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HomeInvestmentsStewart Reports Third Quarter 2023 Results

Stewart Reports Third Quarter 2023 Results

  • Total revenues of $601.7 million ($603.7 million on an adjusted basis) compared to $716.4 million ($722.8 million on an adjusted basis) in the prior year quarter
  • Net income of $14.0 million ($23.9 million on an adjusted basis) compared to $29.4 million ($43.3 million on an adjusted basis) in the prior year quarter
  • Diluted EPS of $0.51 ($0.86 on an adjusted basis) compared to prior year quarter diluted EPS of $1.08 ($1.58 on an adjusted basis)

HOUSTON, Oct. 25, 2023 /PRNewswire/ — Stewart Information Services Corporation (NYSE: STC) today reported net income attributable to Stewart of $14.0 million ($0.51 per diluted share) for the third quarter 2023, compared to $29.4 million ($1.08 per diluted share) for the third quarter 2022. On an adjusted basis, Stewart’s third quarter 2023 net income was $23.9 million ($0.86 per diluted share) compared to $43.3 million ($1.58 per diluted share) in the third quarter 2022. Third quarter 2023 pretax income before noncontrolling interests was $27.1 million ($40.0 million on an adjusted basis) compared to pretax income before noncontrolling interests of $45.5 million ($63.9 million on an adjusted basis) for the third quarter 2022.

Third quarter 2023 and 2022 results included $1.9 and $6.4 million, respectively, of pretax net realized and unrealized losses primarily driven by net unrealized losses on fair value changes of equity securities investments in the title segment.

“Our third quarter results reflect the continuing slowdown in real estate market activity due to the higher interest rate environment coupled with the normal seasonality of late summer. As we expect that higher interest rates will continue for several quarters before beginning to moderate, we will continue to balance thoughtful cost discipline with investment in long-term enterprise initiatives,” commented Fred Eppinger, chief executive officer. “Our focus remains on these long-term strategies that will create a stronger and more resilient company, and I am pleased with the significant progress on these important enterprise initiatives this quarter.”

Selected Financial Information
Summary results of operations are as follows (dollars in millions, except per share amounts, and amounts may not add as presented due to rounding):


Quarter Ended

September 30,


Nine Months Ended

September  30,


2023

2022


2023

2022







Total revenues

601.7

716.4


1,675.2

2,413.4

Pretax income before noncontrolling interests

27.1

45.5


42.1

211.9

Income tax expense

(9.1)

(10.8)


(9.6)

(48.4)

Net income attributable to noncontrolling interests

(3.9)

(5.3)


(10.9)

(14.5)

Net income attributable to Stewart

14.0

29.4


21.6

149.0

Non-GAAP adjustments, after taxes*

9.9

13.9


27.7

33.3

Adjusted net income attributable to Stewart*

23.9

43.3


49.4

182.3

Net income per diluted Stewart share

0.51

1.08


0.79

5.45

Adjusted net income per diluted Stewart share*

0.86

1.58


1.80

6.66

   * Adjusted net income and adjusted net income per diluted share are non-GAAP measures. See Appendix A for explanation

   and reconciliation of non-GAAP adjustments.

Effective this quarter, we revised our presentation of non-GAAP measures related to adjusted net income and adjusted net income per diluted share by excluding acquired intangible asset amortization from the calculation. Acquired intangible asset amortization for the third quarter and first nine months of 2023 was $9.6 million ($0.26 per diluted share) and $27.3 million ($0.75 per diluted share), respectively, compared to $7.8 million ($0.22 per diluted share) and $24.7 million ($0.68 per diluted share) for the third quarter and first nine months of 2022, respectively. Excluding this adjustment for acquired intangible asset amortization, adjusted net income per diluted share would have been $0.60 and $1.05 for the third quarter and first nine months of 2023, respectively, compared to $1.36 and $5.98 for the third quarter and first nine months of 2022, respectively. Acquired intangible asset amortization is a non-cash expense related to acquisitions that management believes is not indicative of the ongoing performance of the acquired operations. This revised presentation also allows us to present our non-GAAP consolidated results consistent with the presentation of our non-GAAP measures related to our title and real estate solutions segments. Refer to Appendix B for the restated non-GAAP consolidated results for all quarters of 2022 and the first two quarters of 2023.

