- Total revenues of $549.2
million ($550.3 million on an
adjusted basis) compared to $844.1
million ($850.7 million on an
adjusted basis) in the prior year quarter
- Net income of $15.8 million
($18.9 million net income on an
adjusted basis) compared to $61.7
million ($70.4 million on an
adjusted basis) in the prior year quarter
- Diluted EPS of $0.58
($0.69 on an adjusted basis) compared
to prior year quarter diluted EPS of $2.26 ($2.58 on an
adjusted basis)
HOUSTON, July 26,
2023 /PRNewswire/ -- Stewart Information Services
Corporation (NYSE: STC) today reported net income attributable to
Stewart of $15.8 million
($0.58 per diluted share) for the
second quarter 2023, compared to $61.7
million ($2.26 per diluted
share) for the second quarter 2022. On an adjusted basis, Stewart's
second quarter 2023 net income was $18.9
million ($0.69 per diluted
share) compared to $70.4 million
($2.58 per diluted share) in the
second quarter 2022. Second quarter 2023 pretax income before
noncontrolling interests was $25.2
million ($29.3 million on an
adjusted basis) compared to pretax income before noncontrolling
interests of $86.8 million
($98.2 million on an adjusted basis)
for the second quarter 2022.
Second quarter 2023 results included $1.1
million of pretax net realized and unrealized losses,
primarily composed of a contingent receivable loss adjustment
resulting from a previous disposition of a business, partially
offset by net unrealized gains on fair value changes of equity
securities investments. Second quarter 2022 results included
$11.9 million of pretax net realized
and unrealized losses, primarily related to net unrealized losses
on fair value changes of equity securities investments.
"Our second quarter results improved compared to the first
quarter as we moved into the seasonally stronger summer selling
season. The elevated interest rate environment continued throughout
the second quarter as mortgage interest rates reached almost seven
percent, keeping transaction volumes from increasing as in a normal
market," commented Fred Eppinger,
chief executive officer. "Our long-term strategies of creating a
stronger and more resilient company remain our primary focus, and I
am pleased with our progress on these important initiatives. We
continue to balance cost discipline with investments in managing
our operations in this challenging environment."
Selected Financial Information
Summary results of
operations are as follows (dollars in millions, except per share
amounts, and amounts may not add as presented due to rounding):
|
Quarter
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2023
|
2022
|
|
2023
|
2022
|
Total
revenues
|
549.2
|
844.1
|
|
1,073.5
|
1,697.0
|
Pretax income before
noncontrolling interests
|
25.2
|
86.8
|
|
15.0
|
166.4
|
Income tax
expense
|
(5.4)
|
(19.9)
|
|
(0.5)
|
(37.6)
|
Net income attributable
to noncontrolling interests
|
(4.0)
|
(5.2)
|
|
(6.9)
|
(9.2)
|
Net income attributable
to Stewart
|
15.8
|
61.7
|
|
7.6
|
119.6
|
Non-GAAP adjustments,
after taxes*
|
3.1
|
8.7
|
|
4.5
|
6.7
|
Adjusted net income
attributable to Stewart*
|
18.9
|
70.4
|
|
12.1
|
126.2
|
Net income per diluted
Stewart share
|
0.58
|
2.26
|
|
0.28
|
4.37
|
Adjusted net income per
diluted Stewart share*
|
0.69
|
2.58
|
|
0.44
|
4.61
|
|
* Adjusted net income
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):
|
Quarter Ended June
30,
|
|
2023
|
2022
|
% Change
|
Operating
revenues
|
466.7
|
761.1
|
(39 %)
|
Investment
income
|
12.1
|
6.7
|
80 %
|
Net realized and
unrealized gains (losses)
|
2.0
|
(8.8)
|
(123 %)
|
Pretax
income
|
35.5
|
93.6
|
(62 %)
|
Non-GAAP adjustments to
pretax income
|
1.7
|
11.5
|
|
Adjusted pretax
income*
|
37.2
|
105.1
|
(65 %)
|
Pretax
margin
|
7.4 %
|
12.3 %
|
|
Adjusted pretax
margin*
|
7.8 %
|
13.7 %
|
|
|
* Adjusted pretax
income and adjusted pretax margin are non-GAAP financial measures.
