Q1 2025 Stewart Information Services Corp Earnings Call

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Speaker Change: Hello, and thank you for joining the Stewart information services first quarter 2025 earnings call. At this time all participants are in a listen only mode. Later, you'll have the opportunity to ask questions. During the question and answer session and instructions will be given at that time. Please.

Speaker Change: Note that today's call is being recorded lastly should you need operator assistance. Please press star zero.

Speaker Change: It is now my pleasure to turn the conference over to Cat bass director of Investor Relations. Please go ahead.

Unknown Executive: Thank you for joining us today for Stewart's first quarter 2025 earnings conference call. We will be discussing results that were released yesterday after the close.

Speaker Change: Thank you for joining us today for Stewart's first quarter 2025 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 Heidi to listen online. Please go to the Stewart Dot Com website to access the link for this conference call. This conference call.

Unknown Executive: 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.

Unknown Executive: 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.

Speaker Change: 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 a reconciliation of these non-GAAP measures. Please refer to the appendix.

Unknown Executive: During our call, we will discuss some non-GAAP measures. For 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.

Speaker Change: In today's earnings release, which is available on our website at Stewart Dot Com, Let me now turn the call over to Fred.

Frederick Eppinger: Let me now turn the call over to Fred. Thank you for joining us today for Stewart's first quarter 2025 earnings conference. Yesterday, we released the financial results for the quarter, which David will review with you shortly.

Fred Eppinger: For joining us today for Stewart's first quarter 2025 earnings conference call.

Fred Eppinger: Yesterday, we released our financial results for the quarter, which David will review with you shortly.

Frederick Eppinger: Given the current macro environment, I'd like to open today's call with our perspective on the housing market conditions, followed by a review of our first quarter results and some insight into the progress we are making on our strategic growth initiative. I am pleased with the quarter as we continue to improve and grow financially in a difficult housing The housing market remained challenging in the first quarter, with interest rates remaining in the range of 6.6% to 7% during the quarter. Existing home sales continued to bounce along the bottom in the quarter, with sales slightly worse than last year's historically weak numbers.

Fred Eppinger: Given the current macro environment I'd like to open today's call with our perspective on the housing market conditions, followed by a review of our first quarter results and some insight into the progress we are making on our strategic growth initiatives.

Fred Eppinger: I am pleased with the quarter as we continue to improve and grow financially in a difficult housing market.

Fred Eppinger: The housing market remain challenging in the first quarter with interest rates remaining in the range of six 6% to 7% during the quarter existing home sales continued to bounce along the bottom in the quarter, we feel slightly worse than last year's historically weak numbers.

Frederick Eppinger: While final existing home sales for March are not out yet, the pending home sales for February were down 3.6% from last year, indicating a weaker number for the quarter. As we look forward, we do see positive signs and both improved housing inventories and market activity trends in early April. For those that monitor the housing market trends closely, it is clear to see that we have an educated consumer base sitting on the sidelines, poised and ready to take advantage of a quick rate drop or changes to market conditions that make buying a home more accessible. And unlike last year, the housing inventory is at a higher level of both quality and volume.

Fred Eppinger: Final existing home sales for March.

Fred Eppinger: Yes, the pending home sales for February were down three 6% for the lap from last year.

Fred Eppinger: <unk>, a weaker number for the quarter.

Fred Eppinger: As we look forward, we do see positive signs in both improved housing inventories and market activity trends in early April.

Fred Eppinger: Those are monitored at the housing market trends closely it is clear to see that we have an educated consumer base sitting on the sidelines poised and ready to take advantage of a quick rate drop or changes to market conditions that make buying a home or access.

Fred Eppinger: And unlike last year the housing inventory is at a higher level of both quality and volume and while the current market uncertainty makes it difficult to predict given this activity, we expect to see improved second half of the year relative to 'twenty four.

Frederick Eppinger: And while the current market uncertainty makes it difficult to predict, given this activity, we expect to see improved second half of the year relative to 2024.

Frederick Eppinger: With all these challenging market dynamics, I'm proud to say that in the first quarter, we continue to grow our business with the title segment growing 11% and our real estate solutions growing 17%. In our title segment, our commercial services business continues to grow nicely, driven by thoughtful investment in talent as we deepen our capabilities and more geographies and asset classes. Our domestic commercial business grew 39% in the first quarter of 2025 relative to the Q1 of 2024. We benefited from strong growth in the majority of our asset classes, with retail mixed use and energy as the biggest winners for the quarter across our largest asset classes.

Fred Eppinger: With all these challenging market dynamics I'm proud to say the first quarter, we continue to grow our business with the title segment grew 11% and our real estate solutions grew at 17%.

