Fidelity National Financial Inc

NYSE:FNF

Earnings Call Transcript 2017-Q4

[Operator]

Ladies and gentlemen, thank you for standing by and welcome to Fidelity National Financial 2017 Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today's call is being recorded.

Your hosting speaker, Dan Murphy. Please go ahead, sir.

[Daniel Murphy, SVP & Treasurer]

Thanks, good morning everyone, and thank you for joining us for our fourth quarter 2017 earnings conference call. Joining me today are Chairman, Bill Foley; CEO, Randy Quirk; President, Mike Nolan; CFO, Tony Park; and EVP, Brent Bickett. We will begin with a brief strategic overview from Bill, Randy will review the title business, and Tony will finish with a review of the financial highlights. We will then open it up 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 at our website at fnf.com. It will also be available through phone replay beginning at 1:30 PM Eastern Time today through February 7. The replay number is 800-475-6701 and the access code is 442706.

Let me now turn the call over to our Chairman, Bill Foley.

[William Foley, Non-Executive Chairman of the Board]

Thank you, Dan. 2017 was a very successful strategic year for our company on a number of fronts. As we continue to deploy capital and our ongoing quest to create value for our shareholders. We simplified our corporate structure through the completion of two transactions during the year. On September 29 we completed the tax free distribution of Black Knight as FNF shareholders received approximately 0.3 shares of Black Knight common share stock for each share of FNF common stock.

On November 17, the exchange of FNFV tracking stock for new Cannae Holdings common stock and then the subsequent split off of Cannae Holdings was completed. We believe these transactions have created a streamline FNF corporate structure that has already provided meaningful value for our shareholders. We also continue to make acquisitions to strengthen our title insurance business. In 2017 we acquired 10 title and escrow companies for a total of approximately $130 million, the most significant being title guarantee of Hawaii in August. We believe there will be a number of strategic title in escrow companies -- company targets to allow us to continue to grow this agency acquisition strategy in 2018.

We also continued building our real estate technology platform aimed at the real estate broker and the agent markets through the real geeks and SkySlope acquisitions. We are now focusing on integrating our lead management, CRM and digital transaction management technologies to offer a suite of best of breed technology solutions for our real estate agent customers and further solidify our relationships with this vital group of clients. We also devoted a significant amount of cash for the repurchase of our outstanding convertible bonds during the year. In total, we repurchase $230 million in face value of the convertible notes for a total purchase price of $549 million leaving $65 million of the notes currently outstanding at the end of 2017. This eliminated the need to issue nearly 12 million shares of FNF stock if the notes have been converted based upon the year end conversion price.

Finally for the sixth straight year our board elected to increase our quarterly cash dividend with our fourth quarter 2017 dividend increasing to $0.27 per share, an 8% from the previously quarterly cash dividend of $0.25. Additionally, yesterday our Board also decided to raise our first quarter 2018 quarterly cash dividend to $0.30 a share, an 11% increase from the fourth quarter 2017 dividend of $0.27. The outlook for our title business and the recent Federal Tax Reform Act leave us confident in our ability to continue to generate the strong cash flow necessary to support the higher dividend which now gives our shareholder a 3% yield. As we enter 2018, we expect to continue to seek ways to deploy capital that will maximize return for our shareholders.

I will now turn the call over to Randy Quirk to discuss the title insurance business.

[Raymond Quirk, CEO]

Thank you Bill. The fourth quarter was another strong performance from our title business as we generated adjusted pretax title earnings of $273 million and an adjusted pretax title margin at 14.7%. For the full year of 2017 we generated more than $1 billion in adjusted pretax title earnings and adjusted pretax title margin of 14.5%.

The residential purchase and commercial markets continue to drive our performance in the fourth quarter as residential opened and closed purchase orders per day increased 5% and 1% respectively in the quarter and total commercial revenue grew by 1% versus the fourth quarter of 2016. On the refinance side, opened refinanced orders declined by 21%, the smallest quarterly year-over-year decline in 2017 and closed refinanced orders fell by 34%. For the fourth quarter, total open orders averaged just over 7,200 per day with October at 7,600, November at more than 7,500 and December seasonally lower at more than 6,300. As I mentioned, purchase orders opened per day increased by 5% for the fourth quarter.

For January, total open orders were just under 7,500 per day through January 26 and purchased orders open per day grew by 2.4% over the first four weeks of January 2017. Additionally, refinanced orders open per day increased 3.3% versus the prior year for the first four weeks of 2018.

