- Total revenues of $582.2
million ($577.4 million on an
adjusted basis) compared to $655.9
million ($643.2 million on an
adjusted basis) in the prior year quarter
- Net income of $8.8 million
($16.6 million on an adjusted basis)
compared to $13.3 million
($22.9 million on an adjusted basis)
in the prior year quarter
- Diluted EPS of $0.32
($0.60 on an adjusted basis) compared
to prior year quarter diluted EPS of $0.49 ($0.84 on an
adjusted basis)
HOUSTON, Feb. 7, 2024
/PRNewswire/ -- Stewart Information Services Corporation (NYSE:
STC) today reported net income attributable to Stewart of
$8.8 million ($0.32 per diluted share) for the fourth quarter
2023, compared to $13.3 million
($0.49 per diluted share) for the
fourth quarter 2022. On an adjusted basis, Stewart's fourth quarter
2023 net income was $16.6 million
($0.60 per diluted share) compared to
$22.9 million ($0.84 per diluted share) in the fourth quarter
2022. Fourth quarter 2023 pretax income before noncontrolling
interests was $18.8 million
($29.1 million on an adjusted basis)
compared to pretax income before noncontrolling interests of
$20.8 million ($33.3 million on an adjusted basis) for the
fourth quarter 2022.
Fourth quarter 2023 results included $4.8
million of pretax net realized and unrealized gains
primarily driven by net unrealized gains on fair value changes of
equity securities investments and net gains from acquisition
liability adjustments, offset by $6.4
million of combined office closures and severance expenses.
Fourth quarter 2022 results included $12.7
million of pretax net realized and unrealized gains,
primarily composed of net unrealized gains on fair value changes of
equity securities investments and gains related to settlements of
company-owned insurance policies, offset by $16.7 million of combined office closure,
severance and regulatory settlement and litigation expenses.
"Our fourth quarter results reflect continuing uncertainty in
the real estate market due to the higher interest rate environment
coupled with the normal seasonality. Although we are encouraged by
the moderation of interest rates into the mid – 6 percent range
during the fourth quarter and into early 2024, we maintain our
outlook that higher interest rates will negatively impact real
estate transaction volume in the first half of 2024," commented
Fred Eppinger, chief executive
officer. "We have made excellent progress on our strategic
investments during 2023 and will continue to focus on balancing
thoughtful cost discipline with investment in these long-term
enterprise initiatives to create a stronger and more resilient
company."
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
December 31,
|
|
Year Ended
December 31,
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
|
|
|
|
Total
revenues
|
582.2
|
655.9
|
|
2,257.3
|
3,069.3
|
Pretax income before
noncontrolling interests
|
18.8
|
20.8
|
|
60.9
|
232.7
|
Income tax
expense
|
(5.7)
|
(2.5)
|
|
(15.3)
|
(50.9)
|
Net income attributable
to noncontrolling interests
|
(4.3)
|
(4.9)
|
|
(15.2)
|
(19.5)
|
Net income attributable
to Stewart
|
8.8
|
13.3
|
|
30.4
|
162.3
|
Non-GAAP adjustments,
after taxes*
|
7.8
|
9.6
|
|
36.2
|
43.1
|
Adjusted net income
attributable to Stewart*
|
16.6
|
22.9
|
|
66.6
|
205.4
|
Pretax
margin
|
3.2 %
|
3.2 %
|
|
2.7 %
|
7.6 %
|
Adjusted pretax
margin*
|
5.0 %
|
5.2 %
|
|
4.8 %
|
9.5 %
|
Net income per diluted
Stewart share
|
0.32
|
0.49
|
|
1.11
|
5.94
|
Adjusted net income per
diluted Stewart share*
|
0.60
|
0.84
|
|
2.42
|
7.51
|
|
* 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 December
31,
|
|
|
|
2023
|
2022
|
% Change
|
|
|
|
|
|
|
|
|
Operating
revenues
|
503.0
|
581.6
|
(14 %)
|
|
|
Investment
income
|
13.0
|
6.9
|
89 %
|
|
|
Net realized and
unrealized gains
|
5.1
|
10.3
|
(50 %)
|
|
|
Pretax
income
|
27.3
|
26.9
|
2 %
|
|
|
Non-GAAP adjustments to
pretax income*
|
4.0
|
8.3
|
|
|
|
Adjusted pretax
income*
|
31.4
|
35.2
|
(11 %)
|
|
|
Pretax
margin
|
5.2 %
|
4.5 %
|
|
|
|
Adjusted pretax
margin*
|
6.1 %
|
6.0 %
|
|
|
|
|
|
|
|
* Adjusted pretax
income and adjusted pretax margin are non-GAAP financial measures.
