Thank you for joining us today for Stewart's First Quarter 2024 Earnings Conference Call. We will be discussing results that were released yesterday after the close. Joining me today are CEO, Fred Eppinger; and CFO, David Hisey. To listen online, please go to the stewart.com website to access the link for this conference call. This conference call may contain forward-looking statements that involve a number of risks and uncertainties. Please refer to the company's press release and other filings with the SEC for a discussion of the risks and uncertainties that could cause our actual results to differ materially. During our call, we will discuss some non-GAAP measures. For a reconciliation of these non-GAAP measures please refer to the appendix in today's earnings release, which is available on our website at stewart.com. Let me now turn the call over to Fred.

Thanks, Kath, and thank you for joining us today for Stewart's First Quarter 2024 Earnings Conference Call. Yesterday, we released financial results for the quarter, which David will review with you. Before doing so, I'd like to share our thoughts on the current housing environment. I'll also provide updates on our core business lines and our continued progress on important initiatives that we believe will set Stewart up for long-term success. As I've noted previously, the housing market is bouncing along the bottom. From a macro perspective, this quarter was a continuation of what we have seen in the past several quarters. Mortgage rates remain elevated, hovering just below 7% during the quarter, which has prolonged the low transaction volumes our industry is facing. The combination of these factors, along with low sales inventory yields an overall weak housing market. On previous calls, we shared our expectation that 2024 will be a transitional year for the industry with 2025 seeing more normal volumes of approximately 5 million units for existing home sales. Following activity this quarter, we now believe the transition has been slowed with much of the improvement pushed into 2025, in a more normal market returning in '26. I'm pleased with our progress on our strategic priorities and we continue to see share gains in most of our businesses. We remain focused on building an improved competitive position by being more efficient and having a more disciplined operating model that functions well throughout all real estate cycles. We are dedicated to growing scale in attractive markets across all lines of our business and we have made great strides in improving the customer experience in all our channels through upgrades on our technology capabilities and operations. Attracting and retaining key talent is always important, and we have been even more focused on retaining talent through this market so that we have the right team in place as the cycle improves. In anticipation of our growth and return to normal home sales volumes, we have also implemented technology to enhance our title production processes and are also working on the utilization of technology to improve our data management and data access. This progress at more normal production levels will result in considerable improvement in our delivery costs. Our direct operations segment is focusing their growth efforts on the expansion in targeted MSAs, and we expect to utilize acquisitions to our advantage to gain share. We've been prudent with our acquisition-related investments in the current environment and routinely evaluate markets in our direct operations, where we have the opportunity to increase share and enhance our leadership capabilities. This has ensured that our deployment of capital provides acceptable long-term returns. While we remain cautious from an acquisition perspective, our long-term goals for our direct operations remain the same: to grow share and scale in attractive MSAs. Positioning our commercial operations for growth across all commercial sectors remains a critical business priority for us. We are making investments in talent across the commercial operations so that we have a leadership and sales team in place to achieve our goals. We are also investing in technology to support the commercial operations to allow us to better serve our customers and manage our business more efficiently. Considering the challenging market in the first quarter, our commercial operations performed very well due to large part to our energy sector mix. In the near term, we expect energy to continue to experience solid volumes as compared to sectors like retail and office, which remain sluggish given the current financial market. Our agency team is focused on driving share gains in attractive agency markets in Florida and Pennsylvania and is also focused on growing our support of agents in the commercial space. We are delivering on our technology roadmap, which will allow us to offer better solutions to our agents and are leveraging our technology efforts to drive market share gains by delivering greater connectivity, ease of use and risk reduction for our agent partners. I am proud that we can offer an enhanced experience to our agents through our upgraded platform. Our agency business finished the first quarter solidly considering current market conditions, and we are beginning to see some solid share shift in most of our critical markets. The Real Estate Solutions team is focused on gaining share with the top lenders through cross-selling our products as we leverage our improved portfolio of services to better and more deeply service our lender clients. Our Real Estate Solutions business maintained solid financial results for the first quarter, particularly given market headwinds. We experienced higher revenues as compared to the first quarter in '23, largely due to our credit data business, Informative Research, which we acquired in 2021. We are not immune to the market downturn in these businesses, but we are able to offset some of these challenges with share gains. We are thoughtfully managing all lines of business and remain prudent with both our expense management and our allocation of investment funds. We have been careful not to take expense actions that we feel would threaten our competitive position or take away from the critical initiatives that will help us meet our long-term goals. We feel that this financial discipline paired with our investment in customer technologies and focus on growth resulted in a stronger first quarter as compared to the first quarter of '23. Even given the difficult market conditions we are now experiencing, I am very pleased with our efforts yielding results to increase market share gains in our core business lines. We believe that our focus on growth across all business and investments in our capabilities should allow us to achieve low double-digit pretax margins as we return to a more normal 5 million unit purchase market. We maintain a positive long-term outlook for the real estate market and are confident that Stewart is on a journey to become the Premier Title Services company. We believe in the strength of the company and are committed to investing in ourselves to further fortify Stewart’s long-term growth and performance. Our solid financial footing should best position us to take advantage of the opportunities that we believe this cycle will provide. Thank you for our customers and agency partners for your continued trust. We are committed to doing our best to serve you with excellence. Finally, I'd like to express my gratitude to our employees. I'm grateful for your hard work and dedication to Stewart as we work together to create a more resilient company that continually delivers for our customers. David, I will now turn over to you to provide the update on the results.

