Stewart Information Services Q4 2025 Stewart Information Services Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Stewart Information Services Corp Earnings Call
Speaker #3: Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press star zero and a member of our team will be happy to help you.
Speaker #3: Please stand by. Your meeting is about to begin. Hello, and thank you for joining the Stewart Information Services Corporation's fourth-quarter and full-year 2025 earnings call.
Operator: Hello, and thank you for joining the Stewart Information Services Corporation's Q4 and full year 2025 earnings call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask a question 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 today's conference over to Kat Bass, Director of Investor Relations. Please go ahead.
Operator: Hello, and thank you for joining the Stewart Information Services Corporation's Q4 and full year 2025 earnings call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask a question 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 today's conference over to Kat Bass, Director of Investor Relations. Please go ahead.
Speaker #3: At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask a question session. during the question and answer that time.
Speaker #3: 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 today's conference over to Relations.
Speaker #3: Kathryn Bass, Director of Investor Please go ahead.
Speaker #2: Good morning, and thank you for joining us today for Stewart's fourth-quarter and full-year
David Hisey: Good morning, and thank you for joining us today for Stewart's Q4 and full year 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 Hisey. To listen online, please go to the stewart.com website to access the link for this conference call. 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 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.
Q4 2025 Stewart Information Services Corp Earnings Call
Kat Bass: Good morning, and thank you for joining us today for Stewart's Q4 and full year 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 Hisey. To listen online, please go to the stewart.com website to access the link for this conference call. 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 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.
Speaker #1: 2025 earnings conference call . We will be discussing results that were released after the yesterday me Joining today are CEO Fred close . Eppinger CFO and to listen David Hisey please go to online , website of the close .
Speaker #1: today are Joining me CEO Fred the CFO Eppinger and David Hisey . To listen to the please go . Com access the link for this conference call .
Speaker #1: This call may website to looking contain statements that involve a conference uncertainties . Please refer to the press release and other filings company's with the SEC for a discussion of the uncertainties that risks and could cause our actual results to differ materially During our call , we will discuss some non-GAAP for measures reconciliation of non-GAAP measures .
Speaker #1: to the refer in Please appendix release , which is website at earnings today's available on . now turn
Kathryn Bass: Thank you for joining us today for Stewart's Fourth Quarter and Full Year Earnings Conference Call. Yesterday, we released the financial results for the fourth quarter and full year, which David will review with you shortly. I'd like to open today's call with some remarks on the overall progress we made in 2025 and then shifting to market conditions a little bit, and then our fourth quarter results and strategic outlook for each of the businesses. We are very pleased with the progress we made in 2025, strengthening and growing the earnings power of all our businesses. While commercial markets saw some awakening in 2025, we remained in a multi-year slump for existing home sales, with two years in a row of the lowest existing home sales in 30 years.
Fred Eppinger: Thank you for joining us today for Stewart's Fourth Quarter and Full Year Earnings Conference Call. Yesterday, we released the financial results for the fourth quarter and full year, which David will review with you shortly. I'd like to open today's call with some remarks on the overall progress we made in 2025 and then shifting to market conditions a little bit, and then our fourth quarter results and strategic outlook for each of the businesses. We are very pleased with the progress we made in 2025, strengthening and growing the earnings power of all our businesses. While commercial markets saw some awakening in 2025, we remained in a multi-year slump for existing home sales, with two years in a row of the lowest existing home sales in 30 years.
Speaker #1: Joining us on the call, Fred.
Speaker #1: over to
Speaker #2: for today
Speaker #2: Stewart's fourth quarter and full for Thank you earnings conference call .
Speaker #2: released the financial the fourth quarter and for full year , which David will review with you shortly . I'd like to some call with remarks open today's on the we made progress in before shifting , and then shifting to market And .
Speaker #2: conditions a strategic and outlook for each of the businesses 25 and We are very pleased with the progress we made in 25 , strengthening the .
Speaker #2: power of all earnings our businesses , while markets saw awakening 25 , we remained commercial in in a multiyear slump for existing home sales row of the lowest , with home sales existing 30 years .
Speaker #2: power of all earnings our businesses , while markets saw awakening 25 , we remained commercial in in a multiyear slump for existing home sales row of the lowest , with home sales existing in market Despite this , headwind , we grew two years in a revenues by 18% .
Kathryn Bass: Despite this market headwind, we grew revenues by 18%, net income by 48%, and adjusted EPS by 46% full year 2025. That growth has allowed us to gain share and improve margins. We grew the company's adjusted pre-tax margin to 6.8%, up from 5.8% year prior. We have created momentum for the company through continued execution of our target growth plans and have strengthened our position in each business. We delivered more distinctive products and services for our customers and made good progress on becoming a destination for the best talent in the industry. At the end of 2025, we also rounded out our lender services portfolio with the acquisition of Mortgage Contracting Services, also known as MCS. In 2025, virtually all of our growth was organic, but we will continue to set our sights on additional profitable growth through targeted acquisitions.
Fred Eppinger: Despite this market headwind, we grew revenues by 18%, net income by 48%, and adjusted EPS by 46% full year 2025. That growth has allowed us to gain share and improve margins. We grew the company's adjusted pre-tax margin to 6.8%, up from 5.8% year prior. We have created momentum for the company through continued execution of our target growth plans and have strengthened our position in each business. We delivered more distinctive products and services for our customers and made good progress on becoming a destination for the best talent in the industry. At the end of 2025, we also rounded out our lender services portfolio with the acquisition of Mortgage Contracting Services, also known as MCS. In 2025, virtually all of our growth was organic, but we will continue to set our sights on additional profitable growth through targeted acquisitions.
Speaker #2: Net income by 48% , and adjusted by 46% . Full That year 25 . growth has allowed us to gain share and improve We margins .
Speaker #2: adjusted grew the margin to pre-tax 6.8 , up from 5.8 . Years prior . We have created momentum for the company of our continued growth execution strengthened position in our business .
Speaker #2: We each delivered more distinctive products and services for customers and made good progress on a our the best becoming destination for talent in the industry .
Speaker #2: At the end of 25 , we also out our rounded lender portfolio services with the acquisition of Mortgage contracting Services , also known as mix and , in 2025 , virtually growth all of our was organic .
Kathryn Bass: We enhanced our financial flexibility to capitalize on potential opportunities in the near term by successfully upsizing our credit facility by $100 million to $300 million and executing an equity offering of 2.2 million shares of stock, raising $140 million to provide additional dry powder. In 2025, we also increased our dividend for the fifth year in a row, moving from $2 to $2.10 a share annually. Moving toward some highlights for our businesses. In 2025, we grew all domestic commercial revenues by 34% year-over-year. This growth can be attributed to continued success in the expansion of our National Commercial Services business and growth in our Small Commercial Growth Initiative in our Direct Operations business unit. Our National Commercial Services business grew 43% year-over-year, with significant growth across all of our asset classes.
Fred Eppinger: We enhanced our financial flexibility to capitalize on potential opportunities in the near term by successfully upsizing our credit facility by $100 million to $300 million and executing an equity offering of 2.2 million shares of stock, raising $140 million to provide additional dry powder. In 2025, we also increased our dividend for the fifth year in a row, moving from $2 to $2.10 a share annually. Moving toward some highlights for our businesses. In 2025, we grew all domestic commercial revenues by 34% year-over-year. This growth can be attributed to continued success in the expansion of our National Commercial Services business and growth in our Small Commercial Growth Initiative in our Direct Operations business unit. Our National Commercial Services business grew 43% year-over-year, with significant growth across all of our asset classes.
Speaker #2: will But we continue to set our sights on additional profitable targeted And on to opportunities acquisitions . we capitalize financial potential in the term by successfully near credit enhanced our facility by 100 million to 300 million and an equity upsizing our offering of 2.2 million shares of stock , raising flexibility additional dry 140 million to provide powder executing also increased our dividend for the fifth year in a row , moving from $2 to $2.10 a share annually .
Speaker #2: Moving towards some highlights for our businesses in We grew all 2025 . commercial domestic revenues by 34% year over year . This growth can be attributed to continued success in the expansion of national commercial our services business and growth in commercial our small Growth initiative .
Speaker #2: In our direct operations business unit . Our commercial Services national business grew 43% year over year , with significant growth across all of our asset classes and our real solutions business .
Kathryn Bass: In our real estate solution business, we grew revenues by 22% year-over-year and continue to have a very robust pipeline of opportunities. We have made significant progress on our expansion of this business line since beginning the journey in the late 2019 and look forward to seeing how recently acquired MCS will expand our breadth and client coverage for top lenders and services. Our agency services business also made strong progress in 2025, growing revenue by 21% overall. Our strategy to drive more commercial through our agents was also very successful, delivering 34% growth for the year. Now I'd like to turn to the broader housing environment and our fourth quarter results. In the fourth quarter, we were able to maintain and, in most of our businesses, improve on our momentum.
