Q4 2023 Stewart Information Services Corp Earnings Call
Operator: Please stand by; your program is about to begin. Hello, and thank you for joining the Stewart Information Services fourth quarter 2023 earnings call. At this time, all participants are in a listen-only mode.
By your program is about to begin.
Hello, and thank you for joining the Stewart information services fourth quarter 2023 earnings call. At this time all participants are in a listen only mode. Later, you will have an opportunity to ask questions. During the question and answer session and instructions will be given at that time. Please.
Operator: Later, you will have an opportunity to ask questions during the question and answer session. Instructions will be given at that time. Please note today's call is being recorded. Lastly, if you should require operator assistance, please press star zero. It is now my pleasure to turn the conference over to Brian Glaze, Chief Accounting Officer. Please go ahead.
Note today's call is being recorded lastly, if you should require operator assistance. Please press star zero. It is now my pleasure to turn the conference over to frankly, Chief Accounting Officer. Please go ahead.
Brian Glaze: Thank you for joining us today for Stewart's fourth quarter 2023 earnings conference call. We will be discussing results that were released yesterday after the close. Joining me today are CEO Fred Eppinger and CFO David Hisey. To listen online, please go to the Stewart.com website to access the link for this conference call.
Thank you for joining us today for Stewart's fourth quarter 2023 earnings conference call. We will be discussing results that were released yesterday. After the close joining me today are CEO, Fred Eppinger, and CFO, David Hazy to listen online. Please go to the Stewart Dot Com website to access the link for this conference call.
Brian Glaze: This conference call may contain forward-looking statements that involve a number of risks and uncertainties. Please refer to the company's press release and other filings with the SEC for a discussion of the risks and uncertainties that could cause our actual results to differ materially. During our call, we will discuss some non-GAAP measures. For a reconciliation of these non-GAAP measures, please refer to the appendix in today's earnings release, which is available on our website at stewart.com. Let me now turn the call over to Fred.
The conference call May contain forward looking statements that involve a number of risks and uncertainties. Please refer to the company's press release and other filings with the SEC, where your discussion of the risks and uncertainties that could cause our actual results to differ materially.
During our call we will discuss some non-GAAP measures for a reconciliation of these non-GAAP measures. Please refer to the appendix in today's earnings release, which is available on our website at Stewart Dot Com let.
Now I'll turn the call over to Fred.
Frederick H. Eppinger: Thanks, Brian, and thank you for joining us today for Stewart's 4th Quarter 2023 Earnings Conference Call. Yesterday, we released financial results for the quarter, and Dave will review these in a minute. Before doing so, though, I'd like to update you on my view of the market and our continued progress on important initiatives that we believe will set Stewart up for long-term success. While we have thoughtfully managed through this very difficult economic environment and its expenses and invested carefully, we have continued to invest in a number of critical areas to materially improve our performance. Our focus has been on creating a stronger and more resilient enterprise that will thrive over a full real estate cycle As we close 2023, we are operating in an environment that saw mortgage interest rates reach a high of 8% during the fourth quarter before falling to around mid-6% near the end of the year. Mortgage rates and rate volatility continue to impact transaction volumes, and we find ourselves at historic lows for the sale of existing homes. At an industry level, historically low purchase volumes combined with low existing home listing inventory have kept home prices elevated.
Thanks, Brian and thank you for joining us today for Stewart's fourth quarter 2023 earnings conference call.
Yesterday, we released financial results for the quarter and David will review these in a minute.
Before doing so though I'd like to update you on my view of the market and our continued progress on important initiatives that we believe will set Stewart up for long term success.
Well, we have thoughtfully managed through this very difficult economic environment and its expenses and invested carefully we have continued to invest in a number of critical areas to materially improve our business. Our focus has been on creating a stronger and more resilient enterprise that will thrive over a full real estate cycle.
As we close to 2023, we are operating in an environment. That's a mortgage interest rates reached a high of 8% during the fourth quarter before falling to around mid 6% near the end of the year mortgage rates and rate volatility continued to impact transaction volumes and we find ourselves at historic lows.
Sale of existing homes.
In an industry level, the historically low purchase volumes combined with low existing home listing inventory is kept at home prices elevated.
Frederick H. Eppinger: As I have said before, we see 2024 as a transition year towards a more normal market for existing home sales in 2025, and believe the next six will likely be very challenging given the macroeconomics laid on top of a typical seasonal impact. While the current environment has been difficult, I am very pleased with the progress our teams have made in improving the underlying financial and operating performance of the company during 2023. There is more work to be done, and it is critical we remain focused on improving margins, growth, and resiliency through improved scale and attractive markets and enhancing our operational capabilities. But I want to thank our teams for their dedication to making significant progress on these enterprise initiatives during the last 12 months.
As I have said before we see 2024 is a transition year towards a more normal market for existing home sales during 2025 and believe the next six months will likely be very challenging given the macroeconomics laid on top of a typical seasonal impact.
While the current environment has been difficult I am very pleased with the with the progress our teams have made in improving the underlying financial and operating performance of the company. During 2023. There is more work to be done and it is critical we remain focused on improving margins growth and resiliency through improved scale in it.
Tractor market and enhancing our operational capabilities, but I want to thank our teams for their dedication to making significant progress on these enterprise initiatives. During the last 12 months during the year and continuing this quarter, we successfully strengthened our financial position, giving us the flexibility to continue investing in our long term success.
Frederick H. Eppinger: During the year and continuing this quarter, we've successfully strengthened our financial position, giving us the flexibility to continue investing in the long-term success of Stewart and to take advantage of opportunities as they arise. During the fourth quarter, we continue to manage costs thoughtfully and have taken targeted actions where appropriate. We continually evaluate our cost structure to ensure that we are making sound, long-term decisions on expenses. We have also been very careful not to take actions that we feel would threaten our competitive position and long-term value-creating opportunities.
Stuart and to take advantages of opportunities as they arise.
During the fourth quarter, we continued to manage costs thoughtfully taken targeted actions where appropriate we continually evaluate our cost structure to ensure that we are making sound long term decisions on expenses.
We have also been very careful not to take actions that we felt would threaten our competitive position and long term value creating opportunities.
Frederick H. Eppinger: The most prudent path forward for Stewart, as the market begins to normalize in late 2024 and into 2025, is to continue investing in our people and remaining focused on long-term improvement. I believe we've done a good job of balancing strong financial discipline with targeted investment. And we will continue to be very diligent with our expense management during this difficult moment in the cycle. We remain focused on enhancing our operating model, investments in technology to enhance our customer experience and improve the efficiency of our operations, and building scale and targeted areas. Some of the investments in technology have focused on improving our title production process, as well as our data management and access. These strategic investments are resulting in cost ratios that are somewhat elevated given we are in a market with historically low transactions. However, we are setting Stewart up for better overall performance in the future.
