STC - Earnings call transcript Q1 2024 | Stewart Information Services Corporation

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Operator

Hello, and thank you for joining the Stewart Information Services First Quarter 2024 Earnings Call. [Operator Instructions] Please note today's call is being recorded. [Operator Instructions] It is now my pleasure to turn today's conference over to Kath Bass, Director of Investor Relations. Please go ahead.

Kathryn Bass

Thank you for joining us today for Stewart's First Quarter 2024 Earnings Conference Call.

results released discussing close. after be will that yesterday were the We

website could link me Eppinger; conference please listen stewart.com Fred are call go access CFO, the Joining statements CEO, To may and other results the risks contain today SEC for the that call. this for differ and of to risks number with uncertainties Please conference refer actual David forward-looking Hisey. the discussion filings to of to This cause company's materially. a uncertainties. press to and the that release involve our online, and a

During non-GAAP measures. call, will our discuss we some

a For which these release, is refer please available on to at measures the reconciliation our in earnings of appendix today's website non-GAAP stewart.com.

over call Let turn to me the Fred. now

Frederick Eppinger

and you. for for quarter, Earnings Kath, financial thank XXXX Quarter we with today the results Call. for First review us Conference will joining Stewart's Yesterday, which David released you Thanks,

I'd environment. will continued on important like up and thoughts our that to progress our provide Before success. long-term for core Stewart lines our believe we also doing on initiatives I'll so, business share housing set on current the updates

approximately year home units these industry factors, XXXX shared housing million industry which XXXX continuation that combination seen for prolonged existing macro Mortgage with our is As bottom. of what a weak we the housing has transaction was elevated hovering transitional perspective, remain market. our for of sales. rates volumes more during in yields normal have with a be quarter, facing. I've is the calls, overall a this the will X% of market bouncing we the the seeing sales From previous past X quarter The along low quarters. noted the previously, along inventory On an several expectation volumes below just low

We I'm with more been pleased continue the Following to being on see more market returning share believe an building into transition gains much all more businesses. 'XX. a in competitive well disciplined by having quarter, operating and functions in normal in progress strategic improved of cycles. we estate on slowed activity and we our real a now XXXX efficient remain has focused our the priorities pushed with model our that of this throughout most improvement position

enhance In place to in cycle return considerable to our also all important, title and result We made to been delivery improvement of are will normal so have anticipation our in have data business and are home also costs. levels team right our even of retaining key great we we implemented and as the have on dedicated technology more data capabilities volumes, technology our of have markets processes management in normal progress this retaining strides production more in on at production customer upgrades working sales improving and in scale all we we growing through in that attractive the across operations. Attracting and experience channels and always improve focused is lines utilization the to the on through access. our This talent market improves. our growth technology and our talent

capital the acquisitions with our focusing direct to prudent expansion investments been advantage in expect long-term provides and we have targeted is We've share the environment to acceptable growth markets increase share. and Our opportunity operations, on deployment This of that has direct efforts to leadership enhance gain our in we where our their returns. ensured segment our operations evaluate the to utilize acquisition-related current routinely and MSAs, capabilities. in our

a growth operations long-term and goals for commercial priority sectors attractive across and remain acquisition for our MSAs. for our to from remains cautious same: an scale grow Positioning remain business us. While the our direct critical all operations we commercial perspective, share

are achieve a to have in goals. leadership We talent sales place and investments commercial in teams we the our that across so operations making

technology well are due to first which the retail and the to term, near market to We energy part operations to more support commercial our energy in sector mix. In quarter, us efficiently. current to large investing sluggish serve the manage the better challenging also compared solid sectors continue volumes given market. like the business we our in very allow to to experience Considering financial our office, expect operations as commercial remains performed our customers to

agents space. on team of agency markets attractive is in on in our the also focused agency Pennsylvania share growing driving commercial Our is gains focused Florida, in support it and

upgraded map, We to are leveraging efforts we greater drive delivering technology our to of through platform. by risk use gains market and solutions our agents our that agents proud ease can to better offer on offer connectivity, our are for agent us technology reduction share our our road delivering to enhanced partners. I which allow experience will am and an

market finished top deeply team clients. solidly and we on as products we our to see gaining service current of cross-selling improved some in lenders Our focused share The markets. through is with quarter of to Estate services and our conditions, first Real beginning agency share Solutions the considering critical lender better solid leverage most business more shift our portfolio are our the

quarter revenues maintained quarter, we which the experienced credit our higher solid acquired in Solutions particularly as Our Informative to largely 'XX, for financial first business results given Research, market due the XXXX. first in data compared headwinds. We to business, Real Estate

businesses, immune are offset downturn share these to of with we some are market not We these challenges to in able the but gains.