Fred Eppinger: In our real estate solution business, we grew revenues by 22% year-over-year and continue to have a very robust pipeline of opportunities. We have made significant progress on our expansion of this business line since beginning the journey in the late 2019 and look forward to seeing how recently acquired MCS will expand our breadth and client coverage for top lenders and services. Our agency services business also made strong progress in 2025, growing revenue by 21% overall. Our strategy to drive more commercial through our agents was also very successful, delivering 34% growth for the year. Now I'd like to turn to the broader housing environment and our fourth quarter results. In the fourth quarter, we were able to maintain and, in most of our businesses, improve on our momentum.
Speaker #2: We grew revenues by 22% year over year, and have a robust pipeline of opportunities. We have made significant progress on our line of business from our beginning.
Speaker #2: Continued business also made strong for our progress in '25, growing revenue by 21% overall, and our strategy to drive more through our commercial was also very successful.
Speaker #2: The journey in the late since then, and look forward to seeing how the recently acquired mix will expand the breadth and coverage of our top lenders and services client.
Speaker #2: Delivering 34% growth for the year . Now , turn to the broader housing and our fourth quarter environment results . In the fourth I'd like to to maintain and in quarter , we most of our were able businesses improve on our momentum .
Kathryn Bass: For Q4, we grew revenue 20% and adjusted net income by 52% compared to Q4 2024. This growth is meaningful for us, given Existing Home Sales grew in the quarter just under 1% in the same time frame. While existing home sales purchases improved very slightly in the quarter, we will see signs for cautious optimism for housing in 2026. In Q4, 30-year mortgage rates hovered between 6.1% and 6.35% range, showing a bit more stability than more recent short-term trends. We have also seen a shift in the composition of mortgage holders, with the population of mortgage holders with rates of 6% or higher exceeding the population of those below 3%.
Fred Eppinger: For Q4, we grew revenue 20% and adjusted net income by 52% compared to Q4 2024. This growth is meaningful for us, given Existing Home Sales grew in the quarter just under 1% in the same time frame. While existing home sales purchases improved very slightly in the quarter, we will see signs for cautious optimism for housing in 2026. In Q4, 30-year mortgage rates hovered between 6.1% and 6.35% range, showing a bit more stability than more recent short-term trends. We have also seen a shift in the composition of mortgage holders, with the population of mortgage holders with rates of 6% or higher exceeding the population of those below 3%.
Speaker #2: For the fourth grew quarter , we 20% and revenue income adjusted net by 52% compared to the quarter fourth of 20 . For This growth us meaningful for is the us , given home sales grew existing quarter , just under 1% .
Speaker #2: time existing home sales , while In purchases slightly in the quarter We . will see cautious signs for cautious signs for , optimism for improved very in 26 .
Speaker #2: time existing home sales , while In purchases slightly in the quarter We . will see cautious signs for cautious signs for , optimism for .
Speaker #2: In the fourth quarter , 30 year mortgage rates hovered see between We 6.1 and 6.35 . Range , showing a bit more stability than more recent short term trends .
Speaker #2: have We a shift in the also seen composition of mortgage holders , with the population of mortgage holders with rates 6% or of higher , exceeding the population of those below 3% .
Kathryn Bass: This implies that we are seeing people continue to buy homes for life events and that the market is beginning to accept we are unlikely to return to the 3% rates in the future. In the beginning of 2026, we have seen rates remain in the low 6% range, and housing inventory has continued to be a little bit better than last year, and it was up 8% for the quarter compared to Q4 2024. Looking forward, we believe we have rounded the corner and are heading in the right direction to get back to a more normalized Existing Home Sales environment in the coming years. We do not anticipate Existing Home Sales getting all the way back to their long-term historic average of 5 million units in 2026, but we believe we will begin to see modest market improvements in 2026.
Fred Eppinger: This implies that we are seeing people continue to buy homes for life events and that the market is beginning to accept we are unlikely to return to the 3% rates in the future. In the beginning of 2026, we have seen rates remain in the low 6% range, and housing inventory has continued to be a little bit better than last year, and it was up 8% for the quarter compared to Q4 2024. Looking forward, we believe we have rounded the corner and are heading in the right direction to get back to a more normalized Existing Home Sales environment in the coming years. We do not anticipate Existing Home Sales getting all the way back to their long-term historic average of 5 million units in 2026, but we believe we will begin to see modest market improvements in 2026.
Speaker #2: This we are implies that seeing continue to buy and sell for people and that the beginning to market is accept we are unlikely to return to the life 3% rates in the events , future .
Speaker #2: At the beginning of 26 , we have seen rates remain in the low 6% range and housing inventory has continued to be a little bit better than year , and it was up last 8% for the quarter fourth quarter of 24 .
Speaker #2: compared to Looking forward , we believe we have rounded the and are heading corner direction to get back to more normalized existing in the home environment sales coming years .
Speaker #2: We do not anticipate existing getting back to their home sales historic average of all the way units in 26 , but we believe we long term will begin to see market modest improvements in 26 .
Kathryn Bass: Our Direct Operations business unit grew 3%, I'm sorry, 8%, in Q4 compared to the same period last year, which we feel is strong given that this business is the most impacted by the effects of the challenged residential housing market. We remain focused on prioritizing share gains in target MSAs, both organically and inorganically, and we continue to make strides in our strategic initiative to grow our Main Street commercial business that runs through our direct office. Our Main Street commercial business grew 17% for the full year and 16% in Q4 in Direct Operations. We continue to expect a portion of our future growth in this business to come from targeted acquisitions, and we maintain a growing pipeline of targets that should begin to develop as the market signals a return to normal levels. Our National Commercial Services business delivered another solid quarter of growth.
Fred Eppinger: Our Direct Operations business unit grew 3%, I'm sorry, 8%, in Q4 compared to the same period last year, which we feel is strong given that this business is the most impacted by the effects of the challenged residential housing market. We remain focused on prioritizing share gains in target MSAs, both organically and inorganically, and we continue to make strides in our strategic initiative to grow our Main Street commercial business that runs through our direct office. Our Main Street commercial business grew 17% for the full year and 16% in Q4 in Direct Operations. We continue to expect a portion of our future growth in this business to come from targeted acquisitions, and we maintain a growing pipeline of targets that should begin to develop as the market signals a return to normal levels. Our National Commercial Services business delivered another solid quarter of growth.
Speaker #2: Our direct operations business grew 3% . unit Sorry , 8% in the fourth quarter compared to the same period last , which we feel is year strong .
Speaker #2: Given that this business is the most impacted by the effects of the challenge . Residential housing We market . focused on remain prioritizing share gains in MSAs , target organically and inorganically , and we continue to make strides in our strategic initiative to grow our mainstream commercial business that runs through our direct our Main Street office , business grew year , and 16% in the fourth quarter .
Speaker #2: In direct, 17% for the full operations, we continue to expect our future growth in a portion of this business to come from targeted, and we maintain a growing pipeline of development as they begin to—that should target market return signals, a normal to levels.
Kathryn Bass: Success for this group is largely due to increased coverage in a number of geographic markets and asset classes, expansion of our team, and our ability to underwrite larger transactions over the past several years given our improved surplus. We are focused on continuing to invest in best-in-class talent to grow share, as relationships are especially important in this space and will allow us to expand on our network and deepen our expertise. Because of the work we have done to continually improve this unit, in Q4, we benefited from underwriting some sizable transactions. We grew National Commercial Services business unit by 49% in the quarter. We are pleased with the progress here, and it really represents the improved competitive position we have built for ourselves in the commercial market.
Fred Eppinger: Success for this group is largely due to increased coverage in a number of geographic markets and asset classes, expansion of our team, and our ability to underwrite larger transactions over the past several years given our improved surplus. We are focused on continuing to invest in best-in-class talent to grow share, as relationships are especially important in this space and will allow us to expand on our network and deepen our expertise. Because of the work we have done to continually improve this unit, in Q4, we benefited from underwriting some sizable transactions. We grew National Commercial Services business unit by 49% in the quarter. We are pleased with the progress here, and it really represents the improved competitive position we have built for ourselves in the commercial market.
Speaker #2: Our national services commercial business delivered solid another growth of acquisitions this group quarter largely due to increased a number of markets . and Success for classes .
Speaker #2: our team Expansion of ability to , and our underwrite larger transactions . Over geographic the past several years . improved Given our , we are focused on surplus continuing to invest in best in class grow , share .
Speaker #2: As relationships talent to especially important in this space and will allow us to expand on our network and deepen our expertise . Because of the work we have done to continually improve this unit .
Speaker #2: In the fourth quarter , we underwriting some sizable transactions . We grew national commercial service business unit by 49% in the quarter . We are pleased progress here with the is really represents the improved competitive position we have built for ourselves in the commercial market .
Kathryn Bass: Energy continues to be a point of strength, but for the year, energy growth was less than overall growth in this sector. In 2025, energy grew 34% for the year, and all other classes grew 46%. We remain focused on growing all asset classes and target geographies to expand our overall footprint. Our agency services business had another strong quarter, with revenues up 20% year-over-year for the quarter. This amount of growth is strong when considering that the overall housing market is near flat to last year, which affects our agency partners. We remain focused on growing this business through the expansion of wallet share with existing agents and on onboarding new agents in all states, with an emphasis on 15 states that are most attractive from an agency perspective.