It was prudent path forward for Stuart as the market begins to normalize in late 2024 it into 'twenty five.
Is to continue investing in our people and remaining focused on our long term improvement plan I believe we have a good we've done a good job of balancing strong financial discipline with targeted investments and we will continue to be very diligent with our expense management. During this difficult moment in the cycle.
We remain focused on enhancing our operating model investments in technology to enhance our customer experience and improve efficiency of our operations and building scale in targeted areas. Some of the investments in technology have focused on improving our title production processes as well as our data management and access these strategic.
Investments are resulting in cost ratios that are somewhat elevated given we are in a market with the historically low transaction volumes.
However, we are setting steward for better overall performance in the future. We believe that these long term investments coupled with.
Frederick H. Eppinger: We believe that these long-term investments, coupled with Thoughtful Near-Term Expense Management, will improve our structure and financial performance in the long term. In the current environment, we have been prudent with our acquisition-related investments and have been routinely reevaluating markets in our direct operations, where we have the opportunity to increase share and enhance our leadership capability. This has ensured that our deployment of capital provides acceptable long-term returns. We will maintain this cautious approach to investments through the first half of 2024.
Cycled near term expense management will improve our stroke structured financial performance in the long term.
The current environment, we have spin prudent with our acquisition related investments and had been routinely we evaluating markets and our direct operations, where we have the opportunity to increase share and enhance our leadership capabilities.
Has ensured that our deployment of capital provides acceptable long term returns we will maintain this cautious approach to investments through the first half of 'twenty 'twenty four.
Frederick H. Eppinger: During the fourth quarter and throughout 2023, our commercial operations have performed well in a challenging market. While certain sectors were and will be challenged in the near term due to challenging financial markets, sectors such as energy remain extremely strong for us, and we see ongoing challenges in sectors like office. Growth in all sectors of our commercial operations remains an important component of our overall strategy, and positioning our commercial operations for growth across all our business lines has been a key focus of our journey. We are making investments in talent so that we have the leadership in place to achieve these objectives.
The fourth quarter and throughout 2023, our commercial operations have performed well in a challenging market, while certain sectors or it will be challenged in the near term due to challenging financial markets sectors, such as energy remains extremely strong for us and we see ongoing challenges and sectors.
Office.
In all sectors of our commercial operations remains an important component of our overall strategy and positioning our commercial operations for growth across all our business lines has been key focus of our journey.
We are making investments in talent. So that we have the leadership in place to achieve these objectives. We are also investing in technology to support the commercial operations to allow us to better serve our customers and more efficiently manage our business. We believe our strategies will create long term growth of the commercial markets for us.
Frederick H. Eppinger: We are also investing in technology to support commercial operations to allow us to better serve our customers and more efficiently manage our business. We believe our strategies will create long-term growth in the commercial market. Our agency business finished the fourth quarter with another solid performance as we have been leveraging our agency technology to drive market share gains. During the fourth quarter and throughout the year, we have made excellent progress on our deployment of technology and services that provide a significantly improved customer experience for our agents. This enhanced experience includes greater connectivity, ease of use, and risk reduction for our agent partners.
Our agency business finished the fourth quarter with another solid performance as we have been leveraging our agency technology to drive market share gains.
During the fourth quarter and throughout the year, we have made excellent progress on our deployment of technology and services that provide a significantly improved customer experiences for our agents.
Yes, it enhanced experience includes greater connectivity ease of use and risk reduction for our agent partners.
Frederick H. Eppinger: We are pleased that our platform of services for agents is as strong as it has ever been, and we will continue to focus on growing share in our target market, such as Florida, Pennsylvania, and the overall commercial real estate sector. Our real estate solutions delivered solid financial results in the fourth quarter and throughout twenty-three, particularly given the market headwinds. We are focusing on driving share gains as we leverage our improved portfolio of services to better and more deeply serve our lender clients. While we are not immune to the market downturn in these businesses, we've been able to offset some of the challenges we share today. An important achievement during 2023 was our focus on improving our technology for title production process automation and centralization to improve operational efficiency and capability.
We are pleased that our platform of services for agents is as strong as it has ever been and we will continue to focus on growing share in our target markets, such as Florida, and Pennsylvania, and the overall commercial market.
Our real estate solutions maintained solid financial results in the fourth quarter and throughout 'twenty, three, particularly given the market headwinds.
We are focusing on driving share gains as we leverage our improved portfolio of services to better and more easily serve our lender clients.
While we are not immune to the market during downturn in these businesses, we've been able to offset some of the challenges with share gains.
An important achievement during two 2023 was our focus on improving our technology for the title production process automation and centralization to improve operational efficiency and capabilities.
Our investments have already resulted in significant progress toward improving the customer experience across all the channels.
And then the other area of priority work.
Uh huh.
As we work to improve our operating efficiency at the centralization and Digitization of our title data. We are pleased with the significant progress that we've made on that this year.
Frederick H. Eppinger: Our investments have already resulted in significant progress toward improving the customer experience across all the channels. And another area of priority work, as we work to improve our operating efficiency, is the centralization and digitization of our title. We are pleased with the significant progress that we made on that this year. This progress at more normal production levels will result in a considerable improvement in our delivery. Improving our financial strength by a growing margin has been a significant focus of our journey. We have made good progress in our efforts, and we are aware that returns remain depressed during this phase of the cycle. However, our investments should allow us to achieve low double-digit pre-tax margins as we turn to a more normal $5 million unit purchase. While we are encouraged by our improvements in talent, technology, customer experience, and our financial model, we know that our journey is not complete.
Progress at more normal production levels.
Suitable improvement in our delivery costs.
Improving our financial strength by growing margin has been a significant focus of our journey.
We have made good progress in our effort and we are aware that the returns remain depressed during this phase of the cycle.
Our investments should allow us to achieve low double digit pre tax margins has returned to a more normal 5 million unit purchase market.
While we are encouraged by our improvements in talent technology customer experience and our financial model, we know that the journey is not complete.
We remain focused on our strategic plan of building, an improved competitive position by being more efficient and having a disciplined off rebel that functions well throughout all the real estate cycles, we have emphasized growing scale in attractive markets across all the lines of business that we have made great strides in improving the customer experience at all our channels.
Tracking and retaining key talent is always important and we've been even more focused on retaining talent to this market. So that we have the right team in place as the cycle improves.
Frederick H. Eppinger: We remain focused on our strategic plan of building an improved competitive position by being more efficient and having a disciplined operating model that functions well throughout all the real estate cycles. We have emphasized growing scale and attractive markets across all the lines of business, and we have made great strides in improving the customer experience across all our channels. Attracting and retaining key talent is always important, and we've been even more focused on retaining talent in this market so that we have the right team in place as the cycle improves.
I am pleased with our efforts that our efforts.