Fred Eppinger: Our title segment, our commercial services business continued to grow nicely driven by thoughtful investment in talent as we deepen our capabilities in more geographies and asset classes, our domestic commercial business grew 39% in the first quarter of 2025 relative to the Q1 'twenty four we benefited from strong growth in a bit.

Fred Eppinger: <unk> of our asset classes with retail mixed use in energy is the biggest winners for the quarter across our largest asset classes, we expect domestic commercial activity to improve year over year and look forward to continuing to capture our fair share of that market.

Frederick Eppinger: We expect domestic commercial activity to improve year over year and look forward to continuing to capture our fair share of that market. In our direct business, we remain focused on growth in our target MSAs. We expect acquisitions will be a key component of our growth plan in this business and maintain a warm pipe on the targets and believe activity will increase with the improving market. And while the business is impacted by suppressed residential housing market, we saw strong progress in our strategic priority of growing small commercial within our direct operations as we saw a 16% growth this quarter in that important segment.

Fred Eppinger: In our direct business, we may be focused on growth in our target Msas we.

Fred Eppinger: Acquisitions will be a key component of our growth plan in this business and to maintain a one pipeline with targets I believe activity will increase with the improving market.

Fred Eppinger: And while the business is impacted by suppressed residential housing market. We saw strong progress in our strategic priority of growing small commercial within our direct operations as we saw 16% growth. This quarter is that important segment and.

Frederick Eppinger: and Agency Services. Our team remains focused on expansion through shared gains and attractive markets by adding new agent partners and by growing our share with existing. We are pursuing growth across all our existing markets, but are targeting share growth in 15 important states. Preliminary industry share data shows that in 24, we grew our share in these 15 states. And our momentum continues as we grew gross agency revenue by 11 percent year over year and net revenue by 14 percent. We attribute this solid momentum to increasing penetration of our agency partners and an increase in commercial transactions.

Fred Eppinger: And agency services.

Fred Eppinger: Our team remains focused on expansion through share gains in attractive markets.

Fred Eppinger: Adding new agent partners that by growing our share with existing agents, we are pursuing growth across all our existing markets, but are targeting share growth at 15% Port states preliminary industry shared data showed that at 24, we grew our share in these 15 states and Adobe.

Fred Eppinger: <unk> continues as we grew gross agency revenue by 11% year over year and net revenue by 14% attributed.

Fred Eppinger: Tribute has solid momentum to increasing penetration of our agency partners and an increase in commercial transactions.

Frederick Eppinger: Our improved support services and enhanced abilities around servicing commercial agents allows us to stand out to our agents.

Fred Eppinger: Sure.

Fred Eppinger: Support services and enhanced abilities around servicing commercial agents allows us to stand out to our regions. We will continue to build on this momentum and we have made that we've made in recent years for our agents in order to differentiate our services are better our offerings for our agent partners.

Frederick Eppinger: We will continue to build on this momentum that we have made in recent years for our agents in order to differentiate our services and better our offerings for our agent partners. Our real estate solutions business segment had strong revenue results for the first quarter as well, growing 17%. Our margins were up sequentially, but down relative to the Q1 in 2024. Our strong revenue gains came with higher expenses, primarily due to increased costs of credit data from our informative research business. We expect margins in our lender services to normalize in the low teens range for the remainder of the year.

Fred Eppinger: Our real estate solutions business segment had strong revenue results for the first quarter as well growing 17% our margins were up sequentially, but down relative to the Q1 2024, our strong revenue gains came with higher expenses, primarily due to increased cost of credit data from our <unk>.

Fred Eppinger: <unk> research business, we expect margins in our lender services to normalize in the low teens range for the remainder of the year, we expect to grow the real estate solutions business line by gaining share with the top lenders in cross selling our products as we leverage our improved portfolio of services.

Frederick Eppinger: We expect to grow the real estate solutions business line by gaining share with the top lenders and cross-selling our products as we leverage our improved portfolio of services. Cross-selling in the current market conditions poses some challenges, however, we continue to see share gains from both existing clients and new client introductions. We expect continued momentum in this space as the market improves.

Fred Eppinger: Cross selling in the current market conditions poses some challenges. However, we continue to see share gains from both existing clients and new client introductions. We expect continued momentum in this space as the market improves.

Frederick Eppinger: Our international business is pursuing a growth agenda as well, focused on broadening our geographical presence in Canada. In the first quarter of 2025, we grew non-commercial international revenue by 16% compared to the year prior. We also intend to increase our penetration of commercial business in our international business. We are closely monitoring the impact of trade negotiations on both our domestic and global countries. From an expense perspective, our significant growth in real estate solutions and commercial services has resulted in an increase in our other operating expense ratio. In real estate solutions, other operating expenses are higher percentage of mixed due to use of outside services and data.

