Q2 2019 Earnings Call
Good morning, My name is you'll see which call for joining.
Oh, the fidelity financial National earnings call. Please.
Okay. Thank you may I have any place.
My name is Elliot Nash yellow iron <unk> and I guess it's.
I'm sorry, what is your first name.
Elliot E L L I O T.
Okay. Thank you and this does it Nash for the last name.
Yep and a S H.
To give us an idea what does the company name.
The company name is era A.I.E.R.
E.R.A.
Yes.
Thank you very much LP approve hold a conference will begin shortly is being recorded and have a great day.
Thanks.
Eligible for replay via webcast at our website at FNF Dotcom. It will also be available through phone replay beginning at one PM Eastern time today through July 24th.
That replay number is 804 756 701 and the access code is 469 to two two.
Let me now turn the call over to our CEO Randy Quirk.
Thank you Dan.
All the second quarter was a very strong performance for our title business as we generated adjusted pre tax title earnings of $363 million and a 17.
0.7, adjusted pre tax title margin, both of which were our best quarterly performance since the third quarter of 2003, nearly 16 years ago.
I will let Mike go into more detail on the title business.
With respect to the acquisition of Stewart information services, we recently exercised our second option to extend the closing date of the transaction and additional three months to September 18 2019.
We continue to work with the FTC and the New York State Department of financial services to seek approval of the proposed acquisition and we have meetings scheduled with the FCC and both July and August .
If the approvals are obtained we remain confident that the Stewart acquisition can create meaningful long term value for our shareholders. We are not able to further comment or take questions on Stewart.
In April our board declared a 31 cents per share second quarter, 2019, cash dividend, which used $85 million and available cash from the holding company in June .
We also repurchased 720000 shares of stock during the second quarter for approximately approximately 28 million.
Cash inflows were 450 million, primarily from the $323 million in underwriter and non underwriter dividends that were paid up to the FNF holding company level in the second quarter.
The $102 million and interest and full repayment of the Kenai line of credit that was originally drawn in February .
And $25 million in principal and interest on the intercompany Servicelink note.
The net result was that we ended the second quarter with approximately $862 million and available holding company cash in the first week of July Tonight again, borrow the full 100 million under the line of credit, which reduced our traction our cash, albeit at the holding company.
By 100 million.
Let me now turn the call over to Mike Nolan to discuss the title insurance business.
Thanks, Randy we generated adjusted pre tax title earnings of $363 million.
A $26 million or 8% increase over the very strong second quarter of 2018.
Our adjusted pre tax title margin was 17.7%, a 60 basis point or 4% increase over the prior year.
Direct orders closed decreased 1% comprised of a 6% reduction in daily purchase orders closed.
A 3% decrease in total commercial orders closed and a 25% increase in daily refinance orders closed.
Purchase orders opened declined by 2% versus the second quarter of 2018, the sequential improvement from the 6% decrease in the first quarter of 2019 versus the prior year.
Refinance orders opened increased by 51% versus the second quarter of 2018.
As a decline in mortgage rates appears to be more persistent than many originally expected.
Lastly, total commercial orders opened increased by 8% over the second quarter of 2018.
With strong second quarter refinance orders opened an improving trend in purchase orders opened and continued strength in commercial orders opened we are well positioned to continue to produce strong financial results and our title business as we enter the second half of 2019.
For the second quarter total orders opened averaged 8500 per day with April as 8400 may at 8100 and June increasing to 9000.
Purchase orders opened and closed were down 2% and 6% respectively on a daily basis in the second quarter.
In both April and June purchase orders opened were down by just 1% versus the prior year periods.
Refinance orders opened and closed increased by 51% and 25% respectively on a daily basis versus the second quarter of 2018.
The best month of the quarter was June when refinance orders opened increased by 82% over June of 2018.
For the first two weeks of July total orders opened were approximately 8800 per day.
Daily purchase orders opened declined by 2% versus the prior year and daily refinance orders opened increased by 83% over the prior year period.
Total commercial revenue of $286 million was a 2% increase over the second quarter of 2018.
Driven primarily by a 5% increase in the commercial fee per file somewhat offset by a 3% decrease in closed commercial orders.