Fred Eppinger: Energy continues to be a point of strength, but for the year, energy growth was less than overall growth in this sector. In 2025, energy grew 34% for the year, and all other classes grew 46%. We remain focused on growing all asset classes and target geographies to expand our overall footprint. Our agency services business had another strong quarter, with revenues up 20% year-over-year for the quarter. This amount of growth is strong when considering that the overall housing market is near flat to last year, which affects our agency partners. We remain focused on growing this business through the expansion of wallet share with existing agents and on onboarding new agents in all states, with an emphasis on 15 states that are most attractive from an agency perspective.
Speaker #2: Energy be a continues to but for point of the year , energy growth was overall than growth . In this sector . In 25 , energy grew 34% for the year , other and all classes grew 46% .
Speaker #2: remain focused We on growing all asset classes and target yard fees to expand our overall footprint . Our agency services business had another strong quarter , with revenues up 20% year over year for the quarter .
Speaker #2: This amount of growth is strong when considering overall that the housing market is near flat to last year, which affects our agency partners. We remain focused on growing this on through the wallet share with expansion of existing and business new agents in all, with an emphasis on states most attractive from an agency perspective.
Kathryn Bass: We are seeing sustained growth year-to-date agency across all our target markets, and most notably, Florida, Texas, and New York. Our commercial initiative with agents has also been a big part of our success as we continue to build on the momentum we have had in recent years for our agents to differentiate our service and better our offerings to our agent partners. We saw 34% growth in this important initiative in 2025. Our Real Estate Solutions business grew by 29% in Q4 compared to last year. We also improved our margin in Q4 over last year, but our full year margin of 10.1% was a bit short of our target for the full year in 2025 due to some isolated pricing issues and expansion costs.
Fred Eppinger: We are seeing sustained growth year-to-date agency across all our target markets, and most notably, Florida, Texas, and New York. Our commercial initiative with agents has also been a big part of our success as we continue to build on the momentum we have had in recent years for our agents to differentiate our service and better our offerings to our agent partners. We saw 34% growth in this important initiative in 2025. Our Real Estate Solutions business grew by 29% in Q4 compared to last year. We also improved our margin in Q4 over last year, but our full year margin of 10.1% was a bit short of our target for the full year in 2025 due to some isolated pricing issues and expansion costs.
Speaker #2: We are seeing sustained agents data across all our Agency target markets, and most notably, 15 states that are Texas and New York.
Speaker #2: Our initiative commercial with agents have also been a big our success as we continue to build part of we have had momentum in recent years for our agents to differentiate our service better and our our agent offerings to partners .
Speaker #2: Our initiative commercial with agents have also been a big our success as we continue to build part of we have had momentum in recent years for our agents to differentiate our service better and our our agent offerings to we saw growth in this important initiative And in 34% 2025 .
Speaker #2: on the Our real estate solutions business grew by quarter , compared to last year . We also improved 29% in the fourth margin in the fourth quarter over last year , but our full year margin of 10.1 was a short of target for our the full year of 25 due to some isolated pricing and issues expansion costs for the full year we fully expect 26 , improve to and margins deliver in the low teen range for this segment and expect that our recent acquisition of help us MCs will improve our historical margin outlook .
Speaker #2: on the Our real estate solutions business grew by quarter , compared to last year . We also improved 29% in the fourth margin in the fourth quarter over last year , but our full year margin of 10.1 was a short of target for our the full year of 25 due to some isolated pricing and issues expansion costs for the full year we fully expect 26 , improve to and margins deliver in the low teen range for this segment and expect that our recent acquisition of help us MCs will improve our historical margin bit acquisition of MCs , a property preservation service provider , allowing us to expand our default services offering and cross and cross-sell expanded across our product lines .
Kathryn Bass: For the full year 2026, we fully expect to improve margins and deliver in the low-teens range for this segment and expect that our recent acquisition of MCS will help us improve our historical margin outlook. As mentioned in late December, we closed our acquisition of MCS, a property preservation service provider, allowing us to expand our default services offering and cross-sell customers across our expanded product lines. We expect continued progress in this business line as the market improves. Moving to our international operations, we are focused on broadening our geographic presence and depth in Canada, increasing our commercial penetration, and expanding our presence in the refi market. In Q4, we grew our non-commercial revenue by 20% for the year, and we grew total international revenue by 11%. We believe we can build on our strong position in these markets and continue to grow share.
Fred Eppinger: For the full year 2026, we fully expect to improve margins and deliver in the low-teens range for this segment and expect that our recent acquisition of MCS will help us improve our historical margin outlook. As mentioned in late December, we closed our acquisition of MCS, a property preservation service provider, allowing us to expand our default services offering and cross-sell customers across our expanded product lines. We expect continued progress in this business line as the market improves. Moving to our international operations, we are focused on broadening our geographic presence and depth in Canada, increasing our commercial penetration, and expanding our presence in the refi market. In Q4, we grew our non-commercial revenue by 20% for the year, and we grew total international revenue by 11%. We believe we can build on our strong position in these markets and continue to grow share.
Speaker #2: expect to We continued progress in this business line as the market improves . Moving to our international operations . We are focused broadening our on presence geographic and depth Canada , increasing our commercial penetration and expanding refi our presence in the market .
Speaker #2: In the fourth quarter , grew our non-commercial we revenue by in year , 20% for the and we total international revenue We believe we can build on our position in these markets strong by 11% .
Kathryn Bass: Overall, we remain dedicated to strengthening our company throughout geography, customer, and channel expansion in each business to set the company up for continued long-term success. I'm proud of the work we did in 2025 to further the company and look forward to seeing how we can capitalize on the potentially improving market conditions and opportunities in 2026. I want to thank our customers and our agent partners for their continued trust. We are committed to doing our best to serve you with excellence. And finally, to the Stewart team, I want to thank you for the loyalty and continued dedication to excellence. We are committed to being a destination for best-in-class talent. This year, I had the opportunity to meet with thousands of employees across many different cities in the US and Canada as part of my year-long roadshow.
Fred Eppinger: Overall, we remain dedicated to strengthening our company throughout geography, customer, and channel expansion in each business to set the company up for continued long-term success. I'm proud of the work we did in 2025 to further the company and look forward to seeing how we can capitalize on the potentially improving market conditions and opportunities in 2026. I want to thank our customers and our agent partners for their continued trust. We are committed to doing our best to serve you with excellence. And finally, to the Stewart team, I want to thank you for the loyalty and continued dedication to excellence. We are committed to being a destination for best-in-class talent. This year, I had the opportunity to meet with thousands of employees across many different cities in the US and Canada as part of my year-long roadshow.
Speaker #2: continue to grow , share . Overall , we remain dedicated to strengthening our company geography throughout , customer and channel expansion in each business to set the up for continued long term success .
Speaker #2: proud of the I'm did in 25 to work we further the company and look forward to seeing how we can on capitalize potentially the improving market conditions and opportunities in 26 .
Speaker #2: I want to thank our customers agent and our their continued trust . We are committed to best to doing our serve you with excellence Stewart and finally to the team .
Speaker #2: I want to thank you for the loyalty and continued dedication to We are committed to being a excellence . destination for best in class talent .
Speaker #2: year I had the This opportunity to meet with thousands of employees across many different cities in the US and Canada a year . As part of roadshow .
Kathryn Bass: My time with you all during this series was powerful, as it showed me that we have a very dedicated team that is aligned and focused on the strategic objective of becoming the premier title services company. We point to this dedication and alignment as a key component of why we received several employment awards this year, including the USA TODAY's Top 25 Workplaces Award, Forbes America's Best Employers for Company Culture, and ranking number one in Forbes America's Best Employer for Women in Business Services. We are also proud that we were able to support our employees by donating $1.2 million through the Stewart Foundation to their local communities. We stood up the foundation together in 2021, and we've made a significant impact on our community since the inception.
Fred Eppinger: My time with you all during this series was powerful, as it showed me that we have a very dedicated team that is aligned and focused on the strategic objective of becoming the premier title services company. We point to this dedication and alignment as a key component of why we received several employment awards this year, including the USA TODAY's Top 25 Workplaces Award, Forbes America's Best Employers for Company Culture, and ranking number one in Forbes America's Best Employer for Women in Business Services. We are also proud that we were able to support our employees by donating $1.2 million through the Stewart Foundation to their local communities. We stood up the foundation together in 2021, and we've made a significant impact on our community since the inception.
Speaker #2: My my time with you all during this series was powerful as it showed me that we very dedicated team have a that is aligned and focused on the strategic objective becoming the premier title services company .
Speaker #2: We point to this of dedication and alignment as a key why we received several awards component of this year , including the USA Today's Top 25 Workplaces Forbes America's Best Employers for Company Culture and ranking one performs America's Best Employer for Women number Services .
Speaker #2: also We are proud that we were able employment support our to employees by donating 1.2 million through the Stewart in Foundation to their local communities .
