Stewart Information Services Q1 2025 Earnings Report

Stewart Information Services EPS Results

• Actual EPS: $0.25
• Consensus EPS: $0.34
• Beat/Miss: Missed by -$0.09
• One Year Ago EPS: $0.17

Stewart Information Services Revenue Results

• Actual Revenue: $608.90 million
• Expected Revenue: $595.50 million
• Beat/Miss: Beat by +$13.40 million
• YoY Revenue Growth: +10.40%

Stewart Information Services Announcement Details

• Quarter: Q1 2025
• Date: 4/23/2025
• Time: After Market Closes
• Conference Call Date: Thursday, April 24, 2025
• Conference Call Time: 8:30AM ET

Stewart Information Services (NYSE:STC) (NYSE: STC) is a publicly traded provider of title insurance and real estate transaction services. The company underwrites title insurance policies for residential and commercial properties, offering lenders and property owners protection against title defects and liens. Beyond title insurance, Stewart delivers a range of ancillary services, including closing and escrow administration, property valuation, and risk mitigation solutions designed to streamline the mortgage process and reduce operational complexity for clients.

In addition to core title and settlement services, Stewart offers technology-driven products aimed at enhancing transparency and efficiency in real estate transactions. These include digital closing platforms, automated document preparation, property data analytics and search tools that support due diligence and underwriting. The company’s integrated service model enables mortgage lenders, real estate professionals and corporate clients to access end-to-end transaction capabilities through a single point of contact, backed by regional expertise and compliance support.

Founded in 1893 in Galveston, Texas, Stewart Information Services has grown from a regional title company into a global enterprise headquartered in Houston. The firm operates across the United States and maintains a presence in Canada, Australia, the United Kingdom, Ireland and select international markets. Stewart’s long-standing history in the industry is supported by an experienced management team and a network of local offices that deliver tailored services while leveraging the company’s national and international infrastructure.

Stewart Information Services Q1 2025 Earnings Call Transcript

Key Takeaways

• The housing market remained challenging in Q1 with interest rates at 6–7% and existing home sales at multi-decade lows, constraining residential transaction volumes.
• Stewart reported Q1 net income of $3 million ($0.11/share) and adjusted net income of $7 million ($0.25/share), up from $5 million ($0.17/share) a year ago on total revenues of $612 million.
• The Title segment grew revenues by 11% (+$48 million) and raised its adjusted pretax margin to 2% from 1%, driven by strong domestic commercial and agency title operations.
• Its domestic commercial title business jumped 39% year-over-year, with average fee per file up 13%, led by retail, mixed-use and energy asset classes.
• Agency Services achieved an 11% increase in gross revenue and 14% growth in net revenue, fueled by market-share gains across 15 targeted states.

Presentation

[Operator]

Hello, and thank you for joining the Stewart Information Services First Quarter 2025 earnings call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. Instructions will be given at that time. Please note that today's call is being recorded. Lastly, should you need operator assistance, please press star zero. It is now my pleasure to turn the conference over to Kat Bass, Director of Investor Relations. Please go ahead.

[Kat Bass, Director of Investor Relations at Stewart Information Services Corporation]

Thank you for joining us today for Stewart's First Quarter 2025 earnings conference call. We will be discussing results that were released yesterday after the close. Joining me today are CEO Fred Eppinger and CFO David Hisey. To listen online, please go to the stewart.com website to access the link for this conference call. This conference call may contain forward-looking statements that involve a number of risks and uncertainties. Please refer to the company's press release and other filings with the SEC for a discussion of the risks and uncertainties that could cause our actual results to differ materially. During our call, we will discuss some non-GAAP measures. For reconciliation of these non-GAAP measures, please refer to the appendix in today's earnings release, which is available on our website at stewart.com. Let me now turn the call over to Fred.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

Thank you for joining us today for Stewart's First Quarter 2025 earnings conference call. Yesterday, we released the financial results for the quarter, which David will review with you shortly. Given the current macro environment, I'd like to open today's call with our perspective on the housing market conditions, followed by a review of our first quarter results and some insight into the progress we are making on our strategic growth initiatives. I am pleased with the quarter as we continue to improve and grow financially in a difficult housing market. The housing market remained challenging in the first quarter, with interest rates remaining in the range of 6.6-7% during the quarter. Existing home sales continue to bounce along the bottom in the quarter, with sales slightly worse than last year's historically weak numbers.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

