Stewart Information Services (STC) 24 Oct 242024 Q3 Earnings call transcript

Hello, and thank you for joining the Stewart Information Services Third Quarter 2024 Earnings Call. [Operator Instructions] Please note that 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.

Thank you for joining us today for Stewart's Third 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,

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

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

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

Let now the Fred. to me call turn over

released review for call our which for on us today lines. the the continued financial Third with you each by for we joining we've market, business Stewart's David in our update I'd sharing the overall the you quarter, of start XXXX housing like core to followed made Earnings shortly. will Quarter on Thank outlook results by Conference Yesterday, progress Call. an

take these affected Hurricane to for Milton. I and wanted the to by moment Before jumping Hurricane our into many express discussions, people a Helene sympathies

many have the communities to with by are and efforts impacted to we their in thoughts Our ways to storms, and these continue will these we communities find support rebuild.

reached contraction I home am we very months reduction the consecutive market. of quarter, continued the pleased for At of sales. the results in with quarter, XX the of given end the the existing year-over-year

remain we actions and our improve have market on well years over the have to from the operations our normalized market that upside recovery in quarter, we past our ourselves We to the have and we significant will the In company. our to another on this in X our more confident X%. feel saw a positioning put journey. environment, for and the sales business dedicated taken continue home feel focus efforts performance decrease We This we growing offerings. reflects we existing improving

in has This the both housing the U.S. quarter large and interesting an been for economy at

continued sentiment improved temporarily. X.X% over August, with has the past changing volumes we inventory historical have several lowest lingers to rates the just of turnover While one U.S. improve through decades. year-to-date the The hands of housing low of experienced trend months, in in homes the

Affordability leveling entry many mortgage cut remains typical buyers. Reserve way the rates But around September, Federal interest temporary as first have shoots by hardship out. level a applications. time rates some and back for barrier plays off years, X mid-X% for seasonality to of would-be in resulted mortgage see settled things the in in green we and which In the

that of very a on lends All 'XX, leading will however, transitional annual of -- an homes choppy as to year, the on our is 'XX however view this a elections, which remains, market. normal a we top be million existing which basis. of a sold to continuation in more remain, market a We X upcoming of housing define

while improved also building operations. efficiencies prepare market rebound. executing disciplined model identifying position by a remain our to Turning upon the on an to operating for We ourselves focused competitive

dedicated to to business are do each so. lines We have we across all positioned attractive of business, in our and growing share markets

in all We upgrades technology advancements customers' operations. in have improving made our our capabilities great experience and on channels through

utilizing on title and data our enhance to technologies implemented production technology management and our to have access. improve processes We are working

retaining focus and key to on attracting continue We talent.

market improves. best becoming us as industry-leading Stewart As grow home to we know, talent is the for the with the

are we keep housing of immediately our We through the in remains our operating suppressed focused feels to targeted managing country. the efforts the a as our segment diligent business potential are to segment residential been market. the of corner protect in in fullest margin direct we're as this operations our as those market direct both a to our impact Strategically, well We've and operation organic and means. expansion inorganic pulse across MSAs ensure markets on not on we most

acquisition-related have history. conditions in market activity slowed recent housing Choppy

we warm pipeline a market. an remain future opportunities positive about improved outlook the and very for However, for in maintain preparation

Our top priority in markets. is grow this our share attractive in business to

Our grow a commercial and positive services been share several quarters last our performer geographies businesses efforts our feel has over channels. we critical effects strong the the as of in to

we people lot growth potential. investments place a in to of in maximize operations have made across that have right commercial talent our We so our the

a investing clients. We in experience our better to are also technology for upgrading provide and customer to business our support

We market momentum themselves, depending the near-term but we economic mentioned. previously on of some present to expect that continue, commercial we commercial know our transaction challenges may variables

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

target We XX these in a are solid improving focused in on and position, states number of particularly our have already. progress states seen

our servicing to out commercial us allows around abilities enhanced to and services support agents improved agents. Our stand

continue to serve will We differentiate better service agent and to on offerings build improvements our to partners. these our

see growth financial to share to quarter. solutions top cross-selling client lenders the real on we clients existing our overall, portfolio our poses gains results leverage The maintained of continue introductions. with both Our business current challenge The in is real products initiatives. gaining third we improved estate as services. focused estate share the market from and new solid solutions our and some and But team cross-selling