Fred Eppinger: International business is pursuing a growth agenda as well focused on broadening our geographical presence in Canada in the first quarter of 2005, we grew non commercial international revenue by 16% compared to the year. Prior we also want to attempt to increase our penetration of the commercial business and our international unit, we are closely monitoring the impact.

Fred Eppinger: <unk> trade negotiations in both our domestic and global customer base.

Fred Eppinger: From an expense perspective, our significant growth in real estate solutions and commercial services has resulted in an increase in our other operating expense ratios and real estate solutions. Other operating expenses are higher percentage of mix due to use of outside services and data and commercial we encounter higher outside data and services.

Frederick Eppinger: In commercial, we encounter higher outside data and service fees. We will expect these two trends to continue as we continue to grow these lines of business.

Fred Eppinger: We will expect these two trends to continue as we continue to grow these lines of business.

Fred Eppinger: Yeah.

Frederick Eppinger: We are dedicated to growing to growing share in all lines of business and remain focused on positioning ourselves well for door for both near and long term growth and sustainability.

Fred Eppinger: We are dedicated to growing to grow share in all lines of business every being focused on positioning ourselves well for door for both near and long term growth and sustainability.

Frederick Eppinger: Stewart's current position can be described as a tale of two cities. While the challenging market improvement has been stubbornly slow, Stewart has never been in a better position to grow and improve our top end bottom line. One thing that I can say with certainty is that we have assembled a strong team of leaders that are focused on working together to execute our strategic plan. This group wakes up every morning thinking about how we can improve the company and we're better. Our charge remains immovable to be the top destination for talent in this industry.

Fred Eppinger: Stewarts current position can be described as a tale of two cities.

Fred Eppinger: The challenging market improvement has been stubbornly slow Stewart has never been in a better position to grow and improve our top and bottom lines.

Fred Eppinger: Well I think that I can say with certainty is that we have assembled a strong team of leaders that are focused on working together to execute our strategic plan. This.

This group wakes up every morning thinking about how we can improve the company and we're better for it.

Fred Eppinger: Our charge remains to be the top destination for talent in this industry.

Frederick Eppinger: For these reasons and more, we were again awarded the Top Workplace Award by USA Today. And while it has been a very challenging market for the last three years, I have never been more confident in our ability to capitalize on what I see as an improving market in the second half of 25 and into 20.

Fred Eppinger: For these reasons and more we were again awarded the top workplaces award by USA today.

Fred Eppinger: And while it has been a very challenging market for the last three years I have never been more confident in our ability to capitalize on what I see is an improving market in the second half of 'twenty five and into 'twenty six.

Frederick Eppinger: I want to thank all our employees for their dedication and to our customers for trusting us to deliver with consistency.

Fred Eppinger: I want to thank all our employees for their dedication to our customers for trusting us to deliver with consistency and excellence Dave.

David Hisey: David, I will now turn it over to you to provide the update. Good morning, everyone. And thank you, Fred.

Speaker Change: David I will now turn it over to you to provide the update on our results.

David Heidi: Good morning, everyone and thank you Fred I appreciate our employees and I'm grateful for our customers. The real estate market continues facing with existing single family home sales at multi decade lows in mortgage rates in the 7% area. Recent tariff news has created great volatility yesterday Stewart reported first.

David Hisey: I appreciate our employees and I'm grateful for our customers. The real estate market continues facing with existing single family home sales at multi-decade lows and mortgage rates in the 7% area. Recent tariff news has created great volatility. Yesterday, Stewart reported first quarter net income of $3 million or $0.11 per diluted share on total revenues of $612 million. Appendix A of our press release shows adjustments primarily related to net realized and unrealized gains and acquired intangibles amortization that we use to measure operating performance. On an adjusted basis, net income for the quarter was $7 million, or $0.25 per diluted share, compared to $5 million, or $0.17 in the first quarter, 2024.

David Heidi: Quarter net income of $3 million or 11 cents per diluted share on total revenues of 612 million appendix a of our press release shows adjustments primarily related to net realized and unrealized gains and acquired intangibles amortization that we use to measure operating performance.

David Heidi: On an adjusted basis net income for the quarter was 7 million or <unk> 25 per diluted share compared to 5 million or 17 sets in the first quarter 2024.

David Hisey: In the title segment, operating revenues include $48 million, or 11%, driven by our domestic commercial and agency title operations. This resulted in two million higher title pre-tax. After adjustments for purchase and tangible amortization, the segment's first quarter adjusted pre-tax income improved to $12 million or $5 million higher than last year, with adjusted pre-tax margin slightly improved to 2% compared to 1% last year. On our direct title business, total open orders in the first quarter were comparable to last year, while total closed orders were down 9% primarily due to low residential transactions. Domestic residential fee profile improved 13% to $3,300 compared to $2,900 in the prior year, primarily due to higher share purchase transactions.