expense with investment business of of managing We funds. and are allocation prudent thoughtfully our all our remain management and both lines

for We goals. We results with now we increase with we market I first careful conditions help the customer company. real further estate on take strength are in been performance. the Stewart focus in our to growth core double-digit Premiere will resulted and growth that long-term million are share from to on the low 'XX. our fortify initiatives us in that margins X would purchase to critical long-term for paired stronger to technologies achieve capabilities maintain financial in that that threaten the to position across growth we our business investing become feel believe company lines. outlook quarter takeaway and all expense more believe and pretax the Title ourselves is meet gains very normal as and market yielding first journey in and investment not We are on experiencing, actions our pleased that market. We investments to confident our as the us of our quarter positive a unit return a in have long-term business difficult compared committed Stewart's focus as are efforts this should given competitive discipline to Even our We a growth feel to allow am market Services the our

of we Our agency customer take for believe provide. will this opportunities customer thank solid partners continued financial -- our that trust. for us footing cycle Thank you should advantage the to and your best position you our to

to are excellence. with committed doing you to our serve best We

to update I a Finally, we the employees. to I'd will our Stewart express continually hard you delivers our the over customers. David, like results. and to to for together your on that my gratitude as work resilient provide turn now company to more create for I'm work to dedication grateful

David Hisey

Good their support steadfast and customers our thank outstanding for through service for and difficult their and Fred. morning, associates everyone, market. you, this thankful our I'm

continue residential mentioned broader is mortgage to while in Fred affecting and activity. economy earlier, the in X% residential impacting work the volumes, As be habits area, commercial high rates -- transaction which the are

$X,XXX agency file. Average of was and year. Yesterday, Total title energy activity, to per solutions, to operating however, from million million result of pretax a while to file operations, last gains resulted Average lower energy and commercial real breakeven was adjusted $X by the decreased were diluted by losses, expenses first margin the compared quarter commercial, lower in $X to the net operations results purchase of first adjustments first first was XXXX the of XXXX. our orders acquired late $X compared or lower, was detailed improved increased or quarter. performances, residential operations the to slightly fee A as loss intangible as quarter Title year million decreasing result quarter, while $XX Consistent year operating pretax per in total closed in income to per mix. improved average X% due quarter Domestic After while $X,XXX direct of to investment per residential due prior million, respectively, $X,XXX the or diluted rate the pretax from fee with share expense activity, completed quarter revenues the and due estate due Solid million segment's ramp-up refinancing release, and residential our in net a $X which were million Total $XX quarter, or average was to year $X.XX the prior lower or the geographic reported primarily other first and open revenues manager. After sector to Stewart was of fee In higher compared realized quarter international quarter, commercial $X.XX total volume. in per adjustments X%, primarily purchase for to XX%, year primarily agency remittance the our final was lower by first comparable. Title mix. lower slightly compared income revenues in on an prior the quarters prior by higher amortization total other quarter purchase million compared and in was and $X $XXX primarily the revenues acquisitions quarter the increased declined transaction both net items, $XX unrealized transaction revenues XXXX. Domestic adjusted expense intangible compared our press offset file share revenues the amortization title income for million appendix first and X% approximately XX% or commercial million. investment for XX% On from and X%, low income quarter range. X% $XX,XXX volumes stable. segment, lower and a to income

low revenues, a full XXXX first for total year XXXX, of in XXXX. for and was range expect the As the expense title to title mid-X% to and losses quarters loss percentage X% average both we

increased valuation revenues primarily compared data X% from our Solutions the Regarding $X last businesses. from to credit-related last Real X% was and compared segment, pretax year, Pretax year. services income Estate margin million resulting improved to

was pretax Excluding acquisition intangible approximately amortization, XX.X% last year. to XX% margin compared adjusted

services employee compared XX.X% compared in in to primarily revenues to average the commercial operations. the prior percent year XX.X% a cost other quarter lower quarter, estate customers, Our solid revenues consolidated higher position operating XX.X%, related were primarily to financial matters, employee employees driven in of as by our despite On our our expenses and expenses, environment, year better the continues in slightly expenses XXXX the to our estate ratio increased challenging the real quarter real supporting counts. Other on operating prior current be due operating market. for was first to XX.X% solutions

$XXX the $X.XX approximately $XX approximately approximately improved a improved total result million premium and of Our of per $XX of have and as million quarter first we to cash million credit. during value fully the requirements Stewart payments. were compared first a at cash primarily liability lower billion prior the in million to in was $XX end while of year also excess share. Net quarter, investments results used with book quarter operations line equity a available XXXX of $XXX Total reserve Stockholders' statutory