While final existing home sales for March are not out yet, the pending home sales for February were down 3.6% from last year, indicating a weaker number for the quarter. As we look forward, we do see positive signs in both improved housing inventories and market activity trends in early April. For those that monitor the housing market trends closely, it is clear to see that we have an educated consumer base sitting on the sidelines, poised and ready to take advantage of a quick rate drop or changes to market conditions that make buying a home more accessible. Unlike last year, the housing inventory is at a higher level of both quality and volume. While the current market uncertainty makes it difficult to predict, given this activity, we expect to see improved second half of the year relative to 2024.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

With all these challenging market dynamics, I'm proud to say that in the first quarter, we continue to grow our business, with the title segment growing 11% and our real estate solutions growing 17%. In our title segment, our commercial services business continued to grow nicely, driven by thoughtful investment and talent as we deepen our capabilities in more geographies and asset classes. Our domestic commercial business grew 39% in the first quarter of 2025 relative to the Q1 of 2024. We benefited from strong growth in the majority of our asset classes, with retail, mixed use, and energy as the biggest winners for the quarter across our largest asset classes. We expect domestic commercial activity to improve year over year and look forward to continuing to capture our fair share of that market. In our direct business, we remain focused on growth in our target MSAs.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

We expect acquisitions will be a key component of our growth plan in this business and maintain a warm pipeline to targets, and believe activity will increase with the improving market. While the business is impacted by the suppressed residential housing market, we saw strong progress in our strategic priority of growing small commercial within our direct operations, as we saw 16% growth this quarter in that important segment. In agency services, our team remains focused on expansion through share gains in attractive markets by adding new agent partners and by growing our share with existing agents. We are pursuing growth across all our existing markets but are targeting share growth in 15 important states.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

Preliminary industry share data show that in 2024, we grew our share in these 15 states, and our momentum continues as we grew gross agency revenue by 11% year over year and net revenue by 14%. We attribute this solid momentum to increasing penetration of our agency partners and an increase in commercial transactions. Our improved support services and enhanced abilities around servicing commercial agents allow us to stand out to our agents. We will continue to build on this momentum that we have made in recent years for our agents in order to differentiate our services and better our offerings for our agent partners. Our real estate solutions business segment had strong revenue results for the first quarter as well, growing 17%. Our margins were up sequentially but down relative to the Q1 in 2024.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

Our strong revenue gains came with higher expenses, primarily due to increased costs of credit data from our Informative Research business. We expect margins in our lender services to normalize in the low teens range for the remainder of the year. We expect to grow the real estate solutions business line by gaining share with the top lenders and cross-selling our products as we leverage our improved portfolio of services. Cross-selling in the current market conditions poses some challenges. However, we continue to see share gains from both existing clients and new client introductions. We expect continued momentum in this space as the market improves. Our international business is pursuing a growth agenda as well, focused on broadening our geographical presence in Canada. In the first quarter of 2025, we grew non-commercial international revenue by 16% compared to the year prior.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

We also intend to increase our penetration of commercial business in our international unit. We are closely monitoring the impact of trade negotiations on both our domestic and global customer bases. From an expense perspective, our significant growth in real estate solutions and commercial services has resulted in an increase in our other operating expense ratios. In real estate solutions, other operating expenses are a higher percentage of mix due to the use of outside services and data. In commercial, we encounter higher outside data and service fees. We will expect these two trends to continue as we continue to grow these lines of business. We are dedicated to growing share in all lines of business and remain focused on positioning ourselves well for both near and long-term growth and sustainability. Stewart's current position can be described as a tale of two cities.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

While the challenging market improvement has been stubbornly slow, Stewart has never been in a better position to grow and improve our top and bottom lines. One thing that I can say with certainty is that we have assembled a strong team of leaders that are focused on working together to execute our strategic plan. This group wakes up every morning thinking about how we can improve the company and we're better for it. Our charge remains immovable to be the top destination for talent in this industry. For these reasons and more, we were again awarded the Top Workplace Award by USA Today. While it has been a very challenging market for the last three years, I have never been more confident in our ability to capitalize on what I see as an improving market in the second half of 2025 and into 2026.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

I want to thank all our employees for their dedication and to our customers for trusting us to deliver with consistency and excellence. David, I will now turn it over to you to provide the update on results.