See Appendix A for explanation and reconciliation of non-GAAP
adjustments.
|
|
Fourth quarter title segment operating revenues decreased
$78.6 million, or 14 percent,
compared to the prior year quarter, as a result of transaction
volume declines in our direct and agency title operations. Total
segment operating expenses in the fourth quarter 2023 decreased
$78.1 million, or 14 percent,
consistent with lower operating revenues. Agency retention expenses
decreased $39.7 million, or 15
percent, in the fourth quarter 2023 primarily due to $49.2 million, or 16 percent, lower gross agency
revenues. The average independent agency remittance rate in the
fourth quarter 2023 was 17.3 percent, compared to 17.6 percent
during the fourth quarter 2022.
Total employee costs and other operating expenses in the fourth
quarter 2023 were lower by $37.6
million, or 13 percent, compared to the prior year quarter,
while as a percentage of operating revenues, these expenses were
49.1 percent in the fourth quarter 2023 compared to 48.9 percent in
the prior year quarter. Fourth quarter title loss expense decreased
$1.1 million, or 5 percent, primarily
as a result of lower title revenues compared to the prior year
quarter. As a percentage of title revenues, title loss expense was
4.1 percent in the fourth quarter 2023 compared to 3.7 percent in
the fourth quarter 2022, which benefited from last year's favorable
claims experience.
Investment income in the fourth quarter 2023 increased
$6.1 million, compared to the prior
year quarter, primarily due to higher interest income resulting
from earned interest from eligible escrow balances in the fourth
quarter 2023. Non-GAAP adjustments to the title segment's pretax
income included $9.1 million and
$18.6 million of acquisition
intangible asset amortization and other expenses, partially offset
by $5.1 million and $10.3 million of net realized and unrealized
gains in the fourth quarters 2023 and 2022, respectively.
Direct title revenues information is presented below (dollars in
millions):
|
Quarter Ended December
31,
|
|
2023
|
2022
|
% Change
|
|
|
|
|
|
|
Non-commercial:
|
|
|
|
|
Domestic
|
153.8
|
171.3
|
(10 %)
|
|
International
|
24.0
|
24.0
|
0 %
|
|
|
177.8
|
195.3
|
(9 %)
|
|
Commercial:
|
|
|
|
|
Domestic
|
56.1
|
66.9
|
(16 %)
|
|
International
|
6.5
|
7.7
|
(16 %)
|
|
|
62.6
|
74.6
|
(16 %)
|
|
Total direct title
revenues
|
240.4
|
269.9
|
(11 %)
|
|
|
|
|
|
Total non-commercial domestic revenues in the fourth quarter
2023 declined $17.5 million, or 10
percent, primarily due to a 5 percent decline in total residential
purchase and refinancing transactions and a lower average fee per
file compared to the fourth quarter 2022. Fourth quarter domestic
commercial revenues decreased $10.8
million, or 16 percent, primarily driven by 14 percent lower
commercial transactions compared to the prior year quarter. Average
domestic commercial fee per file in the fourth quarter 2023 was
$14,800, compared to $15,100 in the fourth quarter 2022, while average
residential fee per file in the fourth quarter 2023 was
$3,200, compared to $3,500 in the prior year quarter primarily due to
transaction mix in the fourth quarter 2023. Total international
revenues in the fourth quarter 2023 decreased by $1.2 million, or 4 percent, primarily due to
lower transaction volumes compared to the prior year quarter.
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 December
31,
|
|
|
2023
|
2022
|
% Change
|
|
|
|
|
|
|
Operating
revenues
|
61.4
|
54.7
|
12 %
|
|
Pretax
income
|
1.4
|
0.4
|
276 %
|
|
Non-GAAP adjustments to
pretax income*
|
6.0
|
6.6
|
|
|
Adjusted pretax
income*
|
7.4
|
7.0
|
5 %
|
|
Pretax
margin
|
2.3 %
|
0.7 %
|
|
|
Adjusted pretax
margin*
|
12.0 %
|
12.8 %
|
|
|
|
* Adjusted pretax
income and adjusted pretax margin are non-GAAP financial measures.