Good morning, everyone, and thank you, Fred. I'm thankful for our associates and their outstanding service and our customers for their steadfast support through this difficult market. As Fred mentioned earlier, residential mortgage rates continue to be high in the 7% area, which is affecting residential transaction volumes, while the economy and work habits are impacting broader commercial activity. Solid performances, however, from our real estate solutions, energy commercial, title operations, and investment operations resulted in an improved first quarter compared to last year. Yesterday, Stewart reported first quarter 2024 net income of $3 million or $0.11 per diluted share on total revenues of $554 million. After adjustments for net realized and unrealized gains and losses, acquired intangible amortization, and other expenses detailed in the appendix of our press release, first quarter adjusted net income was $5 million or $0.17 per diluted share compared to breakeven results for the first quarter of 2023. In the Title segment, total operating revenues were slightly lower, decreasing by $6 million, while first quarter pretax income was $11 million higher, primarily due to improved investment income and expense management. After adjustments to purchase intangible amortization and other items, the Title segment's pretax income was $2 million or 41% higher compared to the prior year quarter, while adjusted pretax margin for both quarters was in the low 1% range. On our direct final operations, total open and closed orders in the first quarter increased by 7% and 5%, respectively, compared to the prior year quarter, primarily due to the ramp-up of the acquisitions completed in late 2022. Domestic commercial revenues increased by $17 million or 52%, primarily due to energy sector activity, which offset lower commercial transaction volume. Average commercial fee per file was approximately $13,900 compared to $8,300 from the prior year quarter. Domestic residential revenues declined $15 million or 10% as a result of 5% lower purchase and refinancing volumes and a lower average fee per file. Average residential fee per file was $2,900 compared to $3,400 from the prior year quarter, primarily as a result of a lower purchase transaction mix. Total international operating revenues were stable. Consistent with lower residential activity, our agency revenues in the first quarter decreased by $8 million or 3%, while the average agency remittance rate was slightly lower due to geographic mix. Total title loss expense in the quarter was comparable. As a percentage of title revenues, title loss expense was 4% for both the first quarters of 2024 and 2023, and we expect total losses to average in the low to mid-4% range for the full year 2024. Regarding the Real Estate Solutions segment, pretax income improved $5 million compared to last year, primarily resulting from increased revenues from our credit-related data and valuation services businesses. Pretax margin was 8% compared to 2% last year. Excluding acquisition intangible amortization, adjusted pretax margin was approximately 15% compared to 11.5% last year. Our consolidated operating expenses, our employee cost ratio was 32.3%, slightly better compared to 32.8% in the prior year quarter, primarily due to lower average employee counts. Other operating expenses as a percent of operating revenues were 25.6% in the first quarter of 2024 compared to 23.2% in the prior year quarter, primarily driven by increased expenses related to higher revenues on our real estate solutions and commercial services operations. On other matters, despite the current challenging environment, our financial position continues to be solid for supporting our customers and employees in the real estate market. Our total cash and investments at the end of the first quarter of 2024 were approximately $325 million in excess of statutory premium reserve requirements while we also have a fully available $200 million line of credit. Total Stewart stockholders' equity was approximately $1.36 billion with a book value of approximately $49 per share. Net cash used in operations improved to $30 million compared to $51 million during the prior year quarter, primarily as a result of improved first quarter results and lower liability payments. Lastly, we greatly appreciate our customers and associates, and we remain confident in our service to the real estate markets. I'll now turn the call back over to the operator for questions.

