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Fidelity National Financial, Inc. (FNF)

Q1 2010 Earnings Call Transcript

April 22, 2010 9:00 am ET

Executives

Dan Murphy – SVP and Treasurer

Al Stinson – CEO

Tony Park – CFO

Randy Quirk – President

Bill Foley – Chairman

Analysts

Mark Dwelle – Barclays Capital

Doug Mewhirter – RBC Capital Markets

Brett Huff – Stephens

Bob Napoli – Piper Jaffray

Nathaniel Otis – KBW

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Fidelity National Financial first quarter earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session. Instructions will be given at that time. (Operator Instructions) And as a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Dan Murphy. Please go ahead, sir.

Dan Murphy

Thank you. Good morning, everyone, and thanks for joining us for our first quarter 2010 earnings conference call. Joining me today are Al Stinson, Chief Executive Officer; Raymond Quirk, President; and, Tony Park, CFO. Our Chairman, Bill Foley, will join us later for the question-and-answer session.

We'll begin with the brief strategic overview from Al Stinson. Al will also provide an update on the title business and our other operating companies. And then Tony will finish with the review of the financials. We'll then open to questions – open for your questions, and then finish with some concluding remarks.

This call may contain forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our beliefs and expectations 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 economic performance and are not statements of facts, 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 risks and other factors detailed in our press release dated yesterday and in a 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. It will also be available through phone replay beginning at 11:00 am Eastern Time today through May 22nd, 2010. The replay number is 800-475-6701. And the access code is 152826.

Let me now turn the call over to our CEO, Al Stinson.

Al Stinson

Thank you, Dan. This quarter was a typical seasonally-impacted beginning to the year as we started slow in January coming out of the holiday season and built momentum as we made our way into the month of March. Open order counts were relatively stable during the quarter after the first two weeks of January as we averaged between 8,500 and 8,800 from the second half of January through March. Close order accounts were seasonally soft during the first quarter and were further impacted by the new RESPA closing requirements.

We also continued to aggressively manage our cost structure in the first quarter, eliminating nearly 600 additional positions during those three months. The two-and-a-half months of consistent open order activity, the first quarter seasonal delay in order closings, and the continued cost reductions should allow us to produce stronger results in the title business during the second quarter.

Previously, we announced the signing of a definitive agreement, under which we will sell our 32% equity ownership stake in Sedgwick to two private equity firms, including one which was a 40% owner of Sedgwick when we made our initial investment in January 2006. Under the terms of the definitive agreement, the total cash purchase price for Sedgwick, including the repayment of debt, will be about $1.1 billion. We expect to receive net proceeds of about $220 million for a 32% equity ownership stake resulting in a pre-tax gain of about $95 million. Closing is expected during the second quarter of 2010 subject to customary closing conditions and the receipt of any necessary regulatory approvals.

The sale of Sedgwick clearly achieves our ongoing goal of creating significant value for our shareholders and is the culmination of a very successful four-year investment for FNF. We are very proud of the growth that Sedgwick experienced during our mutually beneficial partnership with the company. And we wish them future success with their new investment partners.

We realized a significant gain from one distressed debt investment in our portfolio, MSX International. We originally purchased the bonds during the first half of 2009 for a total purchase price of about $22 million. In early March, we sold these bonds for total net proceeds of about $48 million, a pre-tax gain of $26 million.

Yesterday, our Board of Directors declared an increase quarterly cash dividend of $0.18 per share. The $0.18 per share cash dividend represents a 20% increase over the most recent quarterly cash dividend of $0.15 per share. We are confident in the future prospects of FNF. And we hope that this significant increase in the dividend could face that confidence to our shareholders.

During March, we amended and extended our existing credit facility, decreasing the total size of the facility from $1.1 billion to about $951 million and pushing the maturity date on a $925 million tranche out to March 2013. We had one lender who declined to extend. And thus, we still have a $26.25 million tranche that matures in October 2011. Pricing on the $925 million tranche was increased to LIBOR plus 150 basis points at our current ratings, while the $26.25 million tranche pricing remained at LIBOR plus 47.5 basis points.