Title Segment
Summary results of the title segment are as follows (dollars in millions, except pretax margin):


Quarter Ended September 30,




2023

2022

% Change









Operating revenues

522.1

647.9

(19 %)



Investment income

13.4

5.2

159 %



Net realized and unrealized losses

(1.8)

(6.4)

72 %



Pretax income

35.4

51.8

(32 %)



Non-GAAP adjustments to pretax income*

6.6

12.7




Adjusted pretax income*

42.0

64.5

(35 %)



Pretax margin

6.6 %

8.0 %




Adjusted pretax margin*

7.8 %

9.9 %




   * Adjusted pretax income and adjusted pretax margin are non-GAAP financial measures. See
   Appendix A for explanation and reconciliation of non-GAAP adjustments.


Title segment operating revenues in the third quarter 2023 decreased $125.8 million, or 19 percent, compared to the third quarter 2022, due to transaction volume declines in our direct and agency title businesses. Total segment operating expenses in the third quarter 2023 decreased $96.5 million, or 16 percent, primarily driven by lower operating revenues. Agency retention expenses in the third quarter 2023 decreased $61.5 million, or 22 percent, in line with lower gross agency revenues of $74.8 million, or 22 percent, while the average independent agency remittance rate in the third quarter 2023 was comparable to the prior year quarter.

Total employee costs and other operating expenses in the third quarter 2023 decreased $33.8 million, or 12 percent, compared to the prior year quarter, while as a percentage of operating revenues, these expenses were 47.4 percent in the third quarter 2023 compared to 43.4 percent in the third quarter 2022. Title loss expense in the third quarter 2023 decreased $3.2 million, or 13 percent, compared to the prior year quarter, primarily as a result of lower title revenues. As a percentage of title revenues, title loss expense was 4.3 percent in the third quarter 2023 compared to 3.9 percent in the third quarter 2022, which benefited from last year’s favorable claims experience.

Investment income in the third quarter 2023 increased $8.2 million compared to the third quarter 2022, primarily due to higher interest income resulting from earned interest from eligible escrow balances and increased interest rates and higher short-term investment balances in the third quarter 2023. Non-GAAP adjustments to pretax income primarily included $1.8 million and $6.4 million of net realized and unrealized losses and $4.8 million and $6.3 million of acquisition intangible asset amortization and other expenses in the third quarters 2023 and 2022, respectively.

Direct title revenues information is presented below (dollars in millions):


Quarter Ended September 30,


2023

2022

% Change







Non-commercial:





Domestic

167.6

204.4

(18 %)


International

29.1

33.8

(14 %)



196.7

238.2

(17 %)


Commercial:





Domestic

51.9

61.0

(15 %)


International

7.8

8.2

(5 %)



59.7

69.2

(14 %)


Total direct title revenues

256.4

307.4

(17 %)

Total non-commercial domestic revenues in the third quarter 2023 decreased $36.8 million, or 18 percent, primarily driven by a 17 percent decline in residential purchase and refinancing transactions compared to the prior year quarter. Domestic commercial revenues in the third quarter 2023 declined $9.1 million, or 15 percent, primarily resulting from 18 percent lower commercial closed orders compared to the third quarter 2022. Average domestic commercial fee per file in the third quarter 2023 was $14,200, or 3 percent better compared to $13,700 in the third quarter 2022, while average residential fee per file in the third quarter 2023 was $3,000, which was 10 percent lower compared to $3,300 in the prior year quarter due to a lower purchase mix in the third quarter 2023. Total international revenues in the third quarter 2023 decreased by $5.1 million, or 12 percent, primarily due to lower transaction volumes in our Canadian operations compared to the third quarter 2022.

Real Estate Solutions Segment
Summary results of the real estate solutions segment are as follows (dollars in millions):


Quarter Ended September 30,



2023

2022

% Change







Operating revenues

68.2

69.7

(2 %)


Pretax income

2.6

3.4

(22 %)


Non-GAAP adjustments to pretax income*

6.3

5.8



Adjusted pretax income*

8.9

9.1

(3 %)


Pretax margin

3.8 %

4.8 %



Adjusted pretax margin*

13.0 %

13.1 %



* Adjusted pretax income and adjusted pretax margin are non-GAAP financial measures. See
Appendix A for an explanation and reconciliation of non-GAAP adjustments.


