STC - Earnings call transcript Q4 2024 | Stewart Information Services Corporation

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Operator

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

Kathryn Bass

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

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

website link me Eppinger; please listen stewart.com Fred are go access CFO, the Joining CEO, To and today call. this for conference David Hisey. to to the online,

our contain to risks cause This refer for involve a uncertainties. company's a results with and SEC press could release actual discussion statements number conference forward-looking of materially. that the risks uncertainties differ of that some call and filings of may the Please to and other

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

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

Let me Fred. to the over now turn call

Frederick Eppinger

we David for the today Thank joining released review Quarter will for financial us XXXX results you quarter, Fourth for shortly. Call. which you Stewart's the with Yesterday, Earnings Conference

my I'd today. like remarks topics address X to in

XXXX. journey I my on First, share will our on the made we progress in reflections

market. Second, I I'll our the commentary view offer on will challenged share our direction by And some business. finally, on strategic housing continued

Before these discussions, of a all acknowledge been into who California. to wanted have across to by those moment affected take the I wildfires jumping

devastation are communities thoughts many caused. impacted by fires Our the have the with which

in offices to efforts we say -- we will While fortunate to are impacted, did or not rebuild. we to ways their that in to efforts communities our have find employees continue and have support these

growth market. levels. show XX%, market we growth the company XXXX resilience we net I low plans in returns normal revenues adjusted that and a leverage annual to the am quarter. the to capitalize created our in real fortify we system earnings when on revenue minutes we we like results with and In These our further confronting position. in the saw on a progress progress decade while on can and the making pleased XX% to few to reflect 'XX, in build and grew very have by earnings the I'd fourth and by multiple are take made housing

significant position dedication In to why destination took our forward talent. This U.S. for XXXX, a fortify is we a step as top

News and one the work of us 'XX 'XX. for to Report World in & best recognized as companies

new organization. families talent hiring will through of accomplish best-in-class the across to company We the

We of have strong thoughtful really at direct result of which set a position helm, have a this the assumed succession several leaders plan. is our of which year,

excited over Our to leadership the strong industry now few view, next my team, in to to a the having with about this work team the level. am company opportunity of is is take the position in years in one the the I company take best forward. next and the

to some Moving businesses, to our dedicated our reflect and team more the We of renewable accurately forward, branded and teams. energy of our up services clients energy housing to we team in affordable including centers. infrastructure extensive data the hospitality to offerings our provide infrastructure Commercial projects, highlights stood now energy,

by year. structure this for Commercial while of place XX% revenues Domestic was All in the growing put

client in improving the Solutions growth year. to Estate up and prior excellent innovating Real also on revenue Our 'XX, offerings. team Thanks in our saw continually XX%

We our have the since late in XXXX. business in made of our beginning significant expansion of progress this journey line

And this in the in we segment. made year of we that doubled We are proud more in made have the in than revenue growth business. we the entire QX, XXXX

including our internally company's dedicated to energy upgrades, Across customers. infrastructure, technology to and improving we the some of organization, have both our

strong centers great and have through leverage assistant have global on building market the We centralization headway operational made when to and leverage capitalize in returns. our

our per strength dividend to cash share reiterate third our In announced we increased to shareholders. XXXX, the $X quarter commitment annual and fourth to

recipients the the Stewart we our Since and not communities and its of donated on over through have we over progressing XXX Finally, organizations scholarship when the progress real in the in. $X XXX did foundation in. XXXX, in company Foundation that have our I'd I work to million mention the inception serving work be remiss million live the $X.X we have we to communities if journey and given effort 'XX. proud And live and we we made to of the made I'm all goals in Title so

to quarter first market in the existing results. improvement fourth to very coin conditions. we year-over-year quarter perspective, for have preceded given trends. that From XX negative year-over-year quarter pleased fourth months with of I'm a Turning want by the was I the note results the macro seen sales was that the

more we've several the decades. the to market X the -- market housing in the X still sales home last years Even -- We also housing historically significant markets housing with experienced even in that know QX lowest in need QX, positive to existing to down normal it relative 'XX, the the making were positive homes print sold get now with annually. order year 'XX back making improvement million