See Appendix A for an explanation and reconciliation of non-GAAP
adjustments.
|
The segment's fourth quarter operating revenues improved
$6.7 million, or 12 percent, compared
to the prior year quarter, primarily due to increased credit
information services revenues, partially offset by lower valuation
services revenues from lower transaction volumes. Combined segment
employee costs and other operating expenses in the fourth quarter
2023 increased $5.4 million, or 11
percent, consistent with the higher operating revenues. Non-GAAP
adjustments to pretax income of $6.0
million and $6.6 million in
the fourth quarters 2023 and 2022, respectively, were primarily
related to acquisition intangible asset amortization expenses.
Corporate and Other Segment
The segment's results for
the fourth quarter 2023 and 2022 were primarily driven by net
expenses attributable to corporate operations which were
$9.7 million and $9.0 million, respectively. During the prior year
quarter, the segment recorded $2.5
million of net realized gains primarily related to a
settlement of a company-owned life insurance policy.
Expenses
Fourth quarter consolidated employee costs
were lower by $13.6 million, or 7
percent, compared to the prior year quarter, primarily due to lower
salaries and benefits expenses and incentive compensation resulting
from lower average employee count and reduced transaction volumes
in the fourth quarter 2023. As a percentage of total operating
revenues, consolidated employee costs were slightly higher at 31.6
percent in the fourth quarter 2023 compared to 30.1 percent in the
prior year quarter, primarily due to lower fourth quarter 2023
revenues.
Total other operating expenses in the fourth quarter 2023
decreased $17.9 million, or 12
percent, primarily as a result of reduced costs tied to lower title
revenues, and lower litigation settlement, third-party outsourcing,
and office closures expenses compared to the fourth quarter 2022.
As a percentage of total operating revenues, consolidated other
operating expenses for the fourth quarter 2023 were 22.5 percent,
which was slightly better compared to 22.8 percent in the prior
year quarter.
Other
Net cash provided by operations improved to
$40.6 million in the fourth quarter
2023 compared to $24.8 million in the
fourth quarter 2022, primarily as a result of lower payments on
claims and accounts payable, partially offset by the lower net
income during the fourth quarter 2023. Our income tax rate for the
fourth quarter 2023 was higher than our normal tax rate primarily
due to the effect of non-deductible expenses on lower domestic
pretax income.
Fourth Quarter Earnings Call
Stewart will hold a
conference call to discuss the fourth quarter 2023 earnings at
8:30 a.m. Eastern Time on Thursday,
February 8, 2024. To participate, dial (800) 267-6316 (USA) or (203) 518-9783 (International) -
access code STCQ423. Additionally, participants can listen to the
conference call through Stewart's Investor Relations website at
http://investors.stewart.com/news-and-events/events/default.aspx.
The conference call replay will be available from 11:00 a.m. Eastern Time on February 8, 2024 until midnight on February 15, 2024 by dialing (800) 934-8233