[David Hisey, CFO at Stewart Information Services Corporation]

Good morning, everyone, and thank you, Fred. I appreciate our employees and am grateful for our customers. The real estate market continues facing with existing single-family home sales at multi-decade lows and mortgage rates in the 7% area. Recent tariff news has created great volatility. Yesterday, Stewart reported first quarter net income of $3 million or $0.11 per diluted share on total revenues of $612 million. Appendix A of our press release shows adjustments primarily related to net realized and unrealized gains and acquired intangibles amortization that we use to measure operating performance. On an adjusted basis, net income for the quarter was $7 million or $0.25 per diluted share compared to $5 million or $0.17 in the first quarter 2024. In the title segment, operating revenues improved $48 million or 11%, driven by our domestic commercial and agency title operations.

[David Hisey, CFO at Stewart Information Services Corporation]

This resulted in $2 million higher title pre-tax income. After adjustments for purchase intangible amortization, the segment's first quarter adjusted pre-tax income improved to $12 million or $5 million higher than last year, with adjusted pre-tax margin slightly improved to 2% compared to 1% last year. On our direct title business, total open orders in the first quarter were comparable to last year, while total closed orders were down 9%, primarily due to low residential transactions. Domestic residential fee profile improved 13% to $3,300 compared to $2,900 in the prior year, primarily due to higher share purchase transactions. Higher fee profile offset lower closed orders, resulting in relatively flat residential revenue. Our domestic commercial revenues improved $20 million or 39%, driven by higher transaction size and volume.

[David Hisey, CFO at Stewart Information Services Corporation]

As Fred noted, we saw growth in several asset classes: multifamily, industrial, mixed use, and retail, along with energy. Domestic commercial average fee profile increased 13% to $15,800 compared to $13,900 in the prior year quarter. Total international revenues increased $2 million or 9%, primarily due to improved volumes from our Canadian operations. With our agency operations, first quarter gross agency revenues improved $27 million or 11%, also held by commercial activity with agents, while net agency revenues improved $5 million or 13% due to slightly better remittance rate. On title losses, total title loss expense in the first quarter was comparable to last year, primarily due to overall favorable claim experience offsetting higher title revenues. The title loss ratio for the first quarter improved to 3.5% compared to 3.9% in the prior year quarter.

[David Hisey, CFO at Stewart Information Services Corporation]

We expect our title losses to average in the low 4% range for the full year 2025. Regarding the real estate solution segment, operating revenues increased $14 million or 7%, primarily driven by additional revenues from credit information services. However, segment pre-tax income decreased as we continue to work through the matters discussed in the fourth quarter: higher credit information costs to services and increased employee costs as we grow customer relationships. Adjusted pre-tax margin improved to approximately 10% from Q4, 7%, and we expect to be in the low teens margins as these relationships mature. Excluding acquisition intangible amortization, adjusted pre-tax income was $10 million in the first quarter compared to $12 million last year. On our consolidated operating expenses, our employee cost ratio in the first quarter improved to 31% from 32% last year, primarily due to higher operating revenues.

[David Hisey, CFO at Stewart Information Services Corporation]

Our other operating expense ratio as Fred covered increased to 27% in the first quarter compared to 25.6% last year, as we saw the higher costs in real estate solutions and commercial operations that Fred described from outside data and service costs. Our financial position remained solid to support our customers, employees, and the real estate market during this environment. Our total cash and investments were approximately $320 million in excess of our statutory premium reserve requirements, while we also have a fully available $200 million line of credit facility. Total stockholders' equity at March 31, 2025, was approximately $1.4 billion, with a book value of $50 per share. Net cash used by operations in the first quarter 2025 was $30 million, which was similar to last year's first quarter.

[David Hisey, CFO at Stewart Information Services Corporation]

Again, thank you to all of our customers and employees, and we remain confident in our service to the real estate markets. I'll now turn the call over to the operator for questions.

[Operator]

Thank you. If you would like to ask a question, please press Star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing Star 2. Once again, that is Star 1 to ask a question. We will pause for just a moment to allow questions to queue. Thank you. Our first question will come from Bose George with KBW. Your line is open.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

Good morning, Bose.

[Bose George, Managing Director at KBW]

Good morning. Actually, I wanted to just ask about commercial. Fred, you noted that you expect commercial to remain strong in the back half of the year. Just curious, in April, given the volatility of the last few weeks, has there been any indication of sort of a slowdown in activity or just delays in loans that are already in the pipeline? Or just any color on changes that you might have seen?