rate are we believe while than to this given increase in The to outlook it and as sales, data we pleased movement the down And September. uptick in pending substantiates expectations. trend also latest year-over-year the point-in-time is drop brief sales see comp less this a be and home

light quarter higher in that appreciation strong significant inventories, uptick very shows smaller the in home even and normal in However, demand existing us rates. sales of than price fourth mortgage home the is

gradually shifted the year, given have Over market our long last expectations the return for the normal, conditions. we to

second given challenging prolonged the the will existing the cite of inventory XXXX, remain very are the number be year benefit of the start a at 'XX a half of will home quarter In normal expect currently here, of will a factors We first have to the sales to expect very we on half be and steadily -- beginning very as first could we There around to housing more the at effects demand demand the rates. expectations bay see we moving cooker Commercial, increasing past year. the elevated that last the -- continuation in election more or while choppy such transition will and the That the saw on of we we mortgage than price much market we keep the and continued for to 'XX -- saw appreciation, be months. uncertainty. the lower In it first -- said, tempered But steady year likely rates few the pressure half growth and in we growth, have in continue. 'XX. first this that probably saw of

business. to each Turning

on we operations direct our and segment, in most well direct as those and market. and are are our we Our as our core all are remained segment through remain the MSAs targeted means margin. protect not across on inorganic diligent efforts to of in, our markets both potential stifled in organic the housing the felt focused operations the ensure we We has of impact expansion immediately Residential managing fullest country. we a have to market keep pulse operating

Choppy market conditions have slowed acquisition-related recently. activity

in outlook We've growth However, acquisition small direct opportunities future have direct a seen operations that of pipeline in segment improved we remain market. the maintain about and for also in pursued XX% and for positive warm 'XX. preparation an very offices Commercial penetration our in

in priority the acquisitions and our business through top organically resilience improve markets in and markets, structurally target attractive earnings. of both enhance share Our grow in our to margins to this is

of and has we a the so across efforts the several been people in our our business investments sectors. quarters strong of lot in our effects operations feel our the positive industry place critical a as grow We've Our right to potential. share Commercial Commercial performer we made that to talent geography Services in last in maximize have growth

and customers in fourth well talent, to made reflect our fair that market. the bring progress quarter serve top Our results our we share in have

near-term the Commercial ourselves expect just headwinds We stay mind, transaction try our to momentum continue with we Commercial to as ahead. in vantage

Our new share partners well agency with attractive existing growing agents. our in gains as remains markets share by team driving focused adding as on agent agency

our We XX have are in target seen majority these progress states improving position and the states. of focused solid on in

us enhanced and with integration abilities stand out technology improved to allow Our support Commercial agents servicing agents. our around services

continue We production solution our attorney our is to Title launch economics. technology Connect innovate efficiency Close, day agents. both are specifically agent too to to This which of improving a built our on of system a customers is recent proud and focused and every for agents, cater

will differentiate in years our we for We better offerings our all on for have made to to and agents momentum services continue the partners. build order our agent in recent

by Solutions its Our story continues Estate growth business results. quarter shown fourth as Real

margins as start-up Our such timing of fourth in for costs impacts the quarter a bit customers were onetime some by new some contracts. and dampened data

introductions. on the services. last team However, our in see we our gains to leverage improve clients to continue with products cross-selling years. and is improved or share and however, new seen top both This gaining existing from market Cross-selling as portfolio client to we posed we of subchallenges, conditions have low expect lenders teen current sustain focused couple margins we of the and

continued as improves. expect market this in We space momentum the

Commercial business on XX% we international by where reach well improving our increasing Canadian businesses, focused geographic Our year. our we growth as presence this remain saw our growing as

significant Estate to data and higher outside our are search Commercial, fees expenses use other in percentage in resulted mix operating services an Our increase due And data. has to In growth other encounter in Commercial operating our Real Estate expense service the Services higher and Real Solutions, we outside ratios. Solutions in of of customers.