Kathryn Bass: I could not be prouder of the progress we have made on our journey, which we all know, that much remains to be done to accomplish our goals, but I look forward to seeing where we grow together. David, I will now turn it over to you and provide an update on our results.
Fred Eppinger: I could not be prouder of the progress we have made on our journey, which we all know, that much remains to be done to accomplish our goals, but I look forward to seeing where we grow together. David, I will now turn it over to you and provide an update on our results.
Speaker #2: We stood up the foundation together in and we've made a 2021 , impact on our significant community since inception the could not be .
Speaker #2: prouder of the I have made on progress we our journey , which we all know that much remains to be done to accomplish our goals , but I look forward to seeing where we grow together .
David Hisey: Good morning, everyone, and thank you, Fred. I appreciate our employees and customers for their steadfast support in the slow residential real estate market. Yesterday, Stewart reported strong fourth quarter results with both revenue and profitability improvements. Fourth quarter net income was $36 million, or diluted earnings per share of $1.25, on revenues of $791 million. Appendix A of our press release shows adjustments to our consolidated and segment results, primarily related to net realized and unrealized gains and losses, acquired intangible asset amortization, and office closure and severance expenses that we use to measure operating performance. On an adjusted basis, fourth quarter net income was 50% higher at $48 million, or $1.65 diluted earnings per share, compared to $32 million, or $1.17 diluted earnings per share. In our title segment, operating revenues improved $106 million, or 19%, driven by strong results from both our direct and agency title operations.
David Hisey: Good morning, everyone, and thank you, Fred. I appreciate our employees and customers for their steadfast support in the slow residential real estate market. Yesterday, Stewart reported strong fourth quarter results with both revenue and profitability improvements. Fourth quarter net income was $36 million, or diluted earnings per share of $1.25, on revenues of $791 million. Appendix A of our press release shows adjustments to our consolidated and segment results, primarily related to net realized and unrealized gains and losses, acquired intangible asset amortization, and office closure and severance expenses that we use to measure operating performance. On an adjusted basis, fourth quarter net income was 50% higher at $48 million, or $1.65 diluted earnings per share, compared to $32 million, or $1.17 diluted earnings per share. In our title segment, operating revenues improved $106 million, or 19%, driven by strong results from both our direct and agency title operations.
Speaker #2: now turn David , I will it over to you provide an and update on our results .
Speaker #3: morning Good everyone , and thank you , Fred . I appreciate our employees and customers for their steadfast support this slow in residential real estate market .
Speaker #3: Yesterday , reported strong fourth quarter Stewart results with both and revenue profitability improvements . Fourth quarter net income was 36 million or diluted earnings per share of $1.25 .
Speaker #3: On revenues of 791 million . our press shows release adjustments to our consolidated and segment Appendix A of results , primarily related to net realized and gains and losses acquired intangible unrealized asset amortization and office closure and severance expenses measure operating use to performance on an adjusted that we basis .
Speaker #3: income was 50% higher at 48 million , Fourth quarter net or $1.65 diluted earnings per share , compared to 32 million , or $1.17 diluted per earnings share in our title segment .
Speaker #3: Operating revenues improved 106 million , 19% , driven strong or from both our direct and agency title operations . As a result , pre-tax income increased 13 million , or 28% , on an adjusted basis .
David Hisey: As a result, title pre-tax income increased $13 million, or 28%. On an adjusted basis, title pre-tax income improved 35% to $68 million from $51 million. Adjusted pre-tax margin improved to 10% compared to approximately 9% last year. In our direct title business, total fourth quarter open and closed orders for commercial and residential transactions improved compared to last year. Domestic commercial revenues increased $32 million, or 38%, with growth in all asset classes led by data centers and energy. Transaction size increases. Our average domestic commercial fee per file improved 39% to approximately $27,000 compared to approximately $20,000 last year. Average domestic fee per file improved 13% to $3,300 compared to $2,900 last year, primarily as a result of transaction mix. Total international revenues increased modestly. Our agency operations were robust, with gross agency revenues of $334 million, 20% higher than last year.
David Hisey: As a result, title pre-tax income increased $13 million, or 28%. On an adjusted basis, title pre-tax income improved 35% to $68 million from $51 million. Adjusted pre-tax margin improved to 10% compared to approximately 9% last year. In our direct title business, total fourth quarter open and closed orders for commercial and residential transactions improved compared to last year. Domestic commercial revenues increased $32 million, or 38%, with growth in all asset classes led by data centers and energy. Transaction size increases. Our average domestic commercial fee per file improved 39% to approximately $27,000 compared to approximately $20,000 last year. Average domestic fee per file improved 13% to $3,300 compared to $2,900 last year, primarily as a result of transaction mix. Total international revenues increased modestly. Our agency operations were robust, with gross agency revenues of $334 million, 20% higher than last year.
Speaker #3: Title pre-tax income improved 35% to 68 million , from 51 million adjusted pre-tax margin improved to 10% compared to approximately 9% last year .
Speaker #3: In our direct title business . Total fourth quarter open and closed orders for commercial and transactions residential improved compared to year last . commercial Domestic revenues increased 32 million , or 38% , with growth in all asset classes led by data centers and energy transactions .
Speaker #3: Size increases or average domestic commercial fee per file . Improved 39% to approximately 27,000 , compared to approximately 20,000 last year . Average domestic per file improved 13% 3300 compared , to 2900 last to year a result of transaction mix .
Speaker #3: Total international revenues increased modestly agency . operations Our were robust , with growth agency revenues of 334 million , 20% higher than last year .
David Hisey: This increase was primarily driven by improved volumes in our key agency states, such as Florida, New York, and commercial transactions. After agent retention, net agency revenues increased $11 million, or 22%. On title losses, total title losses in the fourth quarter increased slightly due to increased title revenues. The fourth quarter title loss ratio improved to 3.4% from 3.7% last year due to our continued overall favorable claims experience. We expect our title losses in 2026 to average in the 3.5% to 4% range. On our real estate solutions segment, total revenues improved 29% by $25 million, primarily driven by our credit information services business. As Fred mentioned, we recently added MCS and expect it to be a major contributor to the segment's revenues and profits going forward. The segment's adjusted pre-tax income improved 47% to $10 million, compared to $6 million last year.
David Hisey: This increase was primarily driven by improved volumes in our key agency states, such as Florida, New York, and commercial transactions. After agent retention, net agency revenues increased $11 million, or 22%. On title losses, total title losses in the fourth quarter increased slightly due to increased title revenues. The fourth quarter title loss ratio improved to 3.4% from 3.7% last year due to our continued overall favorable claims experience. We expect our title losses in 2026 to average in the 3.5% to 4% range. On our real estate solutions segment, total revenues improved 29% by $25 million, primarily driven by our credit information services business. As Fred mentioned, we recently added MCS and expect it to be a major contributor to the segment's revenues and profits going forward. The segment's adjusted pre-tax income improved 47% to $10 million, compared to $6 million last year.
Speaker #3: This increase was primarily driven by improved volumes in our key as states , such New York and . After commercial agency retention , net revenues increased 11 million , transactions or 22% , on title losses .
Speaker #3: Total title losses in the fourth quarter slightly increased, which increased title revenues. The fourth quarter title loss ratio improved to 3.4% from 3.7% last year.
Speaker #3: Due to our continued overall favorable claims experience , we expect our title losses in 2026 to average into 3.5 to 4% range on our real estate solutions total revenues segment , improved 29% by 25 million , primarily driven by our credit information services business .
Speaker #3: As Fred recently added mix and expect it to be a major mentioned , we contributor to the segment's revenues profits going and The forward .
David Hisey: We are focused on the overall cost of services and strengthening customer relationships. Adjusted Pre-Tax Margin was 8.5%, 1 percent better than last year's fourth quarter, and we expect our margins to normalize in the low teens as these relationships mature. On consolidated expenses, our employee cost ratio improved 29% compared to 31% last year, primarily due to increased revenues, while our other operating expense ratio was 25%, comparable to last year. On other matters, our financial position remained solid to support our customers, employees, and the real estate market. Our total cash and investments were approximately $480 million in excess of statutory premium reserve requirements. As Fred noted, our line of credit and December common share equity offering provide us financial flexibility. Total Stewart stockholders' equity at December 31, 2025, was approximately $1.6 billion, with a Book Value of $54 per share, which is $4 better than last year.
David Hisey: We are focused on the overall cost of services and strengthening customer relationships. Adjusted Pre-Tax Margin was 8.5%, 1 percent better than last year's fourth quarter, and we expect our margins to normalize in the low teens as these relationships mature. On consolidated expenses, our employee cost ratio improved 29% compared to 31% last year, primarily due to increased revenues, while our other operating expense ratio was 25%, comparable to last year. On other matters, our financial position remained solid to support our customers, employees, and the real estate market. Our total cash and investments were approximately $480 million in excess of statutory premium reserve requirements. As Fred noted, our line of credit and December common share equity offering provide us financial flexibility. Total Stewart stockholders' equity at December 31, 2025, was approximately $1.6 billion, with a Book Value of $54 per share, which is $4 better than last year.
