8-K
Stewart Information Services Corp (STC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIESTEVENT REPORTED): July 24, 2024
STEWART INFORMATION SERVICES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIEDIN ITS CHARTER)
| DELAWARE | 001-02658 | 74-1677330 |
|---|---|---|
| (STATE OR OTHERJURISDICTION) | (COMMISSION FILENO.) | (I.R.S. EMPLOYERIDENTIFICATIONNO.) |
1360 Post Oak Blvd, Suite 100, Houston, Texas
77056
(Address Of Principal Executive Offices) (ZipCode)
Registrant’s Telephone Number,
Including Area Code: (713) 625-8100
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under<br> the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $1 par value | STC | New York Stock Exchange (NYSE) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
A press release issued by Stewart Information Services Corporation on July 24, 2024, regarding financial results for the three months ended June 30, 2024, is attached hereto as Exhibit 99.1, and is incorporated herein by reference. This information is not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference in any filing under the Securities Act of 1933, as amended.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) EXHIBITS
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release of Stewart Information Services Corporation dated July 24, 2024, reporting financial results for the three months ended June 30, 2024. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| STEWART INFORMATION SERVICES CORPORATION | |
|---|---|
| (Registrant) | |
| By: | /s/ David C. Hisey |
| David C. Hisey, Chief Financial Officer and Treasurer |
Date: July 24, 2024
Exhibit 99.1
NEWS RELEASE
| STEWART INFORMATION SERVICES CORP.<br><br> <br>P.O. Box 2029<br><br> <br>Houston, Texas 77252-2029<br><br> <br>www.stewart.com | CONTACT<br><br> <br>Kathryn Bass / Brian Glaze<br><br> <br>Investor Relations<br><br> <br>(713) 625-8633 |
|---|
Stewart Reports Second Quarter 2024 Results
| • | Total revenues of $602.2 million ($602.7 million on an adjusted basis)compared to $549.2 million ($550.3 million on an adjusted basis) in the prior year quarter |
|---|---|
| • | Net income of $17.3 million ($25.4 million on an adjusted basis) comparedto $15.8 million ($25.8 million on an adjusted basis) in the prior year quarter |
| --- | --- |
| • | Diluted earnings per share of $0.62 ($0.91 on an adjusted basis) comparedto prior year diluted EPS of $0.58 ($0.94 on an adjusted basis) |
| --- | --- |
HOUSTON, July 24, 2024 - Stewart Information Services Corporation (NYSE: STC) today reported net income attributable to Stewart of $17.3 million ($0.62 per diluted share) for the second quarter 2024, compared to $15.8 million ($0.58 per diluted share) for the second quarter 2023. On an adjusted basis, second quarter 2024 net income was $25.4 million ($0.91 per diluted share) compared to $25.8 million ($0.94 per diluted share) in the second quarter 2023. Pretax income before noncontrolling interests for the second quarter 2024 was $29.0 million ($39.6 million on an adjusted basis) compared to $25.2 million ($38.3 million on an adjusted basis) for the second quarter 2023.
Second quarter 2024 results included $0.5 million of pretax net realized and unrealized losses primarily driven by net unrealized losses on fair value changes of equity securities investments in the title segment, while second quarter 2023 results included $1.1 million of pretax net realized and unrealized losses, primarily composed of a contingent receivable loss adjustment resulting from a previous disposition of a business in the corporate and other segment, partially offset by net unrealized gains on fair value changes of equity securities investments in the title segment.
“Our second quarter revenues increased when compared to the second quarter of last year, driven by solid topline results in several of our core businesses. As with the rest of the industry, we remain impacted by a continued difficult housing market,” commented Fred Eppinger, chief executive officer. “We remain focused on achieving our strategic goals and continue to invest in ourselves as we pursue growth and margin improvement across all lines of business.”