continue, lines those those we will business. and expect to continue X grow We trends of to

operations both remain can ensure goals. Overall, long-term our in we we achieve to and managing diligent near-

each we business levels, achieve remain historically as million our steadfast a share growth. normal for margins We belief growing our will to and believe macro returns the characterize dedicated position low pretax $X and market businesses, our direction are We double-digit would maintaining of to we that in our purchase which with market. that pursuits to and all

our thank to continued partnership. trust want and I for customers all of their

forward to for want to doing proud to seeing to to I excellence. and lead and been journey. X our an our honor with serve made we thank finally, the progress Stewart of the on and over loyalty I we It's excellence. not We permitted can I together. team the grow look be are company last best where to could dedication And have years, their continued the

you of David, it provide to over results. I'll an update turn the now to

David Hisey

service employees, appreciate our you, grateful Good morning, the everyone, the thank I'm support continued of of and Fred. our and for I customers. excellent

Let express by for impacted the my sympathies those wildfires. also me California

home noted, rates As area. Fred with and the sales at existing multi-decade market mortgage to challenging single-family lows the in continues X% be

total expenses on of per share $XX appendix gains, used release realized and Yesterday, Stewart other unrealized income performance. A intangible our The or quarter reported $X.XX to and related million. operating amortization fourth of to $XXX primarily we presents revenue adjusted of acquired that net net diluted press million measure

was On increased the income Title $XX fourth increased million in an and $X.XX $XX pretax Residential quarter diluted share the revenues. primarily improved diluted net million XXXX. per compared or or or adjusted XX% In higher to $XX share $XX revenues agency or $X.XX income Commercial, from quarter basis, XX% per operating million type to our segment, million Title operations. due in performance segment fourth

fourth closure adjustments After for segments income severance million $XX amortization, million last office to expenses purchase year. pretax increased quarter adjusted versus and $XX to

X% increased slightly On orders While Title higher approximately adjusted improved Commercial improved X% orders compared pretax while year primarily to compared last Domestic margin and business, quarter, driven refinancing our closed Direct to open XX%, prior by year. total to the transactions.

$X,XXX to file solid $X,XXX asset generated average improving quarter. Our volume Domestic to classes driven million mix. or Domestic purchase compared office Commercial higher fee average broad and to $XX,XXX led the another from fee in transaction sectors. and the by prior $XX,XXX X% quarter to and file result, the year Domestic by increased by $XX per Residential primarily to energy prior year XX%, compared due multifamily transaction lower Commercial size revenues and decreased in per XX% operations

favorable as experience loss year. The revenues to last Title million loss compared quarter $XX operations, revenues. compared for XXXX, to to Title both the was With fourth improved quarter with year. year X.X% respectively, higher X% to million, ratio Direct X.X% losses, our was net total loss consistent and or comparable expense agency offset trend. fourth ratio Title the quarter quarter On claim the prior year Title agency gross X.X% fourth X.X% Title last $X in the Title improved full the and

in losses X% XXXX. to low be the for expect Title We range

Regarding and the by improved Estate Real driven segment, services by $XX data million, businesses. higher Solutions revenues our credit-related revenues valuation operating in

we elevated However, declined customer vendor to price and occurred to continue costs increases renewals as customer pretax grow as prior relationships. contract employee income

in to margin cash Fred expect these low we area relationships be As as teens mature. noted, the

to million, higher consolidated XX% $X compared to amortization, quarter intangible the due to to primarily income acquisition or in $X Excluding adjusted XX% was million fourth revenues. pretax last year, employee XX% operating last our cost X.X% margin year. margin expenses, improved ratio compared On

Our increased higher and Real those of businesses XX% costs. other as operating expense ratio as increased revenue our third-party Solutions have to mix Commercial Estate

support financial market to On $XXX employees our statutory environment. challenging At solid in and our be continues position this other matters, year-end, to were estate customers, approximately and continually excess cash our of investments real requirements. premium during million the our reserve total

available a value $X.X In fully Total Stewart at facility. book XXXX, share. have was of $XXX million addition, December of $XX per we stockholders' line XX, a billion or approximately approximately equity credit

to from service operations income. estate million higher in cash to of improved the $XX which employees, are customers prior our remain Again, was the net million, all we and year as was $XX thank result compared quarter our Our you to net and markets. a confident real

for operator I'll questions. now to back turn the

Operator

And take George [Operator question we KBW. Bose will first our Instructions] from with