Yielding results through increased year over year market share gains in each of our direct agency commercial and real estate services businesses.
Let me conclude by re.
Reiterating that we have been managing the balance of our expenses and investments throughout.
Actually to be mindful of necessary operating discipline for the current market challenges, while also dedicated to strengthening Stuart for long term growth and performance.
Solid financial footing should best position us to take advantage of the opportunities that this cycle will provide.
Frederick H. Eppinger: I am pleased with our efforts and that our efforts are yielding results through increased year-over-year market share gains in each of our direct agency, commercial, and real estate services. Let me conclude by reiterating that we have been managing the balance of our expenses and investments throughout thoughtfully to be mindful of necessary operating discipline for the current market challenges while also dedicated to strengthening Stewart for long-term growth and performance. Our solid financial footing should best position us to take advantage of the opportunities that this cycle will provide. Finally, I remain positive about the long-term outlook for the real estate market and the ability of Stewart to become the premier title services company. Our associates have worked diligently through these challenges, and I appreciate all they have accomplished.
Finally, I remain positive on the long term view.
One of the real estate market and the ability of Stewart to become the Premier title services company.
Associates have worked diligently throughout these challenging times and I. Appreciate all they have accomplished I also want to thank our customers and our agency partners for their continued loyalty and support.
David will now update everyone on the results.
Good morning, everyone and thank you Fred as always I'm thankful of our associates for their outstanding service and our customers for their continued support more so during the challenging current market, although mortgage rates dropped after the Feds December meeting comments in the January meeting cause rates to rise through today.
It's causing a continuation of a choppy market 2023 had the lowest existing single family home sales in over 15 years of commercial real estate activity was also challenged as a result operating results were lower than the prior year, yes.
Frederick H. Eppinger: I also want to thank our customers and our agency partners for their continued loyalty and support. David will now update everyone on the. Good morning, everyone, and thank you, Fred. As always, I'm thankful of our associates for their outstanding service and our customers for their continued support, more so during the challenging current market. Although mortgage rates dropped after the Fed's December meeting, comments in the January meeting caused rates to rise through today, causing a continuation of a choppy market. 2023 had the lowest existing single-family home sales in over 15 years, and commercial real estate activity was also challenged.
Yesterday, <unk> reported fourth quarter 2023, net income of $9 million or 32 cents per diluted share on total revenues of 582 million after adjustments for net realized and unrealized gains and losses acquired intangible asset amortization. The other expenses detailed at expenses. They are our press release.
Fourth quarter, adjusted net income was $17 million or <unk> 60 per diluted share compared to adjusted net income of $23 million or 84 cents per diluted share in the fourth quarter of 2022.
In the title segment total operating revenues in the fourth quarter decreased $79 million or 14%, while fourth quarter pretax income slightly improved primarily due to higher investment income and expense management.
David C. Hisey: As a result, operating results were lower than the prior year. Yesterday, Stewart reported fourth-quarter 2023 net income of $9 million, or $0.32 per diluted share, on total revenues of $582 million. After adjustments for net realized and unrealized gains and losses, acquired intangible asset amortization, and other expenses detailed in expenses A of our press release, fourth quarter adjusted net income was $17 million, or $0.60 per diluted share, compared to adjusted net income of $23 million, or $0.84 per diluted share, in the fourth quarter of 2022. In the title segment, total operating revenues in the fourth quarter decreased $79 million, or 14%, while After adjustments for purchase and tangible amortization and other items, the title segment's pre-tax income was $31 million compared to $35 million for the fourth quarter of 2022.
After adjustments for purchase intangible amortization and other items. The title segment pretax income was $31 million compared to 35 million for the fourth quarter 2022, adjusted pre tax margin was about 6% for both quarters.
On our direct title business total opened orders in the fourth quarter increased by 10% primarily due to acquisitions in 2023, while closed orders decreased by 3% compared to the prior year.
Domestic commercial revenues decreased by $11 million or 16%, primarily due to lower commercial transactions average commercial fee per file was approximately 14.
<unk> thousand 800, compared to 15100 from the prior year quarter domestic residential revenues decreased $18 million or 10% as a result of a 5% lower purchase and refinancing volumes and lower fee per file average residential fee per file in the fourth quarter was 32.
$100 compared to 3500 last year, primarily due to transaction mix.
Total international operating revenues declined $1 million or 4%, primarily due to overall lower transaction volumes.
Similar to the lower commercial and residential activity in the market agency revenues in the fourth quarter decreased by 49 million or <unk> 16 per cent compared to the prior year, while the remittance rate was roughly comparable.
David C. Hisey: Adjusted pre-tax margin was about 6% for both quarters. For our direct title business, total open orders in the fourth quarter increased by 10 percent, primarily due to acquisitions in 2023, while closed orders decreased by 3% compared to the prior year. Domestic commercial revenues decreased by 11 million, or 16%, primarily due to lower commercial transactions. The average commercial fee profile was approximately $14 million, compared to $15,100 for the prior year quarter. Domestic residential revenues decreased $18 million, or 10%, as a result of 5% lower purchase and refinancing volumes and a lower fee profile. Average residential fee profile in the fourth quarter was $3,200 compared to $3,500 last year, primarily due to transaction mail.
On title losses total title loss expense in the fourth quarter was 5% lower compared to prior year, primarily from lower title revenue as a percentage of title revenues. The fourth quarter title loss expense was four 1% compared to three 7% in the fourth quarter of 'twenty to 'twenty two.
<unk>, which benefited from 'twenty to 'twenty two is favorable claims experience.
For the year title loss expense averaged four 1% compared to three 8% last year, we expect title losses to be in the low to mid 4% range in 2024.
Regarding the real estate solutions segment fourth quarter pre tax income improved $1 million compared to last year, primarily due to increased revenues from our credit related data business, which more than offset declines from our transactional businesses pre tax margin was two 3% compare.
To avoid 7% last year on an adjusted basis pre tax income and margin was comparable to the prior year quarter at roughly 12%.
On a consolidated expenses are employee cost ratio was 32% compared to 30% last year, primarily driven by lower operating revenues. Other operating expenses were 23%, which was comparable to last year.
David C. Hisey: Total international operating revenues declined $1 million, or 4%, primarily due to overall lower transaction volume. Similar to the lower commercial and residential activity in the market, agency revenues in the fourth quarter decreased by $49 million, or 16% compared to the prior year, while the remittance rate was roughly constant. On title losses, total title loss expense in the fourth quarter was 5% lower compared to the prior year, primarily due to lower title revenue. As a percentage of title revenues, the fourth-quarter title loss expense was 4.1% compared to 3.7% in the fourth quarter of 2022, which benefited from 2022's favorable claims experience. For the year, title loss expense averaged 4.1% compared to 3.8% last year.
