Exhibit 99.1
Stewart Reports Earnings for Second Quarter
HOUSTON, July 27 /PRNewswire-FirstCall/ -- Stewart Information Services
Corporation (NYSE: STC) reported net earnings of $30.0 million, or $1.65 per
diluted share, for the three months ended June 30, 2004, versus net earnings of
$41.0 million, or $2.29 per diluted share, for the second quarter of 2003.
Revenues in the second quarter increased 1 percent to $565 million from $558
million for the same period last year.
Total revenues for the first half of 2004 were $1.0 billion, up 3 percent
from the same period a year ago. Earnings for the first six months totaled $41.1
million, or $2.26 per diluted share, versus $60.9 million, or $3.40 per diluted
share, for the first six months of 2003.
"We continue our strategies to grow stockholders' wealth -- resulting in
book value per share increasing from $34.47 at December 31, 2003 to $36.27 at
June 30, 2004," said Malcolm S. Morris, chairman of the board and co-chief
executive officer. "We have grown our balance sheet, added key personnel and
strategic major-market offices for a nationwide push to expand significantly the
higher-margin commercial business. Our prior investment of stockholders' capital
into our commercial title operations is generating returns exceeding our
expectations. Our year-to-date commercial revenues and profitability are the
best in our history and key additions to this segment, such as Title Associates
in New York, have continuing potential for growth."
"We continue to grow both organically and through targeted acquisitions in
our lines of business -- we focus on investments that we believe will be
accretive to earnings and increase book value," added Morris.
Representative title agency acquisitions this past quarter included
operations in Santa Cruz, California; Marin, California and Pullman, Washington,
as well as other offices in Kentucky and Wisconsin. New startup offices included
Stewart Insurance Solutions, a property and casualty insurance agent operating
initially in five states and Stewart Default Solutions, offering an array of
default management and technology to the mortgage and consumer services
industry. We also opened a new title agency in Spokane, Washington.
"SureClose, our transaction management platform, is now available in more
than 70 percent of our affiliate offices and branches in addition to more than
100 independent agents," said Stewart Morris, Jr., president and co-chief
executive officer. "This on-line transaction folder provides access for
customers to view the status and documents involving their real estate
transactions. We continue investing in technology to reach our goals to increase
revenues, productivity and future profit margins.
"Our new office in Istanbul, Turkey, which provides escrow, title guaranty
and closing services to foreign buyers, continues Stewart's systematic
international expansion," added Morris. "Stewart International's new Land
Projects Division targets municipal and national governments with services and
products including land registries, mapping and GIS services and property
taxation systems. This division provides a one-stop shop and cross-selling group
in offering our expanding array of services and products."
Title orders per working day for the second quarter of 2004 were down 29
percent from the same period in 2003. For the month of June 2004, orders per
working day declined 42 percent compared with the same period in 2003. The
decrease in orders was primarily attributable to a decline in refinancing
transactions beginning in the third quarter of 2003, when mortgage interest
rates increased. Rates rose above prior-year levels in May 2004. While current
rates have retreated to the 6 percent level, in June rates were more than 100
basis points higher than a year ago.
Total revenues increased slightly in the second quarter of this year
primarily because of increased acquisitions, commercial business and home
prices. Revenues from direct operations also increased slightly while order
counts declined primarily because refinancing transactions represented a larger
portion of orders in 2003. However, the company generally earns less revenue on
a refinancing transaction.
The pretax profit margin for the quarter declined from 11.8 percent to 8.4
percent. Periods of record order volumes, such as those that occurred in 2003,
resulted in higher margins given the fixed-cost nature of the title business. In
addition, technology costs, an increase in policy losses and litigation
reserves, opening new offices and rising occupancy costs contributed to lower
margins.
Stewart Information Services Corporation is a technology driven,
strategically competitive, real estate information and transaction management
company. Stewart provides title insurance and related information services
through more than 7,700 issuing locations in the United States and several
international markets. Stewart meets the needs of the real estate and mortgage
industries through the delivery of information services required for settlement
using e-commerce. These services include title reports, flood determinations,
document preparation, property reports and background checks. Stewart also
supplies post-closing services to lenders, automated county clerk land records,
property ownership mapping, and geographic information systems for governmental
entities. Stewart provides expertise in tax-deferred exchanges. More information
about Stewart can be found at www.stewart.com.