(USA) or (402) 220-6991
(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, 2022,
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.
ST-IR
STEWART INFORMATION
SERVICES CORPORATION
CONDENSED STATEMENTS
OF INCOME
(In thousands of
dollars, except per share amounts and except where
noted)
|
|
|
Quarter
Ended
December 31
(Unaudited),
|
|
Year Ended
December 31,
|
|
2023
|
2022
|
|
2023
|
2022
|
Revenues:
|
|
|
|
|
|
Title
revenues:
|
|
|
|
|
|
Direct
operations
|
240,432
|
269,894
|
|
962,674
|
1,246,258
|
Agency
operations
|
262,513
|
311,697
|
|
985,989
|
1,466,243
|
Real estate solutions
and other
|
61,408
|
54,697
|
|
263,577
|
335,850
|
Total operating
revenues
|
564,353
|
636,288
|
|
2,212,240
|
3,048,351
|
Investment
income
|
13,021
|
6,903
|
|
45,135
|
22,421
|
Net realized and
unrealized gains (losses)
|
4,795
|
12,718
|
|
(34)
|
(1,476)
|
|
582,169
|
655,909
|
|
2,257,341
|
3,069,296
|
Expenses:
|
|
|
|
|
|
Amounts retained by
agencies
|
217,021
|
256,752
|
|
813,519
|
1,208,307
|
Employee
costs
|
178,084
|
191,715
|
|
712,794
|
802,001
|
Other operating
expenses
|
127,171
|
145,056
|
|
507,701
|
648,022
|
Title losses and
related claims
|
20,555
|
21,628
|
|
80,282
|
102,733
|
Depreciation and
amortization
|
15,600
|
15,075
|
|
62,447
|
57,178
|
Interest
|
4,959
|
4,932
|
|
19,737
|
18,403
|
|
563,390
|
635,158
|
|
2,196,480
|
2,836,644
|
Income before taxes and
noncontrolling interests
|
18,779
|
20,751
|
|
60,861
|
232,652
|
Income tax
expense
|
(5,675)
|
(2,488)
|
|
(15,263)
|
(50,864)
|
Net income
|
13,104
|
18,263
|
|
45,598
|
181,788
|
Less net income
attributable to noncontrolling interests
|
4,289
|
4,949
|
|
15,159
|
19,483
|
Net income attributable
to Stewart
|
8,815
|
13,314
|
|
30,439
|
162,305
|
|
|
|
|
|
|
Net earnings per
diluted share attributable to Stewart
|
0.32
|
0.49
|
|
1.11
|
5.94
|
Diluted average shares
outstanding (000)
|
27,751
|
27,276
|
|
27,520
|
27,347
|
|
|
|
|
|
|
Selected financial
information:
|
|
|
|
|
|
Net cash provided by
operations
|
40,585
|
24,820
|
|
83,042
|
191,860
|
Other comprehensive
income (loss)
|
23,406
|
13,465
|
|
16,128
|
(51,596)
|
Fourth Quarter
Domestic Order Counts:
|
|
|
|
|
|
|
|
Opened Orders
2023:
|
Oct
|
Nov
|
Dec
|
Total
|
|
Closed Orders
2023:
|
Oct
|
Nov
|
Dec
|
Total
|
Commercial
|
1,031
|
1,335
|
1,381
|
3,747
|
|
Commercial
|
1,074
|
1,264
|
1,463
|
3,801
|
Purchase
|
16,995
|
14,076
|
11,679
|
42,750
|
|
Purchase
|
12,187
|
10,595
|
10,989
|
33,771
|
Refinancing
|
5,165
|
5,038
|
5,194
|
15,397
|
|
Refinancing
|
3,479
|
3,034
|
3,045
|
9,558
|
Other
|
1,912
|
1,506
|
3,271
|
6,689
|
|
Other
|
2,000
|
1,309
|
1,367
|
4,676
|
Total
|
25,103
|
21,955
|
21,525
|
68,583
|
|
Total
|
18,740
|
16,202
|
16,864
|
51,806
|
|
|
|
|
|
|
|
|
|
|
|
Opened Orders
2022:
|
Oct
|
Nov
|
Dec
|
Total
|
|
Closed Orders
2022:
|
Oct
|
Nov
|
Dec
|
Total
|
Commercial
|
1,243
|
1,124
|
1,807
|
4,174
|
|
Commercial
|
1,242
|
1,141
|
2,058
|
4,441
|
Purchase
|
15,591
|
13,400
|
11,562
|
40,553
|
|
Purchase
|
12,560
|
11,480
|
11,340
|
35,380
|
Refinancing
|
4,858
|
4,549
|
3,682
|
13,089
|
|
Refinancing
|
