HOUSTON, April 26 2007 -- Stewart Information Services Corporation (NYSE-STC) today reported the results of its operations for the quarter ended March 31, 2007. (Dollar amounts in the table below are in millions, except for per share figures.)
|Pretax (loss) earnings before minority interests|
|Net (loss) earnings|
|Net (loss) earnings per diluted share|
(a) Includes a $3.2 million gain ($2.1 million after taxes, or $0.11 per diluted share) from the sale of two subsidiaries, GlobeXplorer® and AirPhotoUSA®, in the first quarter of 2007. Also includes a charge to earnings of $5.1 million ($3.3 million after taxes, or $0.18 per diluted share) for title loss provisions relating to four large title losses.
- Revenues decreased approximately 1.4 percent to $531.7 million in the first quarter of 2007 compared with $539.4 million for the first quarter of 2006. The Company reported a loss before taxes (and before minority interests) of $4.6 million for the first quarter of 2007 compared with earnings of $8.3 million for the same period of 2006. As described in the preceding footnote, the first quarter of 2007 includes a gain on the sale of two subsidiaries and a charge to earnings for large title losses.
- The revenue decline was due to decreasing home sales and prices, adverse weather conditions and reduced financing activity related in part to a weakening in the subprime lending market. Revenues were favorably impacted by commercial and international transactions. Acquisitions increased revenues by $4.3 million and pretax earnings by $0.3 million for the quarter.
- Excluding acquisitions, divestitures and startups, the Company has reduced its employee headcount since December 31, 2006 by approximately 470, or 4.7 percent. The Company has, however, increased the number of employees in its better-performing operations, including its commercial business. In addition, the current conversion and roll-out phases of the Company's AIM+ technology will temporarily require above-normal staffing levels. The Company maintains staffing levels sufficient to continue to provide superior customer service and gain market share through a highly-trained, dedicated employee work force. The Company continues to incur significant costs related to its technology advancements.
- Stewart's book value per share decreased to $43.81 at March 31, 2007 compared with $44.00 at December 31, 2006.
- Title orders declined in the first quarter of 2007 by 10.4 percent from the same period a year ago. Orders were 13.6 percent lower in March 2007 than in March 2006. The continued softening of the housing market was the primary reason for the decline in title orders.
"During the quarter, we continued the alignment of technology services with our Company strategy, including changing the leadership of our technology services group and incorporating responsibilities for PropertyInfo.com, Stewart's real estate information portal, under the same leadership," said Stewart Morris, Jr., co-chief executive officer. "The migration of ASP users to our new state-of-the-art data center is progressing well, which we expect will allow us to shut down multiple older data centers by the end of the third quarter.
"We are also looking forward to contributions from Murshid Khan, our new chief information officer, who joined Stewart this month," said Stewart Morris, Jr. "His experience managing complex IT operations at Disney will be important in leading our IT efforts as we target efficiencies and increased service levels, all with the ultimate goal of enhancing the real estate transaction process."
"While small in size, contracts signed this past quarter to install and service our LandFolio® system in the governmental land recording offices in Belize and Bermuda illustrate Stewart's ability to provide industry-leading real estate transaction services globally," said Malcolm S. Morris, co-chief executive officer.
"For the second year in a row, FORTUNE magazine named us one of 'America's Most Admired Companies', maintaining fourth place on the mortgage services industry list," said Malcolm S. Morris. "Our focus continues in growing the higher-profit commercial services and achieving substantial improvement in our international operations. In addition, our direct operations and acquisitions in recent years, which include operations servicing New York's commercial customers, are producing excellent results."
Stewart Information Services Corporation is a customer-oriented, technology-driven, strategically competitive, real estate information and transaction management company. Stewart provides title insurance and related information services required for settlement by the real estate and mortgage industries through more than 9,500 policy-issuing offices and agencies in the United States and international markets. Stewart also provides post-closing lender services, automated county clerk land records, property ownership mapping, geographic information systems, property information reports, flood certificates, document preparation, background checks and expertise in tax- deferred exchanges. More information can be found at www.stewart.com .
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 because Stewart cannot predict the number of orders that will result in closings.
STEWART INFORMATION SERVICES CORPORATION
STATEMENTS OF EARNINGS
(In thousands of dollars, except per share amounts)
Three months ended
|Real estate information|
|Investment and other gains - net (1)|
|Amounts retained by agencies|
|Other operating expenses|
|Title losses and related claims|
|Depreciation and amortization|
|(Loss) earnings before taxes and minority interests|
|Income tax (benefit) expense|
|Net (loss) earnings|
|Average number of diluted shares (000)|
|(Loss) earnings per share - diluted|
|Title pretax (loss) earnings before minority interests|
|REI pretax earnings before minority interests (1)|
|Selected financial information:|
|Cash provided by operations|
|Title loss payments - net of recoveries|
|Changes in other comprehensive earnings - net of taxes|
|Number of title orders opened (000):|
|Number of shares outstanding (000)|
|Book value per share|
(1) Includes a gain of $3.2 million in 2007 related to the sale of subsidiaries.
|STEWART INFORMATION SERVICES CORPORATION BALANCE SHEETS (condensed)|
(In thousands of dollars)
|Cash and cash equivalents|
|Investments - statutory reserve funds|
|Investments - other|
|Receivables - premiums from agencies|
|Receivables - other|
|Less allowance for uncollectible amounts|
|Property and equipment|
|Accounts payable and accrued liabilities|
|Estimated title losses|
|Deferred income taxes|
|Contingent liabilities and commitments|
|Common and Class B Common Stock and|
additional paid-in capital
|Accumulated other comprehensive earnings|
|Total stockholders' equity|
|April 26, 2007|
Source: Stewart Information Services Corporation