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Selected Financial Information
Summary results of operations are as follows (dollars in millions, except per share amounts, pretax margin and adjusted pretax margin, and amounts may not add as presented due to rounding):
| Quarter Ended <br>June 30, | Six Months Ended <br>June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Total revenues | 602.2 | 549.2 | 1,156.5 | 1,073.5 | ||||||||
| Pretax income before noncontrolling interests | 29.0 | 25.2 | 36.2 | 15.0 | ||||||||
| Income tax expense | (7.9 | ) | (5.4 | ) | (8.9 | ) | (0.5 | ) | ||||
| Net income attributable to noncontrolling interests | (3.7 | ) | (4.0 | ) | (6.8 | ) | (6.9 | ) | ||||
| Net income attributable to Stewart | 17.3 | 15.8 | 20.5 | 7.6 | ||||||||
| Non-GAAP adjustments, after taxes* | 8.1 | 10.0 | 9.6 | 17.9 | ||||||||
| Adjusted net income attributable to Stewart* | 25.4 | 25.8 | 30.0 | 25.5 | ||||||||
| Pretax margin | 4.8 | % | 4.6 | % | 3.1 | % | 1.4 | % | ||||
| Adjusted pretax margin* | 6.6 | % | 7.0 | % | 4.2 | % | 3.6 | % | ||||
| Net income per diluted Stewart share | 0.62 | 0.58 | 0.73 | 0.28 | ||||||||
| Adjusted net income per diluted Stewart share* | 0.91 | 0.94 | 1.07 | 0.93 |
* Adjusted net income, adjusted pretax margin and adjusted net income per diluted share are non-GAAP measures. See Appendix A for explanation and reconciliation of non-GAAP adjustments.
Title Segment
Summary results of the title segment are as follows (dollars in millions, except pretax margin and adjusted pretax margin):
| Quarter Ended June 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | % Change | |||||||
| Operating revenues | 496.2 | 466.7 | 6 | % | |||||
| Investment income | 14.3 | 12.1 | 18 | % | |||||
| Net realized and unrealized (losses) gains | (0.5 | ) | 2.0 | (125 | )% | ||||
| Pretax income | 33.4 | 35.5 | (6 | )% | |||||
| Non-GAAP adjustments to pretax income* | 5.0 | 2.3 | |||||||
| Adjusted pretax income* | 38.4 | 37.7 | 2 | % | |||||
| Pretax margin | 6.5 | % | 7.4 | % | |||||
| Adjusted pretax margin* | 7.5 | % | 7.9 | % |
* Adjusted pretax income and adjusted pretax margin are non-GAAP financial measures. See Appendix A for explanation and reconciliation of non-GAAP adjustments.
Title segment operating revenues improved $29.5 million, or 6 percent, in the second quarter 2024 primarily driven by increased revenues from our domestic commercial, international and agency title operations, partially offset by lower domestic noncommercial revenues, while total segment operating expenses increased $31.3 million, or 7 percent, compared to the second quarter 2023. Agency retention expenses in the second quarter 2024 increased $28.4 million, or 17 percent, primarily driven by $32.0 million, or 15 percent, improvement in gross agency revenues compared to the second quarter 2023, while the average independent agency remittance rate in the second quarter 2024 decreased to approximately 16.9 percent, compared to 17.7 percent during the prior year quarter, primarily due to increased agency revenues in states with relatively higher agent retention rates.
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Total title segment employee costs and other operating expenses slightly increased by $2.0 million, or less than a percent, in the second quarter 2024 compared to the prior year quarter, primarily due to increased outside search expenses related to higher commercial revenues. As a percentage of operating revenues, these expenses were 49.7 percent in the second quarter 2024 compared to 52.4 percent in the second quarter 2023. Title loss expense in the second quarter 2024 increased $1.3 million, or 7 percent, primarily driven by higher title revenues compared to the prior year quarter. As a percentage of title revenues, title loss expense was 4.2 percent for both the second quarters 2024 and 2023.
Investment income improved by $2.2 million in the second quarter 2024 compared to the prior year quarter, primarily resulting from higher interest income on eligible escrow balances in the second quarter 2024. In addition to the net realized and unrealized losses and gains presented above, non-GAAP adjustments to the title segment’s pretax income for the second quarters 2024 and 2023 included $4.6 million and $4.2 million, respectively, of total acquisition intangible asset amortization and other expenses.