Speaker #3: adjusted pre-tax income improved to 10 million , 47% compared to . We are year 6 million last focused overall cost strengthening customer on the relationships .
Speaker #3: Adjusted of was 8.5% , a percent margin better than pre-tax year's fourth quarter , and we expect our margins last in the normalize low teens as these mature on consolidated expenses , our employee cost relationships improved ratio 29% compared to 31 last year , primarily due to increased revenues , while our other operating expense ratio was 25% , comparable to last year .
Speaker #3: matters , On other our financial position remains support our customers , employees and the real estate market . Our total cash and investments were approximately 480 million in excess of statutory premium reserve requirements .
Speaker #3: As Fred noted , our line of credit and December common share equity offering provide us financial flexibility . Total Stewart stockholders equity at December 31st , 2025 was approximately 1.6 billion , with a book value of $54 per share , which is $4 better than year last cash provided by .
David Hisey: Net cash provided by operations improved by $22 million, or 32%, primarily due to higher net income. Again, thank you to our customers and employees, and we remain confident in our service to the real estate markets. I'll now turn the call over to the operator for questions.
David Hisey: Net cash provided by operations improved by $22 million, or 32%, primarily due to higher net income. Again, thank you to our customers and employees, and we remain confident in our service to the real estate markets. I'll now turn the call over to the operator for questions.
Speaker #3: improved operations by 22 million , or 32% , primarily due to Net higher net income thank you to our . Again , customers and employees and we remain our confident in service to the real estate markets .
Kathryn Bass: Thank you. If you'd like to ask a question, press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star one to ask a question, and we'll pause for just a moment to allow everyone a chance to join the queue. Our first question comes from Bose George with KBW. Please go ahead.
Operator: Thank you. If you'd like to ask a question, press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star one to ask a question, and we'll pause for just a moment to allow everyone a chance to join the queue. Our first question comes from Bose George with KBW. Please go ahead.
Speaker #3: I'll now turn the call over to the operator for questions .
Speaker #4: Thank you . If you'd like to ask a question , press Star One on your keypad . To leave the queue time , at any press star two .
Speaker #4: Once again , ask a that is star one . To question and we'll pause for just a moment allow everyone a chance to to the queue join .
Bose George: Morning, Bose George.
Fred Eppinger: Morning, Bose George.
Kathryn Bass: Your line is now open.
Operator: Your line is now open.
Bose George: Hey, everyone. Good morning. I just wanted to start with the commercial. Just given the strong commercial activity in 2025, can you talk about your expectations for commercial revenue growth in 2026? And then this related question, usually there's pretty meaningful seasonality in Q1, but given what you see in the commercial pipeline, on the commercial side, do you think Q1 could be sort of a little better than usual? Thanks.
Bose George: Hey, everyone. Good morning. I just wanted to start with the commercial. Just given the strong commercial activity in 2025, can you talk about your expectations for commercial revenue growth in 2026? And then this related question, usually there's pretty meaningful seasonality in Q1, but given what you see in the commercial pipeline, on the commercial side, do you think Q1 could be sort of a little better than usual? Thanks.
Speaker #4: And our first question comes from Bose George KB with ahead . . Please go open now line is .
Speaker #5: Hey everyone . Good morning . to start Just wanted with the Just given the strong commercial in activity 2025 . Can you talk about your commercial revenue growth expectations for in 26 ?
Speaker #5: And then this related question usually just there's meaningful seasonality in one . Q but pretty given what you see in the commercial pipeline on the side , do you think commercial be sort of better than a little usual ?
Frederick Eppinger: Yeah. Great questions, Bose. So I feel very confident in kind of our pipeline and the activity. It's pretty broad. It's pretty good. I do think there is seasonality. There will continue to be seasonality in commercial. And Q4, in particular, this year, I think, was very robust. And I think you're going to see that for a lot of people in the industry for some reasons. So I do think we got to our Q1, in general, should be a little bit better than last year, but we'll still have the difficulties of the Q1, in my view. And the commercial, in general, I think, it'll be a good year for us next year, looking at the activity and the breadth of the activity. Some of the comparisons, it'll be interesting to see on growth. So I think we can grow commercial next year. Yes.
Fred Eppinger: Yeah. Great questions, Bose. So I feel very confident in kind of our pipeline and the activity. It's pretty broad. It's pretty good. I do think there is seasonality. There will continue to be seasonality in commercial. And Q4, in particular, this year, I think, was very robust. And I think you're going to see that for a lot of people in the industry for some reasons. So I do think we got to our Q1, in general, should be a little bit better than last year, but we'll still have the difficulties of the Q1, in my view. And the commercial, in general, I think, it'll be a good year for us next year, looking at the activity and the breadth of the activity. Some of the comparisons, it'll be interesting to see on growth. So I think we can grow commercial next year. Yes.
Speaker #5: Thanks .
Speaker #2: Great questions . Yeah . So I feel very confident in our kind of our the activity pipeline and pretty broad . It's pretty .
Speaker #2: good It's . I do think there seasonality . We'll continue to be is in commercial and the fourth quarter in particular this think was year I robust .
Speaker #2: very And I think you're going to a lot of for people in the industry . For reasons . But see that so I do think it's we have our first quarter in general should be a little bit better than last year , but have the we'll still difficulties of the first quarter , in my view .
Speaker #2: the And commercial in general , I think is to it'll be a year for us next year . Looking at the good breadth of the activity , some of the comparisons , interesting to see .
Frederick Eppinger: I just think 49% is not a. There's going to be some comparisons here, given how quickly we got to grow into our skin, that we might see some kind of moderating of growth, of course, and some comparisons that might be kind of not as robust on the growth side. But again, it's going in the right direction in every class, and we're hiring and trying to really get after it, and I feel good about the depth. The other thing that's really interesting qualitatively is we're leading more deals. Some of these big deals, right, historically, we would participate, but we control more now, and you can just feel it and see it, which gives me comfort that we're moving in the right direction.
Fred Eppinger: I just think 49% is not a. There's going to be some comparisons here, given how quickly we got to grow into our skin, that we might see some kind of moderating of growth, of course, and some comparisons that might be kind of not as robust on the growth side. But again, it's going in the right direction in every class, and we're hiring and trying to really get after it, and I feel good about the depth. The other thing that's really interesting qualitatively is we're leading more deals. Some of these big deals, right, historically, we would participate, but we control more now, and you can just feel it and see it, which gives me comfort that we're moving in the right direction.
Speaker #2: On So growth . I do I can grow commercial think we next year . Yes . I just think , you know it'll be , 49% is not there's going to be some comparisons here how , given quickly we got to grow into our skin might that we see some kind of kind of moderating of growth .
Speaker #2: course . And some comparisons that might be kind not as not as of Of the growth side . But again , robust on I'm it's going in the right in every direction class .
Speaker #2: And we're hiring and trying to really get it . And I feel good after about the depth . The other thing really interesting qualitatively is we're leading more deals like some of these big deals , right Historically , we would ?
Speaker #2: participate , but we control more now . can just And you feel it and see it gives me we're , you know , we're moving in the right comfort that direction .
Speaker #2: participate , but we control more now . can just And you feel it and see it gives me we're , you know , we're moving in the right comfort that , which So even if little sideways we went a this year and digested the growth in the next two years , I'm as confident as as I've always been .
Frederick Eppinger: So even if we went a little sideways this year and digested the growth, in the next two years, I'm as confident as I've always been on being able to go from probably 14% share right now in the market. I think over the next two, three years, we're going to get closer to 20, right? So I can't time that, but the momentum and our ability to get after it is there. And I do think the market, in general, is going to be relatively strong this year as well. So hopefully, that's helpful.
Fred Eppinger: So even if we went a little sideways this year and digested the growth, in the next two years, I'm as confident as I've always been on being able to go from probably 14% share right now in the market. I think over the next two, three years, we're going to get closer to 20, right? So I can't time that, but the momentum and our ability to get after it is there. And I do think the market, in general, is going to be relatively strong this year as well. So hopefully, that's helpful.
Speaker #2: able to go On being from probably 14% share right now in the think market . I the next 2 or 3 years we're closer to 20 , right ?
Speaker #2: So I can't time that . But the momentum in our ability to get after do it is think there . the And I market in general is going to be relatively strong this year as well .
Bose George: Great. Yeah, that's great. That's very helpful. Thanks. And then actually, can you remind us what percentage of your agent premiums are commercial?
Bose George: Great. Yeah, that's great. That's very helpful. Thanks. And then actually, can you remind us what percentage of your agent premiums are commercial?
Speaker #2: So hopefully that's helpful .
Frederick Eppinger: That's a great question because so we've been obviously trying to grow that business. And let me just, I have some of the information on that, but we grew of the 20% growth, we grew purchase about 16% for the quarter and 15% for the year. We grew refi with the real estate with the agents about 40%, but that's only about 3%, $3 million of growth because it's such a small percentage of our business. And then we grew, let's see. The commercial was about 34% for the year. And so you can look at the mix. I don't have the specific percentages of each, but it's very small refi. Again, of the growth in the purchase, it represented about $125 million of the growth. And so you can kind of back in in terms of percentages. But again, it's heavy purchase.