Commercial orders opened increased by 8% in the second quarter versus the prior year physician positioning us well for the back half of 2019.
Our first half 2019 total commercial revenue of $517 million was our strongest first half revenue performance. Since we began tracking total commercial revenue in 2015.
Let me talent now turn the call over to Tony Park to review the financial highlights.
Thank you, Mike we generated more than $2.1 billion in total revenue in the second quarter with the title segment generating all but the $52 million of revenue in our corporate segment net earnings were $266 million, which included $41 million in realized gains primarily due to the mark to market accounting treatment of equity and preferred stock securities in our investment portfolio.
Adjusted net earnings were $255 million or 92 cents per diluted share.
In our title segment, excluding realized gains of $46 million, primarily due to the mark to market accounting treatment of the equity and preferred stock securities in our investment portfolio. We generated just over $2 billion in total revenue for the second quarter, a 4% increase from the second quarter 2018.
Direct premiums increased by 4% versus the second quarter of 2018.
Agency revenue grew by 3% and escrow title related and other fees increased by 2% versus the prior year.
Personnel costs increased by 3% and other operating expenses grew by only 2%.
All in the title business generated a 17.7% adjusted pre tax title margin of 60 basis point increase versus the second quarter of 2018.
Interest income of $59 million was a $16 million increase over the prior year as we continued to see the positive impact of higher short term interest rates on the interest we earn on the client exchange funds, we hold in our 10 31 exchange business. The reinvestment of proceeds from maturing fixed income securities and from cash and short term investments.
FNF debt outstanding was $838 million on June Thirtyth for debt to capital ratio of just under 14%.
Our claims paid of $66 million were $4 million higher than our provision of $62 million for the second quarter. The carried reserves for claims losses is currently $28 million or 2% above the actuary central estimate.
We continue to provide for claims at 4.5% of total title premiums.
Finally, our investment portfolio totaled more than $5.2 billion at June Thirtyth from a regulated standpoint, we have $1.4 billion in statutory reserves $90 million in deferred revenue on our home warranty company.
$1.6 billion, unregulated cash and investments and $900 million in secured trust deposits for a total of $4 billion in regulated cash and investments.
From an unregulated perspective, we have nearly $900 million of unregulated cash as of June thirtyth.
There's $200 million in cash and investments at Servicelink and other subsidiaries.
And $140 million in equity method investments all of which are restricted primarily by minimum working capital or other regulatory requirements.
Let me now turn the call back to our operator to allow for any questions.
Ladies and gentlemen, if youd like to ask a question. Please press Star then one at this time if you are using a speakerphone. We ask that you. Please pick up the handset before pressing the numbers. Once again, if you have a question. Please press star one at this time.
And our first question will come from the line of Mark Devries with Barclays. Your line is open.
Thank you.
Tony question for you could you help us think through.
What the impact could be on investment income if the fed does in fact to ease in the back half of this year as is widely expected.
Sure Mark no problem.
$59 million, we generated in the second quarter of 2019, that's up against $43 million in the second quarter of 2018 included within the $59 million is about $5 million that we received.
Every second quarter from some title plant ownership interest we carry in the state of Texas, So thats kind of an annual event, but it's always in the second quarter. So you can expect that third quarter interest and investment income comes down by that $5 million at a minimum and then our expectation is really.
Q3 were were looking at about $54 million, so not a lot of change in interest and investment income, but for the $5 million decline, but then as you work your way through the next few quarters, we do expect some.
Erosion and based on at least one or two of fed rate reductions some erosion in our short term interest and investment income so I'm thinking somewhere in the $50 million in the fourth quarter of 2019, maybe a little lower than that in the first quarter of 2020 may be $48 million and then bump back up in Q2 with that with the Texas title plant dividends to may be around $54 million or so in the second quarter of 2020.
Okay Thats helpful. And then assuming basically 50 basis points of of fed funds, using which I believe is consensus now.
Yes. It is okay, great. Thank you that's helpful and then.
No interest in getting some color on.
Basically the commercial.
Pipeline and how that's looking.
No for the back half of your I know you know you're optimistic but just any color you can give us on kind of.
No geographic diversity transaction sizes.