See Appendix A for explanation
and reconciliation of non-GAAP adjustments.
|
Title segment operating revenues for the second quarter 2023
decreased $294.3 million, or 39
percent, compared to the second quarter 2022, as a result of
transaction volume declines in our direct and agency title
businesses, while total segment operating expenses decreased
$220.1 million, or 33 percent,
primarily driven by lower revenues. Agency retention expenses in
the second quarter 2023 decreased $168.1
million, or 49 percent, in line with $201.2 million, or 49 percent, lower gross agency
revenues, while the average independent agency remittance rate in
the second quarter 2023 slightly improved to 17.7 percent compared
to 17.1 percent in the prior year quarter.
Total employee costs and other operating expenses in the second
quarter 2023 decreased $47.2 million,
or 16 percent, compared to the prior year quarter. As a percentage
of operating revenues, these expenses were 52.4 percent in the
second quarter 2023 compared to 38.3 percent in the second quarter
2022, primarily due to lower second quarter 2023 revenues. Title
loss expense decreased $6.6 million,
or 25 percent, in the second quarter 2023 compared to the prior
year quarter primarily as a result of lower title revenues. As a
percentage of title revenues, title loss expense was 4.2 percent in
the second quarter 2023 compared to 3.5 percent in the second
quarter 2022, which benefited from last year's favorable claims
experience.
The title segment's net realized and unrealized gains in the
second quarter 2023 were primarily driven by $2.0 million of unrealized gains from fair value
changes of equity securities investments, while the segment's net
realized and unrealized losses in the prior year quarter were
primarily due to $9.9 million of net
unrealized losses on fair value changes of equity securities
investments, partially offset by a $1.0
million gain related to an acquisition contingent liability
adjustment. Investment income in the second quarter 2023 increased
$5.4 million compared to the second
quarter 2022, primarily due to higher interest income resulting
from increased interest rates and higher short-term investment
balances in the second quarter 2023. Non-GAAP adjustments to pretax
income primarily included net realized and unrealized gains and
losses, and $3.3 million and
$2.5 million of acquisition
intangible asset amortization and other expenses in the second
quarters 2023 and 2022, respectively.
Direct title revenues information is presented below (dollars in
millions):
|
Quarter Ended June
30,
|
|
2023
|
2022
|
% Change
|
|
Non-commercial:
|
|
|
|
|
Domestic
|
184.5
|
234.4
|
(21 %)
|
|
International
|
25.9
|
41.2
|
(37 %)
|
|
|
210.4
|
275.6
|
(24 %)
|
|
Commercial:
|
|
|
|
|
Domestic
|
41.5
|
67.1
|
(38 %)
|
|
International
|
6.1
|
8.4
|
(27 %)
|
|
|
47.6
|
75.5
|
(37 %)
|
|
Total direct title
revenues
|
258.0
|
351.1
|
(27 %)
|
|
|
|
|
|
Total non-commercial domestic revenues in the second quarter
2023 decreased $49.9 million, or 21
percent, primarily resulting from a 31 percent decline in
residential purchase and refinancing transactions compared to the
prior year quarter. Domestic commercial revenues in the second
quarter 2023 declined $25.6 million,
or 38 percent, primarily driven by 30 percent lower commercial
orders closed and lower average transaction size compared to the
second quarter 2022. Average domestic commercial fee per file in
the second quarter 2023 was $11,600,
or 12 percent lower compared to $13,100 in the second quarter 2022, while average
residential fee per file in the second quarter 2023 was
$3,300, which was 11 percent higher
than $2,900 in the prior year quarter
due to a higher purchase mix. Total international revenues in the
second quarter 2023 decreased by $17.6
million, or 35 percent, primarily due to lower transaction
volumes in our Canadian operations compared to the second quarter
2022.