The segment’s operating revenues in the third quarter 2023 decreased $1.5 million, or 2 percent, compared to the third quarter 2022, primarily as a result of lower valuation services revenues resulting from lower transaction volumes tied to the continuing elevated interest rate environment, partially offset by higher credit information services revenues. In line with the revenue decline, combined employee costs and other operating expenses in the third quarter 2023 decreased $1.6 million, or 3 percent. Non-GAAP adjustments to pretax income in the third quarters 2023 and 2022 were related to acquisition intangible asset amortization expenses of $6.3 million and $5.8 million, respectively.

Corporate and Other Segment
The segment’s results for the third quarter 2023 and 2022 were driven by net expenses attributable to corporate operations which were $10.8 million and $9.7 million, respectively.

Expenses
Consolidated employee costs in the third quarter 2023 were $13.6 million, or 7 percent, lower primarily due to lower salaries and benefits expenses and incentive compensation driven by reduced transaction volumes and lower average employee count compared to the prior year quarter. As a percentage of total operating revenues, consolidated employee costs were 30.7 percent in the third quarter 2023 compared to 27.2 percent in the prior year quarter, primarily due to lower third quarter 2023 revenues.

Total other operating expenses in the third quarter 2023 declined $20.8 million, or 14 percent, compared to the prior year quarter, primarily as a result of lower costs tied to lower title and real estate solutions revenues, and reduced third-party outsourcing, office closures and marketing expenses. As a percentage of total operating revenues, consolidated other operating expenses for the third quarter 2023 were 22.1 percent compared to 21.1 percent in the third quarter 2022.

Other
Net cash provided by operations in the third quarter 2023 improved to $59.5 million compared to net cash provided by operations of $48.9 million in the prior year quarter, primarily driven by lower payments on claims and accounts payable, partially offset by the lower net income during the third quarter 2023. Income tax expense for the third quarter 2023 was higher than our normal tax rate of 24 percent, due to annual federal return adjustments recorded during the quarter primarily related to lower foreign tax credits.

Third Quarter Earnings Call
Stewart will hold a conference call to discuss the third quarter 2023 earnings at 8:30 a.m. Eastern Time on Thursday, October 26, 2023. To participate, dial (800) 343-4849 (USA) or (203) 518-9843 (International) – access code STCQ323. Additionally, participants can listen to the conference call through Stewart’s Investor Relations website at http://investors.stewart.com/news-and-events/events/default.aspx. The conference call replay will be available from 11:00 a.m. Eastern Time on October 26, 2023 until midnight on November 2, 2023 by dialing (877) 856-8966 or (402) 220-1610 (International).

About Stewart
Stewart (NYSE:STC) is a global real estate services company, offering products and services through our direct operations, network of Stewart Trusted Providers and family of companies. From residential and commercial title insurance and closing and settlement services to specialized offerings for the mortgage and real estate industries, we offer the comprehensive service, deep expertise and solutions our customers need for any real estate transaction. More information can be found at http://www.stewart.com.

Cautionary statement regarding forward-looking statements. Certain statements in this earnings release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements relate to future, not past, events and often address our expected future business and financial performance. These statements often contain words such as “may,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “will,” “foresee” or other similar words. Forward-looking statements by their nature are subject to various risks and uncertainties that could cause our actual results to be materially different than those expressed in the forward-looking statements. These risks and uncertainties include, among other things, the volatility of economic conditions; adverse changes in the level of real estate activity; changes in mortgage interest rates, existing and new home sales, and availability of mortgage financing; our ability to respond to and implement technology changes, including the completion of the implementation of our enterprise systems; the impact of unanticipated title losses or the need to strengthen our policy loss reserves; any effect of title losses on our cash flows and financial condition; the ability to attract and retain highly productive sales associates; the impact of vetting our agency operations for quality and profitability; independent agency remittance rates; changes to the participants in the secondary mortgage market and the rate of refinancing that affects the demand for title insurance products; regulatory non-compliance, fraud or defalcations by our title insurance agencies or employees; our ability to timely and cost-effectively respond to significant industry changes and introduce new products and services; the outcome of pending litigation; the impact of changes in governmental and insurance regulations, including any future reductions in the pricing of title insurance products and services; our dependence on our operating subsidiaries as a source of cash flow; our ability to access the equity and debt financing markets when and if needed; our ability to grow our international operations; seasonality and weather; and our ability to respond to the actions of our competitors. These risks and uncertainties, as well as others, are discussed in more detail in our documents filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2022, and if applicable, as supplemented by any risk factors contained in our Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K filed subsequently. All forward-looking statements included in this earnings release are expressly qualified in their entirety by such cautionary statements. We expressly disclaim any obligation to update, amend or clarify any forward-looking statements contained in this earnings release to reflect events or circumstances that may arise after the date hereof, except as may be required by applicable law.