You may also be helpful. Thanks.
Sure markets, It's Mike, Yes, we had a very good quarter with opens up 8% and again, it's very broad based our national commercial orders were up 10% for the quarter and our local were up seven sell good strength in both.
We had some nice larger deals that closed in the quarter, you probably notice that our national commercial fee per file was up quite a bit I think.
Maybe 8% and we're seeing you know transactions.
Larger transactions in a variety of segments from energy to gaming office, we had a couple of nice multi sites that closed in the quarter and the pipeline it looks pretty good as we go into the second quarter geographically, Texas is doing very very well, it's one of our stronger markets.
But what other other mid tier markets like Pittsburgh DC, Virginia.
The Midwest, Ohio, Minnesota, Chicago are all performing well and then we're still seeing some nice.
Our transactions that get exported out of out of New York, you know a lot of the larger deals that occur around the country still get sourced in New York and we're seeing some good strength there as well.
Okay, great. Thank you.
Thanks.
And next we'll go to the line of George Bovie with KBW. Your line is open.
Hey, guys. This is Bose Hey, first question just in terms of the I wanted to ask about your margin expectation for the back half of the year.
And also just the head count was up.
I guess I'd say relatively modestly given the increase in orders.
And just thoughts there could be a little catch up in the head count.
I can assure hoses its Mike on the head count we did add in 290.
People on our field operations and really just dealing with the increase in volume and if you look at our open orders per day in the in the second quarter kind of versus the first we're up about 1300 per day on the open side and.
I think maybe a similar number on the color side or maybe a little bit lower on the CLO side, but but thats a lot of volume and you do have to staff into that and we've done that in the in the second quarter I think as we move into the third we're going to need to add some additional staff and we'll really use our our productivity metrics to guide us on both the kind of opened per employee and closed per employee side and we may need to add another maybe 150 to 200.
People in the third quarter, but we're going to we're going to be very careful with it and.
And if we see order trends going in a different direction animal react accordingly.
On margin expectations.
We would expect the third quarter to be another very good quarter and I think as you know the second quarter tends to be our highest margin quarter of the year and typically what we see is that in the third quarter commercial comes off a bit historically to the second quarter, usually the second and fourth of your best quarters, So commercial could be down a bit but will still be a very good quarter and then purchase tends to fall off slightly in the third quarter as well just historical trends.
And then the on the plus side, we will have more refined closing so it'll be a very good quarter, but hard to call what the exact margin will be.
Okay, Great Thats helpful. Thanks, and then just switching over to capital and if the Stewart deal pulled through can you just remind us how much capital you feel could be available for buybacks and just how much capital you like to keep at the holding company.
Terminals, it's Tony So we started the quarter at call it $530 million or so in cash on hand at the parent company, so pretty close to a position where we could fully fund the cash portion of the Stewart transaction.
We did upstream a total from subsidiaries of about $350 million during the second quarter, we paid our common dividend of $85 million.
Modest buyback 15000 shares a day 720000 total shares we bought back in Q2 for about $30 million and then as we mentioned Kenai repaid $100 million on a revolver. So we ended the quarter at a very strong $862 million in cash on hand at the parent company and then if we kind of fast forward through the balance of the year.
We expect another call at $500 million or so from from dividends from our subsidiaries.
And then.
From an outflow perspective $170 million in dividends to shareholders.
We've that we've anticipated about $90 million in buybacks that would.
That would keep us at 15000 a day.
Through Q3, and bumping that to about 30000, a day in Q4 and then.
Can I get re borrowed $100 million, but that still gets us at about a billion dollars of cash on hand at year end and that absent a stewart transaction. So with Stuart obviously 550, Rsix hundred million dollars obligation plenty of money on hand to fund that with with still more money in.
In the coffers.
If if we weren't able to close on store, we've got $1 billion would probably want.
Comparably $200 million of cash on hand at the Holdco, which would leave us about $800 million of capital and then of course.
Your question, what do you do with that and certainly the board will take a good hard look at a number of things, including our dividend policy as we typically do in our in our October Board meeting, where we typically raise the dividend I'm sure they'd look at that will.