Real Estate Solutions Segment
Summary results of the
real estate solutions segment are as follows (dollars in
millions):
|
Quarter Ended June
30,
|
|
|
2023
|
2022
|
% Change
|
|
Operating
revenues
|
71.4
|
82.9
|
(14 %)
|
|
Pretax
income
|
3.3
|
6.1
|
(46 %)
|
|
Non-GAAP adjustments to
pretax income
|
7.1
|
6.1
|
|
|
Adjusted pretax
income*
|
10.3
|
12.2
|
(15 %)
|
|
Pretax
margin
|
4.6 %
|
7.4 %
|
|
|
Adjusted pretax
margin*
|
14.4 %
|
14.7 %
|
|
|
|
|
* 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 operating revenues in the second quarter 2023
decreased $11.5 million, or 14
percent, compared to the second quarter 2022, primarily due to
lower transaction volumes resulting from the continuing elevated
interest rate environment. Consistent with the revenue decline,
combined employee costs and other operating expenses in the second
quarter 2023 decreased $8.5 million,
or 12 percent. Non-GAAP adjustments to pretax income included
acquisition intangible asset amortization expenses of $5.8 million and $6.1
million in the second quarters 2023 and 2022, respectively,
and a $1.2 million state sales tax
assessment expense in the second quarter 2023 related to an
acquisition.
Corporate and Other Segment
The segment's results for
the second quarter 2023 included net realized losses of
$3.1 million, primarily driven by a
contingent receivable loss adjustment resulting from a previous
disposition of a business, while second quarter 2022 results
included net realized losses of $3.2
million primarily resulting from the same disposition of a
business. Net expenses attributable to corporate operations during
the second quarter 2023 were $10.5
million compared to $10.2
million in the prior year quarter.
Expenses
Consolidated employee costs in the second
quarter 2023 decreased $27.6 million,
or 13 percent, primarily due to lower salaries and benefits
expenses and incentive compensation resulting from reduced
transaction volumes and average headcount compared to the prior
year quarter. As a percentage of total operating revenues,
consolidated employee costs increased to 33.9 percent in the second
quarter 2023 compared to 24.8 percent in the prior year quarter,
primarily due to lower second quarter 2023 revenues.
Total other operating expenses in the second quarter 2023
decreased $32.7 million, or 20
percent, compared to the prior year quarter, primarily resulting
from lower costs tied to lower title and real estate solutions
revenues. As a percentage of total operating revenues, consolidated
other operating expenses for the second quarter 2023 were 24.0
percent compared to 19.1 percent in the second quarter 2022.
Other
Net cash provided by operations in the second
quarter 2023 was $35.1 million
compared to net cash provided by operations of $83.3 million in the prior year quarter,
primarily driven by the lower net income during the second quarter
2023.
Second Quarter Earnings Call
Stewart will hold a
conference call to discuss the second quarter 2023 earnings at
8:30 a.m. Eastern Time on Thursday,
July 27, 2023. To participate, dial (800) 343-4849 (USA) or (203) 518-9843 (International) -
access code STCQ223. 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 July 27, 2023 until midnight on August 3, 2023 by dialing (800) 938-2487 or (402)
220-9026 (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. More information can be found at
http://www.stewart.com, subscribe to the Stewart blog at
http://blog.stewart.com or follow Stewart on Twitter®
@stewarttitleco.