We did not retain the option to increase the facility to $1.1 billion, and financial covenants remain the same. This amendment and extension enhances our longer term liquidity profile and continues our strategy of conservatively managing our balance sheet and liquidity position during these uncertain times as our debt-to-total cap ratio ended the quarter at about 21%. In March, we also repaid $50 million subordinated debt note we issued to LandAmerica as part of the lawyers in Commonwealth acquisition. We borrowed under the credit facility to accomplish this, so there was no net impact on total debt.

Let me turn to the title business. Total open order volumes were relatively stable once we got through the first two weeks of January. We opened about 7,000 orders per day in the first two weeks of January, 8,500 open orders per day in the second half of January, more than 8,500 open orders per day during February, and nearly 8,800 open orders per day in March. Open order counts for the first half of April have averaged about 8,300 per day with a dip below 8,000 in the first week of April, and then a rebound above 8,600 last week.

While order counts are relatively stable, they were down sequentially from the more than 9,000 open orders per day for most of the fourth quarter of 2009. In response, we did eliminate an additional 600 positions in the title operations during the first quarter. In the first few weeks of April, headcount in the title operations has remained relatively unchanged.

We had a stable quarter in the commercial title business. We opened about 17,200 commercial orders in our national commercial divisions, and closed about 98,000 commercial orders, generating $48 million in revenue on a fee-per-file figure of $4,900. This represented increases in fee-per-file and total revenue and a consistent closed order count versus the first quarter of 2009. Commercial revenue accounted for about 17% of total direct title premiums in the first quarter.

Specialty insurance revenue was $89 million for the first quarter, an increase of about $2.5 million from the first quarter of 2009. Flood insurance generated $32 million in revenue, personal lines insurance also contributed $32 million in revenue, and home warranty produced $19 million in revenue. Pre-tax earnings were $6 million, and the homeowners business produced a loss ratio of 72% for the quarter. Pre-tax earnings were down due to increased homeowners’ losses from flooding in the northeast and smoke damage from California fires.

Cascade sold a substantial track of timberland during the quarter for $13.7 million. Before any cash distribution from that sale, our carrying value for Cascade was $87 million. We do expect a cash dividend in the second quarter. While we do not consolidate the results of Sedgwick, they produced revenue of $178 million, an EBITDA of $23 million in the first quarter or EBITDA margin of 13%. Our 33% share of Sedgwick’s first quarter earnings was $1.5 million. We also did not consolidate the results of Ceridian, but they produced revenue of $379 million and EBITDA of $76 million, and EBITDA margin of 20%. Our 33% share of Ceridian's quarterly loss was $7 million. Overall, we recognized $11 million in losses from our equity investments.

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

Tony Park

Thank you, Al. FNF generated $1.2 billion in revenue for the first quarter with pre-tax earnings of $43 million and tax loss used in operations of $88 million. Four major factors drove the majority of this decline in cash flow from operations. First, we received the $73 million Federal income tax refund in the prior year quarter. Also, total title and special insurance claims exceeded the provision by $42 million this quarter.

Annual bonus payments in the first quarter were nearly $30 million larger than the prior year due to improved operating results in 2009 versus 2008. Finally, the $48 million of cash proceeds from the sale of the MSX bonds was reported as cash flow from investing activities, not cash flow from operations. The title segment generated $1.1 billion in total revenue for first quarter, a 15% decline versus the first quarter of 2009 as close orders fell by 22% and the fee per file increased by 15%.

Pre-tax earnings were $23 million and the pre-tax title margin was 2.2%. Title segment personnel cost decreased by $60 million or 15% versus the first quarter of 2009 and other operating expenses declined by approximately $45 million or 16%. Overall, direct and agency title premiums both fell by 16% versus the first quarter of 2009, while personnel and other operating cost declined by 15% and 16% respectively.

Debt on our balance sheet primarily consists of the $411 million in senior notes due in 2011 and 2013, and the $450 million drawn under our credit facility. As Al mentioned, we repaid the LFG subordinated note during the quarter, borrowing under the facility to do so. Our debt to total capital ratio was 21% at March 31. Total titles claims paid were $96 million during the first quarter in line with our expectations. We maintained our 7% provision level and expect to do so again in the second quarter. As Al mentioned, we realized the $26 million gains from the sales of bonds from a distressed debt investment, MSX, causing a significant increase in our realized gains for the quarter. From a segment standpoint this gain was recorded in the corporate and other segment.