Continue to look at M&A agents underwriters may be technology may be something in the Servicelink space and then stock buybacks, we have 23 million shares.
Under a current authorization.
So you know I'm sure they'll take a strong look at potential for more aggressive buybacks as well. So all things are on the table.
With that with $1 billion of cash at Holdco.
Okay. Thanks, Okay, one quick follow up.
It is an accelerated stock repurchase one of the options.
I guess I would say there is theres nothing that that we would take off the table at this point, we have not done within half an app an accelerated buyback.
In the past, but that doesn't mean, we would not do that so I wouldn't say that we've also typically not borrowed money to buyback shares in the past, but again you know.
Now with where we stand from a leverage standpoint at 14% or or sub 14% debt to cap I suppose all things would be on the table.
Okay great helpful. Thanks, guys.
Next we'll go to the line of Jason Deleeuw with Piper Jaffrey. Your line is open.
Yes. Good morning, Thanks for taking the question and just a little bit more color on commercial were there any specific.
Large deals that may have.
Moved into the quarter moved out or anything kind of shifting quarter to quarter that we should be aware of and then the strength you saw in commercial is it is it just kind of broad based for the whole industry or do you think there was some share gains just looking for a little bit of color on that.
Yeah, Jason it's Mike in terms of the quarter I don't know that things really shifted and we actually had some transactions that we thought were going to close in the quarter that moved into the third quarter.
But we did have a number of large transactions as I mentioned, we had a couple of big multi sites.
That closed in the quarter and.
I mentioned, a couple of energy deals those tend to be bigger and.
Again gaming deal so you get larger transactions there.
One of the other things, we're seeing that's kind of affecting fee per file is that our mix has shifted on the close side, where we're closing more resale transactions commercially than in the prior year and the fee per file tends to be a bit bigger.
With the resale transaction as you know because with a refinery or not you're not insuring the full value of the property year, ensuring the debt and so we're getting a benefit from that but but I wouldn't say there was a big shift of.
Pulling transactions forward into the quarter actually may be the opposite.
And the second question again remind me Jason share market share trends here, it's hard to while it's hard to know that we don't have great transparency into market share.
All we can rely on is is probably what the other companies report in terms of.
Their overall commercial performance quarter to quarter and I don't think lease I think we're the first ones out so.
What we will see what what the other companies report and then we might know if we had a little bit of a gain.
Alright, Thats very helpful. Thank you and then.
Another question on kind of want to switch gears here on the i. buyers or instant buyers and.
That emerging trend in residential real estate.
Seems like its continues to pick up a strong head of steam here and there's a lot of interest and I'm just to me. It seems like it would be a net positive for title insurance, but I would just like to kind of get FNF thoughts on how you're thinking about the i. buyers in terms of market opportunity or any challenges. There just just general thoughts on that trend.
Sure Jason it's an absolute opportunity they are going to control and we are controlling transactional volume just like other customers control, whether they're realtors are lenders are attorneys and so on and we're pursuing them just like we pursue other customers and its opportunity both for our Darex and we're working with many of these entities today as we speak.
And it could also be an opportunity on the agency side. Some of these I buyers are either thinking about forming titles agencies or have formed title agencies and we can talk to them about that as well and we are so it's really a very good opportunity and.
Whether it continues to grow at the same pace, it's hard to know.
I think there are certain markets, where it did play stronger than other markets. It seems like Arizona is one of those for example.
But we just see it as an opportunity and we're pursuing it as such.
Helpful. Thank you very much.
Thank you. Our next question is from DAC missing go from Citi. Please go ahead.
Hi, good morning.
First question one of the.
Talk through your thoughts on fee per file obviously, you've got some nice.
Commercial momentum going in I think there is some mix benefit too.
As we look into Threeq and Fourq you.
You've got a little more re fi on the resi side. So that's a lower fee business I guess the question is for setting aside that it's all revenue and that's all good.
The fee per file growth overall continue the positive trajectory in Threeq and Fourq or do we see some moderation because of the mix.
Yes, it's Mike a little hard to predict its interesting if you look at the second quarter, our residential fee per file was up 1% over the second quarter of 2018, yet we had a stronger mix of refinance closings in that quarter. So other things being equal you would expect that the fee per file would have come down and it didnt. So I think we're still seeing.