Regarding income taxes, the effective tax rate for the fourth quarter was 39%, which was higher than our historical tax rate, primarily due to the effect of non deductible expenses and lower domestic pretax income we expect.
Our tax rate to return to historic levels as domestic operations normalize.
On other matters, our financial position remains solid to support our customers employees and the real estate market. Our total cash and investments at December 31, 2023 was approximately $415 million in excess of statutory premium reserve requirements. We also have a fully available 200 million line of credit.
Facility total stockholders equity at December 31, 2023 was approximately 1.38 billion with a book value of approximately $50 per share similar to last year net cash provided by operations in the fourth quarter improved to $41 million compared to 25 million last quarter last.
David C. Hisey: We expect title losses to be in the low to mid 4% range in 2024. Regarding the real estate solutions segment, fourth quarter pre-tax income improved by a million dollars compared to last year, primarily due to increased revenues from our credit-related data business, which more than offset declines from our transactional business. Pre-tax margin was 2.3% compared to 0.7% last year. On an adjusted basis, pre-tax income and margin were comparable to the prior year quarter at roughly 12%. On our consolidated expenses, our employee cost ratio was 32% compared to 30% last year, primarily driven by lower operating revenue. Other operating expenses were 23%, which was comparable to last year. Regarding income taxes, the effective tax rate for the fourth quarter was 39%, which was higher than our historical tax rate, primarily due to the effect of non-deductible expenses on lower domestic pre-tax income.
Year quarter, primarily as a result of lower payments on claims and in accounts payable partially offset by lower net income in this year's quarter.
Lastly, we greatly appreciate our customers and associates and remain confident in our service to the real estate markets I'll now turn the call back over to the operator for questions.
Thank you at this time, if you would like to ask a question. Please press the star and one on your <unk>.
Telephone keypad, you may remove yourself from the queue at any time by pressing star to once again that is star. One if you would like to ask a question well take our first question from Soho in Boston with.
Your line is open.
Hey, guys. Good morning, hope, you're all well and good morning, good morning.
I wanted to maybe just start with you know January and February orders, you know, where where there was a trending for the first few weeks here. You know are you sort of seen comps turned positive year over year or anything on a month over month basis on the rising commercial side would be it would be great.
Yes.
Where do we think about the market as I've said before is.
David C. Hisey: We expect our tax rate to return to historical levels as domestic operations normalize. On other matters, our financial position remains solid to support our customers, employees, and the real estate market. Our total cash and investments at December 31, 2023 was approximately $415 million in excess of statutory premium reserve requirements. We also have a fully available $200 million line of credit facility. Total stockholders' equity at December 31, 2023 was approximately $1.38 billion, with a book value of approximately $50 per share, similar to last year.
It's a little bit of a tale of two cities likely.
This will be the transition year toward towards a more normal market in 'twenty five and I think the first six months are going to be quite challenging. So the way I think about the first quarter is kind of bouncing off the bottom so.
B.
The first quarter is getting closer.
I'm not being worse than last year, but I think the first quarter, we're going to still be worse.
Worse than the previous year and orders by closer together and that trend you can see and what we disclosed here in purchase order trends.
From October November December right. So again.
What what I think we're gonna see is things coming together, a little bit in the first quarter, but still the first quarter being worse than the previous year, and then hopefully bouncing from there.
David C. Hisey: Net cash provided by operations in the fourth quarter improved to $41 million, compared to $25 million last quarter, primarily as a result of lower payments on claims and accounts payable, partially offset by lower net income in this year's quarter. Lastly, we greatly appreciate our customers and associates and remain confident in our service to the real estate markets. I'll now turn the call back over to the operator for questions. Thank you. At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two.
And starting to improve now seasonality helps you as well obviously go into towards the second quarter, but but I think that's where we are in.
One of the challenges by the way to answer your question, just so that the volatility that shot up to 8%.
He has really made havoc kind of with some of the order results because what you've seen is more.
More cancellations when you see that kind of rapid change, you'll see an uptick at least for us.
More greater cancellations of orders, which affects the close orders in and so that volatility has affected.
The trends a little bit right now.
Operator: Once again, that is star and one if you would like to ask a question. We'll take our first question from Soham Bastel with BTIG. Your line is open.
Nothing again.
I feel like that transition that notion of a transition next year still.
A relatively good bat that hopefully the second half of the year, where I see some light at the end of that so yeah. That's David real quick I mean, you also have to look at it in the context of what rates have been doing so if you think about the first quarter of 'twenty three they were in the 6263 area. They came down to six six at the end of this year and then they come back up.
Soham Bastel: Hey guys, good morning. Hope you're all well.
Frederick H. Eppinger: Good morning. Wanted to maybe just start with, you know, January and February orders, you know, where there was a trending for the first few weeks here, you know, are you sort of seeing, you know, comps turn positive year over year or anything on a month over month basis on the resume commercial side would be would be great. Yeah, the way we think about the market, as I've said before, is it's a little bit of a tale of two cities. Likely the this will be the transition year towards a more normal market in twenty five. And I think the first six months are going to be quite challenging. So the way I think about the first quarter is kind of bouncing off the bottom. So.
As a result.
Fed comments in the last meeting and so you sort of start this year with a little bit of a choppy or in via <unk>.
Yeah, Okay understood.
And I guess, a second one I wanted to get a sense for where margins could potentially land this year.
We attack it a little differently.
I think most forecasts are calling for originations up 15% to 20%, we'll see where rates go and everything, but you know 15% to 20% in that sort of scenario.
Frederick H. Eppinger: The, you know, the first quarter is getting closer to not being worse than last year, but I think the first quarter we're going to still be worse than the previous year in orders but closer together. And that trend you can see in what we disclosed here in purchase order trends from October, November, and December, right? So again, what I think we're going to see is things coming together a little bit in the first quarter, but still the first quarter being worse than the previous year, and then hopefully, bouncing from there and starting to improve.
Can you, maybe just give us a sense of how you're thinking about managing the core employee and other opex lines right like should we expect you to sort of stay at this current fourth quarter run rate right for them at least the first half and then maybe there's an increase in the back half, but how would how would you sort of expect that to ramp up with volumes.
Yeah. So.
Actually this is a key.
A couple of times, it's an interesting thing right because.
[laughter] of wild last two or three years.
The way I think about our margins is that you know about 'twenty one if if if all things being equal we took a company that was averaging about 2% over the decade before the journey, we got it up to about nine and a half in Chad and in my view is in 'twenty. One we had better margins had obviously, but it was because it was so much excess volume I had a lot.
