Stewart Information Services Corporation News
Stewart Reports Updated Operating Results for the First Quarter 2008
First Quarter 2008(b) 2007(a) Total revenues $ 394.1 $ 531.7 Pretax loss before minority interests (40.9) (4.6) Net loss (25.2) (4.8) Net loss per share (1.40) (0.26) (a) Includes a $3.2 million gain ($2.1 million after taxes, or $0.11 per share) from the sale of two subsidiaries. Also includes a charge of $5.1 million ($3.3 million after taxes, or $0.18 per share) relating to four large title losses. (b) Includes a charge of $4.6 million ($3.0 million after taxes, or $0.16 per share) related to an agency defalcation. Financial Highlights — Revenues decreased 25.9 percent to $394.1 million in the first quarter of 2008 compared with $531.7 million for the first quarter of 2007. The Company reported a loss before taxes (and before minority interests) of $40.9 million for the first quarter of 2008 compared with a loss of $4.6 million for the same period in 2007. — The revenue decline in 2008 was due to a significant decrease in title orders resulting from a decline in home sales and reduced financing activity relating primarily to tightening of mortgage lending practices and issues in the credit market, as well as lower home prices. — The Company continues to respond aggressively to the decline in the real estate market and is taking appropriate steps to restore profitability. In addition to workforce reductions, the Company continues to consolidate branch offices and locations, and is pursuing the completion of title search and production efficiencies company-wide. The Company's shared services initiative also remains on target and will generate benefits during 2008 in the areas of procurement and information technology infrastructure by reducing costs and enhancing service levels. — Excluding acquisitions, divestitures and startups, the Company has reduced its employee count since December 31, 2005 by approximately 2,500, or 24.8 percent. The Company reduced its employee count during the first quarter of 2008 by approximately 460, or 5.4 percent. The Company will continue to incur significant costs relating to conversion of its technology to more efficient platforms. Although other operating expenses have declined, they have not declined at the same rate as revenues due to the relatively fixed nature of some of these costs, such as rent and other occupancy expenses, and costs associated with our growing, profitable international and commercial businesses. — Stewart's book value per share decreased to $40.31 at March 31, 2008 compared with $41.82 at December 31, 2007. — Title orders declined in the first quarter of 2008 by 13.0 percent from the same period a year ago. Orders were 26.3 percent lower in March 2008 than in March 2007.
"The first quarter of 2008 has been a challenging environment for profitability given the current adverse economic conditions, as well as the traditional negative impact of the seasonality of real estate sales," said
"We continue the process of converting our legacy production systems to a new web-based production platform on our centralized ASP and data center. As this progresses during the year, we will eliminate three data centers, reduce the required level of personnel and reduce maintenance costs," said Morris.
"SureClose(R), our industry-leading transaction management system, has been adopted by the Arizona Association of Realtors(R), the seventh largest state association in the country," added Morris. It will serve more than 5,000 brokerage companies statewide. More than 80 percent of homebuyers already utilize the web to search for a home to purchase. The use of SureClose will now allow the buyer, seller, lender and Realtor(R) to track the progress of the closing via the web.
"Stewart Title Guaranty Company (Guaranty) now has the largest statutory policyholders' surplus of any title insurance underwriter and was the only underwriter with surplus greater than
"We are making progress in reducing our risk exposure by evaluating and potentially cancelling agencies that our models indicate are at the higher-end of the risk spectrum," added Morris. "While we continue to add new agencies, we have increased our qualifying requirements. In addition to our standard background checks on agency personnel and other due diligence, we are now completing full pre-signing audits of agencies," said Morris.
Stewart Information Services Corporation is a customer-driven, technology-enabled, strategically competitive, real estate information, title insurance and transaction management company. Stewart provides title insurance and related information services required for settlement by the real estate and mortgage industries throughout
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 since Stewart cannot predict the number of orders that will result in closings.
STEWART INFORMATION SERVICES CORPORATION STATEMENTS OF OPERATIONS (In thousands of dollars, except per share amounts) Three months ended March 31 2008 2007 Revenues Title insurance: Direct operations 180,587 229,614 Agency operations 191,053 272,254 Real estate information 14,716 16,533 Investment income 8,078 9,051 Investment and other (losses) gains — net (297) 4,222 394,137 531,674 Expenses Amounts retained by agencies 155,562 222,390 Employee costs 151,962 176,793 Other operating expenses 86,836 93,643 Title losses and related claims 29,721 31,859 Depreciation and amortization 9,091 9,885 Interest 1,815 1,668 434,987 536,238 Loss before taxes and minority interests (40,850) (4,564) Income tax benefit (16,761) (2,621) Minority interests 1,203 2,819 Net loss (25,292) (4,762) Average number of shares (000) 18,046 18,237 Net loss per share (1.40) (0.26) Segment information: Title revenues 379,421 515,141 Title pretax loss before minority interests (41,544) (8,056) REI revenues 14,716 16,533 REI pretax earnings before minority interests 694 3,492 Selected financial information: Cash used by operations (31,447) (15,116) Title loss payments — net of recoveries 30,482 25,453 Changes in other comprehensive earnings — net 159 833 Number of title orders opened (000): January 50.9 56.0 February 52.7 53.4 March 47.0 63.8 Quarter 150.6 173.2 Number of title orders closed — quarter(000): 89.5 109.4 March 31 Dec 31 2008 2007 Stockholders' equity 730,412 754,059 Number of shares outstanding (000) 18,120 18,031 Book value per share 40.31 41.82 STEWART INFORMATION SERVICES CORPORATION BALANCE SHEETS (condensed) (In thousands of dollars) March 31 December 31 2008 2007 Assets Cash and cash equivalents 90,903 109,239 Short-term investments 77,648 79,780 Investments — statutory reserve funds 516,613 518,586 Investments — other 93,424 98,511 Receivables — premiums from agencies 37,379 48,040 Receivables — other 101,572 93,335 Allowance for uncollectible amounts (12,001) (11,613) Property and equipment 91,151 96,457 Title plants 78,650 78,245 Goodwill 209,628 208,824 Intangible assets 15,950 17,157 Other assets 104,751 105,413 1,405,668 1,441,974 Liabilities Notes payable 116,223 108,714 Accounts payable and accrued liabilities 89,639 108,658 Estimated title losses 439,109 441,324 Deferred income taxes 15,314 13,509 Minority interests 14,971 15,710 675,256 687,915 Contingent liabilities and commitments Stockholders' equity Common and Class B Common Stock and additional paid-in capital 142,682 141,196 Retained earnings 571,826 597,118 Accumulated other comprehensive earnings 20,001 19,842 Treasury stock (4,097) (4,097) Total stockholders' equity 730,412 754,059 1,405,668 1,441,974 May 9, 2008
SOURCE Stewart Information Services Corporation
Search Our News Using Google Search
Can't find what you want? Try using Google:
