to get on the other side of the mountain of those high claim years in '06, '07 and '08. And then we've seen favorable loss experience in '09, '10, '11 and year-to-date '12. So at some point, frankly, we're going to be over-provisioning. And if that trend continues, that we've seen over the last few years, then continuing a 7% rate will be inappropriate and too high. So as we look into next year, we're going to maintain that 7% rate. You're always subject to some volatility with major claims and so we want to maintain more of a conservative bias, but certainly, if we maintain this pace through '13, then as you look at '14, I'd say there's likely to be a reduction in that provision rate.

Okay. And then in the past, you guys have talked about sort of what the normalized market and what maybe the earnings power could be. Any revisions to that thought in terms of earnings power for the company looking forward now in a normalized market, whatever that might mean?

Yes, it's hard to say what a normalized market is. The outlook for next year is changing and improving. I think as refi is expected to be stronger than it was originally thought and the resale market is improving and we're seeing that in our numbers. I think what we've done is we've adjusted our cost structure to where in a normalized 1.5 trillion market, we're going to do very well. But next year won't be normalized because, I think, we're still seeing the transition and I don't think we'll see, until '14, a shift where purchase is outweighing refi, but we've done the things on the cost side, both in our shared services group, as well as in our field operations, to improve our efficiency. We've done some things with technology that are enabling us to be more productive. And so our breakeven point is lower and we've consistently shown a discipline on the cost side so that as order volumes pick up, we closely monitor the variable expense. So getting to the high teens is eminently achievable without getting to a $2 trillion market, which at one point in time, would have been kind of average. So we're just taking as it comes. Again, if commercial can continue to maintain its pace, the residential side will take care of itself and you'll continue to see margin expansion down the road.

Great. And then 2 more questions here. One is just a quick numbers question. On the tax rate, that moved around a little bit, it seems like the new segments are affecting that. What's a good number to use going forward? And then similar to that, as we look on the 2 new segments, the restaurants are relatively new and then Remy, should we just kind of double Remy based on what we saw this quarter and is that a reasonable run rate and then adjust it for any cost savings or operational synergies going forward? And then restaurants, what can we expect sort of on a run rate either with or without the new Jacks business?

Well, let me answer a couple question, I want Tony to handle the tax rate. I think using the Remy 6 weeks is a -- for modeling purposes, is probably a good way to start. They had some softness on the revenue line this quarter. That's probably going to continue for a little while, but I think directionally, that's a good start. Our restaurant business is running at about $1.5 billion of annualized revenue. The EBITDA measures are going to be still a little noisy as we get through the assimilation of O'Charley's, some additional restructuring expenses, the benefits of synergy coming through, and the timing of those, and then obviously, the J. Alexander's integration. So we don't give guidance, Brett, here, but I'd say you'll see expanding EBITDA margins into 2013, with a better second half run rate than a first half run rate as we further the integration and get some of the store closures and cost adjustments behind us.

And Brett, just to follow on. On the Remy piece, there was one adjustment that was solely related to our acquisition of a majority ownership stake, it was a purchase accounting number of $8.5 million that you can see in the reconciliation. So I would factor that in as being a one-time item. And then in terms of the tax rate, the fourth quarter, we would expect to see somewhere about the same as what we see year-to-date, which is a 30% effective income tax rate and that's been lowered due to a consolidations of ABRH, consolidation of Remy and losses from our equity investment in Ceridian. If you look toward next year though, I would expect to see that rate somewhere closer to what our historical rate's been, which is about 35%.

[Operator Instructions] Our next question will come from the line of Deforest Hinman with Walthausen & Company. DeForest R. Hinman - Walthausen & Co., LLC: I had a couple of strategic questions. Can you talk about your performance targets you're using with the Blue Ribbon's business and how we should think about you achieving those benchmarks going forward?

I think our first performance target relates to O'Charley's, and that's with this image enhancement and the menu change, uniform change and enhanced training. We really want -- we're really focused on moving the average unit volumes of O'Charley's up from that 2.3 per store average and getting more toward 2.5, 2.6 over the next several years. And as you know, as you get that additional revenue, it really starts falling through into EBITDA and into pre and after-tax profits because you've already got your fixed expenses and -- fixed expenses in place. I think the earlier question really highlighted where we're trying to get to in terms of this EBITDA margin target. And so we're targeting the 6.5% to 7% once our synergies are in place in terms of EBITDA on the restaurant group based upon the total revenue of the group. And we should get these synergies and it should be done and out of the way by the middle to the third quarter of next year. And then we'll really get back to work on just running the businesses very, very efficiently. Does that help or? DeForest R. Hinman - Walthausen & Co., LLC: No, that's very helpful. And then on the Remy business, it's interesting that you increased your ownership in that business. I know, in the past, you had the S1 sitting out there trying to do the IPO and with this transaction, are you kind of saying that you're not looking to do this spin in the near-term? And if not, what is the strategy with this business being consolidated at this point in time?

Well, we did a lot of work on Remy over the last 4 or 5 years. I mean, restructured the balance sheet, got rid of the preferred shares, got rid of some very expensive debt, and now, have now got the company structured with really modest debt. And on a net basis, we have about $100 million of cash, $105 million of cash and $290 million of debt. So the goal for Remy now is to start paying down that debt and move toward a lower debt-to-capital ratio. But on the overall thought process, we've investigated taking Remy public and it just was not -- the timing was just not right for that particular asset to undertake a public offering. We then took a stab at seeing that there were interested parties in acquiring our position in Remy, and that didn't work out. People really wanted the whole company or they weren't willing to pay enough money or they just didn't want our position. So for all the myriad of reasons you'd always experience in trying to sell a large minority position in the company. So then we decided, what we should really do is get this company more closely integrated within the Fidelity National Financial organizational structure, acquire a majority interest and then follow through on a NASDAQ listing by trying to create an employee stock purchase plan or other ways to try to increase the round lot number of shareholders to the 300 minimum required by NASDAQ. And so then at least we've gotten -- we've accomplished the mission of getting Remy traded on NASDAQ as a public company even though the float will be fairly modest but it will give some of our larger shareholders a chance to dispose of shares through NASDAQ as opposed to pink sheets. It will also raise the standard for Remy a bit because it will be Sarbanes-Oxley compliant within the next, I think, it's 2 years for them and 1 year for -- by the end of '13 for FNF. And then we'll see how the market goes for an asset like Remy. There may be some acquisitions. We have a lot of building on that balance sheet to borrow money to make acquisitions. We have a way to -- if we're on NASDAQ, we have a way to issue stock to a potential seller. So the flexibility for us goes way up. So that's kind of the Remy plan we ended up doing or taking the best alternative that we could come up with in terms of improving our relative position with our Remy investment and that's why we went over 50%. DeForest R. Hinman - Walthausen & Co., LLC: Okay, that's helpful. And then my last question is just on can you help us understand how the economics of foreclosure transaction like let's say some type of auction or even a bank sale to a third party. Is there any difference between the fees on that title search relative to the business we're seeing now?

Well, I think, Randy, you've got to handle that one because you'd be more attuned to it.

Yes. Virtually the same. I mean, you've got the REO that goes from the bank over to the home buyer, the new buyer and potentially a lender. So generally speaking, the fees are the same. You'd have a closing fee and a title insurance policy. So pretty much the same as your typical resale transaction. DeForest R. Hinman - Walthausen & Co., LLC: Okay. So there's no increased instances of like quick claim deeds. And the need to these type of transactions, it's really -- they have to go through a regimented process?

Correct, yes.

And with that, I'd like to turn it back over to you, Mr. Foley, for any closing comment.

Thank you. This is another great quarter for our Title business, primarily driven by refinance transactions. We were particularly excited about our future earnings potential as we begin to see more meaningful sustained improvement in the residential purchase market. We are also excited to be consolidating ABRH and Remy, and we are confident that holding a majority ownership positions in both of these companies will allow us to better create future significant value for our shareholders from both of these investments. Thanks for joining us today. Look forward to talking to you next quarter.

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