3,866
|
3,231
|
3,151
|
10,248
|
Other
|
1,844
|
1,428
|
1,219
|
4,491
|
|
Other
|
1,403
|
964
|
926
|
3,293
|
Total
|
23,536
|
20,501
|
18,270
|
62,307
|
|
Total
|
19,071
|
16,816
|
17,475
|
53,362
|
STEWART INFORMATION
SERVICES CORPORATION
CONDENSED BALANCE
SHEETS
(In thousands of
dollars)
|
|
|
December 31,
2023
|
December 31,
2022
|
Assets:
|
|
|
Cash and cash
equivalents
|
233,365
|
248,367
|
Short-term
investments
|
39,023
|
24,318
|
Investments in debt
and equity securities, at fair value
|
679,936
|
710,083
|
Receivables – premiums
from agencies
|
38,676
|
39,921
|
Receivables –
other
|
93,811
|
85,111
|
Allowance for
uncollectible amounts
|
(7,583)
|
(7,309)
|
Property and
equipment, net
|
82,335
|
81,539
|
Operating lease
assets, net
|
115,879
|
127,830
|
Title
plants
|
73,359
|
73,358
|
Goodwill
|
1,072,129
|
1,072,982
|
Intangible assets, net
of amortization
|
193,196
|
199,084
|
Deferred tax
assets
|
3,776
|
2,590
|
Other
assets
|
84,959
|
80,005
|
|
2,702,861
|
2,737,879
|
Liabilities:
|
|
|
Notes
payable
|
445,290
|
447,006
|
Accounts payable and
accrued liabilities
|
190,054
|
196,541
|
Operating lease
liabilities
|
135,654
|
148,003
|
Estimated title
losses
|
528,269
|
549,448
|
Deferred tax
liabilities
|
25,045
|
26,616
|
|
1,324,312
|
1,367,614
|
Stockholders'
equity:
|
|
|
Common Stock and
additional paid-in capital
|
338,451
|
324,344
|
Retained
earnings
|
1,070,841
|
1,091,816
|
Accumulated other
comprehensive loss
|
(35,215)
|
(51,343)
|
Treasury
stock
|
(2,666)
|
(2,666)
|
Stockholders' equity
attributable to Stewart
|
1,371,411
|
1,362,151
|
Noncontrolling
interests
|
7,138
|
8,114
|
Total stockholders'
equity
|
1,378,549
|
1,370,265
|
|
2,702,861
|
2,737,879
|
|
|
|
Number of shares
outstanding (000)
|
27,370
|
27,130
|
Book value per
share
|
50.11
|
50.21
|
STEWART INFORMATION
SERVICES CORPORATION
SEGMENT
INFORMATION
(In thousands of
dollars)
|
|
Quarter
Ended:
|
December 31,
2023
|
|
December 31,
2022
|
|
Title
|
Real
Estate
Solutions
|
Corporate
and Other
|
Total
|
|
Title
|
Real
Estate
Solutions
|
Corporate
and Other
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
502,945
|
61,408
|
-
|
564,353
|
|
581,591
|
54,697
|
-
|
636,288
|
Investment
income
|
12,996
|
25
|
-
|
13,021
|
|
6,891
|
12
|
-
|
6,903
|
Net realized and
unrealized gains (losses)
|
5,094
|
(3)
|
(296)
|
4,795
|
|
10,262
|
-
|
2,456
|
12,718
|
|
521,035
|
61,430
|
(296)
|
582,169
|
|
598,744
|
54,709
|
2,456
|
655,909
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Amounts retained by
agencies
|
217,021
|
-
|
-
|
217,021
|
|
256,752
|
-
|
-
|
256,752
|
Employee
costs
|
163,142
|
11,987
|
2,955
|
178,084
|
|
177,371
|
11,860
|
2,484
|
191,715
|
Other operating
expenses
|
83,777
|
41,587
|
1,807
|
127,171
|
|
107,118
|
36,293
|
1,645
|
145,056
|
Title losses and
related claims
|
20,555
|
-
|
-
|
20,555
|
|
21,628
|
-
|
-
|
21,628
|
Depreciation and
amortization
|
8,819
|
6,401
|
380
|
15,600
|
|
8,617
|
6,182
|
276
|
15,075
|
Interest
|
378
|
48
|
4,533
|
4,959
|
|
338
|
-
|
4,594
|
4,932
|
|
493,692
|
60,023
|
9,675
|
563,390
|
|
571,824
|
54,335
|
8,999
|
635,158
|
Income (loss) before
taxes
|
27,343
|
1,407