Direct title revenues information is presented below (dollars in millions):
| Quarter Ended June 30, | |||||||
|---|---|---|---|---|---|---|---|
| 2024 | 2023 | % Change | |||||
| Non-commercial: | |||||||
| Domestic | 169.4 | 184.5 | (8 | )% | |||
| International | 28.1 | 25.9 | 8 | % | |||
| 197.5 | 210.4 | (6 | )% | ||||
| Commercial: | |||||||
| Domestic | 51.0 | 41.5 | 23 | % | |||
| International | 7.0 | 6.1 | 15 | % | |||
| 58.0 | 47.6 | 22 | % | ||||
| Total direct title revenues | 255.5 | 258.0 | (1 | )% |
Second quarter 2024 total non-commercial domestic revenues decreased $15.1 million, or 8 percent, primarily resulting from a 9 percent decrease in total residential purchase and refinancing transactions and a lower average fee per file compared to the prior year quarter. Domestic commercial revenues increased $9.5 million, or 23 percent, primarily driven by improved average transaction size and higher commercial transactions closed compared to the prior year quarter. Second quarter 2024 average domestic commercial fee per file improved 17 percent to $13,500, compared to $11,600 in the second quarter 2023, while average residential fee per file was $3,000, which was 7 percent lower compared to $3,300 in the prior year quarter, primarily due to a lower purchase transaction mix in the second quarter 2024.
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Real Estate Solutions Segment
Summary results of the real estate solutions segment are as follows (dollars in millions, except pretax margin and adjusted pretax margin):
| Quarter Ended June 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | % Change | |||||||
| Operating revenues | 92.2 | 71.4 | 29 | % | |||||
| Pretax income | 5.1 | 3.3 | 56 | % | |||||
| Non-GAAP adjustments to pretax income* | 5.5 | 7.1 | |||||||
| Adjusted pretax income* | 10.6 | 10.3 | 3 | % | |||||
| Pretax margin | 5.5 | % | 4.6 | % | |||||
| Adjusted pretax margin* | 11.5 | % | 14.5 | % |
* Adjusted pretax income and adjusted pretax margin are non-GAAP financial measures. See Appendix A for an explanation and reconciliation of non-GAAP adjustments.
Segment operating revenues increased $20.8 million, or 29 percent, in the second quarter 2024 compared to the prior year quarter, primarily due to increased revenues from credit information and valuation services. On a combined basis, employee costs and other operating expenses in the second quarter 2024 increased $19.0 million, or 31 percent, consistent with the higher operating revenues. Non-GAAP adjustments to pretax income shown in the schedule above were primarily related to acquisition intangible asset amortization expenses.
Corporate and Other Segment
The segment’s results were primarily driven by net expenses attributable to corporate operations, which decreased to $9.5 million in the second quarter 2024, compared to $10.5 million in the second quarter 2023, primarily driven by management’s cost discipline. The segment’s results for the second quarter 2023 included net realized losses of $3.1 million, primarily driven by a loss adjustment resulting from a previous disposition of a business.
Expenses
Consolidated employee costs in the second quarter 2024 decreased $3.0 million, or 2 percent, compared to the second quarter 2023, primarily due to reduced incentive compensation and a 3 percent lower average employee count in the second quarter 2024. As a percentage of total operating revenues, employee costs improved to 30.5 percent in the second quarter 2024 compared to 33.9 percent in the prior year quarter.
Consolidated other operating expenses in the second quarter 2024 increased $23.0 million, or 18 percent, primarily as a result of increased service expenses and outside search fees related to higher revenues from real estate solutions and commercial title operations, respectively, and higher office closure costs compared to the second quarter 2023. As a percentage of total operating revenues, total other operating expenses for the second quarter 2024 were 25.9 percent, compared to 24.0 percent in the prior year quarter, primarily driven by increased real estate solutions service expenses.
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Other
Net cash provided by operations in the second quarter 2024 was $21.1 million compared to $35.1 million of net cash provided by operations in the second quarter 2023, primarily due to increased trade accounts receivable resulting from increased revenues in our real estate solutions operations during the second quarter 2024. Our effective income tax rate for the second quarter 2024 was higher than our normal tax rate primarily due to the higher pretax contribution of our international operations (which have higher average income tax rates) compared to our domestic operations.
Second Quarter Earnings Call
Stewart will hold a conference call to discuss the second quarter 2024 earnings at 8:30 a.m. Eastern Time on Thursday, July 25, 2024. To participate, dial (800) 274-8461 (USA) or (203) 518-9814 (International)
- access code STCQ224. Additionally, participants can listen to the conference call through Stewart’s Investor Relations website at https://investors.stewart.com/news-and-events/events/default.aspx. The conference call replay will be available from 11:00 a.m. Eastern Time on July 25, 2024 until midnight on August 1, 2024 by dialing (888) 274-8335 (USA) or (402) 220-2327 (International).
About Stewart
Stewart (NYSE-STC) is a global real estate services company, offering products and services through our direct operations, network of Stewart Trusted Providers™ and family of companies. From residential and commercial title insurance and closing and settlement services to specialized offerings for the mortgage and real estate industries, we offer the comprehensive service, deep expertise and solutions our customers need for any real estate transaction. At Stewart, we are dedicated to becoming the premier title services company and we are committed to doing so by partnering with our customers to create mutual success. Learn more at stewart.com.
Cautionary statement regarding forward-looking statements. Certain statements in this earnings release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements relate to future, not past, events and often address our expected future business and financial performance. These statements often contain words such as “may,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “will,” “foresee” or other similar words. Forward-looking statements by their nature are subject to various risks and uncertainties that could cause our actual results to be materially different than those expressed in the forward-looking statements. These risks and uncertainties include, among other things, the volatility of economic conditions; adverse changes in the level of real estate activity; changes in mortgage interest rates, existing and new home sales, and availability of mortgage financing; our ability to respond to and implement technology changes, including the completion of the implementation of our enterprise systems; the impact of unanticipated title losses or the need to strengthen our policy loss reserves; any effect of title losses on our cash flows and financial condition; the ability to attract and retain highly productive sales associates; the impact of vetting our agency operations for quality and profitability; independent agency remittance rates; changes to the participants in the secondary mortgage market and the rate of refinancing that affects the demand for title insurance products; regulatory non-compliance, fraud or defalcations by our title insurance agencies or employees; our ability to timely and cost-effectively respond to significant industry changes and introduce new products and services; the outcome of pending litigation; our ability to manage risks associated with potential cybersecurity or other privacy or data security breaches; the impact of changes in governmental and insurance regulations, including any future reductions in the pricing of title insurance products and services; our dependence on our operating subsidiaries as a source of cash flow; our ability to access the equity and debt financing markets when and if needed; our ability to grow our international operations; seasonality and weather; and our ability to respond to the actions of our competitors. These risks and uncertainties, as well as others, are discussed in more detail in our documents filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2023, and if applicable, as supplemented by any risk factors contained in our Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K filed subsequently. All forward-looking statements included in this earnings release are expressly qualified in their entirety by such cautionary statements. We expressly disclaim any obligation to update, amend or clarify any forward-looking statements contained in this earnings release to reflect events or circumstances that may arise after the date hereof, except as may be required by applicable law.