Finally, our investment portfolio totaled $4.8 billion at March 31. There are approximately $3.1 billion of legal regulatory and other restrictions on some of those investments including secure trust deposits of approximately $400 million and statutory premium reserves for underwriters of approximately $2.1 billion.

There are also some other restrictions including less liquid investments like our ownerships stake in Sedgwick, Ceridian and Remy and working capital need as from underwritten title companies, all of which totaled approximately $600 million. So of the gross $4.8 billion, approximately $1.7 billion was theoretically available for use, with about $1.55 billion held at regulated underwriters and approximately $170 million in non-regulated entities. We expect $100 million to $150 million of additional dividends from underwriters during the remainder of 2010.

I will now turn the call back to our operator to allow for any questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question will come from the line of Mark Dwelle with Barclays Capital. Please go ahead, sir.

Mark Dwelle – Barclays Capital

Yes. Thank you. Are you guys seeing any improvement in the last couple of months in the purchase refi mix that might suggests the average fee per file could start heading up?

Al Stinson

I think we’ll have Randy Quirk, President of Title Operations respond to that one.

Randy Quirk

Yes. Sure, Mark. We certainly have. The mix has shifted in the first quarter towards the resale side, where we currently are running in that at 55% of our open orders in April are resale transactions. We ended the first quarter with 51% of our resale orders opened up, our total order volume of that were re-sales. It is affecting the fee per file. As Tony had mentioned, our fee per file over the first quarter of last year, we're up 15%. We're finished out first quarter about $1,340 on average fee per file. That’s increasing now. We're running at about $1,400 moving towards the mid $1,400 range as we move to April and we anticipate that range to hold through the entire second quarter.

Mark Dwelle – Barclays Capital

Okay. Thanks. Can you guys provide any update on your efforts at Ceridian to improve the profitability out with there?

Randy Quirk

Yes, sure. Under our new CEO, Lee Kennedy, Ceridian has shown an improvement in the following areas, number one, Comdata is showing dramatic improvements as trucking miles begin to improve nationwide. We’re also, yes, implementing an extensive cross-sale program, which are the paying benefits. Lee is also in the early stages of a $50 million cost reduction plan. We're also rolling out our new InView payroll processing system as the year goes by. I think what you’re going to see is a pretty good improvement there, but where you really going to see the improvement is, when unemployment begins to – it had been in decline, and our performance will continue to improve.

Mark Dwelle – Barclays Capital

Okay, great. And just one last question, with the stock now trading a little above book, could you just talk to your interest in buying back stock here and also remind us where you stand on your authorization?

Also Stinson

Tony or Dan, you might have to comment on the authorization. But we continue to evaluate stock buybacks. We've always been a buyer as the stock gets down, the book [ph] value below. So we just continue to evaluate alternative uses of capital.

Randy Quirk

Yes. We have a $15 million share authorization. I believe we have more than $12 million shares available under that authorization. So we have plenty of room for more buyback.

Mark Dwelle – Barclays Capital

Okay, great. Thanks.

Operator

Our next question will come from the line of Doug Mewhirter with RBC Capital Markets. Please go ahead.

Doug Mewhirter – RBC Capital Markets

Hi. Good morning. I just have a couple of questions. First, could you go a little bit more into the how – I guess how you’re estimating the impact of the new RESPA requirements that’s pushed a lot of the closings out in terms of – is that term 45-day closings and the 60-day closings? Also, do you think that the RESPA requirements may also affect your closing ratio? In other words, would that cause some people to drop out of the closing process? Or is it just a few more pieces of paperwork?

Al Stinson

Randy, will you take that one?

Randy Quirk

Yes. Well, what we saw to the beginning of the year with the changes was really more mechanical. There were learning curves on both the lender side and title insurance at large in terms of how to produce the documentation, how to prepare the good faith estimates, the (inaudible). Systems had to be retooled. And so, it’s really mechanical at the beginning of the year. We’re probably through a lot of that already. It’s pushing orders into the second quarter that probably would have closed – opened or closed in the first quarter. So I believe we’re through a lot of that as not necessarily extending – that we know that's not necessarily extending the closing period, but it did push back the volume of closings into the second quarter.