Fred Eppinger: That's a great question because so we've been obviously trying to grow that business. And let me just, I have some of the information on that, but we grew of the 20% growth, we grew purchase about 16% for the quarter and 15% for the year. We grew refi with the real estate with the agents about 40%, but that's only about 3%, $3 million of growth because it's such a small percentage of our business. And then we grew, let's see. The commercial was about 34% for the year. And so you can look at the mix. I don't have the specific percentages of each, but it's very small refi. Again, of the growth in the purchase, it represented about $125 million of the growth. And so you can kind of back in in terms of percentages. But again, it's heavy purchase.
Speaker #5: That's great . That's Great . Yeah . very helpful . Thanks . And then actually , can you remind us what your percentage of agent are commercial .
Speaker #2: great question That's a because so so we've been obviously trying to grow that business . And let me just I the information on that .
Speaker #2: have some of But we grew up in the 20% growth we grew purchase about 16% for the And quarter . 15% for the year .
Speaker #2: We grew , we grew refi with the real with with the agents . About 40 . But that's estate , about it's such a only small 3 million of growth because percentage of our 3% , business .
Speaker #2: And grew , let's see , the commercial was about 34% for the year . And so you can look at the mix , I don't have the percentages of each , specific but it's small very refi .
Speaker #2: as of the growth in the in the purchase Again , represent about 125 million of the growth . And so you can kind of back in .
Frederick Eppinger: Again, it's somewhere around 15% to 20% commercial now. And then the rest is refi. But what's nice about it to me is that when you look at the 15%, 16%, excuse me, 16% growth for the quarter in purchase, the market's somewhere between 1% and 2%, right? So I know this year, we're going to get the data. We're going to have another share movement in most of these markets that is pretty robust. And on commercial, I would say we're playing catch-up. If I was a guessing man and I looked at my competitors, their numbers of commercial in their agency would be closer to 15% to 20% of the business. And so we're still catching up of our penetration of commercial in the agency. So I wouldn't be surprised if our percentage of growth in commercial doesn't continue because we're catching up, right?
Fred Eppinger: Again, it's somewhere around 15% to 20% commercial now. And then the rest is refi. But what's nice about it to me is that when you look at the 15%, 16%, excuse me, 16% growth for the quarter in purchase, the market's somewhere between 1% and 2%, right? So I know this year, we're going to get the data. We're going to have another share movement in most of these markets that is pretty robust. And on commercial, I would say we're playing catch-up. If I was a guessing man and I looked at my competitors, their numbers of commercial in their agency would be closer to 15% to 20% of the business. And so we're still catching up of our penetration of commercial in the agency. So I wouldn't be surprised if our percentage of growth in commercial doesn't continue because we're catching up, right?
Speaker #2: The percentages , but it's of but again , it's heavy purchase . It's probably it's somewhere around 15 to 20% commercial . Now
Speaker #5: Okay
Speaker #5: great .
Speaker #2: And . rest is know the But it's what's nice about it to me is that look at when you the 15% , 16 excuse me , 16% the for quarter growth in purchase the in market somewhere between 1 and 2 .
Speaker #2: Right . You know , so I know that we're going to get the data . going to have We're another movement in most of these markets .
Speaker #2: is pretty That robust . And on would commercial I say we're playing catch up . You know , if I was a on and I guessing man looked at my competitors , their commercial and their agency would be closer to numbers of like .
Speaker #2: so And we're still catching up penetration of commercial in the agency . So of our would be surprised I if we out our percentage of commercial growth in doesn't continue because we're catching up .
Frederick Eppinger: I would say our competitors are probably in the 20 to 22% range, and we're probably in that 15% range.
Fred Eppinger: I would say our competitors are probably in the 20 to 22% range, and we're probably in that 15% range.
Bose George: Okay. Great. Actually, just one last one on commercial. Have you talked about commercial, the direct margins versus the residential direct margins? Is that something? I can't remember if you've discussed that?
Bose George: Okay. Great. Actually, just one last one on commercial. Have you talked about commercial, the direct margins versus the residential direct margins? Is that something? I can't remember if you've discussed that?
Speaker #2: not I would say you know , We're competitors are probably in range . And 20 to 22% we're probably in that 15% range .
Speaker #2: the
Speaker #5: And just one last Right . commercial . The have you talked about commercial the direct margins versus residential the direct margins . that Is remember something .
Frederick Eppinger: They're a little better. Again, it has a lot, the costs are more variable in commercial because of the way the commission structures work and the arrangements with developers and stuff. But it's a tad better. It's probably 1/3 better. And again, the other thing about it is the float is also better. So there's an investment income portion of commercial that is quite important. And for us, I don't know. I can't tell you what the competitors' numbers are, but scale matters because of the nature of the work. And so as we get bigger, the margins get better, right, because of the critical mass you receive in some of these asset classes and skill sets. So it's a good margin enhancer, and it's a margin grower if we can continue to grow this business.
Fred Eppinger: They're a little better. Again, it has a lot, the costs are more variable in commercial because of the way the commission structures work and the arrangements with developers and stuff. But it's a tad better. It's probably 1/3 better. And again, the other thing about it is the float is also better. So there's an investment income portion of commercial that is quite important. And for us, I don't know. I can't tell you what the competitors' numbers are, but scale matters because of the nature of the work. And so as we get bigger, the margins get better, right, because of the critical mass you receive in some of these asset classes and skill sets. So it's a good margin enhancer, and it's a margin grower if we can continue to grow this business.
Speaker #5: if you've discussed that Can't .
Speaker #2: a little They're better has a . Again it the costs are more lot variable in because of commercial the way the commission structures work in the and the and the arrangements with developers and stuff .
Speaker #2: So, but it's a tad better. It's probably a third better. And the thing about it is, the float is also, again, the other better.
Speaker #2: So there's an investment income of of of commercial that is quite important . And there's portion a and us , you know , I don't know , I can't tell you what the competitors numbers are .
Speaker #2: But scale matters because but of because of the nature of the work and the and so as we get bigger , the margins get better , right ?
Speaker #2: Because of the critical mass , you receive in some of these asset And skill classes . sets . So it's a it's a it's a good enhancer .
Frederick Eppinger: We are probably somewhere probably Q4, 18% of our revenue was commercial. But over the year, my guess is the average was like 14 to 15. But if I looked at my best competitors, the big guys, they're probably in the low to mid-20s, if I was guessing. It's hard to back into it because it goes through the various channels. But we are, again, short there too. So it's not just our share in that business, but even relative to our business mix, we were short. And that's why this has been an important initiative, and this progress for us is very helpful as a company, so.
Fred Eppinger: We are probably somewhere probably Q4, 18% of our revenue was commercial. But over the year, my guess is the average was like 14 to 15. But if I looked at my best competitors, the big guys, they're probably in the low to mid-20s, if I was guessing. It's hard to back into it because it goes through the various channels. But we are, again, short there too. So it's not just our share in that business, but even relative to our business mix, we were short. And that's why this has been an important initiative, and this progress for us is very helpful as a company, so.
Speaker #2: And it's margin a margin grower . If we can continue to business , we are probably grow this know somewhere , you , probably the fourth quarter , revenue 18% of our was commercial title was commercial .
Speaker #2: But is the year , my guess average was over the like 14 to 15 . But if I looked at my best the big guys , competitors , they're probably in the in the low to mid 20s .
Speaker #2: If I was guessing , you know , I it's hard to into it because it goes through the various back channels . But but we are again short there too .
Speaker #2: So you know not just our share in that business , but it's even business to our relative We were short and that's why this been an important initiative in this progress for us .
Bose George: That's great. Thanks a lot for the call.
Bose George: That's great. Thanks a lot for the call.
Speaker #2: Is very helpful as a company . So .
Kathryn Bass: Thank you. Once again, if you would like to ask a question, please press star and one on your keypad now. We'll now move on to Geoffrey Dunn with Dowling & Partners. Your line is now open.
Operator: Thank you. Once again, if you would like to ask a question, please press star and one on your keypad now. We'll now move on to Geoffrey Dunn with Dowling & Partners. Your line is now open.
Speaker #5: That's great . Thanks a lot for the call .
Speaker #4: you . And you would once again , if Thank like to ask a question , press star One on your keypad . Now .
Frederick Eppinger: Morning, Jeff.
Fred Eppinger: Morning, Jeff.
[Analyst] (Dowling & Partners): Good morning. Thank you. A couple of questions. First, what are the plans for the line of credit? Do you have an aggressive paydown schedule there, or do you think it's just the plan to let that leverage come down gradually with equity growth?
Geoffrey Dunn: Good morning. Thank you. A couple of questions. First, what are the plans for the line of credit? Do you have an aggressive paydown schedule there, or do you think it's just the plan to let that leverage come down gradually with equity growth?
Speaker #4: move on to We'll now with Jeffrey Dunn Dowling and Partners . Your now line is
Speaker #4: open .