[Fred Eppinger, CEO at Stewart Information Services Corporation]

Yeah. We have been relatively robust. I would say that there is some money on the sidelines, but it is a lot. It feels still relatively robust. My expectation is a little bit better than last quarter when I was talking about kind of a 5, 6. I think this year is going to be more double-digit potential growth. Could it be a little bit bumpy because of some of the news? Yes. To tell you the truth, we have not seen a material change in kind of orders yet. So far, so good.

[Bose George, Managing Director at KBW]

Okay. Perfect. Great. Thanks. Actually, on investment income, was the lower one Q just on lower escrow balances? The decline was just a little more pronounced than we've seen in the past.

[David Hisey, CFO at Stewart Information Services Corporation]

Yeah, that's right, Bose. It was primarily off of balances. Yeah.

[Bose George, Managing Director at KBW]

Okay. Great. Thanks.

[Operator]

Thank you again. As a reminder, that is Star 1 if you would like to ask a question. Our next question will come from John Campbell with Stephens Inc. Your line is open.

[John Campbell, Managing Director of Equity Research at Stephens Inc]

Hey, guys. Good morning.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

Good morning, John.

[John Campbell, Managing Director of Equity Research at Stephens Inc]

Hey. David, on the low 4% loss provision rate for the full year, you guys are at 3.5% this quarter. You'd have to see a pretty big step up throughout the balance of the year. It seems like you've been pretty cautious or conservative in the commentary about loss provision rate over the last couple of quarters. I'm just curious if there is something that you are potentially seeing or if that's just an era of conservatism that you're kind of continuing. Just kind of any kind of commentary there and what you maybe view as the key swing factors this year.

[David Hisey, CFO at Stewart Information Services Corporation]

Yeah. No, John, it's a great question. I mean, we really are closely focused on some of the loss development trends. What you always have to be monitoring is sort of the large claims that could be out there. Keep in mind our mix of international business relative to revenue is a little bit bigger than our competitors. That international tends to have a higher claim rate and can be more volatile. I would say it's mainly the volatility of our mix of business. If that breaks for us, we'll see sort of what we saw in the first quarter. If it breaks against us, it gets to be a little higher.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

Yeah. I would not say, John, there is any trend that we see that is worse. It is just that we tend to be conservative on this. There is nothing developing that we see that is different than what has been. If that is really your question.

[John Campbell, Managing Director of Equity Research at Stephens Inc]

Yeah. That's exactly it. I appreciate that. David, I apologize if I missed this during your prepared remarks on the fee profile, but what was the growth out of just residential purchase fee profile?

[David Hisey, CFO at Stewart Information Services Corporation]

That was really what drove the overall increase is that we just had out of our total mix of orders, others were down. That tends to bring down fee profile, whereas the purchase was a higher percentage. It is just the higher percentage of that purchase mix that caused the fee profile to go up.

[John Campbell, Managing Director of Equity Research at Stephens Inc]

Okay. I do not know if you isolated just the residential purchase fee profile. The reason I'm asking is one of your competitors reported, obviously, last night as well. They had, I think, 8% growth out of resi purchase fee profile. That is obviously much faster than national trends. I was curious if you guys are kind of seeing that same dynamic.

[David Hisey, CFO at Stewart Information Services Corporation]

Our residential fee profile was up 13 from $3,300 to $2,900. I mean, I think the other thing relative to that person you're referencing is that there's probably a higher California mix of business. Fee profile's naturally going to be a little higher there.

[John Campbell, Managing Director of Equity Research at Stephens Inc]

Okay. Just mainly regional mix shift.

[David Hisey, CFO at Stewart Information Services Corporation]

Right. I mean, transaction size there is bigger in California than most markets. You could see some of that dynamic.

[John Campbell, Managing Director of Equity Research at Stephens Inc]

Okay. And then last one for me, obviously, I think the Texas Department of Insurance, I mean, that was a pretty surprising cut. I think it was a 10% cut to fees starting July 1. You guys, I think in your filings, maybe said 15% or so of total revenues tied to Texas. So I'm curious about, first, your initial impressions of that fee cut, whether you can work around that in any way, and then kind of broad strokes, expectations for the impact on the business.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

Yeah. A couple of points in that. It is being challenged. We think it's appropriate to be challenged because of just the odd timeframes we're talking about, right? You've got timeframes, the greatest years in history and the worst years in history. To me, the level of the recommendation is inappropriate and would actually challenge some agents' existence, frankly. We feel pretty good about that challenge. We think there could be some adjustment. We've kind of planned for that. There are things, obviously, you can do to manage through that. There are other fees and service fees around those transactions, etc., that you can try to manage too. We have it built in our plan, and we're going to manage to it.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

We are, as I say, there's a lot of things going on in the process because it kind of surprised most people in the market. I mean, it doesn't really make sense given the current environment.