David Heidi: In the title segment operating revenues include $48 million or 11% driven by our domestic commercial in agency title operations. This resulted in $2 million higher title pre tax income.

David Heidi: After adjustments for purchase intangible amortization segment's first quarter, adjusted pretax income improved to $12 million or 5 million higher than last year.

David Heidi: With adjusted pre tax margin slightly improved to 2% compared to 1% last year.

David Heidi: On our direct title business total opened orders in open orders in the first quarter were comparable to last year. While total closed orders were down 5%, primarily due to lower residential transactions domestic residential fee per file improved 13% to 3300 compared to.

David Heidi: 2900 in the prior year, primarily due to higher share purchase transactions higher fee per file offset lower closed orders, resulting in relatively flat residential revenue.

David Hisey: Higher fee profile offset lower closed orders resulting in relatively flat residential revenue. Our domestic commercial revenues improved 20 million or 39% driven by higher transaction size and volume. As Fred noted, we saw growth in several asset classes, multifamily industrial, mixed use, and retail along with energy. Domestic commercial average fee profile increased 13% to $15,800 compared to $13,900 in the prior year quarter. Total international revenues increased 2 million, or 9%, primarily due to improved volumes from our Canadian operation. With our agency operations first quarter gross agency revenues improved 27 million or 11% also held by commercial activity with agents, while net agency revenues improved 5 million or 13% due to slightly better remittance rate.

Fred Eppinger: Our domestic commercial revenues improved $20 million or 39% driven by higher transaction size and volume as Fred noted we saw growth in several asset classes multifamily industrial mixed use and retail along with energy domestic.

Fred Eppinger: Commercial average fee per file increased 13% to 15800 compared to 13900 in the prior year quarter.

Fred Eppinger: Total international revenues increased $2 million or 9%, primarily due to improved volumes from our Canadian operations.

Fred Eppinger: With our agency operations first quarter gross agency revenues improved $27 million or 11% also helped by commercial activity with agents, while net agency revenues improved $5 million or 13% due to slightly better remittance rate.

David Hisey: On title losses, total title loss expense in the first quarter was comparable to last year, primarily due to overall favorable claim experience, offsetting higher title revenues. The title loss ratio for the first quarter improved to 3.5% compared to 3.9 in the prior year quarter. We expect our title losses to average in the low 4% range for the full year 2025. Regarding the real estate solution segment, operating revenues increased 14 million or 7%, primarily driven by additional revenues from credit information services. However, segment pre-tax income decreased as we continue to work through the matters discussed in the fourth quarter, higher credit information cost of services, and increased employee costs as we grow customer relationships.

Fred Eppinger: On title losses total title loss expense in the first quarter was comparable to last year, primarily due to overall favorable claim experience offsetting higher title revenues the title loss ratio for the first quarter improved to three 5% compared to three point.

Fred Eppinger: In the prior year quarter, we expect our title losses to average in the low 4% range for the full year 2025.

Fred Eppinger: Regarding the real estate solution segment operating revenues increased $14 million or 7%, primarily driven by additional revenues from credit information services.

Fred Eppinger: However segment pre tax income decrease as we continue to work through the matters discussed in the.

Fred Eppinger: In the fourth quarter higher credit information cost of services and increased employee costs as we grow customer relationships adjusted pre tax margin improved to approximately 10% from Q4, 7% and we expect to be in the low teens margins as these relationships mature.

David Hisey: Adjusted pre-tax margin improved to approximately 10% from Q4, 7%, and we expect to be in the low teens margins as these relationships mature. Excluding acquisition and tangible amortization, adjusted pre-tax income was $10 million in the first quarter compared to $12 million last On our consolidated operating expenses, our employee cost ratio in the first quarter improved to 31% from 32% last year, primarily due to higher operating revenues. Our other operating expense ratio, as Fred covered, increased to 27% in the first quarter, compared to 25.6 last year, as we saw the higher costs in real estate solutions and commercial operations that Fred described, from outside data and service costs.

Fred Eppinger: Sure.

Fred Eppinger: Excluded excluding acquisition intangible amortization adjusted pre tax income was $10 million in the first quarter compared to $12 million last year on.

Fred Eppinger: Our consolidated operating expenses are employee cost ratio in the first quarter improved to 31% from 32 last year, primarily due to higher operating revenues.

Fred Eppinger: Our other operating expense ratio as Fred covered increased to 27% in the first quarter compared to $25 six last year as we saw the higher costs and real estate solutions and commercial operations.

Fred Eppinger: Describe from outside data and service costs, our financial position remains solid to support our customers employees and the real estate market during this environment.