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; 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 (Unaudited)
(In thousands of
dollars, except per share amounts and except where
noted)
|
|
|
Quarter Ended June
30,
|
|
Six Months Ended June
30,
|
|
2023
|
2022
|
|
2023
|
2022
|
Revenues:
|
|
|
|
|
|
Title
revenues:
|
|
|
|
|
|
Direct
operations
|
257,994
|
351,122
|
|
465,864
|
668,956
|
Agency
operations
|
208,755
|
409,931
|
|
457,775
|
814,076
|
Real estate solutions
and other
|
71,387
|
88,186
|
|
133,978
|
211,415
|
Total operating
revenues
|
538,136
|
849,239
|
|
1,057,617
|
1,694,447
|
Investment
income
|
12,123
|
6,739
|
|
18,722
|
10,361
|
Net realized and
unrealized losses
|
(1,105)
|
(11,905)
|
|
(2,883)
|
(7,820)
|
|
549,154
|
844,073
|
|
1,073,456
|
1,696,988
|
Expenses:
|
|
|
|
|
|
Amounts retained by
agencies
|
171,776
|
339,847
|
|
377,514
|
671,039
|
Employee
costs
|
182,666
|
210,246
|
|
353,217
|
415,228
|
Other operating
expenses
|
129,333
|
162,008
|
|
250,073
|
351,756
|
Title losses and
related claims
|
19,802
|
26,398
|
|
37,476
|
55,619
|
Depreciation and
amortization
|
15,528
|
14,288
|
|
30,434
|
28,037
|
Interest
|
4,875
|
4,507
|
|
9,724
|
8,918
|
|
523,980
|
757,294
|
|
1,058,438
|
1,530,597
|
Income before taxes and
noncontrolling interests
|
25,174
|
86,779
|
|
15,018
|
166,391
|
Income tax
expense
|
(5,392)
|
(19,894)
|
|
(454)
|
(37,594)
|
Net income
|
19,782
|
66,885
|
|
14,564
|
128,797
|
Less net income
attributable to noncontrolling interests
|
3,967
|
5,225
|
|
6,939
|
9,240
|
Net income attributable
to Stewart
|
15,815
|
61,660
|
|
7,625
|
119,557
|
|
|
|
|
|
|
Net earnings per
diluted share attributable to Stewart
|
0.58
|
2.26
|
|
0.28
|
4.37
|
Diluted average shares
outstanding (000)
|
27,444
|
27,293
|
|
27,402
|
27,377
|
|
|
|
|
|
|
Selected financial
information:
|
|
|
|
|
|
Net cash provided
(used) by operations
|
35,107
|
83,312
|
|
(15,995)
|
118,187
|
Other comprehensive
(loss) income
|
(1,290)
|
(20,992)
|
|
6,017
|
(40,455)
|
Second Quarter
Domestic Order Counts:
|
|
|
|
|
|
|
|
Opened Orders
2023:
|
Apr
|
May
|
June
|
Total
|
|
Closed Orders
2023:
|
Apr
|
May
|
June
|
Total
|
Commercial
|
1,034
|
1,071
|
1,189
|
3,294
|
|
Commercial
|
1,069
|
1,212
|
1,304
|
3,585
|
Purchase
|
18,032
|
21,408
|
19,197
|
58,637
|
|
Purchase
|
12,606
|
15,098
|
15,378
|
43,082
|
Refinancing
|
7,055
|
6,160
|
5,427
|
18,642
|
|
Refinancing
|
3,302
|
3,605
|
3,767
|
10,674
|
Other
|
1,270
|
1,619
|
1,722
|
4,611
|
|
Other
|
767
|
1,026
|
1,112
|
2,905
|
Total
|
27,391
|
30,258
|
27,535
|
85,184
|
|
Total
|
17,744
|
20,941
|
21,561
|
60,246
|
|
|
|
|
|
|
|
|
|
|
|
Opened Orders
2022:
|
Apr
|
May
|
June
|
Total
|
|
Closed Orders
2022:
|
Apr
|
May
|
June
|
Total
|
Commercial
|
2,134
|
1,594
|
1,802
|
5,530
|
|
Commercial
|
1,647
|
1,652
|
1,833
|
5,132
|
Purchase
|
25,065
|
24,115
|
22,904
|
72,084
|
|
Purchase
|
18,716
|
18,275
|