Can you discuss the sustainability of the run rate that you achieved this quarter?

I'm sorry, I missed the beginning. Yes, I believe our services business is very sustainable. As you know, we have developed our portfolio of products, which has been in place for about three to four quarters now, and it's gaining traction in our ability to cross-sell that portfolio. We also have some exciting solutions in our data operation IR, particularly a verification waterfall that has seen significant interest. While it's possible to lose an account occasionally, I feel we've repositioned ourselves in the market effectively, and we should be able to maintain that run rate.

Okay. Great. And then just sticking to the move in rates and then your commentary, Fred, just on the cadence of the housing recovery, how do you see your margins trending over the next sort of 12 to 18 months?

Yes, that's a good question. I believe we're going to improve. I think we'll recover from the low point a bit, and our margins will enhance as the market allows for more growth. The target we discussed, in the $11.5 million to $12 million range, may not be achievable until around 2026 in a $5 million market, depending on how quickly things progress. As you know, we took some cost-cutting measures and reallocated resources at the end of last year. We evaluated certain regions and closed down some offices because we couldn't foresee them meeting our expectations during this extended period of low volume. We can benefit from those decisions, but I don’t see a need for further expense reductions at this time. Essentially, we have a bit of excess capacity in our system, so as volume increases, our margins will improve. Someone asked during the last call if we would perform better even if this year is flat compared to last year, and the answer is yes. Given the margins we achieved last year and our current slightly better performance, even in a flat or slightly improving market, we will see a marginal increase in our margins compared to last year.

I want to follow back up on Bose's question on the Real Estate Solutions segment. I mean, I think the strength there probably isn't getting the airtime it probably deserves with investors. I mean, this quarter, it was up looks like 35% sequentially versus 4Q. Obviously, the mortgage market didn't see that type of lift. So maybe if you could first talk to why or how you're able to buck that the typical mortgage market seasonal trend? And then Fred, maybe double-click on the business mix, maybe where you're seeing the most share gains? And I don't know if you have it on hand, but if you can maybe talk to maybe the mix of revenues, what your largest businesses are, what's your fastest-growing businesses are? Just any incremental color over there?

Yes. John, what’s interesting is that we established this business ourselves. As you know, when we launched in 2019, we only had around $30 million in the services sector. Unlike large firms, we didn’t have a range of services to offer. We acquired modernization capabilities, appraisal capabilities, and credit data capabilities, which are the key components of what we’re discussing. When you bring these together, you have a unified product with some partners. Now that everything is integrated and we are a reliable partner—a factor that vendors value—we are now a credible third option for these firms. This enables us to effectively cross-sell those three service categories to lenders. Additionally, due to the small cyber incidents last year, lenders are more cautious about ensuring their resources are diversified for protection. All these factors contribute to our focus on business growth. Informative Research constitutes a significant portion of our business; it encompasses both traditional tri-merge credit services and has developed some excellent solutions that help lenders save money in the mortgage process. We’ve seen strong adoption rates. Looking ahead, I expect continued growth in that area, which represents half of our business, while also seeing other segments improve as we cross-sell. However, it’s important to note that the market is challenging, particularly in the mortgage and refinancing sectors. Nonetheless, we’re in a strong position to reposition ourselves. I am very confident in our progress. As I’ve mentioned in previous calls, we needed to increase our volume on the platform to enhance margins, and we've achieved that. Our current cash and GAAP margins are in a good place, as we hit the necessary critical metrics in several segments. Overall, I believe we’re doing well. Our highly regarded competitors have had this positioning for some time, while we were the only ones among the 30 that didn’t initially possess this portfolio. Now, we are gaining considerable respect in that area, which is crucial for our overall success.