David C. Hisey: Now, seasonality helps you as well, obviously, going toward the second quarter, but I think that's where we are. And one of the challenges, by the way, to answer your question, just so the volatility that shot up to 8% and that has really made havoc with some of the order results because what you've seen is more cancellations. When you see that kind of rapid change, you'll see an uptick, at least for us, in greater cancellations of orders, which affects closed orders. And so that volatility has affected the trends a little bit right now. Again, I feel like that transition, that notion of a transition next year is still a relatively good bet that, hopefully, in the second half of the year, we're going to see some, Yeah, it's David real quick. I mean, you also have to look at it in the context of what rates have been doing. So if you think about the first quarter of 23, they were in the 6-2, 6-3 area.
Officers that over 100% capacity so it wasn't a sustainable thing that top of the margin.
And what we've done the work we've done.
Over the last year in particular, we broke the camel's back a little bit on a couple of things.
I believe we picked up a couple of hundred basis points. So in a normal market that we think about at about $5 million purchase homes, I think where instead of nine and a half turn we're probably 11 to 11 and a half something like that now so we're.
So that's kind of the general way to think about our economics the problem is.
We're in the worst markets in 15 years and at a very low level. So so I look at the numbers that improvement I just talked about doesn't show up in the numbers, but what it what it what we've done is created what I call excess capacity.
So as volume comes back we won't be adding a lot of resources.
David C. Hisey: They came down to 6-6 at the end of this year, and then they've come back up as a result of those Fed comments at the last meeting. And so you sort of start this year with a little bit of a choppier environment. Yeah, okay.
Because of the way we've now with the operating model that we've created we've part of the savings that you don't see is the fact that we have excess capacity like at our search and clear areas and some of the data management.
Management here, so so I feel like as things improve our margins will as well again.
Soham Bastel: And I guess, second one, you know, I wanted to get a sense for where margins could potentially land this year, but maybe attack it a little differently. So I think most forecasts are calling for originations up 15 to 20%. We'll see where rates go and everything. But, you know, 15 to 20% in that sort of scenario, can you maybe just give us a sense for how you're thinking about managing the core employee and other OpEx lines, right? Like, should we expect you to sort of stay at this current fourth-quarter run rate, right, for at least the first half, and then maybe there's an increase in the back half? But, you know, how would you sort of expect that to ramp up with volume? Yeah, so I've mentioned this a couple of times.
As analogy and the challenge in the first quarter as it has done in my view is going to be worse than last year.
But but but again I see as we come out of the year.
We should have improving margins, but we're not going to be anywhere close to a normal market probably next year.
But I think we're in pretty good shape.
And again I look at this fourth quarter and as you know.
One of the worst quarters in 17 18 years, this isn't and we're able to make money right, which was not historically true. So I feel like we're in a really good position to improve margins as the market improves.
If that's helpful.
If I could just follow up David I guess for you should we just think about sort of the employee an opex line sort of run rate that where where it is today and take that forward for the rest of the year, how should we think about that.
Frederick H. Eppinger: It's an interesting thing, right because we've had a wild last two or three years. The way I think about our margins is that, at about 21, if all things being equal, we took a company that was averaging about 2% over the decade before the journey, and we got it up to about nine and a half in 10. And my view is that in 21, we had a better margin set, obviously, but it was because there was so much excess volume; I had a lot of offices at over 100% capacity. So it wasn't a sustainable thing, the top of the margin.
Well I think what Frank was saying is that the so we wouldn't really be adding a lot of head count right, but what's going to add to what will end up happening is is just because the first period is the seasonally slowest period right youre not going to have as much revenue and so you probably.
Really on a percentage basis, you might have a little bit of a spike in that's going to be the toughest quarter like the first quarter, Yeah, and then and then as volume starts to come back right, you'll you'll be getting the benefit of not adding people.
There'll be always be some variable cost because our sales expenses and things like that right, but it won't go up at the same rate as it's gone up historically right. So your youll see a margin improvement over the period as the volume comes in.
Frederick H. Eppinger: And what we've done, the work we've done over the last year, in particular, we broke the camel's back a little bit on a couple of things. I believe we picked up a couple hundred basis points. So in a normal market that we think about, at about 5 million purchase homes, I think we're, instead of nine and a half, 10, we're probably 11 to 11 and a half, something like that now. So that's kind of the general way to think about our economy. The problem is... We're in, you know, one of the worst markets in 15 years and at a very low level.
Okay, Yeah that makes sense and then just last one.
You know your your parents had cyber attacks.
Have you seen any sort of discernible change in customer behavior or anything out there.
No I don't think in the short term there isn't any material impact in the long term I think it's quite helpful in that.
Frederick H. Eppinger: So I look at the numbers; that improvement I just talked about doesn't show up in the numbers, but what we've done is created what I call excess capacity. Right, so as volume comes back, we won't be adding a lot of resources because of the way we've now, with the operating model that we've created, we have. Part of this savings that you don't see is the fact that we have excess capacity, like in our search and clear areas and some of the data management areas. So I feel like as things improve, our margins will improve as well. Now again, the seasonality and the challenge in the first quarter are going to be, in my view, worse than last year. But again, I see as we come out of the year, we should have improving margins, but we're not going to be anywhere close to a normal market probably next year. But I think we're in pretty good shape.
We're one of the big four we have one of the strong balance sheets.
I think if you talk to agents today.
They're more kind of thoughtful about boy I got a spread by risk a little bit.
And so and that's true we're going to be true in commercial too.
And a good ones I think always thought about it that way, but but disproportionally that should help us just because of.
Our share position and how many we don't have a ton of agents there.
Fully dedicated to us or anything like that so I think that people are going to be thoughtful about spreading the risk I guess.
It's a normal thing to think about.
Particularly in our in our business that such an oligopoly.
One four.
For strong players.
Yes.
Soham Bastel: And again, I look at this fourth quarter and this, you know, this is one of the worst quarters in 17, 18 years, and we're able to make money, right, which was not historically true. So I feel like we're in a really good position to improve margins as the market improves, etc.
Alright, Thanks, a lot guys.
Thank you we'll take our next question from Bose George with Keybanc.
Your line is open good.
Hey, good morning.
Actually I wanted to ask just in terms of your margin expectations for the back half of this year is that.
Is that sort of looking at the year over year sort of improvement or is that sort.
David C. Hisey: So, David, I guess for you, should we just think about sort of the employee and OpEx line sort of run rate as it is today and take that forward for the rest of the year? How should we think about that? Well, I think what Fred was saying is that we wouldn't really be adding a lot of head count, right, but what's going to end up, what will end up happening is just because the first period is the seasonally slowest period, right? You're not going to have as much revenue. And so you're probably on a percentage basis. You might have a little bit of a spike, and that's going to be the time for the quarter like the first.
Sort of incorporating some potential pick up in macro sense. How are you thinking about later this year.
Yes, it's the macros, but it's also bose.
Leveraging.
Some of the work we've done.
This excess capacity I talked about it's kind of sitting on the sidelines right and.
And so it's it's both leveraging the volume increase but also the kind of new profile of the business.
And so it's a little bit of both but it's driven by what I mean.
