HOUSTON, April 28, 2004 -- Stewart Information Services Corporation (NYSE-STC) today reported net earnings of $11.1 million for the three months ended March 31, 2004, compared to net earnings of $19.9 million for the first quarter of 2003. On a diluted per share basis, net earnings were $.61 for the first quarter of 2004, compared to net earnings of $1.11 for the first quarter of 2003. Revenues in the first quarter increased 5 percent to $465 million from $441 million in the same period last year.
Title orders for the company for the first quarter of 2004 and the month of March 2004 (adjusted for same number of work days) were each down 17 percent from the same periods in 2003. The decrease in orders was primarily attributable to a decline in refinancing transactions. The decline began in the third quarter of 2003 when mortgage interest rates increased. Rates are currently at a level comparable to a year ago.
Despite a 5 percent decrease in title orders, total revenues increased 5 percent in the first quarter of this year because of increased premiums from agencies, home prices and commercial business. Revenues from direct operations declined less than order counts because refinancing transactions represented a larger portion of orders in 2003 and the company earns less revenue on refinancing transactions.
Pretax profits declined by 42 percent in the first quarter of 2004 over the same quarter a year ago due to a higher complement of lower margin agency business compared to direct operations. In addition, opening new offices and occupancy costs contributed to lower margins.
We continue our focus to increase book value, which grew to $35.17 per share.
"Our long-term plan is ongoing. We are increasing higher-margin commercial lines of business, developing, acquiring and using technology to increase productivity for our customers and our associates. We are creating innovative products and packages, maintaining an excellence of service expected by our customers -- all for the goal of enhancing shareholder value," said Stewart Morris, Jr., president and co-chief executive officer.
"The purchase of the remaining interest of RealtyAssist this past quarter allows us to more widely distribute a productivity platform for residential real estate agents and brokers. At the same time, it electronically integrates their activities with ours, resulting in increased productivity."
Stewart's industry-first home equity transaction bundle is exceeding expectations for sales to customers. Stewart expects its innovative bundling of services to continue growth in multiple rather than single products in the future.
"With the acquisition of Title Associates this past quarter, we acquired the pre-eminent commercial title agency in the crucial Manhattan market and gained a major national referral business. Significant commercial transactions will now go to Stewart rather than being shared among the competition. There is no finer team than Title Associates, and we are happy they have joined Stewart," said Malcolm S. Morris, chairman and co-chief executive officer.
"Although interest rates have been more favorable than we anticipated for the first quarter of 2004, strong job growth should see rates increase. While that will reduce refinancings in the near term, it supports continued health and growth in residential and commercial markets."
Stewart Information Services Corporation is a technology driven, strategically competitive, real estate information and transaction management company. Stewart provides title insurance and related information services through more than 7,400 issuing locations in the United States and several international markets. Stewart meets the needs of the real estate and mortgage industries through the delivery of information services required for settlement using e-commerce. These services include title reports, flood determinations, document preparation, property reports and background checks. Stewart also supplies post-closing services to lenders, automated county clerk land records, property ownership mapping, and geographic information systems for governmental entities. Stewart provides expertise in tax-deferred exchanges. More information about Stewart can be found at www.stewart.com.
This press release may contain forward-looking statements, which include all statements other than statements of historical facts. Forward-looking statements are not guarantees of performance and no assurance can be given that Stewart's expectations will be achieved. In particular, historical order counts do not necessarily indicate future revenues because Stewart cannot predict the number of orders that will result in closings.
Stewart Information Services Corporation
|
|
Three months | |
| ended March 31 | ||
| 2004 | 2003 | |
|
Revenues |
$464,892,000 |
$440,924,000 |
|
|
Net earnings |
$11,140,000 |
$19,875,000 |
|
|
Average shares - diluted |
18,181,000 |
17,831,000 |
|
|
Earnings per share: |
|||
|
Basic |
$0.62 |
$1.12 |
|
| Diluted |
$0.61 |
$1.11 |
|
STEWART INFORMATION SERVICES CORPORATION
STATEMENTS OF EARNINGS
(In thousands of dollars, except per share amounts)
|
|
Three months | |
| ended March 31 | ||
| 2004 | 2003 | |
Revenues
|
Title Insurance: |
||
| Direct operations |
182,534 |
191,730 |
|
Agency operations |
257,887 |
225,565 |
|
Real estate information services |
17,615 |
19,050 |
| Investment income |
5,152
|
4,783
|
| Investment gains (losses) - net |
1,704
|
(204)
|
|
464,892 |
440,924 |
Expenses
|
Amounts retained by agencies |
210,052 |
184,749 |
|
Employee costs |
134,350 |
132,002 |
|
Other operating expenses |
73,981 |
66,848 |
|
Title losses and related claims |
19,280 |
17,956 |
|
Depreciation |
6,976 |
5,909 |
|
Interest |
218 |
215 |
|
Minority interests |
2,148 |
2,338 |
|
447,005 |
410,017 |
|
Earnings before taxes |
17,887 |
30,907 |
|
Income taxes |
6,747 |
11,032 |
|
Net earnings |
11,140 |
19,875 |
|
Average number shares |
18,181 |
17,831 |
|
Earnings per share - diluted |
0.61 |
1.11 |
Segment information:
|
Title revenues |
447,277 |
421,874 |
|
Title pretax earnings |
16,653 |
27,942 |
|
REI revenues |
17,615 |
19,050 |
|
REI pretax earnings |
1,234 |
2,965 |
Selected financial information (000):
|
Cash flow from operations |
25,251 |
22,538 |
|
Title loss payments - net |
12,940 |
11,590 |
|
Other comprehensive earnings - net of taxes |
1,673 |
872 |
|
Average number of basic shares |
18,070 |
17,742 |
|
Number of title orders opened |
223 |
263 |
|
March 31 |
March 31 |
|
|
2004 |
2003 |
|
| Stockholders' equity | 636,547 | 515,127 |
| Number of shares outstanding | 18,100,000 | 17,766,000 |
| Book value per share | 35.17 | 29.00 |
STEWART INFORMATION SERVICES CORPORATION
CONSOLIDATED BALANCE SHEETS (condensed)
(In thousands of dollars)
|
March 31 |
December 31 |
|
|
2004 |
2003 |
Assets
|
Cash and cash equivalents |
101,401 |
114,202 |
|
Short-term investments |
146,756 |
153,322 |
|
Investments - statutory reserve funds |
387,692 |
375,421 |
|
Investments-other |
63,109 |
59,035 |
|
Receivables |
66,202 |
79,025 |
|
Property and equipment |
77,867 |
74,174 |
|
Title plants |
45,473 |
43,216 |
|
Goodwill |
97,655 |
79,084 |
|
Other assets |
58,839 |
54,388 |
|
1,044,994 |
1,031,867 |
Liabilities
|
Notes payable |
28,738 |
24,583 |
|
Accounts payable and accrued liabilities |
68,468 |
82,148 |
| Estimated title losses |
274,429
|
268,089
|
|
Deferred income taxes |
24,185 |
22,440 |
|
Minority interests |
12,627 |
13,219 |
Contingent liabilities and commitments
Stockholders' equity
|
Common and Class B Common Stock and |
143,514 |
141,168 |
|
Retained earnings |
480,246 |
469,106 |
|
Accumulated other comprehensive |
16,692 |
15,019 |
|
Treasury stock |
(3,905) |
(3,905) |
|
Total stockholders' equity |
636,547 |
621,388 |
|
1,044,994 |
1,031,867 |
April 28, 2004