David Hisey: Our financial position remained solid to support our customers, employees, and the real estate market during this environment. Our total cash and investments were approximately $320 million in excess of our statutory premium reserve requirements, while we also have a fully available $200 million line of credit facility. Total stockholders' equity at March 31, 2025, was approximately $1.4 billion, with a book value of $50 per share. Net cash used by operations in the first quarter, 2025, was $30 million, which was similar to last year's first quarter.

Fred Eppinger: Our total cash and investments were approximately $320 million in excess of our statutory premium reserve requirements. While we also have a fully available 200 million dollar line of credit facility.

Fred Eppinger: Total stockholders equity at March 31, 2025 is approximately one 4 billion with a book value of $50 per share net cash used by operations in the first quarter 2025 was $30 million, which was similar to last year's first quarter again, Thank you to all of our customers and at <unk>.

David Hisey: Again, thank you to all of our customers and employees, and we remain confident in our service to the real estate markets.

Fred Eppinger: <unk> and we remain confident in our service to the real estate markets I'll now turn the call over to the operator for questions.

Unknown Executive: I'll now turn the call over to the operator for questions. Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star 1 to ask a question. We will pause for just a moment to allow questions to queue. Thank you.

Speaker Change: Thank you.

Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: May remove yourself from the queue at any time by pressing star Q. Once again that is star one to ask a question, we'll pause for just a moment to allow questions to queue.

Bose George: Thank you. Our first question will come from Bose George with <unk>. Your line is open.

Bose George: Our first question will come from Bose George with KBW. Your line is open. Good morning, Bose. Good morning. Actually, I wanted to just ask about commercial, you know, Fred, you noted that, you know, you expect commercial to remain strong in the back half of the year. Just curious in April, you know, since the given the volatility the last few weeks, has there been any indication of sort of a slowdown in activity or just delays in loans that are already in the pipeline? And just any color on changes that you might have seen? Yeah, so, so it's been, it's remained relatively robust.

Bose George: Morning, guys good morning.

Bose George: I wanted to just ask about commercial in afraid you noted that you expect commercial to remains strong in back half of the year. Just curious in April since given the volatility of the last few weeks has had been any indication that sort of a slowdown in activity or just delays.

Bose George: And loans that are already in the pipeline and just any color on changes that you might've seen yes. So.

Bose George: Which Vince it's remained relatively robust.

Frederick Eppinger: And I would say that there is some money on the sidelines, but it's a lot. So it, it feels still relatively robust. And my expectation is a little bit better than last quarter when I was talking about kind of a five, six, I think, I think this year is going to be more double digit potential growth. Could it be, could it be a little bit bumpy because of some of the news? Yes, but we haven't, to tell you the truth, we haven't seen a material change in kind of orders yet. So, so far, so good.

Bose George: And I would say that there is some money on the sidelines, but it's a lot.

Bose George: So it feels still relatively robust and my expectation is a little bit better than last quarter. When I was talking about kind of a $5 six I think I think.

Bose George: He is going to be more double digit potential growth.

Bose George: Could it be could be a little bit bumpy because of some of the news, yes, but we haven't.

Bose George: We haven't seen a material change in kind of orders yet.

Bose George: So.

Bose George: So far so good.

Bose George: Okay.

Bose George: Perfect. Great. Thanks. And then actually on investment income, was the lower 1Q just on lower escrow balances? The decline was just a little more pronounced than we've seen in the past. Yeah, that's right, Bose. It was primarily off of balances. Okay, great. Thanks. Thank you again. As a reminder, that is star one.

Bose George: Perfect Great. Thanks, and then on investment income.

Bose George: Was the lower <unk>, just on lower escrow balances as the decline was just a little more pronounced than we've seen in the past.

Bose George: Yes, that's right because it was it was primarily off of balances.

Bose George: Okay, great. Thanks.

Bose George: Okay.

Speaker Change: Thank you again as a reminder that is star one if you would like to ask a question. Our next question will come from John Campbell with Stephens, Inc. Your line is open.

John Campbell: If you would like to ask a question, our next question will come from John Campbell with Stevens Inc. Your line is open. Hey, guys, good morning. Good morning, John. Good morning, Joe. Hey, so David on the low 4% loss provision rate for the full year. You know, you guys are at three and a half this quarter, you'd have to see a pretty big step up, you know, throughout the balance of the year. It seems like you've been, you know, being pretty cautious or conservative in the commentary about loss provision rate over the last couple quarters.

John Campbell: Hey, guys good morning.

Speaker Change: Good morning, John Good morning, Jeff.

John Campbell: So David on the.

John Campbell: The low 4% loss provision rate for the full year.

Speaker Change: You guys are at $3 five this quarter you'd have to see a pretty big step up.

John Campbell: Throughout the balance of the year.

John Campbell: It seems like you've been.

John Campbell: Being pretty cautious.