The issue is we just have so little purchase volume in the system right now versus a normal year.
David C. Hisey: Yeah. And then, and then as volume starts to come back, right, you'll be getting the benefit of not adding people. There'll always be some variable costs because there are sales expenses and things like that. But it won't go up at the same rate as it has gone up historically.
That is it's we're kind of at the bottom as far as what we can do with expenses and managing our resources.
I'm very proud of what we've done but it's.
You wouldn't want to cut.
Much more out of system and that's why it's the first quarter's challenging because we're gonna be bouncing on the bottom in this first quarter.
Soham Bastel: Right. So you'll see a margin improvement over the period as the volume comes back. Okay, yeah, that makes sense. And just last one, you know, I just, you know, your peers had cyber attacks.
Okay, Yes.
Makes sense and then actually the other orders number again had a pretty good jump is there sort of bulk activity and can you just remind us what's in there mostly purchase sure. This is the last quarter.
Frederick H. Eppinger: And I guess, have you seen any sort of discernible change in just customer behavior or anything out there? I don't think, in the short term, there isn't any material impact. In the long term, I think it's quite helpful that we're one of the big four. We have one of the strongest balance sheets. I think if you talk to agents today, they're more kind of thoughtful about, boy, I've got to spread my risk a little bit. And so, and that's true, it will be true in commercial too. And a good one, I think, always thought about it that way.
Where the BCH H acquisition comparison.
US right as we bought them at the beginning at the end of Toyota.
So they weren't in last year much in last year right. So that's what it's driven by that business, which is doing very well.
And so as that order count for the quarter as kind of a reasonable run rate and is there seasonality in there or is that more just sort of transaction base.
It's a transaction based business supposed to think about that as a sort of the board of red build to rent business and then the securitizations and the like and so it's there's property aggregation and then theres disposition and Securitizations. So it's a it's a lumpy.
<unk> business and tends to move in chunks.
Frederick H. Eppinger: But disproportionately, that should help us just because of our shared position and how many agents we don't have a ton that are... fully dedicated to us or anything like that. So I think that people are going to be thoughtful about spreading their risk. I just think, you know, it's a normal thing to think about, particularly in a business that's such an oligopoly around, you know, four strong players. Yep. All right, thanks a lot, guys. Thank you. We'll take our next question from Bose George with KBW. Your line is open.
Yeah, Okay, great. Thanks.
Thank you we'll take our next question from John Campbell with Stephens, Inc. Your line is open.
Good morning, guys. Good morning, good morning.
So you guys in the past you've talked to in fact, I think you've talked specifically to that maybe $20 million of ongoing investment or kind of discretionary spend around the long term strategic initiatives, but Fred.
In our prepared remarks, you talked to a kind of a cautious approach from the first half kind of from the macro standpoint, and then the.
Bose George: Morning, everyone. Hey, good morning. I wanted to ask just in terms of your margin expectations for the back half of this year, is that sort of looking at the year over year sort of improvement, or is that incorporating some potential pickup in macros? What are you thinking about later this year? It's macroeconomics, but it's also leveraging some of the work we've done, right? This excess capacity I talk about, it's kind of sitting on the sidelines, right? And so it's both leveraging the volume increase but also the kind of new profile of the business. And so it's a little bit of both, but it's driven by law.
Prior question, you talked to not really needing to add many heads from here because you've kind of built that excess capacity. So I think you might've somewhat answered. This question, but the question here is do you feel like that $20 million spend from last year, where it is going to kind of hold steady this year and will that be the case that the market recovers and as much as the forecasters are pegged or my two kind of like lean into that possible market.
And it's a great question is roughly ironically, it so roughly about the same.
Probably.
Plus in 19 and 20, but it's.
There's some there's some really important data initiatives, we got going on particularly kind of that kind of access to data that would make us more efficient and then I have some operating technologies just like in commercial we have abated.
Frederick H. Eppinger: I mean, the issue is we just have so little purchase volume in the system right now versus a normal year that we're kind of at the bottom as far as what we can do with expenses and managing our resources. I'm very proud of what we've done, but you would wanna cut much more out of the system, and that's why this first quarter's challenging because we're gonna be bouncing on the bottom. Okay, yep, that makes sense. And then actually, the other orders number actually had a pretty good jump. Is there, you know, sort of bulk activity going on here? And can you just remind us what's in there that most people sort of purchase?
Operating.
Kind of system and so we're upgrading that so it's roughly the same amount of money.
This year. There is also some additional cyber investment in there as well so.
Again, one of the things, we did do which is.
To your question is we went through each of those investments, though and thought about the sequence of it given the challenge of the first six months of the year and what gives a quicker payback et cetera.
David C. Hisey: Sure. This is the last quarter where the BCHH acquisition comparison helps us, right? Because we bought them at the beginning... At the end of 2022. So they weren't in the last year as much.
And tried to be thoughtful about the timing and the starting of.
Those as well, but it's really important that we do invest in those things because we just.
The company got a little bit behind on its invest capital investments in some areas.
David C. Hisey: Right. So that's what it's driven by that business, which is doing very well. Okay, and that's, so that order count for the quarter is kind of a reasonable run rate, and is there seasonality in there, or is that more just sort of transaction-based? Yeah, it's a transaction-based business, so think about that as a, you know, sort of the buy-to-rent, build-to-rent business, and then there's securitizations and the like, and so it's Okay, great. Thanks.
It would be.
For this journey started and we're trying to sequencing and make those investments and catch up in some of those base areas and then some of these are just.
Things, we think they create.
A better kind of whether it's an experience for our people our experience for the customer.
On how we access data and make decisions.
And so it's good.
I feel like the teams we made good progress this year on them the ones coming up are are equally important they're less.
John Campbell: Thank you. We'll take our next question from John Campbell with Stephen Zink. Your line is open.
They're a little bit less transparent to the customer than the ones. We've been doing in the past there a little bit more back office and operating model stuff, but it's it all moves us forward in a pretty good way.
Operator: Good morning, John. Hey, guys. Good morning. Good morning.
Frederick H. Eppinger: So you guys in the past, you've talked specifically about the maybe $20 million of ongoing investment or kind of discretionary spend around the long-term strategic initiatives. But Fred, in your prepared remarks, you talked about kind of a cautious approach for the first half, kind of from a macro standpoint. And then the prior question, you talked about not really needing to add many heads from here because you've kind of built that excess capacity. So I think you might have somewhat answered this question. But the question here is, do you feel like that $20 million spend from last year is going to kind of hold steady this year? And will that be the case if the market recovers as much as the forecasters have pegged it, or might you kind of like lean into that possible market strength? I know it's a great question. It is roughly, ironically, about the same, probably more close to 19 and 20.
Okay. That's helpful and then I was just.