18,363
|
55,354
|
Refinancing
|
9,629
|
7,853
|
7,471
|
24,953
|
|
Refinancing
|
9,112
|
7,434
|
6,131
|
22,677
|
Other
|
340
|
335
|
404
|
1,079
|
|
Other
|
790
|
380
|
549
|
1,719
|
Total
|
37,168
|
33,897
|
32,581
|
103,646
|
|
Total
|
30,265
|
27,741
|
26,876
|
84,882
|
STEWART INFORMATION
SERVICES CORPORATION
CONDENSED BALANCE
SHEETS (Unaudited)
(In thousands of
dollars)
|
|
|
June 30,
2023
|
December 31,
2022
|
Assets:
|
|
|
Cash and cash
equivalents
|
190,039
|
248,367
|
Short-term
investments
|
26,566
|
24,318
|
Investments in debt
and equity securities, at fair value
|
680,153
|
710,083
|
Receivables – premiums
from agencies
|
40,601
|
39,921
|
Receivables –
other
|
96,343
|
85,111
|
Allowance for
uncollectible amounts
|
(7,853)
|
(7,309)
|
Property and
equipment, net
|
81,763
|
81,539
|
Operating lease
assets, net
|
128,167
|
127,830
|
Title
plants
|
73,358
|
73,358
|
Goodwill
|
1,074,678
|
1,072,982
|
Intangible assets, net
of amortization
|
204,509
|
199,084
|
Deferred tax
assets
|
2,582
|
2,590
|
Other
assets
|
86,932
|
80,005
|
|
2,677,838
|
2,737,879
|
Liabilities:
|
|
|
Notes
payable
|
445,027
|
447,006
|
Accounts payable and
accrued liabilities
|
167,564
|
196,541
|
Operating lease
liabilities
|
146,649
|
148,003
|
Estimated title
losses
|
524,141
|
549,448
|
Deferred tax
liabilities
|
28,462
|
26,616
|
|
1,311,843
|
1,367,614
|
Stockholders'
equity:
|
|
|
Common Stock and
additional paid-in capital
|
332,025
|
324,344
|
Retained
earnings
|
1,074,458
|
1,091,816
|
Accumulated other
comprehensive loss
|
(45,326)
|
(51,343)
|
Treasury
stock
|
(2,666)
|
(2,666)
|
Stockholders' equity
attributable to Stewart
|
1,358,491
|
1,362,151
|
Noncontrolling
interests
|
7,504
|
8,114
|
Total stockholders'
equity
|
1,365,995
|
1,370,265
|
|
2,677,838
|
2,737,879
|
|
|
|
Number of shares
outstanding (000)
|
27,267
|
27,130
|
Book value per
share
|
49.82
|
50.21
|
STEWART INFORMATION
SERVICES CORPORATION
SEGMENT
INFORMATION
(In thousands of
dollars)
|
|
Quarter
Ended:
|
June 30,
2023
|
|
June 30,
2022
|
|
Title
|
Real
Estate
Solutions
|
Corporate
and Other
|
Total
|
|
Title
|
Real
Estate
Solutions
|
Corporate
and Other
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
466,749
|
71,387
|
-
|
538,136
|
|
761,053
|
82,862
|
5,324
|
849,239
|
Investment
income
|
12,099
|
24
|
-
|
12,123
|
|
6,737
|
2
|
-
|
6,739
|
Net realized and
unrealized gains (losses)
|
1,977
|
-
|
(3,082)
|
(1,105)
|
|
(8,755)
|
-
|
(3,150)
|
(11,905)
|
|
480,825
|
71,411
|
(3,082)
|
549,154
|
|
759,035
|
82,864
|
2,174
|
844,073
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Amounts retained by
agencies
|
171,776
|
-
|
-
|
171,776
|
|
339,847
|
-
|
-
|
339,847
|
Employee
costs
|
165,585
|
12,538
|
4,543
|
182,666
|
|
193,438
|
12,839
|
3,969
|
210,246
|
Other operating
expenses
|
78,960
|
49,311
|
1,061
|
129,332
|
|
98,267
|
57,549
|
6,192
|
162,008
|
Title losses and
related claims
|
19,802