Doug Mewhirter – RBC Capital Markets

Thanks. My second question is, what are the – I guess Tony, what are your expected uses of the proceeds from the Sedgwick sale?

Tony Park

I think initially, we would just apply those against our line of credit and pay that down. So we don’t have any expected use other than that currently. But it certainly allows us more flexibility.

Doug Mewhirter – RBC Capital Markets

Okay. I guess my last question is around the commercial activity. Looks like you had some – a little bit of organic growth, so now the doubt with comparisons with LandAmerica acquisition are behind you. This is despite hearing a lot of activity in the press about how a lot of commercial mortgages are increasing, including the 60-day delinquencies and various factors in that market. Are you seeing – is that actually helping you? Or are you seeing more workout transactions or people are trying to sell the properties before they get in trouble with the mortgage? Or is it just general better economic conditions contributing to the rise in volume?

Tony Park

It might be a little bit of each. We are seeing more workouts. We’re seeing more loan modifications that definitely structure in. We actually have a very steady stream of inventory coming in as you see in our (inaudible) file, went up a bit in the first quarter and our revenue did, so. We think it’s been somewhat stabilized. And many of our commercial people out in the field are feeling a bit optimistic.

Doug Mewhirter – RBC Capital Markets

Okay. Great. That’s all my questions.

Operator

Next, we have a question from the line of Brett Huff with Stephens. Please go ahead.

Brett Huff – Stephens

Good morning, guys.

Al Stinson

Hi, Brett.

Brett Huff – Stephens

One question, or two quick questions. Number one, can you just go through the fee-per-file decline sequentially again? We are little confused about the drivers of that. Was that a RESPA-driven item? Or can you give us more color on the drivers of that for 1Q?

Tony Park

Brett, one clarification. Are you talking sequentially Q1 2010 to Q1 2009, or fourth quarter to first quarter?

Brett Huff – Stephens

Right, 4Q to 1Q.

Tony Park

Okay. Well really, what that was is really effect of the commercial revenue at the end of the fourth quarter. We did have an uptick there. You don’t get a lot of commercial typically in the first quarter. So that was reason for that decline. But year-over-year, as I had already mentioned, fee-per-files come up from $11.50 to roughly $13.50. So we’re certainly heading in the right direction with the mix of business going to the retail side.

Al Stinson

Brett, I was actually surprised I wasn’t more of a decrease because typically, the fourth quarter fee-per-file is very much impacted by commercial. So that was a very modest decrease Q4 to Q1.

Brett Huff – Stephens

And then you guys talked a little bit about the fee-per-file running $1,400 in early April and going to $1,450, and you feel good about that. What are the drivers of that in particular? Is that some of the deals closing that got pushed out? Is the price increase getting fuller effects, commercial?

Tony Park

The real driver there is the mix of business. We’re opening now. Fifty-five percent, as I mentioned in April, is our resale mix. And we’re closing over 55%, 50% in April really for the first time in a couple of years. So that’s the real driver that the fee-per-file pushes up.

Al Stinson

Brett, you’re seeing some pretty nice return to some pretty decent volumes in resale, which definitely offsets the refi. If refi go down, that mix differential certainly drives increase in fee-per-file.

Brett Huff – Stephens

Thanks. That helps. And just detail the Cascade, it sounds like you guys sold off a chunk of that land. Can you just go through that math or those details again?

Al Stinson

Yes, sure. What we did prior to the sale, our investment, FNS investment in Cascade for how much percent, Tony?

Tony Park

Seventy percent.

Al Stinson

Seventy percent was the $86 million. So Cascade sold a pretty good chunk of land, and that’s an ongoing process. There is more to come in 2010 as a result of a series of transactions that are already pretty much in place. So Cascade is sitting there with the cash. Cascades' Board will meet and decide how much of the distribution to make. So that will continue to push our investment down. Our investment will continue to go down as we reap the rewards of FNF from the sale of those properties.

Brett Huff – Stephens

Got you. But it didn’t show up in your P&L.