[John Campbell, Managing Director of Equity Research at Stephens Inc]

We tend to agree. Thank you.

[Operator]

Once again, that is Star 1. If you would like to ask a question, again, this is a final reminder. Please press Star 1 now to join the queue. Thank you. We do have a follow-up from Bose George with KBW. Your line is open.

[David Hisey, CFO at Stewart Information Services Corporation]

Hey, Bose.

[Bose George, Managing Director at KBW]

Yeah. Thanks. Just a couple of little follow-ups. The other orders line item obviously bounces around a lot. Is there any sort of good way for us to think about where that could go this year?

[Fred Eppinger, CEO at Stewart Information Services Corporation]

Yeah. It is very bouncy because it's kind of batch transactions and big syndications and stuff. We believe that it'll be a tad better this year than last year, but it's bouncing, right? It just, the timing of those transactions occurs. I know we have one transaction that slipped from last quarter to the next quarter. It's going to continue to be like that. I believe that business is going to be a tad better this year than last. You will see continued kind of choppiness in the numbers.

[David Hisey, CFO at Stewart Information Services Corporation]

Okay. Remember, Bose, there's two principal businesses there. There's the reverse business, and then there's the institutional business that Fred was talking about. Both of those businesses can have volatility reversed based on capital market situations. As Fred said, the big bulk SFR and build-to-rent kind of things on the institutional side.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

Yeah. Both businesses are the side I like very well. We're leaders in both those businesses. We're positioned well. Just kind of the strategic aspect of both of those, as those businesses have grown, and we have not only held share but grown lead share. I feel really good about those businesses in the future as well.

[Bose George, Managing Director at KBW]

Okay. Great. That's helpful. Thanks. Actually, switching over to the real estate solutions, I mean, in terms of the margin, in terms of the margin improvement.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

Bose, this one, again, is my fault, I think, for not being as articulate at our last earnings call. Essentially, that business, as you know, last year, particularly IR, Informative Research, has grown at about 40% plus and continues to be kind of a very robust growth. And we've got a lot of new clients. What happened at the end of the year was a very robust cost increase to our data, the credit, FICO stuff. We had to work those rate increases into our contracts. We started in January doing that and finished up kind of around April. That's kind of a significant hole in both understated our revenue growth, obviously, because you're building it into the contracts. It overstates our expense as we kind of carry those expenses before they're into the contracts.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

That's why we say it's just a temporary thing. It's just a timing thing. That'll bounce right back up. The lender services will be in that 11.5 range. We'll end up the year the same as we did last year if the market stays the same in that 11.5-12 range of margin. The team has done a wonderful job. We've built all those into the contracts for their clients and actually created some value-based pricing so that we don't have this kind of challenge next year. I feel really good about that business. I feel like that's going to be a sustainable growth business for a while for us with nice margins.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

The other thing I would tell, just like our other business, when I talk about in a normal market, $5 million purchase will be a 12% kind of margin business. That business is similar because the appraisal business, the notary's business, all of those businesses are affected by the cycle. While we're, say, 11.5, 12 now, with the market gets normal, that's going to go to mid-teen cash margins and going to be from a GAAP, total GAAP, probably in the 12, just like the rest of our businesses. It is a good business now, and it is going to be even better as the market improves. I do not see anything. This was just a timing issue of us working through getting the stuff into the contracts versus any significant change in margin expectations.

[Bose George, Managing Director at KBW]

Okay. Great. That's helpful. Thanks a lot.

[Operator]

Thank you. It appears we have no further questions at this time. I will now turn the program back over to our presenters for any additional or closing remarks.

[Fred Eppinger, CEO at Stewart Information Services Corporation]

I want to thank everybody for their interest in Stewart and thank you for joining the call.

[Operator]

Thank you, ladies and gentlemen. This concludes today's event. You may now disconnect.

Participants

Executives

• Kat Bass, Director of Investor Relations
• Fred Eppinger, CEO
• David Hisey, CFO

Analysts

• John Campbell, Managing Director of Equity Research at Stephens Inc
• Bose George, Managing Director at KBW