During the fourth quarter we eliminated 407 positions in our field operations, almost all of them in November and December as we prepared for their traditional seasonally slow first quarter of 2018. We also eliminated another 62 positions in the first four weeks of January. Both our direct and agency channels had stable revenue performance as direct premiums declined by 1% versus the prior year while agency premiums increased by just under 1% versus the fourth quarter of 2016. Direct revenue benefited from the 16% increase in the fee per file by merely driven by the higher percentage of purchase closed orders and a small commercial fee per file offset by 15% decrease in closed orders driven by a decline in refinanced closings versus the fourth quarter of 2016.

Total commercial revenue of $288 million was a 1% increase over the fourth quarter of 2017 driven by 6% increase in the commercial fee per file offset somewhat by the 4% decrease in closed commercial orders. National commercial revenue of $165 million declined by 1% as the 5% increase in fee per file was offset by 6% decrease in closed orders. The full year 2017, total commercial revenue of more than $1 billion grew by 5% over 2016 while national commercial revenue of approximately $600 million increased by 3% over 2016. The total fee per file of $2,425 increased by 16% over the fourth quarter of 2016 as 61% of closed orders or purchase related versus 51% in the fourth quarter of 2016.

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

[Anthony Park, CFO]

Thank you, Randy. We generated more than $1.9 billion in total revenue in the fourth quarter, with title generating nearly $1.8 billion in total revenue and our corporate and other segment generating $121 million, which is predominantly real estate brokerage and technology revenue. Adjusted pre-tax title earnings were $273 million, a $19 million or 7% decrease from the fourth quarter of 2016. Adjusted net earnings from continuing operations were $170 million or $0.60 per diluted share.

The title segment generated $1.8 billion in total revenue for the fourth quarter, less than a 1% increase over the fourth quarter of 2016. Total title and escrow revenue was essentially flat with the prior year. Personnel costs increased by 5%. Salaries increased with the 3% increase in staffing levels needed to process the increased number of purchase orders as well as title acquisitions during 2017. As Randy mentioned, we did eliminate 407 positions late in the fourth quarter but that cost benefit won't be recognized until 2018. Other operating expenses declined by 3% as the major variable expenses in title plant usage and service linked pass-through businesses declined with the decrease in open and closed orders versus the fourth quarter of 2016.

FNF debt outstanding was $579 million for debt to total capital of just under 14%. Our claims paid of $63 million were $6 million higher than our provision of $57 million for the fourth quarter, we made the decision to lower the provision for claim loss expense to 4.5% for the fourth quarter. This change was supported by continued significant payment declines for policy years 2009 through 2016 and we expect to maintain the 4.5% provision level into 2018. The carried reserve for claim losses is currently $30 million above our actuary central estimate.

With the passage of the federal tax regulation we expect to see a significant benefit from the new 21% federal corporate tax rate. As we begin the year, we estimate that we will incur a 24% total tax rate in 2018 which include the impact of state taxes and other miscellaneous items that may not be deductible under the new federal tax laws. This 24% is our best current estimate and it is possible that figure could fluctuate as we move through 2018. Also, in our GAAP results we did record a $93 million credit adjustment to revalue the net deferred tax liability position given the recent passage of federal tax regulation. This credit adjustment was excluded from both, our adjusted net earnings and adjusted diluted EPS figures.

Finally, our investment portfolio totaled $4.5 billion at December 31. From a regulated standpoint, we have $1.5 billion in statutory reserves, $1.5 billion in regulated cash and investments and $830 million in secured trust deposits for a total of approximately $3.8 billion in regulated cash and investments. From an unregulated perspective, we have $360 million of unregulated cash as of December 31. There is $180 million in cash and investments at ServiceLink and other subsidiaries and $150 million in equity investments, all of which are restricted primarily by minimum working capital, or other regulatory requirements.

Let me now turn the call back to our operator to allow for any questions.

[Operator]

[Operator Instructions] First question from the line of Mark DeVries, Barclays. Please go ahead.

[Mark DeVries, Barclays]

Just one question for me; I was hoping to get a better sense of what we should expect for share buybacks in 2018? And also for the remaining $65 million outstanding in the convertibles.