Lastly, we for turn our estate the greatly we markets. I'll our to back call service associates, now over in remain customers the operator appreciate to questions. real and and the confident

Operator

with We'll George [Operator Bose Instructions] to KBW. first go

Bose George

the rate Can [indiscernible] just run of did this Segment. guys you quarter? talk the you that sustainability about

Frederick Eppinger

Okay. the beginning. I'm I sorry, missed

So, yes.

services I business think much our sustainable. is very

so you portfolio. portfolio about that kind built quarters, some products, had have for and it X of we've again, traction nice -- sell We our it's ability or fourth as together know, our cross-sell quarters, of -- in and probably out now to getting we the X

traction. of in our has data IR, a some that solutions verification called also waterfall gotten interesting a We something have lot operation really

So account be that pretty in or run repositioned rate. I we you able always lose an ourselves feel like can so, I think and we to but nicely, kind that sustain market should of

Bose George

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

Frederick Eppinger

Yes, question. it's great a

better. be So I believe that to going we're

not us I think as I margins think gives we're going to bottom in that market, will we we get could occur I million, to bounce it I little a that you will, target think pretty market a growth. that we the million be we if don't to talked that to time to the up $XX.X confident more is will bit get about but probably of 'XX off improve, better. that million area, $X $XX a frame we little And purchase think the kind I'm until level. if our going bit, that get

actions, and it we of Bose, resources given geographies I -- we're is transparency I see of think we And did those of the shut going because kind know, expense to And don't be. -- end So of this them -- we have this in -- it year. of what to a before, -- them there's being to I that and depends speed some of the on taken take actions don't wanted taking so -- or some reallocation kind we should direction. think additional and kind see but mentioned benefit and those -- didn't we've the last of offices the we actions expense as prolonged now. we we at some I I to down, more looked couldn't I've you think volume, I movement took period as the need I be at couldn't don't of have What any

consider have So our I what a would capacity bit of we excess system. essentially, little in

margins So that as volume will with our comes, improve increase.

little Would better? me And asked this call, do flat a thought answer I was year? last last at great was somebody a question, is bit we the yes. if the to So year which

point So marginally we we year last will we about or little a than the better with and up two. last better think even ended margin if up did year think do performance a we bit in a you I margins perspective of a from by have, market, flat or kind

Operator

Campbell to next Stephens go John with We'll Inc.

John Campbell

isn't Real looks back like Obviously, it didn't Bose's mortgage follow with airtime of there investors. question the up deserves this type probably I on it on getting Solutions lift. think up to quarter, strength I want the probably that sequentially I the segment. see was Estate XQ. XX% mean, mean, market versus I the

to So over mortgage you the able could seeing if the mix on maybe first where largest don't typical your the any can your or to most I that talk are, then you're how of trend? you're you you revenues, why click seasonal And have if if business on gains? Fred, double know share to buck what what's businesses maybe market maybe And the it there? are? hand, fastest-growing but talk maybe maybe Just businesses incremental color mix,

Frederick Eppinger

Yes.

that So we in credit million capability big services. we we're counterparty a didn't and capability. and as you guys Fs, kind a a you had these And with this portfolio okay? pieces about. that big bought what modernization we company. now have of this started are how we're a we're of bought talking product when the the So it together, third business, we XXXX, And the partners. legit about only me, when We appraisal have good some bought is you happens know of and what's the data alternative those single we interesting we and right? And counterparty, vendors all of capability, care And is XXXX, have having for in But assemble know, John, unlike is interesting created what's to services $XX now what we good that these significant is about a business. you

lenders of properly about cyber space is shelf of year, cross-sell service those our X the with game, that I sure events And And themselves. say lenders last think all protect little would their it making fair was ability because to categories right? spread to made kind also so

we've really but lenders' wonderful created the business, that to of had mortgage traditional is of all the adoption. It with created so of also good the -- we're of focused on it's luck process. And what grow money And business. save during chunk trying us is for tri-merge talking Informative keep credit -- to both is kind coming a kind they've some Research solutions the together big to some about. we've

forward, So it's say cross-sell. suit business, with we in I as I also following that But which that it coming along see business. growth continued look I of see the is half as others

Now we a to market. again, mean I all is. it's tough what your point, and what that the -- know refi mortgage market market the

And will. so it is a in down, but you position repositioning ourselves, of if we're

I've -- It's margins, you margins get if margins those place, you I into right? there confident the now We needed this thing of got good kind very some you've pretty other think and cash in in I'm math, in too, couple to our So a see, volume critical to GAAP that, because businesses. -- of of the it's help more platform calls, said we're and the we seen a both will, to sensitive.