ST-IR

STEWART INFORMATION SERVICES CORPORATION

CONDENSED STATEMENTS OF INCOME (Unaudited)

(In thousands of dollars, except per share amounts and except where noted)



Quarter Ended

September 30,


Nine Months Ended
September 30,


2023

2022


2023

2022

Revenues:






Title revenues:






Direct operations

256,377

307,408


722,242

976,364

Agency operations

265,700

340,470


723,476

1,154,546

Real estate solutions and other

68,190

69,737


202,169

281,152

Total operating revenues

590,267

717,615


1,647,887

2,412,062

Investment income

13,393

5,158


32,114

15,519

Net realized and unrealized losses

(1,946)

(6,374)


(4,829)

(14,194)


601,714

716,399


1,675,172

2,413,387

Expenses:






Amounts retained by agencies

218,983

280,517


596,498

951,555

Employee costs

181,493

195,057


534,710

610,286

Other operating expenses

130,455

151,208


380,530

502,966

Title losses and related claims

22,251

25,486


59,727

81,105

Depreciation and amortization

16,414

14,067


46,848

42,103

Interest

5,054

4,553


14,777

13,471


574,650

670,888


1,633,090

2,201,486

Income before taxes and noncontrolling interests

27,064

45,511


42,082

211,901

Income tax expense

(9,134)

(10,783)


(9,588)

(48,376)

Net income

17,930

34,728


32,494

163,525

Less net income attributable to noncontrolling interests

3,931

5,294


10,870

14,534

Net income attributable to Stewart

13,999

29,434


21,624

148,991







Net earnings per diluted share attributable to Stewart

0.51

1.08


0.79

5.45

Diluted average shares outstanding (000)

27,650

27,371


27,445

27,359







Selected financial information:






Net cash provided by operations

59,533

48,853


43,578

167,040

Other comprehensive loss

(13,295)

(24,606)


(7,278)

(65,061)

Third Quarter Domestic Order Counts:








Opened Orders
2023:

July

August

Sept

Total


Closed Orders
2023:

July

August

Sept

Total

Commercial

913

1,208

1,199

3,320


Commercial

1,036

1,320

1,305

3,661

Purchase

17,446

19,674

16,386

53,506


Purchase

13,532

14,200

12,697

40,429

Refinancing

5,077

5,807

5,148

16,032


Refinancing

3,367

3,760

3,252

10,397

Other

2,976

3,161

2,493

8,630


Other

2,891

1,206

2,269

6,347

Total

26,191

29,850

25,226

81,267


Total

20,300

20,486

19,523

60,309












Opened Orders
2022:

July

August

Sept

Total


Closed Orders
2022:

July

August

Sept

Total

Commercial

1,356

1,556

1,544

4,456


Commercial

1,316

1,594

1,534

4,444

Purchase

19,799

22,217

18,630

60,646


Purchase

15,436

16,394

14,762

46,592

Refinancing

6,629

7,257

6,161

20,047


Refinancing

4,674

5,200

4,469

14,343

Other

405

670

750

1,825


Other

419

468

532

1,419

Total

28,189

31,700

27,085

86,974


Total

21,845

23,656

21,297

66,798

STEWART INFORMATION SERVICES CORPORATION

CONDENSED BALANCE SHEETS (Unaudited)

(In thousands of dollars)



September 30,
2023

December 31,
2022

Assets:



Cash and cash equivalents

202,985

248,367

Short-term investments

37,238

24,318

Investments in debt and equity securities, at fair value

660,739

710,083

Receivables – premiums from agencies

40,509

39,921

Receivables – other

82,854

85,111

Allowance for uncollectible amounts

(8,652)