Speaker Change: Conservative on the commentary about loss provision rate over the last couple of quarters. So I'm. Just curious if there is something that you are potentially seeing or is that just an air of conservatism could you kind of continuing just kind of any kind of commentary there and what you maybe you view as the key swing factors this year.

David Hisey: So I'm just curious if there is something that you are potentially seeing or that's just an error of conservatism that you're kind of continuing, just kind of any kind of commentary there and what you maybe view as the key swing factors this year? Yeah, no, John, it's a great question. And I mean, we really, you know, are closely focused on some of the loss development trends. And what you always have to be monitoring is sort of the large claims that could be out there. And keep in mind, our mix of international business relative to revenue is a little bit bigger than our competitors and that international tends to have a higher claim rate and can be more volatile.

Speaker Change: Yes, no John it's a great question I mean, we really are closely focus on some of the loss development trends and what you always have to be monitoring as sort of the large claims that could be out there and keep in mind, our mix of international business relative to revenues, a little bit bigger than our competitors in the international.

Speaker Change: <unk> tends to have a higher claim rate and can be more volatile. So I would say, it's mainly the volatility of our mix of business.

David Hisey: So I would say it's mainly the volatility of our mix of business. And, you know, if that breaks for us, we'll see sort of what we saw in the first quarter. And if it breaks against us, it gets to be a little higher. Yeah, so I wouldn't say John, there's any trend that we see that's worse. it's just that we tend to be conservative on this. But there's nothing developing that we see that's, you know, different than what's bad. Yeah, that's that's exactly I appreciate that.

Speaker Change: And.

Speaker Change: If that breaks for us, we'll see sort of what we saw in the first quarter.

Speaker Change: It breaks against us it gets to be a little higher so I wouldn't say Jonathan is any trend that we see thats worse.

Speaker Change: It's just that we tend to be conservative on this.

But theres nothing developing that we see thats different than whats been attached.

Speaker Change: If that's really your question yes.

Speaker Change: Yes, that's exactly I appreciate that and then David I apologize I apologize if I missed this during your prepared remarks on the fee per file, but what was the growth out of just residential purchase fee profile.

John Campbell: And then, David, I apologize if I missed this during your prepared remarks on the fee profile, but what was the growth out of just residential purchase fee profile? Well, that was really what drove the overall increases that we just had out of our total mix of orders like others was others were down and that tends to bring down fee profile, whereas the purchase was a higher percentage. And so it's just a higher percentage of that purchase mix that caused the fee profile to go up. Okay, and I don't know if you isolate it just to just the residential purchase fee profile.

Speaker Change: Well that was really what drove the overall increase is that we just had out of our total mix of orders like others was others were down and that tends to bring down fee per file, whereas the purchase was a higher percentage and so it's just a higher percentage of that purchase mix that.

Speaker Change: Cause the fee per file to go up.

Speaker Change: Okay, and I don't know if you isolate it just to just a residential purchase fee profile I'm just the reason I'm asking is one of your competitors.

John Campbell: I'm just the reason I'm asking is one of your competitors reported, you know, obviously last night as well. And they had I think 8% growth out of resi purchase fee profile. That's obviously much faster than national trends. I was curious if you guys are kind of seeing that same dynamic. Well, our residential fee profile was up 13 from $3,300 to $2,900. And so Yeah, I mean, I think the other thing relative to that person you're referencing is that there's probably a higher California mix of business of fee profiles naturally going to be a little higher there.

Speaker Change: Reported obviously last night as well and they had I think 8% growth out of resi purchase fee profile. That's obviously much fashion the national trends I was curious if you guys are kind of seeing that same dynamic.

Speaker Change: Well our residential fee per file was up 13 from 3300 20 <unk> hundred.

Speaker Change: So.

Speaker Change: Yes, I mean, I think the other thing relative to that person you're referencing is that there's probably a higher California mix of business a fee per file is naturally going to be a little higher there.

John Campbell: Okay, so just mainly regional mix shift. Right, I mean, transaction size there, you know, is bigger in California than most markets. So you could see some of that dynamic.

Speaker Change: Okay. So just mainly regional mix shift.

Speaker Change: Right I mean, its transaction size there.

Speaker Change: Here in California, and in most markets.

Speaker Change: Could see some of that dynamic.

John Campbell: Okay, and then last one for me, obviously, I think that the Texas Department of Insurance, I mean, that that was a pretty surprising cut, I think a 10% cut the fees starting July 1. You guys, I think in your filings, maybe said 15% or so of total revenues tied to Texas. So I'm curious about your first your initial impressions of that fee cut, whether you can work around that anyway, and then kind of broad strokes expectations for the impact on the business. Yeah, so a couple points on that. So we are it is being challenged.

Speaker Change: Okay, and then last one for me, obviously, I think that the Texas Department of insurance that was it.

Speaker Change: Pretty surprising I think a 10% cut the fees.