A bit of a benefit from a home price appreciation and it's just hard to predict how that plays out in the next two quarters I would expect that we will have a higher percentage of refinance closings in the third quarter than we had in the segment and that could certainly put pressure on the residential fee per file and then commercial you tend to see that just bouncing around more.
But it's been it's been consistently up really over the past couple of.
Years really.
Okay, and then a lot of the driver of the positive operating leverage this quarter was the other operating expense.
Anything in there one time or can you speak to some of the sustainability of the lower potentially a lower run rate any talk about any people on the personnel side to address volumes, but just curious on the opex side.
Hi, Jack its Tony nothing that.
Comes to mind as as unusual or one time in the other operating expenses, but as you probably know.
The major buckets in that category, our facilities costs and that's been pretty stable, that's our largest expense.
And we have a.
Cost of sales bit typically variable with business and so that that ought to fluctuate with with some of our businesses.
We have had growth at some of our businesses like loan care, which is our us sub servicer and so we've seen a little bit of an increase there, but we are we are enjoying some pretty strong operating leverage to your point on on not only other operating expenses, but and personnel costs as well, but again no no one timers, so I would expect that.
The third quarter looks.
Looks pretty similar to what we saw in Q2.
Okay I appreciate that one more just sneak in on on the heels of Boses question around.
The accelerated buyback.
Is it could we add maybe.
Potential special dividend is something that would also be considered on the table.
Per your earlier answer to his questions.
Yes, I think I would give the same answer which is.
No everything would be on that on the table. Our board is very sophisticated and we'd been around a long time, returning strong returns to our shareholders and in a number of different.
A ways and and you know in a in a prior iteration of our companies. We owned to accompany that you might know now is that by us and.
We recapitalize that back in 2005, and and paid a special dividend there. So it's.
Again, everything everything's on the table and we'll just see how things play out.
All right great. Thanks, taking my questions.
Thank you. The next question is from Mackenzie Aron from Zelman and Associates. Please go ahead.
Thanks, Mike that's quite an x.
Question with the Stewart deal.
Lingering just curious if there's been any impact that youve noticed on the ground I'm thinking kind of from an aging perspective are you seeing anything from a competitive dynamic or kind of any update you can give us on how the deals on sandy it's potentially impacting the business if at all.
Mackenzie I guess, Mike are you are you asking if we think it's impacting Stewart's business no more of just the competitive dynamics. If they didn't are moving away from Stuart maybe picking that up that I'm in any way or from a talent perspective.
Okay. Thanks for the clarification I wouldn't say that it's been pretty pretty consistent in that we've not seen a lot of that I think Stuart has done a very good job.
Really from our view of kind of maintaining their and retaining their people and their agents. So we really haven't noticed a lot of.
Disruption, if you will or dislocation inside inside their business.
Okay, Great and then just lastly on the tax rate to the entity yeah.
It shouldn't be right around 24% there.
On the tax rate guidance.
Yeah, Mckenzie, it's Tony I think probably I would model, 25% for the balance of the year, that's what I guided toward in Q2, we came in a little lower than that at about 24, and a half, but I think 25% is a is a pretty good or pretty good number.
Hi, Thank you.
Thank you. Our next question is from Mark Hughes from Suntrust. Please go ahead.
Yes. Thank you very much well give you might reflect on the times in the past we've seen this kind of interest rate trajectory, obviously interest rates have come down really seen a nice spike and redefine the.
Potential Lou for further rate cuts.
Do you would you think that the you you'd see steady volume of refinances, they're usually you know just kind of a.
Initial rush and then it tapers off or I know you don't forecast, but I wonder if there's any historical parallels you could point to that might get some perspective on on volume as we think about coming quarters.
Yes, Mark markets. Its an interesting question I don't know that we have really gone back and looked at that.
You know all these cycles have a life to them and at some point they do slow down what we're seeing right now is that the re Fi activity continues to accelerate we were up 82% June over June on Rifai opens and sitting in July we're still running.
At about that number even slightly ahead and when we look at our Servicelink business.
They were up a 100%.
Second quarter over second quarter, and 124% in June and kind of holding at that number so at least for now.