Speaker #2: morning Good
Speaker #2: . Jeff
Speaker #5: Good morning . Thank .
Speaker #5: you
Speaker #6: I a couple
Speaker #6: questions . what First , plans for the line of credit ? Do you have an aggressive paydown are the schedule there or do you think it's just plan to let leverage come down that equity the .
David Hisey: Hey, Jeff. It's David. I would say the latter. I mean, we could pay it off at any point. I think we're just trying to keep flexibility, as Fred talked about. And so I think we're about $200 million drawn. We may bring it down a little, but you may see that for the year.
David Hisey: Hey, Jeff. It's David. I would say the latter. I mean, we could pay it off at any point. I think we're just trying to keep flexibility, as Fred talked about. And so I think we're about $200 million drawn. We may bring it down a little, but you may see that for the year.
Speaker #3: Yeah . Hey Jeff it's David . I would I would say the latter . I could pay it off at any point . I think we're just to trying keep flexibility .
Speaker #3: Fred, as talked about, and I think so, we're at about $200 million drawn. Bring it down, we may a little, you may see that for the year.
[Analyst] (Dowling & Partners): Okay. And then bigger picture, I wanted to ask you about AI and the effect you feel it's had on your business and if that's still accelerating, but also the effect it's had on the broader business. It looks like there's been some capital investment coming into the space for data collection, data mining, and data organization. Curious if you view those as M&A opportunities, or is that something we should think about in terms of a longer-term competitive consideration?
Geoffrey Dunn: Okay. And then bigger picture, I wanted to ask you about AI and the effect you feel it's had on your business and if that's still accelerating, but also the effect it's had on the broader business. It looks like there's been some capital investment coming into the space for data collection, data mining, and data organization. Curious if you view those as M&A opportunities, or is that something we should think about in terms of a longer-term competitive consideration?
Speaker #3: but
Speaker #6: Okay . And then bigger picture , wanted I to ask you AI about and the effect you had on your business . And if feel it's that's still accelerating , the but also effect the broader business , it's had on it looks like there's been some capital coming investment into the space for data collection , data data mining , organization .
Speaker #6: Curious if you view those as M&A opportunities ? Or is that should think about in terms of something we longer term competitive consideration ?
Frederick Eppinger: Yeah. It's a great question. It's obviously, as I've said previously, because of the way we have so much unstructured documents, there's a big benefit both on efficiency, customer satisfaction, quality because what our losses are because you make a mistake, right? We're a warranty. And so the more efficient you can examine the documents and get to the right points quickly, the better you are. We have, gosh, probably 75 individual initiatives, right, going on right now that have AI to apply in our businesses around customer service or efficiency or data consolidation and management. My view from a competitive point of view is an enormous advantage of the bigger people. It's not going to eliminate our business or anything. It's going to make us better, higher quality, better kind of throughput and consistency. It's a lot of little singles is the way I describe it, but important.
Fred Eppinger: Yeah. It's a great question. It's obviously, as I've said previously, because of the way we have so much unstructured documents, there's a big benefit both on efficiency, customer satisfaction, quality because what our losses are because you make a mistake, right? We're a warranty. And so the more efficient you can examine the documents and get to the right points quickly, the better you are. We have, gosh, probably 75 individual initiatives, right, going on right now that have AI to apply in our businesses around customer service or efficiency or data consolidation and management. My view from a competitive point of view is an enormous advantage of the bigger people. It's not going to eliminate our business or anything. It's going to make us better, higher quality, better kind of throughput and consistency. It's a lot of little singles is the way I describe it, but important.
Speaker #2: Yeah , it's a great question . It's obviously , as I've said previously , because of the way we have so much unstructured documents .
Speaker #2: There's a big both on efficiency , customer quality , satisfaction , what we , you know , our losses are because you make a mistake , right ?
Speaker #2: We're a warranty . And and so the more efficient you can the examine and get to the documents points better you right are quickly , the .
Speaker #2: We have gosh , I probably 75 individual initiatives right going now on right that have AI to apply in our businesses around customer service or efficiency or data consolidation and from a My view management .
Speaker #2: point of competitive view is an enormous advantage of the bigger people know , it's not going to . The you eliminate our business It's going to or anything .
Speaker #2: better , make us , better higher of quality throughput . And . It's a lot consistency of little singles . Is the way I describe it .
Frederick Eppinger: There are tools. You are exactly right. There are innovation and tools. There's one tool in one of our businesses right now, to your point, that I'm likely to buy, which can get plugged in and make our service better in one of our businesses. And again, because our business is so unique and weird, this isn't a revolution. This is kind of a, in my view, a way to make so many parts of your business better. And title's weird, so the opportunities tend to be smallish in the market opportunity. And so there will be some of that tool thing. If you remember, Jeff, in the P&C world after the crisis, the dot-com, same exact thing happened. All these companies failed, but some of the solutions, the models, were extracted by the bigger companies to accelerate some of their innovation.
Fred Eppinger: There are tools. You are exactly right. There are innovation and tools. There's one tool in one of our businesses right now, to your point, that I'm likely to buy, which can get plugged in and make our service better in one of our businesses. And again, because our business is so unique and weird, this isn't a revolution. This is kind of a, in my view, a way to make so many parts of your business better. And title's weird, so the opportunities tend to be smallish in the market opportunity. And so there will be some of that tool thing. If you remember, Jeff, in the P&C world after the crisis, the dot-com, same exact thing happened. All these companies failed, but some of the solutions, the models, were extracted by the bigger companies to accelerate some of their innovation.
Speaker #2: But but important . There are tools . You are right . exactly There are innovation tools and . There's one , you know , tool in one of our businesses right now .
Speaker #2: To your point that I'm likely to buy . So , which is a kind of get and make our plugged in service better .
Speaker #2: And one of our businesses and and again , our because business is so unique and weird , isn't a This is revolution . a this this of is kind a of a kind view , a way to many , in my parts of your business better , and and titles weird .
Speaker #2: So opportunities tend to the be smallish these . in market You know , the opportunity . And will be some of so there tool thing that just if you in the remember PNC world , crisis , after the you know , the.com same exact thing happened .
Speaker #2: These all these companies failed . But the some of solutions the models were by the bigger extracted companies accelerate some of their to innovation .
Frederick Eppinger: I think there will be some of that. Is it going to be massive? No. But I'm pretty excited about what's happening. Again, it's just another thing that's going to, we have a really interesting oligopoly, right, because of the scale and size and the data and the reach. If the big players are using this kind of tool, it's going to increase the quality of our delivery. So it's a great; it is a really good, interesting observation. I would also say there's characteristics in our business that are very similar between us and other kind of insurance delivery through independent channels. So there's some of these things that are kind of repetitive. So there'll be people that will be able to kind of accelerate your advancement because they can take something from another industry and kind of slide it over.
Fred Eppinger: I think there will be some of that. Is it going to be massive? No. But I'm pretty excited about what's happening. Again, it's just another thing that's going to, we have a really interesting oligopoly, right, because of the scale and size and the data and the reach. If the big players are using this kind of tool, it's going to increase the quality of our delivery. So it's a great; it is a really good, interesting observation. I would also say there's characteristics in our business that are very similar between us and other kind of insurance delivery through independent channels. So there's some of these things that are kind of repetitive. So there'll be people that will be able to kind of accelerate your advancement because they can take something from another industry and kind of slide it over.
Speaker #2: And think there of that . Is will be some it going to be I No . massive ? But but I'm pretty happening excited about .
Speaker #2: And what's again , it's just it's another thing that's going to , you know , we have a really interesting oligopoly , right .
Speaker #2: Because scale and size and the data and the reach of the . And big players are , are , are using this tool if the , it's going to increase the quality of our delivery .
Speaker #2: So it's a great it is a really good , interesting observation . And , and I would say also there's , there's characteristics in business that our are very similar , between us and of insurance other kind delivery through independent channels .
Speaker #2: there's some of these And so that are that are kind of repetitive . And that will be be people so there'll able to kind of your advancement take because they can industry and kind of another accelerate .
Frederick Eppinger: So again, I tell our folks what I like about it is that it's not about technology, right? It's about businesses driving improvements by using a tool that makes a more consistent delivery of data. And it's helpful. I would also say that some of what people talk about is overblown a little bit. I mean, this is a world still of you can get to 90% of the solution, but the last 10% is the hardest. And we're still in that range. And so human intervention is going to be really remains really critical, particularly in our business. And again, so that's kind of how I see it developing.
Fred Eppinger: So again, I tell our folks what I like about it is that it's not about technology, right? It's about businesses driving improvements by using a tool that makes a more consistent delivery of data. And it's helpful. I would also say that some of what people talk about is overblown a little bit. I mean, this is a world still of you can get to 90% of the solution, but the last 10% is the hardest. And we're still in that range. And so human intervention is going to be really remains really critical, particularly in our business. And again, so that's kind of how I see it developing.
Speaker #2: So again , it's a I folks tell our what I like about it is that it's it's not about technology , right ? It's about businesses driving improvement by using a makes tool that more consistently delivery of consistent data and it it's it's helpful .