Speaker Change: Starting July one.

Speaker Change: You guys I think in your filings, maybe you said, 15% or so of total revenues tied to Texas. So I'm curious about.

Speaker Change: First your initial impressions of that fee cut whether you can work around that any way and then kind of broad strokes expectations for the impact on the business.

Speaker Change: Yes, so a couple of points in that so it is being challenged.

Frederick Eppinger: And, you know, we think it's appropriate to be challenged. because of just the odd timeframes we're talking about, right? So, you know, you've got timeframes, the greatest years in history and the worst years in history. And so, to me, that the level of the recommendation is inappropriate and would put would actually challenge some agency. So we feel pretty good about that challenge, and we think that there could be some adjustment. But we've kind of planned for that, and there are things, obviously, you can do to manage through that. There are other fees and service fees around those transactions, etc., that you can try to manage, too.

Speaker Change: And we think it's appropriate to be challenged.

Speaker Change: Because of just the odd.

Speaker Change: Frames, we're talking about right so.

Speaker Change: He got timeframe the greatest years in history in the worst years in history, and so to me that the level of the recommendation is inappropriate and would put actually challenge some agents.

Speaker Change: Existence, frankly, and so we feel pretty good about that challenge and we think there could be some.

Speaker Change: Adjustment, but we have we've kind of planned for that and there are things.

Speaker Change: Obviously, you can do to manage through that.

Speaker Change: Is it just there are other fees and service fees around those transactions et cetera.

Speaker Change: Try to manage to and so we haven't built in our plan and we're going to manage to it but we are as I say it's.

Frederick Eppinger: And so we have it built in our plan, and we're going to manage to it, but we are, as I say, There's a lot of things going on in the process because it kind of surprised most people in the market. I mean, it doesn't really make sense given the We tend to agree.

Speaker Change: There's a lot of things going on in the process because it kind of surprised.

Speaker Change: Most people in the market I mean, it doesn't really make sense given the current environment.

Speaker Change: Great. Thank you.

Unknown Executive: Thank you.

Speaker Change: Yes.

Unknown Executive: Once again, that is Star 1.

Speaker Change: Once again that is star one if you would like to ask a question again. This is a final reminder, please press star one now to join the queue.

Unknown Executive: If you would like to ask a question, again, this is a final reminder, please press Star 1 now to join the queue.

Speaker Change: Yeah.

Speaker Change: Yeah.

Unknown Executive: Thank you.

Speaker Change: Thank you we do have a follow up from Bose George with <unk> W. Your line is open.

Bose George: We do have a follow-up from Bose Joyce with KBW. Your line is open. Hey, guys. Thanks. Just a couple of little follow ups. The you know, the other orders line item obviously bounces around a lot. Is there any good way for us to think about, you know, where that could go this year? That business is going to be a tad better this year than last. So you will see continued kind of choppy.

Bose George: Hey, guys. Thanks, just a couple of little follow ups.

Speaker Change: The other line item, obviously bounces around a lot.

Speaker Change: Is there any good way for us to think about where that could go this year.

Speaker Change: Yes, it is very biopsy, because it's kind of batch transactions in VIX indications and stuff and we believe that it will be a tad better this year than last year, but its balance sheet right.

Speaker Change: Timing of those transactions.

Speaker Change: Occurs and I know, we have one transaction that slipped from last quarter to the next quarter. So.

Speaker Change: It's going to continue to be like that but I believe.

Speaker Change: That business is going to be a tad better.

Speaker Change: This year than last so you will see continued kind of choppiness in the numbers okay.

Bose George: Okay, and remember, Bose, there's two principal businesses there. There's the, you know, the reverse business and then there's the institutional business that Fred was talking about. And so both of those businesses can have volatility reverse based on capital market situations. And then, as Fred said, the big bulk SFR and build a rent kind of things on the institutional side. Okay, great. That's helpful. Thanks.

Speaker Change: Proposal two principal businesses there there is the.

Speaker Change: <unk> business and then there is the institutional business that Fred was talking about and so both of those businesses can have volatility reverse based on capital market situations and then.

Speaker Change: Fred said, the big bulk <unk> and build a rate cut of things on the institutional side.

Speaker Change: Yes, both businesses decide.

Speaker Change: Like very well we're leaders in both of those businesses, we're positioned well.

Speaker Change: And just kind of the strategic aspect of both of those as those businesses have grown.

Speaker Change: We have not only held share but grow we'd share.

Speaker Change: So I feel really good about those businesses in the future as well.

Speaker Change: Okay, Great. That's helpful. Thanks, and then just actually switching over to the real estate solutions.