Kind of sticking with the growth initiatives I mean on the rollout of the agency Tech platform. Fred I think you'd mentioned that was actually you pointed to that as a driver of share growth I was hoping if we could maybe get a little bit more color on the platform itself. If you could maybe walk through what's differentiated about it and maybe from a bigger picture standpoint, the goals you're attempting to achieve an agency and how that tech.
At forum fits into that strategy.
So again, one of the things that we got behind on a little bit is kind of when you deal with the agents. It's combined economics and so it's really about the efficiency of the end to end process. So it has a lot to do with you integrating kind of seamlessly into their TPS and provided the kind of information they need to.
To kind of do their business and the other part of what we so we've done a lot of investments on both the integrations and with the kind of information, we pass back and forth.
Frederick H. Eppinger: But there are some really important data initiatives we've got going on, particularly access to data that would make us more efficient. And then I have some operating technologies, just like in commercial, we have a dated operating system. And so we're upgrading that. So it's roughly the same amount of money this year.
The decisions that we can make instantly back and forth.
But on top of that we created when we started we only had three states, where we could provide services search services.
And we now have the full country the equivalent of the full country just like the big guys.
Frederick H. Eppinger: There's also some additional cyber investment in there as well. So again, one of the things we did do, to your question, is we went through each of those investments, though, and thought about the sequence of them, given the challenge of the first six months of the year, and what gives a quicker payback, et cetera, and tried to be thoughtful about the timing and the starting of those as well. But it's really important that we do invest in those things, because we just... The company got a little bit behind on its capital investments in some areas before this journey started.
And that's important to agents because they want a variable is their cost a little bit in a down market. So they're using more of our services to supplement the work Theyre doing so what's happening now is we have a legitimate when we go into an agent in Florida or whatever we have a platform that is efficient.
A little bit more efficient than there are other players and we have these services provide on top of that what we've done is provided for our select agents a concierge service to access to commercial.
Which makes it really efficient for an agent to be able to get access to commercial that's probably broader geographically perhaps than where he is.
Frederick H. Eppinger: And we're trying to sequence and make those investments and catch up in some of those base areas. And then some of these are just things we think that would create a better kind of experience for our people or experience for the customer in how we access data and kind of make decisions. And so it's good. You know, again, I feel like the teams we've made good progress this year with them. The ones coming up are equally important. They're less...
And so that's the other part of this so it's an efficient way to work with them and then provide these additional services one other point I would make and it's one of the investments. We are currently making 13 states that are returning base and they have a different TPS type thing we have we are working with.
We're watching kind of.
As we speak in the next.
A few weeks or months, a new TPS offering for those attorney agents that make their workflows.
Frederick H. Eppinger: They're a little bit less transparent to the customer than the ones we've been doing in the past. They're a little bit more back office and operating model stuff, but it all moves us forward in a pretty good way. Okay, that's helpful.
Kind of efficient and easier to work with which is a unique thing. They just that's different than a regular agent and it requires different things.
And so.
We constantly are thinking about how we can be efficient in our integrations and interface with them and we believe what then happens is agents. We went back to the cyber point agents. Most agents are going to say hey, it's safer for me to split my business, a little bit and give our fair share to Stuart.
Frederick H. Eppinger: And then kind of sticking with the growth initiatives. I mean, on the rollout of the agency tech platform, Fred, you know, I think you'd mentioned that was actually you pointed to that as a driver of share growth. I was hoping if we could maybe get a little bit more color on the platform itself, if you could maybe walk through what's differentiated about it, and maybe from a bigger picture standpoint, the goals you're attempting to achieve as an agency and how that tech platform fits into that strategy. So again, one of the things that we got behind on a little bit is when you deal with the agents, right? It's combined economics. And so it's really about the efficiency of the end-to-end process.
I'll provide as.
Good if not better than the others.
So that's why we're encouraged we've had I think six or seven quarters.
Sure increase in an.
In agency, Ed and we have one weird numbers as you remember in the second quarter, but other than that it's.
Constant we've had steady share growth and some really good states and as kind of these improvements really get solidified geography by geography.
Frederick H. Eppinger: So it has a lot to do with you integrating kind of seamlessly into their TPSs and providing the kind of information they need to kind of do their business. And the other part of what we do, so we've made a lot of investments in both the integrations and with the kind of information we pass back and forth and the decisions that we can make instantly back and forth. But on top of that, we created – when we started, we only had three states where we could provide services, such as search services.
That should continue I feel pretty good about that.
Okay. That's very helpful. Thanks for the color.
And once again that is star one if you would like to ask a question. We will take our next question from Geoffrey Dunn with Dowling <unk> partners. Your line is open.
Hey, good morning.
Good morning.
So I wanted to go back to the expense side here, you know Fred a year ago.
A chunk of expense for office closures.
And you commented that you weren't going to cut too deep into expenses, you're investing for the future here would come this quarter, there's another chunk of office closures.
How do you identify these opportunities and kind of leads into my my second question.
Frederick H. Eppinger: And we now have the full country – the equivalent of the full country, just like the big guys, services. And that's important to agents because they want to vary their costs a little bit in a down market. So what's happening now is we have a legitimate platform when we go into an agent in Florida, whatever, we have a platform that is as efficient, if not a little bit more efficient, than their other players. And we have these services provided. On top of that, what we've done is provided for select agents a concierge service for access to commercial property, which makes it really efficient for an agent to be able to get access to commercial property that's probably broader geographically, perhaps, than where he is.
I think there is an emerging debate here on on what 24 actually ends up being you know if we if we don't get rate cuts towards the end of the year and mortgage rates stay higher than what Fannie and and certainly the MBA are forecasting now.
Im trying to wonder what the risk is of maybe only a 5% type of market rather than a 20% growth market.
I know you said you have kind of bounce off the bottom there's not much more you can do with expenses, but year over year. Obviously, we saw that you could find more.
It doesn't sound like the company is positioned for a flat or a 5% type of growth market. At 24. So can you talk a little bit more about how you go about identifying expense save and.
What are your actions if we are looking at a 5% market.
Yes.
Frederick H. Eppinger: And so that's the other part of this. It's an efficient way to work with them and then provide these additional services. One other point I would make, and it's one of the investments we're currently making, there are 13 states that are attorney-based. And they have a different TPS type thing. We are working on – we're launching, kind of, in the next few weeks or months, a new TPS offering for those attorney agents that makes their workflows kind of efficient and easier to work with, which is a unique thing. They just, that's different than a regular agent, and it requires different things.
Again, Jeff its really good question so.
So there's a couple ways to think about this so we look at this kind of MSA by MSA.
And within the MSA kind of it is geographic pockets and we've made a lot of improvement in say 30 markets or something in the last couple of years to get share and so our margins are good but we still have part of what I would call. These sub geographies, where we were trying to get them to the scale.