|
-
|
-
|
19,802
|
|
26,398
|
-
|
-
|
26,398
|
Depreciation and
amortization
|
8,883
|
6,280
|
365
|
15,528
|
|
7,489
|
6,381
|
418
|
14,288
|
Interest
|
360
|
-
|
4,515
|
4,875
|
|
1
|
-
|
4,506
|
4,507
|
|
445,366
|
68,129
|
10,484
|
523,979
|
|
665,440
|
76,769
|
15,085
|
757,294
|
Income (loss) before
taxes
|
35,459
|
3,282
|
(13,566)
|
25,175
|
|
93,595
|
6,095
|
(12,911)
|
86,779
|
|
|
Six Months
Ended:
|
June 30,
2023
|
|
June 30,
2022
|
|
Title
|
Real
Estate
Solutions
|
Corporate
and Other
|
Total
|
|
Title
|
Real
Estate
Solutions
|
Corporate
and Other
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
923,639
|
133,978
|
-
|
1,057,617
|
|
1,483,032
|
172,238
|
39,177
|
1,694,447
|
Investment
income
|
18,665
|
57
|
-
|
18,722
|
|
10,344
|
17
|
-
|
10,361
|
Net realized and
unrealized gains (losses)
|
164
|
-
|
(3,047)
|
(2,883)
|
|
(4,983)
|
-
|
(2,837)
|
(7,820)
|
|
942,468
|
134,035
|
(3,047)
|
1,073,456
|
|
1,488,393
|
172,255
|
36,340
|
1,696,988
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Amounts retained by
agencies
|
377,514
|
-
|
-
|
377,514
|
|
671,039
|
-
|
-
|
671,039
|
Employee
costs
|
319,862
|
24,971
|
8,384
|
353,217
|
|
378,465
|
26,245
|
10,518
|
415,228
|
Other operating
expenses
|
155,127
|
91,835
|
3,112
|
250,074
|
|
193,262
|
119,947
|
38,547
|
351,756
|
Title losses and
related claims
|
37,476
|
-
|
-
|
37,476
|
|
55,619
|
-
|
-
|
55,619
|
Depreciation and
amortization
|
16,986
|
12,581
|
867
|
30,434
|
|
13,631
|
13,177
|
1,229
|
28,037
|
Interest
|
709
|
-
|
9,015
|
9,724
|
|
2
|
-
|
8,916
|
8,918
|
|
907,674
|
129,387
|
21,378
|
1,058,439
|
|
1,312,018
|
159,369
|
59,210
|
1,530,597
|
Income (loss) before
taxes
|
34,794
|
4,648
|
(24,425)
|
15,017
|
|
176,375
|
12,886
|
(22,870)
|
166,391
|
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, executive severance 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. In addition to these adjustments,
acquired intangible asset amortization are excluded in the
calculation of adjusted pretax income for the title and real estate
solutions segments. 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 measurements
used by management to the most directly comparable GAAP measures
for the quarter and six months ended June
30, 2023 and 2022 (dollars in millions, except share and per
share amounts, and amounts may not add as presented due to
rounding).
|
Quarter Ended June
30,
|
|
Six Months Ended
June 30,
|
|
2023
|
2022
|
% Chg
|
|
2023
|
2022
|
% Chg
|
|
|
|
|
|
|
|
|
Total
revenues
|
549.2
|
844.1
|
(35 %)
|
|
1,703.5
|
1,697.0
|
(37 %)
|
Non-GAAP revenue
adjustments:
|
|
|
|
|
|
|
|
Net realized and
unrealized losses
|
1.1
|
11.9
|
|
|
2.9
|
7.8
|
|
Other
adjustments
|
-
|
(5.3)
|
|
|
-
|
(39.2)
|
|
Adjusted total
revenues
|
550.3
|
850.7
|
(35 %)
|
|
1,076.3
|
1,665.6
|
(35 %)
|
|
|
|
|
|
|
|
|
Pretax
income
|
25.2
|
86.8
|
(71 %)
|
|
15.0
|
166.4
|
(91 %)
|
Non-GAAP pretax