Bose George: And then just actually switching over to the real estate solutions. I mean, in terms of the margin, in terms of the margin, So Bose, this one, again, is my fault, I think, for not being as articulate at our last earnings call. Essentially, that business, as you know, last year, particularly IR, forward research, has grown at about 40 plus percent and continues to be kind of a very robust growth. And we've got a lot of new clients. And what happened at the end of the year was a very robust cost increase to our data, you know, the credit FICA stuff.

Speaker Change: Margin.

Speaker Change: In terms of trying to improve.

Speaker Change: So this one again, it's my fault I think for not being as articulate at our last earnings call.

Speaker Change: Essentially that business as you know last year, particularly IR.

Speaker Change: From our research is growing at about 40 plus percent and continues to be kind of a very robust.

Speaker Change: Robust growth and we've got a lot of new clients and what happened at the end of the year with a very robust cost increase to our data.

Speaker Change: FICO stuff.

Frederick Eppinger: And we had to we had to work those rate increases into our contract. And we started in January doing that and, you know, finished up kind of around April. So that that's a kind of a significant hole in kind of both kind of understated our revenue growth, obviously, because you're building it into the contract. And it overstates our expense as we kind of carry those expenses before they're into the contracts. That's why we say it's just a temporary thing. It's just a timing thing where we'll get that bounce right back up for lender services. We'll be in that 11 and a half range and we'll end up the year the same as we did last year if the market stays the same in that 11 and a half, 12 range of margin.

Speaker Change: And we had to we had to work those rate increases into our contracts and we started in January.

Speaker Change: With that and finished up.

Speaker Change: And around the April so.

Speaker Change: That's a kind of a.

Speaker Change: Difficult hole.

Speaker Change: And kind of both.

Speaker Change: Understated our revenue growth, obviously, because you're building it into the contract and it overstates our expense as we kind of carry those expenses before there into the contracts.

Speaker Change: That's why we say, it's just a temporary thing is just the timing thing, where we will get that that'll bounce right back up for Ledger services will be in that 11, five range and we will end up the year. The same as we did last year if the market stays the same.

Speaker Change: 11, 12 range of margin and again the team has done a wonderful job.

Frederick Eppinger: And again, the team has done a wonderful job. We've we've built all those into the contracts with our clients. It actually created some value based pricing so that we don't have this kind of, kind of challenge next year. So I feel really good about that business. And, and again, it's You know, I feel like that's going to be a sustainable growth business for a while for us with nice margins. The other thing I would tell, just like our other business, when I talk about in a normal market, five million purchase, we'll be at 12%, you know, kind of margin business.

We've built all of those into the contracts with our clients.

Speaker Change: We've actually created some value based pricing. So that we don't have this kind of kind of just challenged next year. So I feel really good about that business and again, it's up.

Speaker Change: I feel like that's going to be a sustainable growth business for a while for us with dice margins. The other thing I would tell you just like our other business when I talk about in a normal market 5 billion purchase will be at 12% kind of margin business that business is similar because the appraisal business. The notary business all of those businesses are.

Frederick Eppinger: That business is similar because the appraisal business, the notary's business, all of those businesses are affected by the cycle. And so while we're, you know, say 11 and a half, 12 now, with the market, it's normal. That's going to go to mid-teen cash margins and going to be from gap, total gap, probably in the 12, just like the rest of our businesses. So it's a good business now, and it's going to be even better as the market improves. And I don't see anything, this was just a timing issue of us working through getting the stuff into the contracts versus any significant change in margin.

Speaker Change: <unk> by the cycle, and so well, where say 11 512 now with the virus. It's normal that is going to go to a mid teen.

Speaker Change: <unk> cash margins and going to be from a GAAP total GAAP probably at the 12, just like the rest of our businesses. So it's a good business and it's got to be even better as the market improves and I don't see anything.

Speaker Change: It was just a timing issue of us working through getting the stuff into the cloud tracks versus any significant.

Speaker Change: Significant change in margin expectations.

Bose George: Okay, great. That's helpful. Thanks a lot. Thank you.

Speaker Change: Okay, Great. That's helpful. Thanks, a lot.

Speaker Change: Thank you. It appears we have no further questions at this time I will now turn the program back over to our presenters for any additional or closing remarks.

Unknown Executive: It appears we have no further questions at this time.

Unknown Executive: I will now turn the program back over to our presenters for any additional or closing remarks. I want to thank everybody for their interest in Stewart and thank you for joining the call. Thank you, ladies and gentlemen.

Speaker Change: I want to thank everybody for their interest in Stuart and thank you for joining the call.

Thank you ladies and gentlemen. This concludes today's event you may now disconnect.

Unknown Executive: This concludes today's event.

Unknown Executive: You may now disconnect.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Hum.

Speaker Change: Okay.

Speaker Change: Hum.

Speaker Change: [music].

Speaker Change: Oh.

Speaker Change: Uh-huh.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change:

Speaker Change: Sure.