HOUSTON, Oct. 24, 2003 -- Stewart Information Services Corporation (NYSE-STC) reported revenues, earnings and earnings per share at the highest level of any third quarter in our history. Book value increased to $33.75 per share, also a record. Earnings for the three months ended September 30, 2003 were $42.1 million, or $2.34 per diluted share, compared to $21.6 million, or $1.22 per diluted share, for the third quarter of 2002. Revenues in the third quarter increased 33 percent to $630 million from $473 million for the same period last year. Record orders in the second quarter of 2003 provided strong volume in the third quarter.
Earnings for the three months ended September 30, 2003 were $42.1 million, or $2.34 per diluted share, compared to $21.6 million, or $1.22 per diluted share, for the third quarter of 2002. Revenues in the third quarter increased 33 percent to $630 million from $473 million for the same period last year. Record orders in the second quarter of 2003 provided strong volume in the third quarter.
Title orders in the third quarter of 2003 were 4 percent lower than the same quarter a year ago. Orders dropped below prior-year totals in August. September was 29% below the same month a year ago. The decline in orders was the result of a rise in mortgage interest rates and consisted mostly of refinance transactions. Interest rates have leveled off at about the 6 percent level. The real estate market remains fundamentally strong.
Total revenues for the first nine months of 2003 were $1.6 billion, up 33 percent from $1.2 billion for the same period a year ago. Earnings for the first three quarters totaled $103.0 million, or $5.74 per diluted share, compared to $50.7 million, or $2.84 per share, for the first nine months of 2002.
"We are committed enhancing shareholder value. Year to date we have increased our book value per share from $27.84 to $33.75," said Stewart Morris, Jr., president and co-chief executive officer. "Our book value per share has increased approximately 190 percent in the past ten years, up from $11.64 in the third quarter of 1993. Our earnings and liquidity position allows us to resume a cash dividend in the fourth quarter, as announced previously," added Morris.
"Our expansion into South Korea this past quarter continues our international growth strategy. In addition, we remain committed to further increasing higher-margin commercial business and growing market share," added Morris.
Stewart is again serving as the exclusive program sponsor of the Technology Learning Center (TLC), presented at the National Association of Realtors® (NAR) Conference in San Francisco this November. This is the fifth consecutive year for Stewart to sponsor the TLC. Through the courses presented at the NAR and an array of technology resources, Stewart enables Realtors to provide the best service to their buyers and sellers.
"We were extremely pleased to announce this past quarter the election of Robert L. Clarke as an advisory director," said Malcolm S. Morris, chairman and co-CEO. "Mr. Clarke joins our stellar board of directors in providing guidance and vision to further augment shareholder value." Mr. Clarke served as Comptroller of the Currency of the United States from 1985 to 1992. In March 1992, he rejoined the prominent Houston law firm Bracewell & Patterson LLP where he serves as senior partner and is the founder of its financial services practice.
"Our technology workhorse platform, AIM® for Windows®, is now in use by more than 11,000 users at 1,000 sites, increasing the productivity of our associates and agents," said Morris. AIM for Windows is a powerful title and escrow system for order entry, document preparation, closing, escrow accounting, file tracking and management. The software is available as a traditional desktop installation or with access on the Internet through Titlelogix®. It is the product of Landata Systems, Inc., Stewart's wholly-owned technology subsidiary.
Stewart Information Services Corporation is a technology driven, strategically competitive, global real estate information company. Stewart provides title insurance and related information services through more than 7,000 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 and land ownership mapping, and GIS for governmental entities. Stewart also 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 fact. 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.
