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Black Knight Reports Q1 2018 Financial Results

Florida-based Black Knight, Inc., a provider of software, data, and analytics solutions to the mortgage and consumer loan, real estate, and capital markets verticals, announced unaudited financial results for the first quarter ended March 31, 2018.

Revenues for the first quarter of 2018 increased 5 percent to $270.3 million from $258.1 million in the prior-year quarter. Net earnings attributable to Black Knight for the first quarter of 2018 were $42.7 million, or $0.29 per diluted share, compared to $12.2 million, or $0.18 per diluted share, in the prior-year quarter.

Adjusted Revenues for the first quarter of 2018 increased 5 percent to $271.2 million from $259.5 million in the prior-year quarter. Adjusted Net Earnings for the first quarter of 2018 increased 42 percent to $64.1 million, or $0.43 per diluted share, compared to $45.3 million, or $0.30 per diluted share, prior-year year quarter.

Adjusted EBITDA for the first quarter of 2018 increased 9 percent to $129.9 million from $119.4 million in the prior-year quarter. Adjusted EBITDA Margin was 47.9 percent, an increase of 190 basis points compared to the prior-year quarter.

Black Knight Executive Chairman Bill Foley said, “We had a solid start to 2018, as we delivered Adjusted Revenues growth of 5 percent and Adjusted EBITDA growth of 9 percent, which drove margin expansion of 190 basis points. Our first quarter results reflect our continued focus on driving organic growth through cross-sell, adding new clients and the delivery of innovative solutions. The underlying fundamentals of our business remain strong, and we are on course to achieve the financial targets we have set for 2018.”

Foley continued, “On behalf of the board of directors, we are excited to welcome Anthony Jabbour to Black Knight as Chief Executive Officer. I am confident that the extensive experience and skills he brings to the company will drive our future success, and we look forward to his leadership.”

Black Knight CEO Anthony Jabbour added, “It is a privilege to join the Black Knight team and I am excited about where this company is today and where I believe it can be in the years to come. The unique blend of industry-leading solutions, exceptional client partnerships and an employee base with deep industry knowledge lead me to believe that Black Knight is well positioned to continue its successes on all fronts."

Definitions of non-GAAP financial measures and the reconciliations to related GAAP measures are provided in subsequent sections of the press release narrative and supplemental schedules. Black Knight has not provided a reconciliation of forward-looking Adjusted Net Earnings Per Share and Adjusted EBITDA to the most directly comparable GAAP financial measures, due primarily to variability and difficulty in making accurate forecasts and projections of non-operating matters that may arise, as not all of the information necessary for a quantitative reconciliation is available to Black Knight without unreasonable effort.

Segment Information

Software Solutions

Adjusted Revenues for the first quarter of 2018 increased 5 percent to $233.6 million from $223.1 million in the prior-year quarter. Our servicing software business had Adjusted Revenues growth of 7 percent, primarily driven by strong loan growth on our core servicing software solution from new and existing clients, price increases and new client wins. In our origination software business, Adjusted Revenues declined 4 percent as increased professional services and new client wins were more than offset by lower Exchange volumes as a result of the 14 percent decline in refinancing originations as reported by the Mortgage Bankers Association and client contract termination fees in the prior-year quarter. Adjusted EBITDA increased 9 percent to $136.8 million from $125.4 million, with an Adjusted EBITDA Margin of 58.6 percent, an increase of 240 basis points compared to the prior-year quarter.

Data and Analytics

Adjusted Revenues for the first quarter of 2018 increased 3 percent to $37.6 million from $36.4 million in the prior year quarter primarily driven by growth in our multiple listing service business and increased volumes in our tax and title data businesses. Adjusted EBITDA was $8.6 million compared to $6.9 million in the prior-year quarter, with an Adjusted EBITDA Margin of 22.9 percent, an increase of 390 basis points compared to the prior-year quarter.

Share Repurchase Program

During the first quarter of 2018, we repurchased 3.0 million shares of common stock for $141.5 million, or an average price of $47.15 per share. As of March 31, 2018, we had approximately 3.8 million shares remaining under our share repurchase authorization.

Segment Realignment

On January 1, 2018, we realigned the composition of our two reportable segments. Certain enterprise business intelligence offerings in our Data and Analytics segment were moved to our Software Solutions segment (the "Segment Realignment"). This change aligns with our go-to-market strategy and with the internal management of our business operations, including the allocation of resources and assessment of performance. Prior-period results have been reclassified to reflect the Segment Realignment.

Balance Sheet

As of March 31, 2018, we had cash and cash equivalents of $9.9 million and debt of $1,502.6 million. As of March 31, 2018, we had available capacity of $363.5 million on our revolving credit facility.

Business Outlook

The following forward-looking statements reflect Black Knight’s expectations as of today's date. Given the number of risk factors, uncertainties, and assumptions discussed below, actual results may differ materially. Black Knight does not intend to update its forward-looking statements until its next quarterly results announcement, other than in publicly available statements.

Black Knight’s full-year 2018 outlook is as follows:

  • Revenues are expected to be in the range of $1,102 million to $1,122 million.
  • Adjusted Revenues are expected to be in the range of $1,105 million to $1,125 million.
  • Adjusted Net Earnings Per Share is expected to be in the range of $1.73 to $1.81.
  • Adjusted EBITDA is expected to be in the range of $530 million to $545 million.

Earnings Conference Call and Audio Webcast

Black Knight will host a conference call to discuss the first quarter 2018 financial results on May 7, 2018, at 5:00 p.m. ET. The conference call can be accessed live over the phone by dialing (877) 407-4018, or for international callers (201) 689-8471. A replay will be available from 8:00 p.m. ET on May 7, 2018 through May 14, 2018, and can be accessed by dialing (844) 512-2921, or for international callers (412) 317-6671, and entering replay passcode 13679141.

The call will also be webcast live from Black Knight's investor relations website at http://investor.bkfs.com. Following completion of the call, a recorded replay of the webcast will be available on the website.

About Author: David Wharton

David Wharton, Online Editor at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has over 15 years of experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. Wharton and his family currently reside in Arlington, Texas. He can be reached at David.Wharton@DSNews.com.

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