(7,309)

Property and equipment, net

83,426

81,539

Operating lease assets, net

123,698

127,830

Title plants

73,359

73,358

Goodwill

1,072,022

1,072,982

Intangible assets, net of amortization

201,539

199,084

Deferred tax assets

2,554

2,590

Other assets

96,799

80,005


2,669,070

2,737,879

Liabilities:



Notes payable

445,158

447,006

Accounts payable and accrued liabilities

177,180

196,541

Operating lease liabilities

142,044

148,003

Estimated title losses

521,395

549,448

Deferred tax liabilities

24,094

26,616


1,309,871

1,367,614

Stockholders’ equity:



Common Stock and additional paid-in capital

337,924

324,344

Retained earnings

1,075,224

1,091,816

Accumulated other comprehensive loss

(58,621)

(51,343)

Treasury stock

(2,666)

(2,666)

Stockholders’ equity attributable to Stewart

1,351,861

1,362,151

Noncontrolling interests

7,338

8,114

Total stockholders’ equity

1,359,199

1,370,265


2,669,070

2,737,879




Number of shares outstanding (000)

27,355

27,130

Book value per share

49.42

50.21

STEWART INFORMATION SERVICES CORPORATION

SEGMENT INFORMATION 

(In thousands of dollars)


Quarter Ended:

September 30, 2023


September 30, 2022


Title

Real
Estate
Solutions

Corporate
and Other

Total


Title

Real
Estate
Solutions

Corporate
and Other

Total

Revenues:










Operating revenues

522,077

68,190

590,267


647,878

69,737

717,615

Investment income

13,368

25

13,393


5,157

1

5,158

Net realized and unrealized
   (losses) gains

(1,821)

(125)

(1,946)


(6,428)

54

(6,374)


533,624

68,215

(125)

601,714


646,607

69,738

54

716,399

Expenses:










Amounts retained by agencies

218,983

218,983


280,517

280,517

Employee costs

165,829

12,361

3,303

181,493


179,911

12,357

2,789

195,057

Other operating expenses

81,625

46,217

2,613

130,455


101,343

47,813

2,052

151,208

Title losses and related claims

22,251

22,251


25,486

25,486

Depreciation and amortization

9,196

6,820

398

16,414


7,467

6,204

396

14,067

Interest

355

191

4,508

5,054


46


4,507

4,553


498,239

65,589

10,822

574,650


594,770

66,374

9,744

670,888

Income (loss) before taxes

35,385

2,626

(10,947)

27,064


51,837

3,364

(9,690)

45,511


Nine Months Ended:

September 30, 2023


September 30, 2022


Title

Real
Estate
Solutions

Corporate
and Other

Total


Title

Real
Estate
Solutions

Corporate
and Other

Total

Revenues:










Operating revenues

1,445,718

202,169

1,647,887


2,130,910

241,975

39,177

2,412,062

Investment income

32,033

81

32,114


15,501

18

15,519

Net realized and unrealized
   (losses) gains

(1,658)

(3,171)

(4,829)


(11,411)

(2,783)

(14,194)


1,476,093

202,250

(3,171)

1,675,172


2,135,000

241,993

36,394

2,413,387

Expenses:










Amounts retained by agencies

596,498

596,498


951,555

951,555

Employee costs

485,690

37,333

11,687

534,710


558,376

38,603

13,307

610,286

Other operating expenses

236,752

138,052

5,726

380,530


294,606

167,760

40,600

502,966

Title losses and related claims

59,727

59,727


81,105

81,105

Depreciation and amortization

26,182

19,401

1,265

46,848


21,098

19,381

1,624

42,103

Interest

1,063

191

13,523

14,777


48


13,423

13,471


1,405,912

194,977

32,201

1,633,090


1,906,788

225,744

68,954

2,201,486

Income (loss) before taxes

70,181

7,273

(35,372)

42,082


228,212

16,249

(32,560)