[William Foley, Non-Executive Chairman of the Board]

The $65 million on the convertibles will be -- our present intention is just to purchase that used cash -- cash-on-hand to take care of that. And as we've certainly moved into the year and get through the first quarter the Board yesterday discussed a pretty significant buyback program, I believe we have $13 million or $14 million shares currently outplaced on it. And so you will start seeing some buybacks starting to occur once we're sure about the convertible repurchase in August end up with the cash has been allocated for that. And then also with regard to the dividend increase, ensure that we have adequate cash flow to fund that and then we'll be buying stock back; that seems like a good use of our -- good use of cash-on-hand. And with the dividend or with the tax reform act, it gives us a little more flexibility.

[Operator]

And next question is from the line of Bose George, KBW. Please go ahead.

[Bose George, KBW]

In terms of capital for acquisitions, it's the number you had in 2017, something we should think about for '18 as well?

[William Foley, Non-Executive Chairman of the Board]

I think that's a good target. We've sort of built out the real estate technology platform that we've been talking about, now it's a matter of integrating it and there are few small acquisitions that will help supplement that platform. And then we continue to look for agency acquisitions but we want them to be sizeable, we don't -- the $2 million or $3 million or $8 million revenue acquisitions don't really move the needle; so we're looking for larger acquisitions and generally those acquisitions reside in the West, so that's really kind of our -- that's really our focus, stay focused, stay central to the title insurance business, agency acquisitions and continue to build out our real estate technology platform.

[Bose George, KBW]

Actually related question on the acquisitions this year, how much did that contribute to the order account in the fourth quarter?

[William Foley, Non-Executive Chairman of the Board]

Well, I don't have an order account, I can tell you that our title guarantee company over in Hawaii was very, very significant acquisition. The other 8 or 9 or 4 of them were escrow companies in Southern California and some was in filling [ph] over in Florida, some small agents over in Florida to build out our Land Castle [ph] title initiative. I don't have TG's order count, we can get that for you but they've been very significant -- it added -- it did add about 600 employees with all these acquisitions through the year, we made room for those employees during the year as we overall reduce our staffing levels by about 800 but we do have a good operation in TG Hawaii with a run rate revenue wise with about $60 million.

[Bose George, KBW]

Last week the California insurance commissioner made some comments about P&C pricing in light of lower tax rate; I just wanted to get your thoughts on any potential changes in the regulatory landscape in title?

[Anthony Park, CFO]

Looking at just our after-tax margins for the company as a whole, we're sub 10%, so even with the tax reform and maybe 100 plus basis point benefit to that we still feel like our pricing across the board is fair and reasonable which is the standard that our regulators would require. If you look at California more specifically, our after-tax margins are in the mid-single digits, so even adding 100 basis points to that again, I feel like we're very competitive and we're very fair and reasonable to the consumers. So we don't really anticipate any regulatory pressure based at least on those guidelines.

[Operator]

Next question is from the line of [indiscernible]. Please go ahead.

[Unidentified Analyst]

First, on the investment income, it looks like it moved higher this quarter, is there anything that you can call out that drove that and is this new run rate got something sustainable that we should expect going forward?

[Anthony Park, CFO]

I would say both, we had our investment property exchange business continues to generate higher returns based on rates moving higher and so I think we had $2 million or $3 million there. We also had some one-time benefit from the FGL transaction, some fees that we earned as a backstop to close that transaction although about $4 million; so that was a non-recurring item in Q4.

[Unidentified Analyst]

And then on the balance sheet, I think last quarter you had suggested that when you achieve a rating as upgrade you would consider getting the debt to capital to a more normalized level. Can you just remind us what that would be and then any update on the timing from the rating agencies?

[Anthony Park, CFO]

Yes, rating agencies we would expect something I think in the first quarter. We've meet with both of them, one of them were half notch below the other, we would expect an upgrade from that one. In terms of debt to cap, 13.6% is pretty low relative to history to give you an idea of maybe a normalized number, 25% debt to cap would allow us to borrow about $850 million if we were to do that at some point; 30% debt to cap if we went that high we could borrow about $1.3 billion. But at this point given our cash flow generation, we don't plan to borrow unless there is a need to do that.

[Operator]

Next we have John Campbell of Stephens Inc. Please go ahead.

[John Campbell, Stephens]

Back to the corporate revenue line; Tony, I think you mentioned the majority of that brokerage in the CRM or technology rev [ph] but could you maybe pass out how much of that or maybe piece out what is brokerage versus tack [ph] and then I'm just curious if the entire bucket or that kind of all-in platform rev is actually making money?