Al Stinson

That’s the point I was trying to make in my comments. It will show up in Q2 when we make a distribution.

Randy Quirk

Just to clarify a little bit, the actual – if you look at the corporate segment, you will see – as we consolidate Cascade's books, you actually will see the impact of the sale. Now as Al mentioned, it didn’t impact our investment to this point because we haven’t had the distribution. But in terms of looking to P&L, you’ll see about $14 million revenue piece in the corporate segment. You’ll see cost of sales, which is in other operating expenses. So you’ll also see a minority interest expense for the 30% we don’t own. So net in our P&L, you don’t see much of a benefit, probably about $1 million. But you will see those components within the corporate segment.

Brett Huff – Stephens

Okay. Those are the two things that I needed. Thanks for your time.

Operator

And we have a question from the line of Bob Napoli with Piper Jaffray. Please go ahead.

Bob Napoli – Piper Jaffray

Good morning, everybody.

Al Stinson

Hi, Bob.

Bob Napoli – Piper Jaffray

Question on, I guess, in this market, I feel that the MBA forecast is for – about $1.3 trillion market refi. Clearly on moderating, maybe some pickup in purchase and refi are probably going to have the potential of rates go up to be low for an extended period of time and margins. Can you get your operating margins this year in the $1.3 trillion market and the title margins to double digits? Or do you need a stronger market than that?

Al Stinson

That’s a tough one, Bob. We’re trying to decide who wants to respond to your question, which is very, very difficult. I’m not sure we can respond very specifically. We’re going to do the best we can. Obviously margins will improve fairly significantly as we move through the year. We just simply don’t know the strength of this resale market and all those mix dynamics. There’re a lot of good things or glimmers of some good things going on. I’m not sure I would not want to go out on a limb and say we'd get to double digits. It's certainly a possibility.

Tony Park

And we also don’t know that $1.3 trillion is the right market. We’re seeing consistent orders flow even through – through today. And with that, it doesn’t feel like a $1.3 trillion market. Clearly, the refi market has dropped off. But the persons market is still there and still pretty strong. And so, we would almost expect to see a significant fall off in purchase and no commercial activity picking up, which doesn’t seems to be the case to see a $1.3 trillion. So when we’re talking of $1.5 trillion or $1.6 trillion, I think that changes considerably in terms of what we think we can do from the margin standpoint.

Bob Napoli – Piper Jaffray

Okay. Thank you. That's helpful. So really, how much do you have – how much did you invest in Ceridian in mix. Because I know you sold some off. What is it on – what do you have on the balance sheet capital investment on Ceridian today?

Tony Park

We have about $440 million invested in Ceridian today. We invested just under $500 million. So some of that have come down with losses experienced at Ceridian that we’ve picked up in our equity in earnings and losses of subs. But it’s down to $440 million.

Bob Napoli – Piper Jaffray

And now the – what are the – I mean are there any challenges on the funding side. I guess earnings have come down at Ceridian since the acquisition. And I know you had – I think it has funded most of the longer term debt, but I don't recall it. Are there any challenges on the funding side there?

Al Stinson

Bob we have no challenges at all, really. That facility is extremely attractive, and we have no problems there, no covenant issues, no either short term or any intermediate issues.

Bob Napoli – Piper Jaffray

And the Comdata business, I know it’s a fuel [ph] card you said that you improved? Is it primarily – is it primarily the heavy duty trucks, is that where you're seeing the pickup?

Al Stinson

Yes, it really is. And what you’re seeing is we track the over the road miles, which are beginning to improve dramatically – pretty significantly. We’re comping very strong month-over-month. And that's really where it’s coming from as heavy truck traffics moves across the country as the economy improves.

Bob Napoli – Piper Jaffray

Will you sell that business to de-lever or you sound like you don't really need to?

Al Stinson

Well, we don’t need to. It's certainly in a tacky piece of – it’s Ceridian that gives us a lot of flexibility, a lot of options.

Bob Napoli – Piper Jaffray

Okay. And Bill, on the investment side, do you have cash coming in from the sale of Sedgwick? I mean, when somebody invested in FNF after, you also – and I think they – given your history, they know that there's the potential for other investments not related to title. Are there other areas today or are you seeing opportunities to attractively invest FNF capital outside of the core business?

