Capital Title Group Reports Second Quarter and Six-Months Results
August 2, 2006
PHOENIX--(BUSINESS WIRE)-- Capital Title Group, Inc. (Nasdaq:CTGI) -- named for a second consecutive year in FORTUNE'S 100 Fastest Growing Companies in America in 2005 -- is a national provider of title, appraisal, flood and other transaction services to the real estate and mortgage lending industries.
Capital Title today reported revenue of $84.9 million for the second quarter ended June 30, 2006, a decrease of 19.8% compared to revenue of $105.8 million in the same quarter of 2005. The revenue decrease in the second quarter is primarily attributable to a general decline in real estate market activity in 2006 compared to the prior year, a result of the increase in mortgage interest rates. Earnings attributable to common shares for the second quarter ended June 30, 2006 were $2.7 million or $.09 per diluted share on weighted average shares outstanding of 31.0 million shares compared to the second quarter ended June 30, 2005 when earnings attributable to common shares were $7.2 million or $.30 per diluted share on weighted average shares outstanding of 24.2 million shares. The increase to the number of shares is a combination of 6.0 million shares issued in the company's pubic offering completed in November 2005 and the shares issued on exercise of employee options and warrants.
In addition to the impact of lower revenues, other factors that contributed to the reduction in net income for the second quarter ended June 30, 2006 mentioned above include increased costs associated with legal costs pursuant to actions brought against a competitor claiming unfair business practices in the recruitment of certain employees of the company and professional fees associated with the pending acquisition of Capital Title by LandAmerica Financial Group, Inc. (LandAmerica), along with the requirement to expense stock options beginning January 1, 2006. The combined impact of these items on the quarter ended June 30, 2006 compared to the same period in 2005 was approximately $.03 per share.
"We have seasoned title industry executives that lead each of our subsidiaries and who have direct operational experience through the various cycles that normally occur in the real estate market. Management is focused on revenue opportunities as well as managing operational costs in today's market environment," commented Donald R. Head, chairman of the board, president and chief executive officer. "Our outstanding employees are committed to premium client service, which has been a major component of Capital Title's growth and success.
"Our planned merger with LandAmerica continues to move forward. As announced in early July, our special meeting of stockholders will be held on August 10, 2006 where stockholders will be asked to approve the proposed merger. The closing of the transaction is dependent on stockholder approval and obtaining all necessary regulatory approvals."
Source: Capital Title Group, Inc.