[Anthony Park, CFO]

So the majority of the $120 million comes from the brokerage side. The technology piece is about $30 million. I think so roughly $90 million on the brokerage side, brokerage business is basically breakeven, the technology business just make a little money, the $23 million in adjusted pretax loss reflects some corporate expenses as well as the $9 million in interest expense. There is a bit of seasonality, especially to the brokerage business, so the fourth quarter and the first quarters are softer, the second quarters and third quarters, we have the strength of real estate activity and that's when we see more profit coming through that segment.

[John Campbell, Stephens]

And then Bill, maybe a question for you. I mean, it sounds like you guys are integrating now and obviously you've probably got bigger plans later down the road. Just curious about what the thought is there, what's kind of the strategic plan or with some blueprints you guys have in place, is that something you might IPO or is that something that you use internally; any thoughts there?

[William Foley, Non-Executive Chairman of the Board]

We're actually like focusing -- putting all of the real estate technology businesses under one umbrella, one single company and we're in the process now to create incentive plans for some of the management so that they can benefit from cross-selling each other's products and that's starting to work very well. And I know that in the last year, Commissions Inc. Randy [ph] had growth in client base of whether you say…

[Raymond Quirk, CEO]

Yes, 37%.

[William Foley, Non-Executive Chairman of the Board]

How many new customers?

[Raymond Quirk, CEO]

About 1,400.

[William Foley, Non-Executive Chairman of the Board]

About 1,400 new customers but about one-third of those new customers were actually generated by cross-selling from the title insurance reps and we really have it even kicked that off. So the idea or the strategy of having these real estate technology businesses and then cross-selling them with our title insurance reps is definitely working. On the build out of the platform we've still got long ways to go so we're really focusing this year in '18 on completing the complete integration from front to back and the goal being that when -- when someone wants to sell a house, when that -- when the farming system happens and they want to list the house, they've list it with one of our -- through one of our technology companies and then it's fully integrated all the way through the escrow close and the intermediate steps we start selling other products and services such as home owners insurance, pest control, inspection, so it's -- we're very confident it's going to be a very vibrant platform, it's going to be significant to our company. It's just -- as you know, the work is now for a year and a half or two years is just a process of getting these things integrated but we're really excited about the progress we've made particularly in the cross-sell area.

[John Campbell, Stephens]

And just curious; I mean, it's a similar situation at Black Knight where -- it's a good technology driven platform where it's kind of being bogged down by the title multiple, right, within the entity. So is there anything you could possibly spin out or IPO or maybe you retain some type of interest or ownership there?

[William Foley, Non-Executive Chairman of the Board]

I think that's part of the long-term plan assuming that we're successful in our process and developing the -- I mean really integrating the platform, probably a few years off to get there, we'd like to get ourselves to the point where we're doing $1.25 billion of revenue in this group of businesses and right now you can see this was about $30 million in the quarter, but -- you know, we're not that far off and the growth next year in these businesses we estimate to be roughly 35% on all the businesses put together. So it's got a lot of potential, it's working the way we hope to work and that [indiscernible] has always been as we develop these lines of businesses to create value for our shareholders whether it's through an IPO or through a spin-off.

[John Campbell, Stephens]

On the share buybacks, I just want to make sure I understand the commentary you guys just provided. It sounds like you may be holding off share repurchase activity into August, is that a fair way to sum up your thoughts?

[William Foley, Non-Executive Chairman of the Board]

No, I'd say it would be after the first quarter. We'll really re-evaluate and see how our cash flow is and see if we feel like it's a good use of borrowings, actually borrows the money and buyback shares; I'm a big fan of buyback shares on a continuing basis and not doing one-off deals. So I'd rather but 25,000 or 50,000 shares a day and be steady rather than buy 2 million shares when there is a particular seller and then we don't do anything. So we're trying to make sure that our projections on our cash flow are accurate and by the end of the first quarter we start moving into the stronger cycle and we definitely want to repurchase the converts in August for cash, not stock which is effect another buyback. So we're anxious, I'm just as anxious as you are to reduce the outstanding share count.

[Operator]

Next we have Mark Hughes, SunTrust. Please go ahead.

