STC Stewart Information Services

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

 

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): February 7, 2024

 

STEWART INFORMATION SERVICES CORPORATION

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 

DELAWARE		001-02658		74-1677330
(STATE OR OTHER JURISDICTION)		(COMMISSION FILE NO.)		(I.R.S. EMPLOYER IDENTIFICATION NO.)

 

1360 Post Oak Blvd, Suite 100, Houston, Texas 77056

(Address Of Principal Executive Offices) (Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (713) 625-8100

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1 par value	STC	New York Stock Exchange (NYSE)

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

  

 

 

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

 

A press release issued by Stewart Information Services Corporation on February 7, 2024, regarding financial results for the three months ended December 31, 2023, is attached hereto as Exhibit 99.1, and is incorporated herein by reference. This information is not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference in any filing under the Securities Act of 1933, as amended.

 

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

 

(d) EXHIBITS

 

Exhibit No.		Description
99.1		Press release of Stewart Information Services Corporation dated February 7, 2024, reporting financial results for the three months ended December 31, 2023.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	STEWART INFORMATION SERVICES CORPORATION (Registrant)
	By:	/s/ David C. Hisey
	David C. Hisey,
	Chief Financial Officer and Treasurer

 

Date: February 7, 2024

 

 

 

Exhibit 99.1

 

 

 

NEWS RELEASE

 

STEWART INFORMATION SERVICES CORP. P.O. Box 2029 Houston, Texas 77252-2029 www.stewart.com

CONTACT Brian Glaze / David Hisey Investor Relations (713) 625-8761

 

Stewart Reports Fourth Quarter 2023 Results

 

	·	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, February 7, 2024 - 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
Commercial			1,031				1,335				1,381				3,747
Purchase			16,995				14,076				11,679				42,750
Refinancing			5,165				5,038				5,194				15,397
Other			1,912				1,506				3,271				6,689
Total			25,103				21,955				21,525				68,583

 

Opened Orders 2022:		Oct				Nov				Dec				Total
Commercial			1,243				1,124				1,807				4,174
Purchase			15,591				13,400				11,562				40,553
Refinancing			4,858				4,549				3,682				13,089
Other			1,844				1,428				1,219				4,491
Total			23,536				20,501				18,270				62,307

 

Closed Orders 2023:		Oct				Nov				Dec				Total
Commercial			1,074				1,264				1,463				3,801
Purchase			12,187				10,595				10,989				33,771
Refinancing			3,479				3,034				3,045				9,558
Other			2,000				1,309				1,367				4,676
Total			18,740				16,202				16,864				51,806

 

Closed Orders 2022:		Oct				Nov				Dec				Total
Commercial			1,242				1,141				2,058				4,441
Purchase			12,560				11,480				11,340				35,380
Refinancing			3,866				3,231				3,151				10,248
Other			1,403				964				926				3,293
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	%

 

 

v3.24.0.1

Cover	Feb. 07, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Feb. 07, 2024
Entity File Number	001-02658
Entity Registrant Name	STEWART INFORMATION SERVICES CORPORATION
Entity Central Index Key	0000094344
Entity Tax Identification Number	74-1677330
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	1360 Post Oak Blvd, Suite 100
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77056
City Area Code	713
Local Phone Number	625-8100
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $1 par value
Trading Symbol	STC
Security Exchange Name	NYSE
Entity Emerging Growth Company	false

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