SUMMARY OF OPERATIONS
Stewart Information Services Corporation
| Three months |
| ended September 30 |
| 2003 2002 |
| Revenues | $629,675,000 | $473,345,000 | |
| Net earnings | $42,068,000 | $21,597,000 | |
| Average shares - diluted | 18,006,000 | 17,729,000 | |
| Earnings per share: | |||
| Basic | $2.35 | $1.22 | |
| Diluted | $2.34 | $1.22 | |
| Nine months |
| ended September 30 |
| 2003 2002 |
| Revenues | $1,635,291,000 | $1,228,447,000 | |
| Net earnings | $102,973,000 | $50,652,000 | |
| Average shares - diluted | 17,937,000 | 17,836,000 | |
| Earnings per share: | |||
| Basic | $5.78 | $2.86 | |
| Diluted | $5.74 | $2.84 | |
STEWART INFORMATION SERVICES CORPORATION
STATEMENTS OF EARNINGS
(In thousands of dollars, except per share amounts)
| Three months | Nine months | |
| ended Sept 30 | ended Sept 30 | |
| 2003 2002 | 2003 2002 |
Revenues
| Title Insurance | ||||
| Direct operations | 261,583 | 175,395 | 694,821 | 474,623 |
| Agency operations | 340,728 | 275,398 | 863,566 | 687,941 |
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|
|
|
| |
| Real estate information services | 21,683 | 18,376 | 61,567 | 51,624 |
| Investment income | 5,262 | 5,597 | 14,580 | 15,093 |
| Investment (losses) gains - net | 419 | (1,421) | 757 | (834) |
| 629,675 | 473,345 | 1,635,291 | 1,228,447 |
Expenses
| Amounts retained by agencies | 279,965 | 228,384 | 710,366 | 565,233 |
| Employee costs | 157,192 | 114,898 | 436,372 | 325,442 |
| Other operating expenses | 86,727 | 65,925 | 226,174 | 180,236 |
| Title losses and related claims | 25,894 | 20,882 | 66,561 | 51,950 |
| Depreciation | 6,422 | 5,196 | 18,499 | 15,824 |
| Interest | 202 | 178 | 563 | 693 |
| Minority interests | 4,755 | 2,445 | 11,237 | 6,509 |
| 561,157 | 437,908 | 1,469,772 | 1,145,887 |
| Earnings before | 68,518 | 35,437 | 165,519 | 82,560 |
| Income taxes | 26,450 | 13,840 | 62,546 | 31,908 |
| Net earnings | 42,068 | 21,597 | 102,973 | 50,652 |
| Average number shares outstanding (000) | 18,006 | 17,729 | 17,937 | 17,836 |
| Earnings per share - diluted | 2.34 | 1.22 | 5.74 | 2.84 |
Segment information:
| Title revenues | 607,992 | 454,969 | 1,573,724 | 1,176,823 |
| Title pretax earnings | 63,865 | 32,064 | 153,281 | 75,746 |
| REI revenues | 21,683 | 18,376 | 61,567 | 51,624 |
| REI pretax earnings | 4,653 | 3,373 | 12,238 | 6,814 |
Selected financial information (000):
| Cash flow from operations | 73,073 | 49,833 | 157,984 | 92,418 |
| Title loss payments - net | 15,564 | 9,490 | 39,340 | 33,136 |
| Other comprehensive earnings-net of taxes | (2,316) | 5,857 | 4,326 | 7,211 |
| Average number of basic shares | 17,893 | 17,637 | 17,826 | 17,740 |
| Number of title orders opened | 239 | 248 | 816 | 593 |
| Sept 30 | Dec 31 | |
| 2003 | 2002 | |
| Stockholder's equity | 604,254 | 493,592 |
| Number of shares outstanding | 17,903 | 17,731 |
| Book value per share | 33.75 | 27.84 |
STEWART INFORMATION SERVICES CORPORATION
BALANCE SHEETS (condensed)
(In thousands of dollars)
| Sept 30 | Dec 31 | |
| 2003 | 2002 |
Assets
| Cash and cash equivalents | 132,962 | 139,156 |
| Short-term investments | 118,986 | 50,673 |
| Investments-statutory reserve funds | 373,288 | 306,501 |
| Investments-other | 63,462 | 69,260 |
| Receivables | 71,101 | 69,041 |
| Property and equipment | 70,837 | 60,592 |
| Title plants | 41,793 | 40,307 |
| Goodwill | 76,873 | 66,885 |
| Other | 52,078 | 39,858 |
| 1,001,380 | 842,273 |
Liabilities
| Notes payable | 24,715 | 14,195 |
| Accounts payable and accrued liabilities | 79,164 | 82,248 |
| Estimated title losses | 258,479 | 230,058 |
| Deferred income taxes | 20,646 | 11,284 |
| Minority interests | 14,122 | 10,896 |
Contingent liabilities and commitments
Stockholders' equity
| Common and Class B Common Stock and | 138,290 | 134,927 |
| Retained earnings | 456,199 | 353,226 |
| Accumulated other comprehensive | 13,670 | 9,344 |
| Treasury stock | (3,905) | (3,905) |
| Total stockholders' equity | 604,254 | 493,592 |
| 1,001,380 | 842,273 |
October 24, 2003