This press release may contain forward-looking statements, which include all
statements other than statements of historical facts. Forward-looking statements
are not guarantees of performance and no assurance can be given that Stewart's
expectations will be achieved. In particular, historical order counts do not
necessarily indicate future revenues because Stewart cannot predict the number
of orders that will result in closings.
Stewart Information Services Corporation
Three months
ended June 30
2004 2003
Revenues $ 565,456,000 $ 558,075,000
Net earnings $ 29,961,000 $ 41,030,000
Average shares - diluted 18,192,000 17,951,000
Earnings per share:
Basic $ 1.66 $ 2.30
Diluted $ 1.65 $ 2.29
Six months
ended June 30
2004 2003
Revenues $ 1,030,348,000 $ 998,999,000
Net earnings $ 41,101,000 $ 60,905,000
Average shares - diluted 18,187,000 17,895,000
Earnings per share:
Basic $ 2.27 $ 3.42
Diluted $ 2.26 $ 3.40
STEWART INFORMATION SERVICES CORPORATION
STATEMENTS OF EARNINGS
(In thousands of dollars, except per share amounts)
Three months Six months
Ended June 30 ended June 30
2004 2003 2004 2003
Revenues
Title insurance:
Direct operations 241,578 240,145 424,112 431,875
Agency operations 300,595 292,019 558,482 517,584
Real estate information
services 17,711 20,834 35,326 39,884
Investment income 5,170 4,535 10,322 9,318
Investment gains - net 402 542 2,106 338
565,456 558,075 1,030,348 998,999
Expenses
Amounts retained by agencies 245,403 239,035 455,455 423,784
Employee costs 152,453 147,178 286,803 279,180
Other operating expenses 81,747 72,599 155,728 139,447
Title losses and related claims 25,807 22,711 45,087 40,667
Depreciation 8,282 6,168 15,258 12,077
Interest 272 146 490 361
Minority interests 3,860 4,144 6,008 6,482
517,824 491,981 964,829 901,998
Earnings before taxes 47,632 66,094 65,519 97,001
Income taxes 17,671 25,064 24,418 36,096
Net earnings 29,961 41,030 41,101 60,905
Average number of
diluted shares (000) 18,192 17,951 18,187 17,895
Earnings per share
- diluted 1.65 2.29 2.26 3.40
Segment information:
Title revenues 547,745 537,241 995,022 959,115
Title pretax earnings 46,417 61,520 63,070 89,416
REI revenues 17,711 20,834 35,326 39,884
REI pretax earnings 1,215 4,574 2,449 7,585
Selected financial
information (000):
Cash flow from operations 58,273 62,373 83,524 84,911
Title loss payments
- net of recoveries 20,039 12,186 32,979 23,776
Other comprehensive income
(loss) - net of taxes (10,046) 5,770 (8,373) 6,642
Average number of
basic shares 18,101 17,833 18,086 17,788
Number of title orders
opened 222 314 445 577
June 30 December 31
2004 2003
Stockholders' equity 656,538 621,389
Number of shares outstanding (000) 18,102 18,026
Book value per share 36.27 34.47
STEWART INFORMATION SERVICES CORPORATION
BALANCE SHEETS (condensed)
(In thousands of dollars)
June 30 December 31
2004 2003
Assets
Cash and cash equivalents 119,824 114,202
Short-term investments 171,307 153,322
Investments - statutory reserve funds 375,379 375,421
Investments - other 59,995 59,035
Receivables 69,625 79,025
Property and equipment 78,363 74,174
Title plants 49,798 43,216
Goodwill 109,187 79,084
Other assets 63,336 54,388
1,096,814 1,031,867
Liabilities
Notes payable 41,501 24,583
Accounts payable and accrued liabilities 82,673 82,147
Estimated title losses 280,197 268,089
Deferred income taxes 22,061 22,440
Minority interests 13,844 13,219
Contingent liabilities and commitments
Stockholders' equity
Common and Class B Common Stock and
additional paid-in capital 143,589 141,168
Retained earnings 510,208 469,107
Accumulated other comprehensive earnings 6,646 15,019
Treasury stock (3,905) (3,905)
Total stockholders' equity 656,538 621,389
1,096,814 1,031,867
July 27, 2004
SOURCE Stewart Information Services Corporation
-0- 07/27/2004
/CONTACT: Ted C. Jones, Director - Investor Relations of Stewart
Information Services Corporation, +1-713-625-8014/
/Web site: http://www.stewart.com /
(STC)
CO: Stewart Information Services Corporation
ST: Texas
IN: FIN RLT
SU: ERN