We felt we needed to get them too and at some point you just feel like you can given the market and to your point the slowness of the comeback that it was going to be kind of really hard to get there in some kind of timeframe that was fair and also we have.
Frederick H. Eppinger: And so what we constantly are thinking about, John, is how we can kind of be efficient in our integrations and interface with them. And we believe what then happens is agents, we go back to the cyber point. Most agents are going to say, hey, it's safer for me to split my business a little bit and give a fair share to Stewart. They now provide as good, if not better, than others.
Some consolidation opportunities from the acquisitions, we've done where you have duplicate locations.
Locations that are close together that you can kind of do some things geographically with real estate to kind of have to manage the business. The other thing that has happened is some of these operational initiatives, obviously have freed up our ability to not have to hire folks if people leave et cetera, because of the efficiency that we've been gaining.
Frederick H. Eppinger: And so that's why we're encouraged. We've had, I think, six or seven quarters of share increase in agency. And we had weird numbers, as you remember, in the second quarter, but other than that, it's pretty constant.
<unk>, two where investment so we try to be really thoughtful my point is that.
We've done a lot and.
There isn't a lot left to do.
Frederick H. Eppinger: We've had steady share growth in some really good states, and as these kinds of improvements really get solidified geography by geography, that should continue. I feel pretty good about that. Okay, that's very helpful.
And so I.
I do believe seasonality is going to help us even if the market isn't as robust as some of the scenarios are.
John Campbell: Thanks for the call. And once again, that is star and one. If you would like to ask a question, we'll take our next question from Geoffrey Dunn with Dowling and Partners. Your line is open.
So you know the.
First quarter is going be quite challenging, but I think the seasonality going to help us in the second quarter. So.
This is why when I talked about the first six months were being really prudent and sequencing investments and stuff because I think we do have to advantage ourselves like it could be what you. Just described that's the way we're gonna have to manage ourselves to be really thoughtful and careful I just don't.
Geoffrey Murray Dunn: Hey Jeff, morning. Morning.
Geoffrey Murray Dunn: So I wanted to go back to the expense side here, you know, Fred. A year ago, you had a chunk of expenses for office closures, and you cautioned that you weren't going to cut, you know, too deep into expenses you're investing for the future. Here we come this quarter, there's another chunk of office closures. How do you identify these opportunities? This kind of leads into my second question. I think there's an emerging debate here on what 24 actually ends up being. If we don't get rate cuts towards the end of the year and mortgage rates stay higher than what Fannie and certainly the MBA are forecasting, I'm starting to wonder what the risk is of maybe only a 5% type of market rather than a 20% growth market.
We just there isn't a lot more.
Have a lotta access here it doesn't mean that we don't we are not thoughtful about managing our business and looking at under every rock and be thoughtful about the sequence and timing and stuff.
But I don't.
Don't see it.
Plant about planning a lot.
If I said the market was going to look exactly like it did in 'twenty three 'twenty four result, better.
Yeah.
Yes, yes so.
Frederick H. Eppinger: So I know you kind of bounced off the bottom, there's not much more you can do with expenses, but year over year, obviously, we saw that you could find more. It doesn't sound like the company is positioned for a flat or 5% type of growth market in 24. So, can you talk a little bit more about how you go about identifying expense saves and what your actions are if we are looking at the 5% mark? Yeah, so again, Jeff, a really good question.
The first quarter.
But it would be a tad better because we're in a better spot rate we got.
And again so.
We've done a better job on investment income on escrow right through the whole year, we've got our operating models a little bit more efficient so all things being equal would be a tad better it's just going to be.
Clouded by the first quarter.
Got it okay. Thank you.
Frederick H. Eppinger: So, there are a couple ways to think about this. So we look at this kind of MSA by MSA, and within the MSA, kind of these geographic pockets, and we've made a lot of improvement in, say, 30 markets or something in the last couple of years to get share, and so our margins are good. But we still have kind of what I would call these sub-geographies where we were trying to get them to the scale that we felt we needed to get them to. And at some point, you just feel like you can't, given the market and, to your point, the slowness of the comeback, that it was going to be kind of really hard to get there in some kind of timeframe that was fair.
We have no further questions on the line at this time I will turn the program back over to our presenters for any additional or closing remarks.
Okay, and I want to thank everybody for joining us for this quarters call. It really appreciate the interest in Stuart. Thank you so much.
This does conclude today's program. Thank you for your participation.
Connect.
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Frederick H. Eppinger: Also, we have some consolidation opportunities from the acquisitions we've done, where you have duplicate kind of locations that are close together so you can kind of do some things geographically with real estate to kind of manage the business. The other thing that has happened is some of these operational initiatives obviously have freed up our ability to not have to hire people if people leave, et cetera, because of the efficiency that we've been gaining through our investment. So we try to be really thoughtful. My point is that we've done a lot and. There isn't a lot left to do, and so I do believe seasonality is going to help us, even if the market isn't as robust as some of the scenarios are.
Okay.
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Frederick H. Eppinger: So the first quarter is going to be quite challenging, but I think the seasonality is going to help us in the second quarter. So this is why, when I talked about the first six months, we're being really prudent in sequencing investments and stuff, because I think we do have to manage ourselves like it could be what you just described. That's the way we're going to have to manage ourselves, be really thoughtful and careful. I just don't, we just, there isn't a lot more. We don't have a lot of access here. It doesn't mean that we're not thoughtful about managing our business and looking at it under every rock and being thoughtful about sequencing, timing, and stuff. But I don't, I don't see it a lot, and I don't plan. I'm not planning.
Hmm.
Okay.
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Frederick H. Eppinger: If I said the market was going to look exactly like it did in 23, is your 24 result better? Yes, yes. But not in the first quarter.
Frederick H. Eppinger: But it would be a tad better because we're in a better spot, right? And again, so. You know, we've done a better job on investment income on escrow right through the whole year. We've got our operating models a little bit more efficient. So all things being able to be a tad better. It's just going to be clouded by the First Corps.
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Frederick H. Eppinger: Got it. Okay. Thank you. We have no further questions on the line at this time. I will turn the program back over to our presenters for any additional or closing remarks. Again, I want to thank everybody for joining us for this course call. I really appreciate the interest in Stewart. Thank you so much. This does conclude today's program. Thank you for your participation and you may disconnect, www.globalonenessproject.org ? ? ? ? ? background music Copyright © 2020, New Thinking Allowed Foundation, ?? ?? ?? ?? ?? ?? www.globalonenessproject.org www.gc.ca.gc.ca ?? ?? ?? ?? www.globalonenessproject.org Copyright © 2020, New Thinking Allowed Foundation, www.fema.gov Copyright © 2020, New Thinking Allowed Foundation, www.globalonenessproject.org ?? ?? ?? Copyright © 2020, New Thinking Allowed Foundation www.globalonenessproject.org ?? ?? ?? Music
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