just good And to -- we're a of us now think this only didn't overall And X And I we're all positioned. the in area, I we that the kind think like becoming So XX I because it's have were have are really competitors spot. respected have important and well-respected highly didn't again, it it. for portfolio. that in of that

John Campbell

color. good that know don't the I if -- that's I appreciate Fred. Fs, haven't term That's heard I solid. I And big yet, that, Yes.

subject, So vendor kind lenders that you just cyber of incidents just make kind process. of that that staying rethink on diversification mentioned did some the

curious, title agency that So that or also seeing agents? are ensuring from core you the I'm channel you are in

Frederick Eppinger

question. So that's great a

people ask So that.

now. legit -- So management, in they always about want we traditionally, lender the to think just in and have I think the places. multiple risk lender our not just business, space,

our But there view, what's the about most with risk little years them is because not what sense lot agents this a doesn't don't do, many of giving would talk fair share is the have gave that the again, would interesting lot what's that it's is in of about less agent we're gave about amount And country. agents talking overwhelming to a practice it to it business and think going more many just agent we just business, P&C. in about in agents happened, anything. agency, -- management and we're level the XXX-X, their agents their space just -- be your way not it's make at point, of that should underwriters, be. the it my our share same And be about straight they you X/X-X/X-X/X to better been everybody, it's I how us of more a volumes dialogue be don't. And to you'd the because too to having an like or than agents see now or So XX-XX. to of sensitive was X little or to much I to a it them was a want business were X bit XX-XX like reason but me balanced. -- of surprised is good given say But for

it's lot don't of of to the a are time. lot because And long is to feed we focus group, a advantaged market new the share is way, lot dialogue it. we're partner that of a have I'm and shift to mouths what low. what that as unfairly by benefit -- we it deliver so as a you've us It execution, that the so with is you hard And able shift don't business. smallest seeing should do on we be when is good because time. right? So of to we And going have the and to you takes takes

more comfortable and as share because and grows, actually business they'll sharing will shift I feel have business think more with So increase momentum more. the our

has more think that So people I got thinking tad strategically. just a trend

term. I term think the at material. overstate short that long the be impact think short people But the could impact was impact I all. term of somewhat the the in don't over the much

John Campbell

guys. continued a success on Congrats

Operator

Partners. [Operator Instructions] Dunn We'll Geoffrey the go next Dowling to with

Geoffrey Dunn

and is you've if you provide M&A. potential on build targets on direct? looking and about MSAs wondering Coast. And little talk was Where for in I geographic your California bit I the a the next to where effort the West that become scale. update know -- you're Midwest been are could now South, that more focused tier can more Southwest of an to right up particular, you

Frederick Eppinger

Yes.

target markets a direct So again, little I don't and from agencies. different think about

under a to in of there's number lot we'd like in that good agency, in in we're -- subscale the grow we're in attractive states have have some states. Northeast. that Midwest, relatively tend in So the there But a Most because economics. XX of big one states be or represented. There's Pennsylvania are particular of pretty is to the They economics Southeast share those.

one is so of XX Texas of is -- the one And those, Florida those.

it the to profile other economic services, agency, cetera. fees has et splits the an of with So and a and lot do

so child kind got -- for what to we done. of And Florida that of poster is get And that's the us.

On the the direct XXX a talked right? little XX did side, We MSAs. with So of different, I about a it's them. about lot

be more the so or kind of I'm in that XX markets, Nashville that and there'll one particularly are core market of places be better places. would a like those gets transaction opportunity, interested As there's

one that's so category. And

a you satellite in city, The second once position category can opportunities. you've is established do good got a

of for great that for example us. Antonio a San example great is Dallas is us. a So

We the real parts that of have a suburbs there very good are opportunities. are position, but

could fillets. you so smaller And do

there's I so significant bunch XX, fill-ins then think on. say core would we focus on. markets, there's are more kind like that I a I move say, a And make XX there of And would can that we

just Your I us want point I much. be to don't California clear. on growing see California,

economics into know, are We're our I direct don't to way ourselves. But you we're California. will, a burn be got leaders of X we'll where burn and are It's there we behind, a player, exclusively a so niche because that if entrenched. well kind quite ways the places, are targeted direction. toward you skewed going we're forever. We'll almost want you market, be in good not are. And as the to certain We

as a forward We'll the far as high of see well. I run going it priority we as have. big our So part We'll I a that We'll but that there, as think solidify positions in people growth. growth. company the invest of for the don't don't

Operator

And to at the comments. closing to the for like turn back are in presenters time, as no questions the any conference or queue, there this further I'd over additional

Frederick Eppinger

thank interest and I joining Stewart. you. having everybody to for the in us want just Thank

Operator

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

Stewart Information Services (STC) 25 Apr 242024 Q1 Earnings call transcript