|
(9,971)
|
18,779
|
|
26,920
|
374
|
(6,543)
|
20,751
|
|
Year Ended:
|
December 31,
2023
|
|
December 31,
2022
|
|
Title
|
Real
Estate
Solutions
|
Corporate
and Other
|
Total
|
|
Title
|
Real
Estate
Solutions
|
Corporate
and Other
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
1,948,663
|
263,577
|
-
|
2,212,240
|
|
2,712,501
|
296,673
|
39,177
|
3,048,351
|
Investment
income
|
45,028
|
107
|
-
|
45,135
|
|
22,392
|
29
|
-
|
22,421
|
Net realized and
unrealized gains (losses)
|
3,437
|
(3)
|
(3,468)
|
(34)
|
|
(1,149)
|
-
|
(327)
|
(1,476)
|
|
1,997,128
|
263,681
|
(3,468)
|
2,257,341
|
|
2,733,744
|
296,702
|
38,850
|
3,069,296
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Amounts retained by
agencies
|
813,519
|
-
|
-
|
813,519
|
|
1,208,307
|
-
|
-
|
1,208,307
|
Employee
costs
|
648,832
|
49,320
|
14,642
|
712,794
|
|
735,747
|
50,462
|
15,792
|
802,001
|
Other operating
expenses
|
320,529
|
179,640
|
7,532
|
507,701
|
|
401,724
|
204,053
|
42,245
|
648,022
|
Title losses and
related claims
|
80,282
|
-
|
-
|
80,282
|
|
102,733
|
-
|
-
|
102,733
|
Depreciation and
amortization
|
35,000
|
25,802
|
1,645
|
62,447
|
|
29,715
|
25,563
|
1,900
|
57,178
|
Interest
|
1,442
|
239
|
18,056
|
19,737
|
|
386
|
-
|
18,017
|
18,403
|
|
1,899,604
|
255,001
|
41,875
|
2,196,480
|
|
2,478,612
|
280,078
|
77,954
|
2,836,644
|
Income (loss) before
taxes
|
97,524
|
8,680
|
(45,343)
|
60,861
|
|
255,132
|
16,624
|
(39,104)
|
232,652
|
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 other adjustments
(revenues of sold real estate brokerage company), 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, regulatory settlement
and litigation expenses, state sales tax assessment expense
(which was related to an acquisition), and other adjustments
(pretax results of sold real estate brokerage company). 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 year ended December 31,
2023 and 2022 (dollars in millions, except shares, per share
amounts and pretax margins, and amounts may not add as presented
due to rounding).
|
|
Quarter Ended Dec.
31,
|
|
Year Ended Dec.
31,
|
|
|
2023
|
2022
|
% Chg
|
|
2023
|
2022
|
% Chg
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
582.2
|
655.9
|
(11 %)
|
|
2,257.3
|
3,069.3
|
(27 %)
|
|
Non-GAAP revenue
adjustments:
|
|
|
|
|
|
|
|
|
Net realized and
unrealized (gains) losses
|
(4.8)
|
(12.7)
|
|
|
0.1
|
1.5
|
|
|
Other
adjustments
|
-
|
-
|
|
|
-
|
(39.2)
|
|
|
Adjusted total
revenues
|
577.4
|
643.2
|
(10 %)
|
|
2,257.4
|
3,031.6
|
(26 %)
|
|
|
|
|
|
|
|
|
|
|
Pretax
income
|
18.8
|
20.8
|
(10 %)
|
|
60.9
|
232.7
|
(74 %)
|
|
Non-GAAP pretax
adjustments:
|
|
|
|
|
|
|
|
|
Net realized and
unrealized (gains) losses
|
(4.8)
|
(12.7)
|
|
|
0.1
|
1.5
|
|
|
Office closure
costs
|
5.5
|
7.5
|
|
|
7.3
|
10.5
|
|
|
Executive severance
expenses
|
0.9
|
2.7
|
|
|
3.1
|
3.9
|
|
|
Regulatory settlement
and litigation expenses
|
-
|
6.5
|
|
|
-
|
6.5
|
|
|
State sales tax
assessment expense
|
-
|
-
|
|
|
1.2
|
-
|
|
|
Other
adjustments
|
-
|
-
|
|
|
-
|
0.9
|
|
|
|
20.4
|
24.7
|
|
|
72.5
|
256.0
|
|
Acquired intangible
asset amortization
|
8.7
|
8.6
|
|
|
36.0
|
33.3
|
|
|