We're seeing a pretty accelerated environment and we think it's got a little bit of legs to it probably you know certainly in July and maybe into August , but it's just hard to know.
You know predicted beyond beyond that.
Understood and then agency commissions were fractionally higher this quarter anything to the.
I think the agency trends are just very similar to what we see on the direct side and you know they benefit from from the refinancing activity just like we do and I don't think there's anything there that we've noticed in the EMS split wise it could depending on geography, because depending on where we're getting a little bit more revenue that will influence the display that we typically run somewhere in that 76% to 77%.
And I think we're still within that range.
Thank you.
Your next question is from a line of Don Campbell from Stephens. Please go ahead.
Hey, guys. Good morning, Congrats on a great quarter.
Thanks Pat.
Oh, no one on the title margin.
On the left I, just wanted to maybe unpack that a little bit. So clearly the investment income helped you guys, but could you talk to the to the headwind from Servicelink and then maybe how much of a positive impact you saw from the centralized refi business.
Yes, I think.
You know Servicelink does because it operates a number of different businesses. There is a little bit of a headwind or total margin in that business runs maybe somewhere in the in the 12% range, whereas if you. If you took our title business on a standalone basis without servicelink were somewhere in the low to mid 18% for the quarter. So we do have that and that's because I mean, if you look at just the re Fi business.
The title re Fi business at Servicelink gets over 30% margin in that business, but then if you look at some of the other lower margin businesses, you have a appraisal, which you know runs somewhere in the 12% range and you have field services, which is a property preservation business, which is a single digit margin business and then you have loan care, which is in growth mode and there there's been a little bit of headwind. If you will on the margin as we as we take on more loans and a sort of assimilate that and so thats been in the roughly 12% range and so thats why maybe you have a little bit of headwind.
Currently there I think you know looking forward to the extent that we continue on a re Fi run you'll you'll see a continued strong performance out of service link on the on the title and close side and I could see us even expanding on that on that 30, 31% margin there.
Okay. That's helpful and then on escrow it looks like.
I guess within that has grown other line looks like escrow might a bounce back a bit but is that mostly driven by just better just things improving purchase marking or youve been able to take price centers or new products or offerings, you didn't call out there.
Yeah, nothing really new in there and there's a lot of different pieces that comprise that line item. In fact, now there's a new disclosure requirement that you'll see in our SEC filings that breaks down our revenue into a number of different components and so you can really see what drives that.
Yes, the purchase market drives the escrow side of things, but if you look at title related and other fees you see you know Weve got home warranty. We've got loan care, we've got valuations Weve got some default business, we have field services. So it so a number of different businesses in there and and.
You know year over year Q2, we had a 4.3% increase in direct premium versus just a 2.2% increase in escrow and other fees and that's really because you have different dynamics in some of those other businesses.
Okay. That's helpful. Thanks, guys.
The next question is.
Chris Good mix.
Tony from Compass point. Please go ahead.
Hi, good morning, everyone. Thanks for taking my call.
Is there any color on the real estate technology business for the quarter revenue side trajectory.
This is a this is randy.
On the on the technology side were.
Year over year, we had a revenue growth of 5%.
Hi, there.
Sold platforms to the elite teams of Realtors rub, 10% client growth overall were up 9% so.
Is it is progressing a halfway through the year. It was a little bit of a slow start to the there are based on a.
At the back half of 18.
Ah some slowdown on on the purchase side I'm on the real estate side, but we're coming out well in the in the first half, but we believe it will accelerate further in the second half of the year.
All right.
And just getting back to the capital structure.
Yeah, I think you've historically said around 20% debt to capital is is your target range. Obviously, we're well below that Stuart doesn't closing with a buyback I still have you four to five percentage points below where that target ranges.
Is that just a nice buffer to have or is it something you'd actively managed to how how do you think about your debt to cap our capital levels in the future.
Hi, Chris It's Tony I think right now it's a nice buffer to have it allows flexibility weve been an acquisitive company over the course of our 30 plus years and.
And I wouldn't be surprised to see.