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STEWART INFORMATION SERVICES CORPORATION
CONDENSED STATEMENTS OF INCOME
(In thousands of dollars, except per share amounts and except wherenoted)
| Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Revenues: | ||||||||||||
| Title revenues: | ||||||||||||
| Direct operations | 255,480 | 257,994 | 466,068 | 465,864 | ||||||||
| Agency operations | 240,760 | 208,755 | 481,532 | 457,775 | ||||||||
| Real estate solutions and other | 92,198 | 71,387 | 175,214 | 133,978 | ||||||||
| Total operating revenues | 588,438 | 538,136 | 1,122,814 | 1,057,617 | ||||||||
| Investment income | 14,306 | 12,123 | 27,207 | 18,722 | ||||||||
| Net realized and unrealized (losses) gains | (514 | ) | (1,105 | ) | 6,524 | (2,883 | ) | |||||
| 602,230 | 549,154 | 1,156,545 | 1,073,456 | |||||||||
| Expenses: | ||||||||||||
| Amounts retained by agencies | 200,126 | 171,776 | 400,102 | 377,514 | ||||||||
| Employee costs | 179,708 | 182,666 | 352,125 | 353,217 | ||||||||
| Other operating expenses | 152,291 | 129,333 | 289,244 | 250,073 | ||||||||
| Title losses and related claims | 21,090 | 19,802 | 38,472 | 37,476 | ||||||||
| Depreciation and amortization | 15,198 | 15,528 | 30,582 | 30,434 | ||||||||
| Interest | 4,812 | 4,875 | 9,869 | 9,724 | ||||||||
| 573,225 | 523,980 | 1,120,394 | 1,058,438 | |||||||||
| Income before taxes and noncontrolling interests | 29,005 | 25,174 | 36,151 | 15,018 | ||||||||
| Income tax expense | (7,940 | ) | (5,392 | ) | (8,876 | ) | (454 | ) | ||||
| Net income | 21,065 | 19,782 | 27,275 | 14,564 | ||||||||
| Less net income attributable to noncontrolling interests | 3,722 | 3,967 | 6,802 | 6,939 | ||||||||
| Net income attributable to Stewart | 17,343 | 15,815 | 20,473 | 7,625 | ||||||||
| Net earnings per diluted share attributable to Stewart | 0.62 | 0.58 | 0.73 | 0.28 | ||||||||
| Diluted average shares outstanding (000) | 28,013 | 27,444 | 28,011 | 27,402 | ||||||||
| Selected financial information: | ||||||||||||
| Net cash provided (used) by operations | 21,123 | 35,107 | (8,465 | ) | (15,995 | ) | ||||||
| Other comprehensive (loss) income | (752 | ) | (1,290 | ) | (7,348 | ) | 6,017 |
Second Quarter Domestic Order Counts:
| Opened Orders<br><br> 2024: | Apr | May | June | Total | Closed Orders <br><br>2024: | Apr | May | June | Total | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Commercial | 1,232 | 1,249 | 1,045 | 3,526 | Commercial | 1,288 | 1,314 | 1,185 | 3,787 | ||||||||
| Purchase | 19,273 | 18,493 | 17,291 | 55,057 | Purchase | 12,247 | 13,610 | 11,975 | 37,832 | ||||||||
| Refinancing | 5,782 | 5,976 | 4,973 | 16,731 | Refinancing | 3,530 | 3,547 | 2,901 | 9,978 | ||||||||
| Other | 3,664 | 4,810 | 2,933 | 11,407 | Other | 3,272 | 2,526 | 2,104 | 7,902 | ||||||||
| Total | 29,951 | 30,528 | 26,242 | 86,721 | Total | 20,337 | 20,997 | 18,165 | 59,499 | ||||||||
| Opened Orders<br><br> 2023: | Apr | May | June | Total | Closed Orders <br><br>2023: | Apr | May | June | Total | ||||||||
| Commercial | 1,034 | 1,071 | 1,189 | 3,294 | Commercial | 1,069 | 1,212 | 1,304 | 3,585 | ||||||||
| Purchase | 17,457 | 20,956 | 19,030 | 57,443 | Purchase | 12,312 | 15,013 | 14,901 | 42,226 | ||||||||
| Refinancing | 5,365 | 6,102 | 5,393 | 16,860 | Refinancing | 3,298 | 3,587 | 3,698 | 10,583 | ||||||||
| Other | 3,536 | 2,129 | 1,923 | 7,588 | Other | 1,066 | 1,131 | 1,658 | 3,855 | ||||||||
| Total | 27,392 | 30,258 | 27,535 | 85,185 | Total | 17,745 | 20,943 | 21,561 | 60,249 |