Bill Foley

Yes. Actually Bob, we're – we've got an interest in the restaurant business again. And so we made a small acquisition of a – we have over 45% owner of Village Inn and Bakers Square. And that investment has worked out very well for us. So we're continuing to look for opportunities in the restaurant – in the restaurant space that – or going through a restructuring or going through some sort of stress that we can consolidate those restaurant into our – into our, we just call American Blue Ribbon Holdings, into that company. So that’s an area that we're – that we continue to be interested in.

And there are just other opportunities. If the market is still being difficult in the real estate sector, we feel there maybe some other opportunities and real estate related businesses that are processing-oriented or processing-related. So that’s where our head is right now. And then of course the Sedgwick, the Sedgwick sale allows us – has allowed us to comfortably increase the dividend by 20%, and further really allow us to really evaluate the stock – more aggressive stock repurchase program and puts us in a strong position relative to the bonds that are due in August of '11, which is about $167 million. Our credit facility has been restructured. So everything is – restructuring everything out on the long side. So I feel optimistic about the financial structure of FNF much more so than I did maybe 15 months ago before we did that secondary offering. Does that handle the question?

Bob Napoli – Piper Jaffray

Yes. That’s very helpful. And last question, looking at this mortgage related processing, the real estate processing or service business, it seems like some of them have some pretty aggressive plans at wrapping up title operations, I think primarily, as agent. But are you seeing – is there any strategically, competitively, are there things like that that concern you that may take share from your direct business?

Bill Foley

The industry is only – is always only as strong as its toughest competitor, so that's a lot of–

Bob Napoli – Piper Jaffray

Yes, right.

Bill Foley

I've had a lot of competitors over the years that really haven't acted very intelligently in the marketplace. And there are a couple of competitors that are doing really some silly things and we just have to respond to them. We have to maintain our position in the market place and maintain our market share where it makes sense and we continue to evaluate whether it makes sense to maintain market share, give up market share and a lot of that relates to the agency side of the business.

But the reality is we have well over half of the cash and surplus of the entire industry and close to 50% of the title premiums in the entire industry. You know, we are always going to be the target but on the other hand our cash investment – our capital surplus is very strong. And lenders and other people doing business with title companies need to be cognizant of who they're doing business with and the strength of those competitors possibly because – LandAmerica is a good example. There a lot of policy holders out there right now that potentially that have now come into bankruptcy proceedings, would not have had a – would not have had a policy that was viable. So we continue to respond to the competition is the short answer.

Bob Napoli – Piper Jaffray

Thank you.

Operator

(Operator Instructions) And we go to the line of Nat Otis with KBW. Please go ahead.

Nathaniel Otis – KBW

Good morning, gentlemen. Most of the questions have been answered, but just quick follow-up to something that was said earlier. It sounds like there is no headcount reduction that have gone on so far in April, does that mean you're kind of taking a wait and see approach as we go into spring or should we expect more through the second quarter.

Al Stinson

Well, as you know, we did eliminate about 600 positions in the first quarter and we did that as the order volume had declined, really the most part of the back end of 2009. With the orders, stabilizing right now, we’re just staying with what we always stay and that's to manage the open order. So we're going to be aggressively managing the headcount. But if the orders remain stable, then the staffing will remain relatively stable. There's still some to do, and we’re still continuing with our consolidation effort in our profit centers around the country, but most aggressively on the agency side. So we are still doing consolidation, which will provide for some staff reductions. But we're staying with the order, our tried-and-true game plan, which is to watch the open order count on a weekly basis and manage our headcount accordingly.

Nathaniel Otis – KBW

Fair enough. That’s it. Thank you.

Operator

(Operator Instructions) We have no questions in queue. Please continue.

Dan Murphy

We are particularly satisfied with the three recent transactions involving the sale of investments including Sedgwick, the MSX bonds, and the timberland sales of Cascade, all of which we value for our shareholders and strengthen our liquidity position. The first quarter was a typically seasonally slow start to the year. We expect to get stronger results in our title business during the upcoming months. Thanks for joining us this morning. We look forward to talking to you next quarter.

Operator

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

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