Bose George

think half year confirm, full you 'XX Commercial. I to it expect trying growth kind modest to I start want or the back in where said market just XXXX. a activity. of you the looks to Fred, of entered basis that that Commercial is wanted I with starting . And like against So with 'XX just -- on Commercial against think the about, And stronger

Frederick Eppinger

in it's that it's for -- there's see the of your We we single But little half year for than that's now. There's funny. the a -- entered the single-digit but the kind first year of we more very The view right right to will those off the market it's bit bit, uncertain, be the trends a the of is point digit now. that Yes. think growth a frankly, last although is see market, better I'm very second the uncertainty, half of was year, we But so. uncertain lot talking. and Yes. it choppy Commercial -- continuation right it's end or really low little our of last in of of now, what month kind that

territory, But data centers going And we're things sector-oriented going will real -- because positive we it's it that. believe. think there's a the very I be positive be continued be around again, in to to and robustness like

Bose George

Okay.

now, just And basis, think in the modest just about uncertainty year-over-year a growth so that's the it for just on to market. as given

Frederick Eppinger

believe. you our lot I In been what as take has those That's the pipeline a And know, longer. transactions fine.

stuff So in lot shorter the more the in we have because window pipeline. a transparency we have of

of kind So this we feel transpired year. about . good what's

Bose George

guess, in to normalizing, the And happen. that Estate Great. Okay. bit Real in fairly of the then noted repricings Or that little actually, margins in likely I that terms does I Solutions mean . a are segment, there is soon transition on XXXX? a David the of of sort happen

David Hisey

question. Great Yes.

transactions. is hear of this big such pieces. that in growth. So start-up mix, of One because It little kind choppy the for really pieces in a I large have there that these of was we year you There's X fourth bump is quarter. costs X

all revenue. these you hit have We of the number And coming without a expenses doesn't have clients right, timing if new exactly on. any

the take itself at very will of of that the end quickly quarter. care So

pricing. is this other The

of industry, tend quarter a data lot input the have this you third end come around the in. costs of the to of So

] credit we've So our into [ and those right, to increases relatively the clients, material, stuff. They been working and for contracts. bureaus with get were those the embedded FICO

feel job. I done good good we've a so really And team very the

started And been actually. imported so week pricing those have this changes

our into building relationships. in get start to So

I So rapid think relatively that's improvement. a

going better. be the that I as my this said, will it about And get is bit is -- think to point I year, year a guess full for business little a

something settling. We're it settling. XX%, because or be margin think will I and growing cash it's that it's XX% it's

the And has business is that XX-year -- when are of million appraisal view that both that business we asked long business. XX.X% also our cyclical or right? a it, at before. answer that did question you've my market data our So because normal when low. I That on term a In in lot market. cyclicality I And $X all GAAP, business to to should very not a

margin So full I a business cash. will those to mid-teens, to thing be on is than where the And of higher more mid, a on now view like maybe point XX% a I a get market fully will it from GAAP mid-teen even margin. expect think cash get that to from little

feel the the margins. we about the recovers, I I they have margins we're think But So good where market business that like generating, are. I shot. That better. as cash get a should

While the see don't the I X big in that in improvement months. market occurring next

the moving start back I at the we're that half think in going of that to year. direction

Operator

we next [Operator take And Instructions] will question Stephens. Campbell John our from with

John Campbell

the a on year. Congrats close of great

Okay.