STEWART INFORMATION SERVICES CORPORATION
CONDENSED BALANCE SHEETS
(In thousands of dollars)
| June 30, 2024<br><br> (Unaudited) | December 31,<br><br> 2023 | |||||
|---|---|---|---|---|---|---|
| Assets: | ||||||
| Cash and cash equivalents | 133,405 | 233,365 | ||||
| Short-term investments | 43,341 | 39,023 | ||||
| Investments in debt and equity securities, at fair value | 660,933 | 679,936 | ||||
| Receivables – premiums from agencies | 39,974 | 38,676 | ||||
| Receivables – other | 117,593 | 93,811 | ||||
| Allowance for uncollectible amounts | (8,186 | ) | (7,583 | ) | ||
| Property and equipment, net | 86,729 | 82,335 | ||||
| Operating lease assets, net | 108,653 | 115,879 | ||||
| Title plants | 73,378 | 73,359 | ||||
| Goodwill | 1,080,546 | 1,072,129 | ||||
| Intangible assets, net of amortization | 177,112 | 193,196 | ||||
| Deferred tax assets | 3,673 | 3,776 | ||||
| Other assets | 128,335 | 84,959 | ||||
| 2,645,486 | 2,702,861 | |||||
| Liabilities: | ||||||
| Notes payable | 445,568 | 445,290 | ||||
| Accounts payable and accrued liabilities | 165,382 | 190,054 | ||||
| Operating lease liabilities | 127,307 | 135,654 | ||||
| Estimated title losses | 512,446 | 528,269 | ||||
| Deferred tax liabilities | 23,509 | 25,045 | ||||
| 1,274,212 | 1,324,312 | |||||
| Stockholders’ equity: | ||||||
| Common Stock and additional paid-in capital | 345,082 | 338,451 | ||||
| Retained earnings | 1,064,870 | 1,070,841 | ||||
| Accumulated other comprehensive loss | (42,563 | ) | (35,215 | ) | ||
| Treasury stock | (2,666 | ) | (2,666 | ) | ||
| Stockholders’ equity attributable to Stewart | 1,364,723 | 1,371,411 | ||||
| Noncontrolling interests | 6,551 | 7,138 | ||||
| Total stockholders’ equity | 1,371,274 | 1,378,549 | ||||
| 2,645,486 | 2,702,861 | |||||
| Number of shares outstanding (000) | 27,605 | 27,370 | ||||
| Book value per share | 49.44 | 50.11 |
STEWART INFORMATION SERVICES CORPORATION
SEGMENT INFORMATION
(In thousands of dollars)
| Quarter Ended: | June 30, 2024 | June 30, 2023 | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Title | Real <br><br>Estate<br><br> Solutions | Corporate<br><br> and Other | Total | Title | Real<br><br> Estate<br><br> Solutions | Corporate<br><br> and Other | Total | ||||||||||||||
| Revenues: | |||||||||||||||||||||
| Operating revenues | 496,240 | 92,198 | - | 588,438 | 466,749 | 71,387 | - | 538,136 | |||||||||||||
| Investment income | 14,282 | 24 | - | 14,306 | 12,099 | 24 | - | 12,123 | |||||||||||||
| Net realized and unrealized (losses) gains | (487 | ) | - | (27 | ) | (514 | ) | 1,977 | - | (3,082 | ) | (1,105 | ) | ||||||||
| 510,035 | 92,222 | (27 | ) | 602,230 | 480,825 | 71,411 | (3,082 | ) | 549,154 | ||||||||||||
| Expenses: | |||||||||||||||||||||
| Amounts retained by agencies | 200,126 | - | - | 200,126 | 171,776 | - | - | 171,776 | |||||||||||||
| Employee costs | 162,916 | 13,583 | 3,209 | 179,708 | 165,585 | 12,538 | 4,543 | 182,666 | |||||||||||||
| Other operating expenses | 83,616 | 67,252 | 1,423 | 152,291 | 78,960 | 49,311 | 1,061 | 129,332 | |||||||||||||
| Title losses and related claims | 21,090 | - | - | 21,090 | 19,802 | - | - | 19,802 | |||||||||||||
| Depreciation and amortization | 8,536 | 6,264 | 398 | 15,198 | 8,883 | 6,280 | 365 | 15,528 | |||||||||||||
| Interest | 380 | 7 | 4,425 | 4,812 | 360 | - | 4,515 | 4,875 | |||||||||||||
| 476,664 | 87,106 | 9,455 | 573,225 | 445,366 | 68,129 | 10,484 | 523,979 | ||||||||||||||
| Income (loss) before taxes | 33,371 | 5,116 | (9,482 | ) | 29,005 | 35,459 | 3,282 | (13,566 | ) | 25,175 | |||||||||||