adjustments:
|
|
|
|
|
|
|
|
Net realized and
unrealized losses
|
1.1
|
11.9
|
|
|
2.9
|
7.8
|
|
Executive severance
expenses
|
1.7
|
-
|
|
|
1.7
|
-
|
|
State sales tax
assessment expense
|
1.2
|
-
|
|
|
1.2
|
-
|
|
Other
adjustments
|
-
|
(0.4)
|
|
|
-
|
0.9
|
|
Adjusted pretax
income
|
29.3
|
98.2
|
(70 %)
|
|
20.9
|
175.1
|
(88 %)
|
GAAP pretax
margin
|
4.6 %
|
10.3 %
|
|
|
1.4 %
|
9.8 %
|
|
Adjusted pretax
margin
|
5.3 %
|
11.5 %
|
|
|
1.9 %
|
10.5 %
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Stewart
|
15.8
|
61.7
|
(74 %)
|
|
7.6
|
119.6
|
(94 %)
|
Non-GAAP pretax
adjustments:
|
|
|
|
|
|
|
|
Net realized and
unrealized losses
|
1.1
|
11.9
|
|
|
2.9
|
7.8
|
|
Executive severance
expenses
|
1.7
|
-
|
|
|
1.7
|
-
|
|
State sales tax
assessment expense
|
1.2
|
-
|
|
|
1.2
|
-
|
|
Other
adjustments
|
-
|
(0.4)
|
|
|
-
|
0.9
|
|
Net tax effects of
non-GAAP adjustments
|
(1.0)
|
(2.7)
|
|
|
(1.4)
|
(2.1)
|
|
Non-GAAP adjustments,
after taxes
|
3.1
|
8.7
|
|
|
4.5
|
6.7
|
|
Adjusted net income
attributable to Stewart
|
18.9
|
70.4
|
(73 %)
|
|
12.1
|
126.2
|
(90 %)
|
|
|
|
|
|
|
|
|
Diluted average shares
outstanding (000)
|
27,444
|
27,293
|
|
|
27,402
|
27,377
|
|
GAAP net income per
share
|
0.58
|
2.26
|
|
|
0.28
|
4.37
|
|
Adjusted net income per
share
|
0.69
|
2.58
|
|
|
0.44
|
4.61
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended June
30,
|
|
Six Months Ended
June 30,
|
|
2023
|
2022
|
% Chg
|
|
2023
|
2022
|
% Chg
|
Title
Segment:
|
|
|
|
|
|
|
|
Revenues
|
480.8
|
759.0
|
(37 %)
|
|
942.5
|
1,488.4
|
(37 %)
|
Net realized and
unrealized (gains) losses
|
(2.0)
|
8.8
|
|
|
(0.2)
|
5.0
|
|
Adjusted
revenues
|
478.8
|
767.8
|
(38 %)
|
|
942.3
|
1,493.4
|
(37 %)
|
|
Pretax
income
|
35.5
|
93.6
|
(62 %)
|
|
34.8
|
176.4
|
(80 %)
|
Non-GAAP revenue
adjustments:
|
|
|
|
|
|
|
|
Net realized and
unrealized (gains) losses
|
(2.0)
|
8.8
|
|
|
(0.2)
|
5.0
|
|
Acquisition intangible
asset amortization and other expenses
|
3.3
|
2.5
|
|
|
6.0
|
4.3
|
|
Severance
expenses
|
0.4
|
0.3
|
|
|
0.4
|
0.3
|
|
Adjusted pretax
income
|
37.2
|
105.1
|
(65 %)
|
|
41.1
|
185.9
|
(78 %)
|
GAAP pretax
margin
|
7.4 %
|
12.3 %
|
|
|
3.7 %
|
11.9 %
|
|
Adjusted pretax
margin
|
7.8 %
|
13.7 %
|
|
|
4.4 %
|
12.5 %
|
|
|
|
|
|
|
|
|
|
Real Estate
Solutions Segment:
|
|
|
|
|
|
|
|
Revenues
|
71.4
|
82.9
|
(14 %)
|
|
134.0
|
172.3
|
(22 %)
|
Pretax
income
|
3.3
|
6.1
|
(46 %)
|
|
4.6
|
12.9
|
(64 %)
|
Non-GAAP revenue
adjustments:
|
|
|
|
|
|
|
|
Acquisition intangible
asset amortization expense
|
5.8
|
6.1
|
|
|
11.6
|
12.5
|
|
State sales tax
assessment expense
|
1.2
|
-
|
|
|
1.2
|
-
|
|
Adjusted pretax
income
|
10.3
|
12.2
|
(15 %)
|
|
17.5
|
25.4
|
(31 %)
|
GAAP pretax
margin
|
4.6 %
|
7.4 %
|
|
|
3.5 %
|
7.5 %
|
|
Adjusted pretax
margin
|
14.4 %
|
14.7 %
|
|
|
13.1 %
|
14.7 %
|
|
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SOURCE Stewart Information Services Corporation