Adjusted pretax
income
|
29.1
|
33.3
|
(13 %)
|
|
108.5
|
289.3
|
(63 %)
|
|
GAAP pretax
margin
|
3.2 %
|
3.2 %
|
|
|
2.7 %
|
7.6 %
|
|
|
Adjusted pretax
margin
|
5.0 %
|
5.2 %
|
|
|
4.8 %
|
9.5 %
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Stewart
|
8.8
|
13.3
|
(34 %)
|
|
30.4
|
162.3
|
(81 %)
|
|
Non-GAAP pretax
adjustments:
|
|
|
|
|
|
|
|
|
Net realized and
unrealized (gains) losses
|
(4.8)
|
(12.7)
|
|
|
0.1
|
1.5
|
|
|
Acquired intangible
asset amortization
|
8.7
|
8.6
|
|
|
36.0
|
33.3
|
|
|
Office closure
costs
|
5.5
|
7.5
|
|
|
7.3
|
10.5
|
|
|
Executive severance
expenses
|
0.9
|
2.7
|
|
|
3.1
|
3.9
|
|
|
Regulatory settlement
and litigation expenses
|
-
|
6.5
|
|
|
-
|
6.5
|
|
|
State sales tax
assessment expense
|
-
|
-
|
|
|
1.2
|
-
|
|
|
Other
adjustments
|
-
|
-
|
|
|
-
|
0.9
|
|
|
Net tax effects of
non-GAAP adjustments
|
(2.5)
|
(3.0)
|
|
|
(11.4)
|
(13.6)
|
|
|
Non-GAAP adjustments,
after taxes
|
7.8
|
9.6
|
|
|
36.2
|
43.1
|
|
|
Adjusted net income
attributable to Stewart
|
16.6
|
22.9
|
(27 %)
|
|
66.6
|
205.4
|
(68 %)
|
|
|
|
|
|
|
|
|
|
|
Diluted average shares
outstanding (000)
|
27,751
|
27,276
|
|
|
27,520
|
27,347
|
|
|
GAAP net income per
share
|
0.32
|
0.49
|
|
|
1.11
|
5.94
|
|
|
Adjusted net income per
share
|
0.60
|
0.84
|
|
|
2.42
|
7.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended Dec.
31,
|
|
Year Ended Dec.
31,
|
|
|
2023
|
2022
|
% Chg
|
|
2023
|
2022
|
% Chg
|
|
Title
Segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
521.0
|
598.7
|
(13 %)
|
|
1,997.1
|
2,733.7
|
(27 %)
|
|
Net realized and
unrealized (gains) losses
|
(5.1)
|
(10.3)
|
|
|
(3.4)
|
1.1
|
|
|
Adjusted
revenues
|
515.9
|
588.5
|
(12 %)
|
|
1,993.7
|
2,734.9
|
(27 %)
|
|
Pretax
income
|
27.3
|
26.9
|
2 %
|
|
97.5
|
255.1
|
(62 %)
|
|
Non-GAAP revenue
adjustments:
|
|
|
|
|
|
|
|
|
Net realized and
unrealized (gains) losses
|
(5.1)
|
(10.3)
|
|
|
(3.4)
|
1.1
|
|
|
Acquired intangible
asset amortization
|
2.9
|
2.8
|
|
|
12.3
|
9.1
|
|
|
Office closure
costs
|
5.5
|
6.9
|
|
|
7.3
|
9.9
|
|
|
Severance
expenses
|
0.7
|
2.4
|
|
|
2.3
|
4.0
|
|
|
Regulatory settlement
and litigation expenses
|
-
|
6.5
|
|
|
-
|
6.5
|
|
|
Adjusted pretax
income
|
31.4
|
35.2
|
(11 %)
|
|
116.0
|
285.8
|
(59 %)
|
|
GAAP pretax
margin
|
5.2 %
|
4.5 %
|
|
|
4.9 %
|
9.3 %
|
|
|
Adjusted pretax
margin
|
6.1 %
|
6.0 %
|
|
|
5.8 %
|
10.5 %
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate
Solutions Segment:
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
61.4
|
54.7
|
12 %
|
|
263.7
|
296.7
|
(11 %)
|
|
Pretax
income
|
1.4
|
0.4
|
276 %
|
|
8.7
|
16.6
|
(48 %)
|
|
Non-GAAP revenue
adjustments:
|
|
|
|
|
|
|
|
|
Acquired intangible
asset amortization
|
5.8
|
5.8
|
|
|
23.7
|
24.0
|
|
|
Severance and office
closure expenses
|
0.2
|
0.8
|
|
|
0.3
|
0.9
|
|
|
State sales tax
assessment expense
|
-
|
-
|
|
|
1.2
|
-
|
|
|
Adjusted pretax
income
|
7.4
|
7.0
|
5 %
|
|
33.8
|
41.5
|
(19 %)
|
|
GAAP pretax
margin
|
2.3 %
|
0.7 %
|
|
|
3.3 %
|
5.6 %
|
|
|
Adjusted pretax
margin
|
12.0 %
|
12.8 %
|
|
|
12.8 %
|
14.0 %
|
|
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SOURCE Stewart Information Services Corporation