| Six Months Ended: | June 30, 2024 | June 30, 2023 | |||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| Title | Real <br><br>Estate<br><br> Solutions | Corporate<br><br> and Other | Total | Title | Real <br><br>Estate<br><br> Solutions | Corporate<br><br> and Other | Total | ||||||||||||||
| Revenues: | |||||||||||||||||||||
| Operating revenues | 947,600 | 175,214 | - | 1,122,814 | 923,639 | 133,978 | - | 1,057,617 | |||||||||||||
| Investment income | 27,158 | 49 | - | 27,207 | 18,665 | 57 | - | 18,722 | |||||||||||||
| Net realized and unrealized gains (losses) | 6,629 | - | (105 | ) | 6,524 | 164 | - | (3,047 | ) | (2,883 | ) | ||||||||||
| 981,387 | 175,263 | (105 | ) | 1,156,545 | 942,468 | 134,035 | (3,047 | ) | 1,073,456 | ||||||||||||
| Expenses: | |||||||||||||||||||||
| Amounts retained by agencies | 400,102 | - | - | 400,102 | 377,514 | - | - | 377,514 | |||||||||||||
| Employee costs | 319,718 | 25,801 | 6,606 | 352,125 | 319,862 | 24,971 | 8,384 | 353,217 | |||||||||||||
| Other operating expenses | 161,516 | 125,070 | 2,658 | 289,244 | 155,127 | 91,835 | 3,112 | 250,074 | |||||||||||||
| Title losses and related claims | 38,472 | - | - | 38,472 | 37,476 | - | - | 37,476 | |||||||||||||
| Depreciation and amortization | 17,266 | 12,538 | 778 | 30,582 | 16,986 | 12,581 | 867 | 30,434 | |||||||||||||
| Interest | 759 | 7 | 9,103 | 9,869 | 709 | - | 9,015 | 9,724 | |||||||||||||
| 937,833 | 163,416 | 19,145 | 1,120,394 | 907,674 | 129,387 | 21,378 | 1,058,439 | ||||||||||||||
| Income (loss) before taxes | 43,554 | 11,847 | (19,250 | ) | 36,151 | 34,794 | 4,648 | (24,425 | ) | 15,017 |
Appendix A
Non-GAAP Adjustments
Management uses a variety of financial and operational measurements other than its financial statements prepared in accordance with United States Generally Accepted Accounting Principles (GAAP) to analyze its performance. These include: (1) adjusted revenues, which are reported revenues adjusted for net realized and unrealized gains and losses and (2) adjusted pretax income and adjusted net income, which are reported pretax income and reported net income after earnings from noncontrolling interests, respectively, adjusted for net realized and unrealized gains and losses, acquired intangible asset amortization, office closure costs, executive severance expenses, and nonrecurring expenses. Adjusted diluted earnings per share (adjusted diluted EPS) is calculated using adjusted net income divided by the diluted average weighted outstanding shares. Adjusted pretax margin is calculated using adjusted pretax income divided by adjusted total revenues. Management views these measures as important performance measures of core profitability for its operations and as key components of its internal financial reporting. Management believes investors benefit from having access to the same financial measures that management uses.
Below are reconciliations of the non-GAAP financial measures used by management to the most directly comparable GAAP measures for the quarter and six months ended June 30, 2024 and 2023 (dollars in millions, except shares, per share amounts and pretax margins, and amounts may not add as presented due to rounding).
| Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | % Chg | 2024 | 2023 | % Chg | |||||||||||||
| Total revenues | 602.2 | 549.2 | 10 | % | 1,156.5 | 1,073.5 | 8 | % | ||||||||||
| Non-GAAP revenue adjustments: | ||||||||||||||||||
| Net realized and unrealized losses (gains) | 0.5 | 1.1 | (6.5 | ) | 2.9 | |||||||||||||