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

enterprise, of the business investment managing and all thoughtfully our lines expense management. intentional remain in we with are Across

our and higher our service account an have operating solutions. we search two solutions, of estate mix in commercial in significant in commercial, by In to expenses from data To real very our we due meaningful data data. margins higher are outside of we operating services, fees commercial. the estate growth percentage are We and And in driven with other pleased to outside a increase experienced services solutions expense customers. use agency are date, achieving other real of percentages, in growth businesses, and

achieve goals. long-term and Overall, we both ensure remain near- management prudent to in our we expense

has a million X feel team that mindset we unit pretax we to purchase us an market. achieve normal leadership double-digit execution-based low more will allow return margins as Our to

remain very the premier focused and the company the for We and on the are services estate to become believe fortifying performance. real about strength our the of are committed company. market for in growth and long-term title journey We outlook to long-term Stewart positive

in view, a reiterate this annual we dividend fourth a our share row is in increased our an from a the share. to To to September, increase $X.XX in announced shareholders. we year have $X dividend This

will want capitalize continue trust. to for and housing our opportunities and to that to able the be agent partners thank continued have on We customers market this ourselves position their provide. I to well will

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

to I'd extending by like my employees. Finally, end our to thanks remarks my

the today are their to will employees be bettering We we dedication commitment of our company. not and where our without

as to Your are that Work named efforts tremendous have this we and Stewart, had were pleased share of XXXX-'XX a quarter to Best we impact Companies the one on U.S. by

for efforts News our your Report. journey. and loyalty & World you on Thank

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

have impacted Good morning, appreciate as service everyone, outstanding sympathies continued support our and customers. the associates those thank of our the you, of the Fred. grateful by for been and My well I hurricanes. deepest to

down XX subsequently a increased. meaningful challenging, not and be to came to continues existing of on it from mid-August rates September but points home impact volume, and basis have market the noted, end Fred about sales mortgage struggled As did

Yesterday, $XX revenues or on share per Stewart of quarter million. income million of $XXX net $X.XX reported diluted third total

expenses use quarter the in additional $XX amortization was losses, or basis, of XXXX. net performance intangibles in of press presented for and third we acquired our per million to quarter annualized income for diluted A or As and net other and share Appendix the release, On adjustments realized adjusted measures. $X.XX per an diluted compared million primarily $X.XX $XX share gains third

title other noncommercial $XX compared million pretax by primarily prior improved to intangible while X%, segment, income higher amortization domestic year operations for million, total segment's margins million revenues were quarter. the the segment revenues pretax quarter, while to prior and After the the $XX In our comparable which was adjustments was year title primarily operating or comparable. purchase XX%, Title or improved our by driven pretax higher commercial by items, agency better $XX slightly from revenues were driven and revenues. income adjusted adjusted

total direct while the in from were by slower residential the primarily On as lower, total due X% title opened orders X% closed to third market orders noted. resulting quarter improved previously orders business, our purchase lower

sectors. domestic Average file file generated the and commercial operations compared another $XX multifamily $X,XXX. revenues, fee per or transaction the to Our residential Domestic higher higher XX% commercial in good million fee to primarily to improved performance year and $XX,XXX to prior energy quarter. per in $XX,XXX slightly XX% improved volume with size due

to due due title in mix. a $XX increased loss due net title year versus operations, retention decreased million, With resulted while million to a average primarily $X X%, title slightly a or our revenues expense to revenues X% prior quarter also slightly agency improved favorable for rate quarter. lower gross primarily On the geographic loss this experience, ratio higher total losses, agency which claim