It I'm going looking by here. year. of you're Let's Xx like in competition scaled stay the Commercial both just at about to outgrow maybe looks guys here. some your on maybe your

know asset versus get your So best there's unpack, best often talked some mix class want I know nuances unique you've your probably gains I sense sense, I to maybe this exposure kind exposure? there. Fred, is your shift. share to for about of tough but

Frederick Eppinger

stuff is some And and That's while you talk kind because used happened books this to everybody frankly, a category alternative our us. its bit grew of surge book that probably. know solar, XX-or-so I That know, about of okay? of little energy the of of some be that a of that energy. category And energy, about question, in percentage don't percent particularly obviously of our book that XX%, as bit some and what's higher little a great John, in the we for the year of that's else, infrastructure

of look part is growth at that But I think know that tell So do then too. said XX%. because know competitors will growth our is I But we don't the I of much. when outsized you -- it. that categories, I how next that's -- stuff, I've part I our our I believe our mix.

people was people it and to underwriting capability. we're capital much fair great a when was sectors as And had our starting to so invested with company And the in match our because as now. up -- and now we said, we've didn't get. and uncertainty And segments of the lot for market the So with sold, as half of is issues our share sale, get about we were that. I

we've my is doing category, market between of something. of the bigger much in probably your think been about down it mix to of than to a that, if me look I But market, at the I XX% category, a than is -- when of there's that our or much -- the our reason grown a again, market And to point, gone And more benefit -- tells question, others, say it's of if energy material. getting single is we back the that, view the growth X% in point, pretty underlying sustainable. So little we're say your than So we're most bit But we're that somewhere every the that. normalized market. bigger right? better we've that I which no to that the

right? journey have as invest this -- be much spread we the up better market. matched and have like at we're of we if should, Commercial not capabilities started in the again, anybody, underwriting risk -- said, so right should much there And but space, properly the We which X% can to share, as capacity we as I is a

is the of of occurred the happy But by industry. to we've it some I'm say encouraged the that done. mix what I'm benefit again, So in

John Campbell

X%. rate. you David, of And maybe sounds low appreciate mid-X% I maybe that. Okay. mentioned now think consistently like Obviously, pretty you've kind historically, years, below loss That's a the you've just or I X expected X that. to very been or provision like talked last It then, low helpful.

talk maybe didn't you you So conservative. maybe could maybe to or But that expectations, maybe expected bit. overly that was range if your built maybe occur that it you past in tightening what a maybe

seeing more book on trends? on Just that also you're . and and back commentary kind what of loss the

David Hisey

mix. just Yes, combination really of a the I it's John, I mean, think

of bit years had little because so the elevated of we some a And exposure. a going back more international few

try to balance to have I to that of claims that's bit. and call the that's little concerned and that you a things what predict. large always have the a we you more is then about, come thing be little those hard in moderated and is think jumbo timing be can why And or we

combination so But hitting be haven't just I'd better the much, why been of favorable for. those it's that's as you've then seen you the some So a And recently. and out there, performance and overall to higher items macros right? of are say always prepared have loss

Frederick Eppinger

Yes.

So average going is think I still guidance Xs, to in low number. that the be right, that's our

John Campbell

investment last And me on Okay. one the for income. then

of over sense expectations a for range or kind any two. the next Just of broad quarter

David Hisey

Yes.

little our like we've had better range. of think million bit We were that I little and in QX. some We a better just that. -- $XX bit escrows been a volume in some on things

hair to bank. versus I think rates off because at in you're we're not market American been able money a Keep we've on a looking because First if mind, us trigger trade not hold. we're don't we

in And themselves little that so banks cushion our . always a negotiated the rates negotiation. are that assuming give

because as so down do. as necessarily that, we of go rates And quickly don't

And we've to able basically hold. so been

were should hold sort at. And be pretty it's the think now, unless a extra we're of drop for range well able X at I in to the maybe And of bedding. We to have rates. X right X, levels year, big really the to so you

Operator

questions or that no program Thank back And turn to any will you. presenters are I at closing our this appears remarks. now time. there . it additional the further for

Frederick Eppinger

interest so Thank Stewart. your in for everybody thank to want I much. you

Operator

Thank participation. you. you for today's presentation. does conclude This Thank your

disconnect at may You any time.

Stewart Information Services (STC) 6 Feb 252024 Q4 Earnings call transcript