Or an acquisition or multiple acquisitions come along that would have us flex that we've we've ranged anywhere from a high of a 42% debt to capital we bought Chicago title to 13.7%, which is where we sit today I don't think we would borrow just to borrow up but in fact I'm sure we would it but.
But certainly if a deal came along or if we decided on some some sort of shareholder return than you know 20% to 25% is a very comfortable range for us okay and on the deal I think you'd previously communicated that.
It already nationals focused in.
Real estate moving forward in the real estate market industries like me broad, but is that still holding that would be something tangentially related to residential or related to real estate.
Yes.
Thank you so much.
Thanks, Chris.
Thank you My final question is Tim Geoffrey Dunn of Dowling and partners. Please go ahead. Thanks, just first a number revisit Mike I missed the details on the.
Purchase and refinance per day in early July I think you said purchase was either it was down 2% and re Fi up over 80.
Sure Jeff Yes.
Purchase was down 2% in the first couple of weeks of July and then re Fi was up 83%.
For the <unk>.
Over last July Okay. Thanks, and then Tony I wanted to come back to something you said about buyback I think you've indicated an expectation for about 30 K. per day in Q4.
Did I hear that right.
Yeah, you heard it right and again, that's not really a forecast as much as it is that kind of what I've modeled in at this point to end the year at about $1 billion, but again you know, we're really waiting for resolution on stored and once we get to that point. Then you know, we'll we'll see how things play out Okay. I guess I wanted to ask in that because I think bill with indicated before the idea of.
Wanting to repurchase the amount of shares that you would issue in the Stewart deal over the course of a one year period.
And it seems to me that you'd be in an even better position to buy back stock if the Stewart deal didn't close and to buy back the 15, plus odd million shares you're probably looking at more of you know 75 K. per day. So I'm just wondering why your forecast going into yearend isn't at least at that level.
Given previous comments and your cash resources.
Yeah, and again it was almost a place holder up I think that you know once we have a resolution on Stuart, which you know it will happen pretty soon.
We'll know up.
I'm pretty sure we'll know a absent some some change and the contract we'll know by the start of the fourth quarter, where we stand and at that point my expectation would be the board looks at our capital of roughly $1 billion and decides okay. What are we going to do here how are we going to handle our dividend policy, how aggressive do we want to be on off on a buyback and so I wouldn't read too much into the the 30000 a day other than it was just sort of a a number I put in there not knowing at this point, whether you know Stuart happens or store doesn't happen gotcha, Okay, and then either for Randy or Mike. If you look at the metrics of order counts per head count the leverage this quarter was one of the highest levels. We've seen in some time is that just because you ran thing so tightly or has the extent of the re fi activity surprised you on the outside.
Sure I'll take that this is Randy.
You know.
As you know the order count accelerated that quickly through the second quarter and you're correct on our on our match our productivity standards in in the second quarter were opening 16 or orders per employee closing 10 in June we were opening up the 18 in closing 12, so that man up pretty quickly what what we know about the third quarter or is that we will have increased closings. So we'll have to as Mike said earlier well have to add staff.
So that.
We can bring that are really that project productivity number on on the closing side from a 12, maybe down to the 11 range or a 10.5 you can you can run as hot as it comes up quickly, but you can't really sustain it through a number of months so.
Ah will and again that just leads to.
The staffing levels are not that we have been holding back, but we always operate conservatively, but we do want to be able to close deals service to customers and take care of our employees.
So as you think about Q3 versus Q2 would seem that you kind of have a bit of an expense lag that makes keeping the margin flat and I think this is directionally in line with or even suggesting but keeping the margin flat seems like a high order into Q3.
Yes, there will be some extent swagger you're correct. If you went through the second quarter I believe we have the 291, we brought on board. It was roughly 100 hundred employees per month, so that time your slip into the third quarter, a that that starts to stack up on yet that okay. All right. Thank you.
Thank you.
Thank you and at this time there are no. Further question. Thank you. Please go ahead with closing.
The second quarter was the strongest quarterly performance or nearly 16 years for our type of business with strong second quarter refinance open orders and improving trend and purchase orders opened and continued strength in commercial orders opened we are well positioned to continue to produce strong financial results in our title business as we enter the second half of 2019.
Thank you for joining us today.
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