| Adjusted total revenues | 602.7 | 550.3 | 10 | % | 1,150.0 | 1,076.3 | 7 | % | ||||||||||
| Pretax income | 29.0 | 25.2 | 15 | % | 36.2 | 15.0 | 141 | % | ||||||||||
| Non-GAAP pretax adjustments: | ||||||||||||||||||
| Net realized and unrealized losses (gains) | 0.5 | 1.1 | (6.5 | ) | 2.9 | |||||||||||||
| Acquired intangible asset amortization | 8.3 | 9.1 | 16.8 | 17.6 | ||||||||||||||
| Office closure costs | 1.5 | - | 1.6 | - | ||||||||||||||
| Executive severance expenses | 0.3 | 1.7 | 0.6 | 1.7 | ||||||||||||||
| State sales tax assessment expense | - | 1.2 | - | 1.2 | ||||||||||||||
| Adjusted pretax income | 39.6 | 38.3 | 3 | % | 48.7 | 38.5 | 27 | % | ||||||||||
| GAAP pretax margin | 4.8 | % | 4.6 | % | 3.1 | % | 1.4 | % | ||||||||||
| Adjusted pretax margin | 6.6 | % | 7.0 | % | 4.2 | % | 3.6 | % | ||||||||||
| Net income attributable to Stewart | 17.3 | 15.8 | 10 | % | 20.5 | 7.6 | 169 | % | ||||||||||
| Non-GAAP pretax adjustments: | ||||||||||||||||||
| Net realized and unrealized losses (gains) | 0.5 | 1.1 | (6.5 | ) | 2.9 | |||||||||||||
| Acquired intangible asset amortization | 8.3 | 9.1 | 16.8 | 17.6 | ||||||||||||||
| Office closure costs | 1.5 | - | 1.6 | - | ||||||||||||||
| Executive severance expenses | 0.3 | 1.7 | 0.6 | 1.7 | ||||||||||||||
| State sales tax assessment expense | - | 1.2 | - | 1.2 | ||||||||||||||
| Net tax effects of non-GAAP adjustments | (2.5 | ) | (3.2 | ) | (3.0 | ) | (5.6 | ) | ||||||||||
| Non-GAAP adjustments, after taxes | 8.1 | 10.0 | 9.6 | 17.9 | ||||||||||||||
| Adjusted net income attributable to Stewart | 25.4 | 25.8 | (2 | )% | 30.0 | 25.5 | 18 | % | ||||||||||
| Diluted average shares outstanding (000) | 28,013 | 27,444 | 28,011 | 27,402 | ||||||||||||||
| GAAP net income per share | 0.62 | 0.58 | 0.73 | 0.28 | ||||||||||||||
| Adjusted net income per share | 0.91 | 0.94 | 1.07 | 0.93 | ||||||||||||||
| Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2024 | 2023 | % Chg | 2024 | 2023 | % Chg | |||||||||||||
| Title Segment: | ||||||||||||||||||
| Revenues | 510.0 | 480.8 | 6 | % | 981.4 | 942.5 | 4 | % | ||||||||||
| Net realized and unrealized losses (gains) | 0.5 | (2.0 | ) | (6.6 | ) | (0.2 | ) | |||||||||||
| Adjusted revenues | 510.5 | 478.8 | 7 | % | 974.8 | 942.3 | 3 | % | ||||||||||
| Pretax income | 33.4 | 35.5 | (6 | )% | 43.6 | 34.8 | 25 | % | ||||||||||
| Non-GAAP revenue adjustments: | ||||||||||||||||||
| Net realized and unrealized losses (gains) | 0.5 | (2.0 | ) | (6.6 | ) | (0.2 | ) | |||||||||||
| Acquired intangible asset amortization | 2.8 | 3.3 | 5.7 | 6.0 | ||||||||||||||
| Office closure costs | 1.5 | - | 1.6 | - | ||||||||||||||
| Severance expenses | 0.3 | 1.0 | 0.6 | 1.0 | ||||||||||||||
| Adjusted pretax income | 38.4 | 37.7 | 2 | % | 44.9 | 41.6 | 8 | % | ||||||||||
| GAAP pretax margin | 6.5 | % | 7.4 | % | 4.4 | % | 3.7 | % | ||||||||||
| Adjusted pretax margin | 7.5 | % | 7.9 | % | 4.6 | % | 4.4 | % | ||||||||||
| Real Estate Solutions Segment: | ||||||||||||||||||
| Revenues | 92.2 | 71.4 | 29 | % | 175.3 | 134.0 | 31 | % | ||||||||||
| Pretax income | 5.1 | 3.3 | 56 | % | 11.8 | 4.6 | 155 | % | ||||||||||
| Non-GAAP revenue adjustments: | ||||||||||||||||||
| Acquired intangible asset amortization | 5.5 | 5.8 | 11.1 | 11.6 | ||||||||||||||
| State sales tax assessment expense | - | 1.2 | - | 1.2 | ||||||||||||||
| Adjusted pretax income | 10.6 | 10.3 | 3 | % | 23.0 | 17.5 | 31 | % | ||||||||||
| GAAP pretax margin | 5.5 | % | 4.6 | % | 6.8 | % | 3.5 | % | ||||||||||
| Adjusted pretax margin | 11.5 | % | 14.5 | % | 13.1 | % | 13.1 | % |