XXXX, title our average we year full the expect to For X%. losses around

in estate income in last Pretax third was And valuation was adjusted pretax the million, compared XX% quarter with our in services prior credit-related intangible, quarter the excluding and to $X pretax segment, by business. data quarter. margin real X.X% driven the solutions Regarding by margin higher then X.X% in acquisition improved year. revenues third year compared the XX.X%

improved to higher XX% On XX% operating by our driven consolidated ratio last from revenues. employee cost primarily expenses, year,

outside XX%, in increased in very our and estate expenses other as higher and res Our to well. increase, operating XX% operating do in revenues compared our commercial. as other search solutions businesses ratio services their driven Recall, ratio and credit by our that so primarily costs they're real information cost data-dependent, increased expenses business to

support our in continues were of market. requirements. of statutory XX, approximately At $XXX cash customers strong excess position September estate total employees million Our to financial real in reserve XXXX, premium and the be and in our investments

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

the operations million, primarily third improved net higher due quarter was net income. cash was to provided year Our in quarter, the which million $XX $XX by than prior

to our questions you any it the Fred or and thank to in associates. our for Again, comments. questions, confident markets. to I service customers remain we all back operator. think estate to No, I'll go And We can turn real

Bose KBW. George question take We'll with first from Instructions] [Operator our

First, Title just there market? commercial obviously was in New fee terms just York that any there? there's in sizes seeing profile, larger a increase the were year-over-year. the benefit you're deal big just deals doing from on they that acquisition the Or the Is of

energy alternative kind because But the be -- in a the But broad-based biggest the we've categories, deal so tend do quarter and the it's bouncy. of outsized number this bit. just is a the it size And of the deals this little had lot the kind of at that but a again, is little a And month, or percent. little has obviously -- with closings year, that's look skewed of it's because lot growth average our energy. It right? mix the to larger, from business and is mix has it's what I'd quarter-to-quarter. bit a of to energy a balancing this it category But

if look go actually, other the there, me, then ramped that than remind of the of gone stuff where refi. through order is purchase mean, your you issues Or And I now? geography segment have great. I there... refi sort there count, some there -- that purchase is up -- kind and and through stronger might at Can relative Okay,

Yes.

a our we deal, of in bulk there's large that's have transactions. if some little In big by a volumes. you a fluctuation quarter, driven which had couple this business, So bit

where little those a deals -- are. it's because bit So of bumpy the

Yes.

business, those to single-family So right, rental the transactions. larger in be tend

big there came in. bulk was So a order that

take with [Operator Inc. from our next Campbell Instructions] We Stephens question John will

the you've the you XX% think you a I'm amortization? that is your add-back margin And maybe that could Fred, basis normalized in adjusted back hoping XX% or on a if also, million type around commentary to talked to market, of of revisit if clarify backdrop. can X GAAP target with like with purchase the past, target target. I that

Yes.

some talked the probably X of particularly interesting some So John, search things again, X or of I it's implemented now. XX.X%, centralization about, stuff. I our data about on think, management quarters, last we've and

we've there. And the my we're or and leveraging us GAAP, at Because probably okay? -- is the that so. now investments ability entire it's and in made about number So just -- think gets kind it of to in XX.X% again, that market normal efficiency of our operating all across a of the overall share grow kind I model the view, company

a So it talked total. I've as about

one general, and a in look months down to -- as we've has think earnings last flat company, X%, -- market a months. in But about margin sales the right, increased particularly down we've And XX%. have the XX things, think so market, again, of it's that's our grown for you grown interesting like revenue X and in I in gone existing home at down XX% our a has increased but

So helps it that interesting us of leverage cost. you what's our and And our lots purchase of about and direct helps distribution. That's of the can the that -- of most if operations the have locations, because see system. us leverage share multiple leverage lots in where it grows, growing fixed particularly the we with lot a is there's where how market have that's lots we lots most and the

for levered to more even so And growth that's us.