Yes, that's helpful. I appreciate that, Fred. I haven't heard that term referring to the big firms yet; it's solid. Staying on that subject, you mentioned that the cyber incidents led some lenders to reconsider their vendor diversification process. Are you also observing this trend in the core title agency channel or are you addressing it from agents?

That’s a great question. In our industry, lenders typically prioritize risk management and utilize multiple resources. Right now, we want to establish ourselves more firmly in the lender space. This has provided us with an opportunity to share our insights, but I want to clarify that we aren’t discussing overwhelming volumes. In agency business, there’s an interesting aspect where the sensitivity to risk management at the agent level has been lacking. Many agents concentrated most of their business with just one underwriter, which is more than what you would see in property and casualty insurance. We’ve been addressing the role of agents for three years now because it just doesn’t add up; while many do spread their business, quite a few don’t. Currently, we are having more discussions with agents about distributing their business more evenly among us, particularly the better agents, who prefer a more balanced approach like one-third to each or fifty-fifty. It is surprising to see how many agents operated on an 80-20 or even 100-0 basis, especially since best practices suggest a more balanced strategy. We stand to benefit from this shift because we are the smallest player in the group. As long as we execute well, this transition should be advantageous for us. However, it requires time to cultivate these discussions. Moreover, given the current market conditions, it's challenging for new partners to diversify when there isn’t significant business to distribute. As our business expands, I anticipate our share will grow as agents become more comfortable sharing their business. This trend has prompted some to think more strategically. While the short-term impact might be overstated, I believe the long-term effects could be significant.

Congrats on the continued success, guys.

I would like to know if you could share an update on your geographic targets for potential mergers and acquisitions. I understand that you've been concentrating on the Midwest, South, Southwest, and West Coast. What are the next key metropolitan areas where you plan to expand? Specifically, could you elaborate on your efforts in California and becoming more direct in that market?

Yes. I view target markets differently for direct and agency. In the agency space, we want to expand in many states, as most have strong economic conditions. Specifically, there are 14 states with appealing economics where we are either small or underrepresented. These states are mainly in the Southeast, although there are also some in the Midwest, like Pennsylvania. Texas and Florida are two of those states. In the agency, our growth is influenced by the economic profile, fees, and services involved. Florida is a prime example of this. On the direct side, I mentioned focusing on 150 MSAs, where we have made significant advancements in about 40. As the market improves and transaction opportunities increase, I am particularly interested in around 35 core markets, such as Nashville. Additionally, once we establish a good presence in a city, we can explore satellite opportunities, like in San Antonio and Dallas, where we have a solid footing but see potential in suburban areas for smaller expansions. I believe we could make considerable progress in about 30 to 40 core markets, along with additional areas for fill-ins. Regarding California, I want to clarify that I do not anticipate much growth there. We are a niche player in that region, focused on specific locations where we plan to remain long-term. However, we lag behind the two dominant competitors, and the market is primarily direct, given the skewed economics. I don't want to overextend ourselves in California; thus, I do not see it as a high priority for the company's future growth. We will continue to manage our existing operations effectively, strengthen our positions, and invest in our team, but California will not be a significant growth focus. I just want to thank everybody for joining us and having the interest in Stewart. Thank you.

Thank you. Again, that concludes today's Stewart Information Services first quarter conference call. At this time, you may disconnect. Thank you for your participation, and have a great day.