211,901

Appendix A
Non-GAAP Adjustments

Management uses a variety of financial and operational measurements other than its financial statements prepared in accordance with United States Generally Accepted Accounting Principles (GAAP) to analyze its performance. These include: (1) adjusted revenues, which are reported revenues adjusted for net realized and unrealized gains and losses, and other adjustments (revenues of sold real estate brokerage company), and (2) adjusted pretax income and adjusted net income, which are reported pretax income and reported net income after earnings from noncontrolling interests, respectively, adjusted for net realized and unrealized gains and losses, acquired intangible asset amortization (see succeeding paragraph), office closure costs, executive severance expenses, state sales tax assessment expense (which was related to an acquisition), and other adjustments (pretax results of sold real estate brokerage company). Adjusted diluted earnings per share (adjusted diluted EPS) is calculated using adjusted net income divided by the diluted average weighted outstanding shares. Management views these measures as important performance measures of core profitability for its operations and as key components of its internal financial reporting. Management believes investors benefit from having access to the same financial measures that management uses.

Effective this quarter, we revised our presentation of non-GAAP measures related to adjusted net income and adjusted net income per diluted share by excluding acquired intangible asset amortization from the calculation. Acquired intangible asset amortization is a non-cash expense related to acquisitions that management believes is not indicative of the ongoing performance of the acquired operations. This revised presentation also allows us to present our non-GAAP consolidated results consistent with the presentation of our non-GAAP measures related to our title and real estate solutions segments. Refer to Appendix B for the restated non-GAAP consolidated results for all quarters of 2022 and the first two quarters of 2023.

Below are reconciliations of the non-GAAP financial measures used by management to the most directly comparable GAAP measures for the quarter and nine months ended September 30, 2023 and 2022 (dollars in millions, except share and per share amounts, and amounts may not add as presented due to rounding).



Quarter Ended Sept. 30,


Nine Months Ended Sept. 30,



2023

2022

% Chg


2023

2022

% Chg











Total revenues

601.7

716.4

(16 %)


1,675.2

2,413.4

(31 %)


Non-GAAP revenue adjustments:









Net realized and unrealized losses

1.9

6.4



4.8

14.2



Other adjustments



(39.2)



Adjusted total revenues

603.7

722.8

(17 %)


1,680.0

2,388.4

(30 %)











Pretax income

27.1

45.5

(41 %)


42.1

211.9

(80 %)


Non-GAAP pretax adjustments:









Net realized and unrealized losses

1.9

6.4



4.8

14.2



Office closure costs

1.4

3.0



1.4

3.0



Executive severance expenses

1.2



1.7

1.2



State sales tax assessment expense



1.2



Other adjustments



0.9




30.4

56.1



51.3

231.3


Acquired intangible asset amortization

9.6

7.8



27.3

24.7



Adjusted pretax income

40.0

63.9

(37 %)


78.6

256.0

(69 %)


GAAP pretax margin

4.5 %

6.4 %



2.5 %

8.8 %



Adjusted pretax margin

6.6 %

8.8 %



4.7 %

10.7 %












Net income attributable to Stewart

14.0

29.4

(52 %)


21.6

149.0

(86 %)


Non-GAAP pretax adjustments:









Net realized and unrealized losses

1.9

6.4



4.8

14.2



Acquired intangible asset amortization

9.6

7.8



27.3

24.7



Office closure costs

1.4

3.0



1.4

3.0



Executive severance expenses

1.2



1.7

1.2



State sales tax assessment expense



1.2



Other adjustments



0.9



Net tax effects of non-GAAP adjustments

(3.1)

(4.5)



(8.8)

(10.8)



Non-GAAP adjustments, after taxes

9.9

13.9



27.7

33.3



Adjusted net income attributable to Stewart

23.9

43.4

(45 %)


49.4

182.3

(73 %)











Diluted average shares outstanding (000)

27,650

27,371



27,445

27,359



GAAP net income per share

0.51

1.08



0.79

5.45



Adjusted net income per share

0.86

1.58



1.80

6.66



Quarter Ended Sept. 30,


Nine Months Ended Sept. 30,


2023

2022

% Chg


2023

2022

% Chg

Title Segment:

 








Revenues

533.6

646.6

(19 %)


1,476.1

2,135.0

(32 %)

Net realized and unrealized losses

1.8

6.4



1.7

11.4


Adjusted revenues

535.4

653.0

(18 %)


1,477.8

2,146.4

(31 %)









Pretax income

35.4

51.8

(32 %)


70.2

228.2

(69 %)

Non-GAAP revenue adjustments:








Net realized and unrealized losses

1.8

6.4



1.7

11.4


Acquired intangible asset amortization

3.4

2.0



9.4

6.3


Office closure costs

1.4

3.0



1.4

3.0


Severance expenses

1.2



0.4

1.2


Adjusted pretax income

42.0

64.5

(35 %)


83.1

250.2

(67 %)

GAAP pretax margin

6.6 %

8.0 %



4.8 %

10.7 %


Adjusted pretax margin

7.8 %

9.9 %



5.6 %

11.7 %



Real Estate Solutions Segment:

 








Revenues

68.2

69.7

(2 %)


202.3

242.0

(16 %)


Pretax income

2.6

3.4

(22 %)


7.3

16.2

(55 %)

Non-GAAP revenue adjustments:








Acquired intangible asset amortization

6.3

5.8



17.9

18.2


State sales tax assessment expense



1.2


Adjusted pretax income

8.9

9.1

(3 %)


26.4

34.5

(23 %)

GAAP pretax margin

3.8 %

4.8 %



3.6 %

6.7 %


Adjusted pretax margin

13.0 %

13.1 %



13.0 %

14.2 %


Appendix B
Restated Non-GAAP Consolidated Measures

Below are the restated non-GAAP consolidated measures for prior quarters in 2023 and 2022, which have been revised from the previously reported measures to adjust for acquired intangible asset amortization‎ expense (dollars in millions, except share and per share amounts, and amounts may not add as presented due to rounding).

Refer to Appendix A for management’s discussion of these non-GAAP adjustments and for the calculations for the quarters ended September 30, 2023 and 2022. In addition to the adjustments described on Appendix A, the non-GAAP consolidated measures for the fourth quarter 2022 also include an adjustment for regulatory settlement and litigation ‎expenses.


Q2 2023

Q1 2023


Q4 2022

Q2 2022

Q1 2022








Total revenues

549.2

524.3


655.9

844.1

852.9

Non-GAAP revenue adjustments:







Net realized and unrealized losses (gains)

1.1

1.8


(12.7)

11.9

(4.1)

Other adjustments


(5.3)

(33.9)

Adjusted total revenues

550.3

526.1


643.2

850.7

815.0








Pretax income (loss)

25.2

(10.2)


20.8

86.8

79.6

Non-GAAP pretax adjustments:







Net realized and unrealized losses (gains)

1.1

1.8


(12.7)

11.9

(4.1)

Acquired intangible asset amortization and other
expenses

9.0

8.6


8.6

8.5

8.2

Executive severance expenses

1.7


2.7

State sales tax assessment expense

1.2


Office closure costs


7.5

Regulatory settlement and litigation expenses


6.5

Other adjustments


(0.4)

1.4

Adjusted pretax income

38.3

0.2


33.4

106.8

85.1

GAAP pretax margin

4.6 %

(1.9) %


3.2 %

10.3 %

9.3 %

Adjusted pretax margin

7.0 %

0.0 %


5.2 %

12.6 %

10.4 %








Net income attributable to Stewart

15.8

(8.2)


13.3

61.7

57.9

Non-GAAP pretax adjustments:







Net realized and unrealized losses (gains)

1.1

1.8


(12.7)

11.9

(4.1)

Acquired intangible asset amortization and other
expenses

9.0

8.6


8.6

8.5

8.2

Executive severance expenses

1.7


2.7

State sales tax assessment expense

1.2


Office closure costs


7.5

Regulatory settlement and litigation expenses


6.5

Other adjustments


(0.4)

1.4

Net tax effects of non-GAAP adjustments

(3.1)

(2.5)


(3.0)

(4.8)

(1.3)

Non-GAAP adjustments, after taxes

10.0

7.9


9.6

15.2

4.3

Adjusted net income (loss) attributable to Stewart

25.8

(0.3)


22.9

76.9

62.1








Diluted average shares outstanding (000)

27,444

27,201


22,276

27,293

27,444

GAAP net income (loss) per share

0.58

(0.30)


0.49

2.26

2.11

Adjusted net income (loss) per share

0.94

(0.01)


0.84

2.82

2.26

SOURCE Stewart Information Services Corporation

Originally published at https://www.prnewswire.com/news-releases/stewart-reports-third-quarter-2023-results-301967778.html
Images courtesy of https://pixabay.com

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