But we And of it -- I manage serve you enhancement. believe the rest a in services. cost, helps where a that and growth come grow, the leverage good direct, numbers still it's our at bit the I we the number. do geography months, If agency kind bit in is believe margins. our a growth the better. if so held And the good you in But it's look has as have geography we the lot, X place little pretty everywhere. right? we've that's kind direct. fixed see can of margin higher from a And of still and little commercial is Because last in the And of the much

of about given that's I good that hope in those I've kind guidance feel past. I the So helpful.

saw was period a they're saying sales X-week an home very from surprising helpful. I their that about year-over-year. X.X% little And this update then the Yes, Redfin morning, pending to rose last notable curious are and That given just recent purchase us, you from seeing tick guys on higher? seeing rates. rates you I'm of consumers both any Are the as response spike what in refi. over just kind

a question. great it's so Yes,

kind right? So the question we the a rate. spiky is this kind it, So market, So is different right? a of and of with of too, saw pending between -- seen lot during but closing we've cancellations mystery

existing quarter help but into -- little be should So the translate that next home I that next in a -- could bit in being sales a better. the

changed ago sentiment weeks before sentiment To like point, do, and this the and actually up And when they it back rates, activity. it on going couple could you all the then and quite you David's was I I of -- XX-year a the don't the good, rate was know some flipped better of and about, of first than kind feel went us as know, X that, interest back. started weeks

see a refi can orders. in also refi. the in we you saw pop So little And it nice

is describe up question feel bouncing haven't I around hold? the I you a My the -- if off it is you to rate whatever, is that you are we're to it back way haven't see going would So or if locked little Or bottom. again bit? locked in a going like

bit a could but or to we it's think everybody other be do think growth of first of for could to find what reports, in hard the way. and And to going going help commercial. in see go we're I I there's the commercial, that that know quarter little the some half so until

to -- positive that's we've see think environment feel continue. this us, sure. to I commercial And for I just a like going lot. grown is For we're a But more going

better moving be But saw again, surprised just too. hopeful right it sentiment for it's was it existing there's -- lot last But -- had question this when now. almost. right, of I a wasn't we And it's X% the of down, the a kind that the activity, I kind -- homes that's great was a because of month. pieces saw -- I And and change [indiscernible], than Because some sign. I

good the a than And ratio our orders, That's purchase on lower Yes. noticed point. I've closing is average.

One kind -- orders, purchase kind question you competitors, a embedded squeeze have per of around the more, back last double if at of basis. on mean, orders, your Bose's like the couple rate, order been So it to if that's your down digits there. I could been look seems kind I if guys I of look just months day of year-over-year cancellation other have top in, at two I the closed

been Your of top competitors flattish. have kind

might hand, could commentary you falling other mix other into those putting some of little the the a are past shift, there's on that differential I if other. categorized now bit have on But in or there's guys been side, the more order maybe results. are you really Maybe a as good where provide there. if purchase orders don't up know a there

I the differentiation, few last kind kind a great particularly question last it's But of one bit of with a there's of -- months, [indiscernible]. been -- don't so. like little think because Yes. competitor, it's a particularly

And so it way MSA-by-MSA. is I took we that, The it went back. look at

so of the competitors And holding bit at bit a couple every every actually is a we serve. little in against we're our in MSAs. There's track serve And seeing against in. what market a we're down we're that market in and holding and up one specific little But others. I'm share

not so translating And differential. revenue it's into

little different worried. of I the I competitors if bit. what's different some don't of So struggling -- or I recorded is But -- not what. really I'm versus kind know don't a I'm

we're share happening. what's the right not Now growing direct now, in of given nature

organic market initiatives some Although we've micro dues. expansions a started paying expansions, are commercial and of around bunch which

But that even in feel better before share I we So softness is transactions. to translated orders. get that, do I that's see going don't

really question. -- a a great it's So it's good

West. where West, our what much could geographies in is be, are, it three things right, are the the in -- weaker Now we

high-end at But our in direct pretty aren't is in different know, the The the low end pretty low The be at far that than could have good I'm that Because businesses something in confident homes. the don't the is as -- high trends other our a as could as slow. we animal some all growth. end you there many hold But there be big as thing, end. that. market in shares other

XX little But lot same go I in it's position of again, the looking. if were It's it's row. things there's a ahead for one keep in we're see -- good kind been the everybody doing. what difference Because we those I a you about for months thing you and But of of share of handful feel of go way. months, the -- a about of the and feel good other where again, kind unfolded I last months,

are no this further I'll any there to And time. the at closing Fred questions turn remarks. for call

everybody I their Yes. interest to morning for time you. their Stewart. and Thank just thank this want in

Thank you. you your conclude program. Thank for And today's does this participation.

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