Stewart Reports Best-Ever First Quarter Results (2002)

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HOUSTON, April 25 -- Stewart Information Services Corporation (NYSE-STC) reported its best-ever first quarter results in terms of revenues, earnings and orders. Earnings per share were near Stewart's all-time record first quarter.

Stewart reported net earnings for the three months ended March 31, 2002 of $11.3 million, compared to earnings of $3.1 million for the first quarter of 2001. On a diluted per share basis, net earnings were $.63 for the first quarter of 2002 compared to earnings of $.20 for the first quarter of 2001. Revenues in the first quarter increased 42 percent to $348 million from $246 million in the same period last year. Cash flow from operations was $14.6 million and $10.2 million for the three months ended March 31, 2002 and March 31, 2001, respectively.

"We are pleased to have been included for the first time in the Fortune 1000 list this month," said Malcolm S. Morris, chairman and co-chief executive officer. "As reported previously, we were selected by Forbes as the best big insurance company in America - posting the highest earnings per share growth rate in the listed insurance sector. We are now included in the S&P SmallCap 600 Index. Our management team will continue to build on positive performance, focusing on profits and return on equity."

Laurie Moore-Moore was added as an advisory director this past quarter. Moore-Moore is co-founder and co-editor of REAL Trends, a highly respected research and forecasting trend letter for the residential real estate industry. "Laurie Moore-Moore has her finger on the pulse of the residential real estate market," said Stewart Morris, Jr., president and co-chief executive officer. "We look forward to her insightful guidance as Stewart continues to develop e-marketing services and tools to help real estate professionals be more productive and profitable.''

"Our core business, which is driven by housing sales, construction activity and commercial transactions, remained strong in the first quarter," said Stewart Morris, Jr. "Although slightly higher interest rates have dampened loan applications, the reduction has been in the lower revenue refinance line of business. The typical refinance title policy yields less revenue than a sales transaction of the same price."

Title insurance order counts in the first quarter of 2002 were up 12 percent from the same period last year, but were up only 6 percent in the month of March 2002 compared with the same month a year ago. Although order counts were down in early April compared to a year ago, interest rates trended downward over the same period and are currently slightly lower than a year ago. Nationwide loan application data indicate that refinances made up 50 percent of all one to four family loan applications in the first quarter of 2002 compared to 56 percent in 2001.

"The opening of our new underwriting subsidiary in Mexico this past quarter continues our path of international expansion," said Malcolm S. Morris. "While current international operations represent a small percentage of revenues, the potential growth and expansion outside of the U.S. is expected to be a significant component of our future. International operations are profitable, and we continue to invest a large portion of international profits into further foreign expansion."

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 5,800 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, property appraisals, surveys, document preparation, property reports and background checks. Stewart also supplies post-closing services to lenders, automated county clerk land records 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.

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SUMMARY OF OPERATIONS

 

Stewart Information Services Corporation

 

 

Three months

 

ended March 31

 

2002 2001

     

Revenues

$374,974,000

$245,714,000

Net earnings

$11,344,000

$3,073,000

Average shares - diluted

17,957,000

15,268,000

Earnings per share:

   

Basic

$ 0.64

$ 0.20

Diluted

$ 0.63

$ 0.20

 

STEWART INFORMATION SERVICES CORPORATION
STATEMENTS OF EARNINGS
(In thousands of dollars, except per share amounts)

 

Three months ended

 

March 31

 

2002   2001

Revenues    

Title insurance:

 


 


Direct operations

146,049

99,757

Agency operations

180,272
326,321

125,597
225,354

Real estate information services

16,398 14,462

Total operating revenues

342,719

239,816

Investment income 4,903 5,545

Investment gains - net

352
347,974

353
245,714

Expenses

Amounts retained by agents

148,289

102,457

Employee costs

104,565

79,352

Other operating expenses

55,204

42,150

Title losses and related claims 14,366 9,595
Deprectiation 5,385 4,727
Goodwill --- 541
Interest 255 659
Minority interests 1,530 1,225
  329,594 240,706
     
Earnings before taxes 18,380 5,008
Income taxes 7,036 1,935
>Net earnings 11,344 3,073
     
Average number of diluted shares (000) 17,957 15,268
Earnings per share - diluted .63 .20

Segment information:

Title revenues

331,576

231,252

Title pretax earnings

17,019

4,345

>REI revenues

16,398

14,462

REI pretax earnings

1,361

663

Selected financial information (000):

Cash flow from operations

14,605

10,220

Title loss payments - net of recoveries

10,304

7,918

Other comprehensive (loss) earnings - net of taxes

(2,330)

2,051

Average number of basic shares

17,810

15,110

Number of title orders opened

171

158

Tangible book value ($19.69 per share at March 31, 2002)

STEWART INFORMATION SERVICES CORPORATION
BALANCE SHEETS (condensed)
(In thousands of dollars)

 

March 31

December 31

 

2002

2001

Assets

Cash and cash equivalents

69,830

60,706

Short-term inestments

52,946

56,267

Investments - statutory reserve funds

247,130

239,084

Investments - other

77,691

86,046

Receivables

44,609

52,036

Property and equipment 48,960 48,772
Title plants 37,799 37,715
Goodwill 52,996 52,971
Deferred income taxes 4,703 4,288
Other    
  678,341 677,863

Liabilities

Notes payable

12,306

13,794

Accounts payable and accured liabilities

45,869

57,752

Estimated title losses

206,606

202,544

Minority interests

9,338

9,233

Contingent liabilities and commitments

Stockholders' equity

Common and Class B Common Stock and additional paid-in capital

133,825

133,157

Retained earnings

270,090

258,746

Accumulated other comprehensive earnings

1,819

4,149

Treasury stock

(1,512)

(1,512)

     
Total stockholders' equity ($22.66 per share at March 31, 2002) 404,222 394,540
  678,341 677,863

April 25, 2002


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