[Mark Hughes, SunTrust]

The underlying fee profile, when we look at residential purchase or refi; could you give us a sense of that with the changes year-over-year say?

[William Foley, Non-Executive Chairman of the Board]

Sure. The few profile now is running about 2,400 all in, it's about 1,100 on the refinance side. It's -- obviously it's increased, we're up by 16% year-over-year and we think there is more room. As this mix changed, now we're running right now about 63% of purchase and as this mix continues to change which it's likely to do for 2018 with some additional follow-up in right refinances, that key profile will go up; so right now we're planning the 2,500 but very good chance that can go up.

[Mark Hughes, SunTrust]

What's the year-over-year changes if you just looked at purchase say in isolation?

[Michael Nolan, President]

We don't break it out that way so we don't have that number because our offices process resale or refi, all the same office and I don't believe we cost accounted that level.

[William Foley, Non-Executive Chairman of the Board]

No, we have the order count at that level, we don't have the revenue broken out between residential purchase and residential refinance.

[Mark Hughes, SunTrust]

And then just overall cash flow in the business now taking into account the title and the technology in the brokerage businesses, how do we think about that kind of on a run rate basis or maybe in relation to net income? How should we think about the free cash flow that's going to be available for these other uses?

[William Foley, Non-Executive Chairman of the Board]

It's usually a little greater than the net income number, it's probably adjusted pretax or maybe a little short of adjusted pretax would be a good way to estimate what our annual run rate is in free cash flow. Not before CapEx which frankly, is not a big part of our business.

[Operator]

Our next question is from the line of Geoffrey Dunn, Dowling & Partners. Please go ahead.

[Geoffrey Dunn, Dowling & Partners]

Bill, last quarter it seemed like you're pretty confident you're going to get back into the market with 50,000 a day of buyback. So I guess I'm trying to figure out what changed? We knew tax reform was likely and that helps your flexibility. So what changed quarter-over-quarter to push the buyback out six months?

[William Foley, Non-Executive Chairman of the Board]

We were taking a look at a fairly significant acquisition and we are in a position we needed to black ourselves out from a buyback and it doesn't appear that particular acquisition is going to transpire, so that's another -- that's really the primary cause for us not buying the shares back and when that -- when we have more clarity on that particular acquisition which we think we believe will have in the next few weeks, then we can start getting back into the market.

[Geoffrey Dunn, Dowling & Partners]

And then on the debt side, you talked about terming out debt; is that still something you might be looking at in the next -- I guess within the next six months type of timeframe?

[Brent Bickett, EVP]

Yes, it's something that we're looking at. We have $300 million on our line of credit. As Bill and the team mentioned, we're going to use cash-on-hand to take care of that and convert -- the balance of the convert by August, that's priced out right now at about $170 million type of range based on current prices. But as Tony said, we talked to the agencies, we think it's important to get the necessary upgrade from Moody's whose been lagging -- we think for many, many years, it's given the strength and the clarity of our capital structure. So we will hope to get that upgrade and look determined out, the rate still look attractive but we'll be opportunistic as we do it but it would be very logical for us to put a 10-year bond on it at some point to term it out.

[Operator]

[Operator Instructions] We have a question from the line of Jason from Piper Jaffray. Please go ahead.

[Jason Deleeuw, Piper Jaffray]

So just wondering on the expenses sounds like they've been reduced further; and just wondering if those expenses are right size for the current volume trends that you're seeing. I'm just trying to get a feel for the margins going forward if -- it seems like the revenue is stabilizing, are the expenses also stabilized?

[Raymond Quirk, CEO]

In terms of our staffing and that typically is the biggest issue; we're getting close but it's always a work in progress against this shift, mix is more towards the purchase and we've gotten there what was a pretty severe follow-up in refinance behind that. We'll continue with our adjustments and continue to lower the labor expense or personal expense, so whenever done we operate kind of a real-time environment and -- but we're optimistic that we'll have a seasonal first quarter, we're optimistic about how this will transpire with the growth and the purchase, we've come out of the year pretty quickly now much like we did in 2017 with the order count running orders today at about -- on the purchase side about where we were in October. So watching all the indicators, we'll operate in real-time and whenever done making these expense adjustments.

[Jason Deleeuw, Piper Jaffray]

And then on the real estate brokerage and tech businesses; I'm just wondering if we're at a point where we could kind of think about a revenue capture, you could get around the transaction as you're doing more of the functions in the value chain versus if you're just doing title insurance or is there some way to think about it like revenue multiplier or maybe even -- you could take that down to earnings; anyway to kind of think about the added value for the P&L from doing more across the value chain?

[William Foley, Non-Executive Chairman of the Board]

It's going to be significant. I believe it's premature for us to speculate on that particular topic at this time because we're just starting to roll out the cross-selling of third-party products through our platform and part of that we're working on is an online document execution platform that would go from front to back through all of our systems and all of our title offices but will start with our -- reload with our TRM business or with our -- for our real estate brokers. So I would rather differ that for six to nine months because I think we'll no more -- and we're really piloting at this point. We believe it's going to be significant and we believe we have come up with something that we've been talking about for a year and a half or so or two years. We believe we have a way to transform the way the industry operates but we're still going to be patient and going to work hard at it.

[Jason Deleeuw, Piper Jaffray]

And then just on -- try to help us think about modeling the corporate segment, it's going to little bit more difficult and I know their seasonality but can -- and there are some acquisitions kind of in the second half of this year, can you just kind of help us think about an annualized revenue run rate for the corporate segment because of the brokerage and technology businesses? And then maybe also just -- also help us with kind of a good corporate expense run rate?

[Raymond Quirk, CEO]

I'll start with the adjusted pretax first and it's a little misleading; if you look at the fourth quarter 2016 you have some eliminations that are actually stuck in the discontinued operations line item because we were elimination Black Knight revenue from the title company and so you really have two components; so you're better off focusing on the current quarter and that $23 million adjusted pretax loss is probably a fairly good number in the seasonally weaker quarters of -- the first quarter and the fourth quarter, and then that number probably comes down to $20 million or under $20 million run rate for the second and third quarter. So that's the number on the pretax side.

In terms of the revenue, from our technology business I think roughly $100 million would be a good run rate on an annualized basis on the technology side. And then the brokerage business, it's probably more like 350 if I had to put a number on it. So that's kind of the all-in including all the acquisitions that we've made to-date.

[Operator]

And back over to Bose George of KBW. Please go ahead.

[Bose George, KBW]

I think I actually have a quick follow-up on the diluted share count. What probed the increase quarter-over-quarter?

[Anthony Park, CFO]

The basic share count was the same, third quarter to fourth quarter,$272 million. As you know the stock price impacts the share count, the way that calculation works and so we had a couple of million share account increase on options and restricted stock both from share price gains as well as vesting a restricted stock in fourth quarter and then the other component which was about $3 million share count increase was related to the convertible debt; and that too is driven not only by share price but as you probably know from an accounting and reporting standpoint, FNF has always had the obligation that was really reflected in FNFV share account, in their diluted share account for the convertible debt and so we've highlighted that before but it was actually in their share account.

When FNFV spun out in Q4, that came over to FNF and became part of that conversion number, so it added about 3 million shares. So 281 million is the number, up from $276 million in the third quarter of this year.

[Bose George, KBW]

Okay, that makes sense and that's kind of the run rate hopefully it's equal going forward?

[Anthony Park, CFO]

That's the run rate going forward until we've retired the convertible debt and it's somewhat dependent on where the stock price is.

[Bose George, KBW]

And once the $65 million of converts are retired, what's the impact on the share account at that point?

[Anthony Park, CFO]

It comes down about $4 million.

[Bose George, KBW]

And actually one more, just on the buybacks. If the wait until the first quarter -- until the converts are being repurchased and basically after that we should expect that kind of 50,000 a day run rate?

[William Foley, Non-Executive Chairman of the Board]

Somewhere between 25,000 and 50,000 shares a day, somewhere in that range based upon our cash flow and really our analysis of that time and that number may fluctuate; some months it might be 15,000 and some months it might be 50. So we never announce that but we are going to be steady and consistent once we get into the program.

[Operator]

Okay, no further questions in queue at time. Back over to Foley for closing remarks.

[William Foley, Non-Executive Chairman of the Board]

Thank you. Fourth quarter was another strong performance in our title business and overall 2017 was a very successful strategic year for our company. We believe our Company is well positioned as we enter 2018 and we look forward to executing on our business plans and deploying capital to maximize returns for our shareholders. Thanks for being with us today.

[Operator]

Ladies and gentlemen, that does conclude your conference. We do thank you for joining, while AT&T executive teleconference. You may now disconnect.