Speaker #2: I would say that also some of the what people talk about is a little overblown mean , bit . I this is a world that's still of you can get to solution .
Speaker #2: But the last ten is the 90% of the still in that range . we're And And you intervention is know , human be , you know , really remains really critical , particularly in our business .
[Analyst] (Dowling & Partners): Okay. And then, David, just an accounting question related to this. Given the digitization at the municipal level and the increased ease of collecting data, is there any implication for the title plan assets, particularly the more legacy plants, because it's now cheaper to create those?
Geoffrey Dunn: Okay. And then, David, just an accounting question related to this. Given the digitization at the municipal level and the increased ease of collecting data, is there any implication for the title plan assets, particularly the more legacy plants, because it's now cheaper to create those?
Speaker #2: And and again , kind of so that's I see it developing
Speaker #6: okay . And then David just an accounting
Speaker #6: related to , given this question digitization at the municipal level and the increased . But collecting data , is there implication for any the title plan assets , particularly the more ease of legacy plants , because it's now cheaper to create ?
David Hisey: No. I mean, as you probably know, title plants vary, and access to title data varies across the country. And the plants are needed in the markets that we're in to access data, so there shouldn't be any issues if you're talking about recoverability.
David Hisey: No. I mean, as you probably know, title plants vary, and access to title data varies across the country. And the plants are needed in the markets that we're in to access data, so there shouldn't be any issues if you're talking about recoverability.
Speaker #6: those
Speaker #3: No , I mean , it I you mean , as probably know plans vary in , title title data across the and country the plants are needed in the markets that we're in to access So there shouldn't be any data .
Frederick Eppinger: Yeah. What is happening, right? Again, what is happening is we're able through the way we've set up the centralized processing and management; the enhancing of the value of those plants has been kind of really helpful, right, because we can supplement the data in those plants more efficiently. And it's becoming kind of more helpful in our business, particularly as we grow.
Fred Eppinger: Yeah. What is happening, right? Again, what is happening is we're able through the way we've set up the centralized processing and management; the enhancing of the value of those plants has been kind of really helpful, right, because we can supplement the data in those plants more efficiently. And it's becoming kind of more helpful in our business, particularly as we grow.
Speaker #3: issues . If you're talking about recoverability . Yeah , yeah .
Speaker #2: What is happening ? Right . Again , what is happening is able to the way we're set we've up the centralized processing and management , the enhancing of the value of those has been kind of really plants helpful .
Speaker #2: Because we supplement and can get the data in those plants more efficiently. And it's becoming kind of more of a business, helpful in our particular case as we grow.
[Analyst] (Dowling & Partners): Okay. Thank you.
Geoffrey Dunn: Okay. Thank you.
Kathryn Bass: Thank you. We'll now move on to Oscar Nieves with Stephens. Your line is now open.
Operator: Thank you. We'll now move on to Oscar Nieves with Stephens. Your line is now open.
Speaker #6: you .
Oscar Nieves: Good morning. How are you all?
Oscar Nieves: Good morning. How are you all?
Speaker #4: Thank you . We'll now move on
[Company Representative] (Stewart Information Services Corporation): Good. Good.
David Hisey: Good. Good.
Speaker #4: Nieves with line is open now . .
Speaker #4: Nieves with line is open now . Your
Oscar Nieves: Earlier, you mentioned seeing signs of cautious optimism for housing as we look into 2026. Can you talk a bit more about the specifics that you're watching and whether those are broad-based or concentrated in certain areas?
Oscar Nieves: Earlier, you mentioned seeing signs of cautious optimism for housing as we look into 2026. Can you talk a bit more about the specifics that you're watching and whether those are broad-based or concentrated in certain areas?
Speaker #7: Good morning . How are you all Okay . .
Speaker #3: Good .
Speaker #3: Good .
Speaker #2: Good .
Speaker #7: You Earlier . mentioned seeing signs of cautious optimism for housing . As we look into 26 . Can you talk a bit more about the specific you're watching and whether those Thank are broad based or concentrated in certain areas ?
Frederick Eppinger: Yeah. That's a great question. So last year, everybody said at this time last year or earlier, say in Q4, when we had that little downturn in rates and we had a nice little spurt in December orders, and it ended up translating into some March close orders, people were saying, "Oh, by the end of the year, we're going to see 8% to 10% improvement." I didn't see any of that, right, because your under-3% mortgage was still really high, and the inventory quality was not great. And, matter of fact, I think we got to the point where 20% of all transactions were really old. People were flippers because it was old inventory. Now, what I see is the under-3% has ticked down a little bit. The quality of inventory has gotten a little bit better and has increased.
Fred Eppinger: Yeah. That's a great question. So last year, everybody said at this time last year or earlier, say in Q4, when we had that little downturn in rates and we had a nice little spurt in December orders, and it ended up translating into some March close orders, people were saying, "Oh, by the end of the year, we're going to see 8% to 10% improvement." I didn't see any of that, right, because your under-3% mortgage was still really high, and the inventory quality was not great. And, matter of fact, I think we got to the point where 20% of all transactions were really old. People were flippers because it was old inventory. Now, what I see is the under-3% has ticked down a little bit. The quality of inventory has gotten a little bit better and has increased.
Speaker #2: It's a good So question . last year everybody said at this time last year or in the earlier , say fourth quarter when we had that little rates downturn in and we had a little spurt nice December , orders .
Speaker #2: And and it ended up translating into some March orders . by the end saying , oh , we're going of the year , People were see , you know , to 8 to 10% improvement .
Speaker #2: I didn't see any of that because you're you're really And the under 3% . Mortgage was still high . inventory not And matter think we got of fact , I great .
Speaker #2: was was to a 20% of all transactions were point where quality old . really Where flippers , because it was old inventory . Now , what I see is the under three has ticked a little down bit .
Frederick Eppinger: People say it goes up and down, and there's some seasonality to inventory. But it's 8% up in the Q4 year-over-year, and we're seeing more activity. Do I think it's going to be more than 6 to 7% or 8% growth? No. It's modest. But if I was, it's hard to guess, but it feels like that this year. Whereas last year, right from the get, I figured it was going to be flat, even though the estimates from some of the economists were up. This year, I could feel it. And you saw our open orders, right? You can see some of the open order data and how it's getting a little bit better. And so again, I don't think it's going to be over the top, but I believe we're going to start to see some movement this year.
Fred Eppinger: People say it goes up and down, and there's some seasonality to inventory. But it's 8% up in the Q4 year-over-year, and we're seeing more activity. Do I think it's going to be more than 6 to 7% or 8% growth? No. It's modest. But if I was, it's hard to guess, but it feels like that this year. Whereas last year, right from the get, I figured it was going to be flat, even though the estimates from some of the economists were up. This year, I could feel it. And you saw our open orders, right? You can see some of the open order data and how it's getting a little bit better. And so again, I don't think it's going to be over the top, but I believe we're going to start to see some movement this year.
Speaker #2: The quality inventory has bit gotten a little better and has increased people will say it goes up and down and it's , you know , there's some .
Speaker #2: inventory , but it's 8% up in the fourth quarter year over . And we're seeing more activity And year think it's be more going to than 6 to 7% .
Speaker #2: or 8% No , modest growth ? , but I Do I was you know , it's hard But it's feels that like year this it to guess .
Speaker #2: . Whereas last year right , you know get I figured to be flat it was going even from the though the estimates the economists were from some of this year , I could up feel you saw it .
Speaker #2: our And open right . You can see some of the open order data and how it's getting a little bit better so . again , And I , I it's going to don't think but I top , but I believe we're going to start seeing some movement this year .
Frederick Eppinger: Again, the first quarter is always hard for us for geography reasons. As far as the breadth, I think there is some breadth to it. Now, again, some of the places that didn't go up as much don't move as much, like the Midwest kind of has less variability in it. The South tends to be the swing a lot of times. I feel pretty good about modest improvement. That's what we're trying to make sure we're on top of and planning for, is that kind of how do you capture that for the course?
Fred Eppinger: Again, the first quarter is always hard for us for geography reasons. As far as the breadth, I think there is some breadth to it. Now, again, some of the places that didn't go up as much don't move as much, like the Midwest kind of has less variability in it. The South tends to be the swing a lot of times. I feel pretty good about modest improvement. That's what we're trying to make sure we're on top of and planning for, is that kind of how do you capture that for the course?
Speaker #2: Again . The hard for us . It's for geography the reasons . But far as breadth , I think some breadth to it .
Speaker #2: You some of the again , places that didn't as go up much know , don't move as much like the Midwest kind of has less it .
Speaker #2: And variability in the . South so swing . A lot to be the times . But I feel of pretty good modest about improvement .
Speaker #2: That's what I you , what we're know trying make sure we're on top of . to And planning for is that kind of how do you capture that sort of .
Oscar Nieves: Yeah. Touching on rates, looking at data from the ICE Mortgage Monitor, I can see that once rates go below, say, 6%, the number of people with in-the-money mortgages increases significantly. Could you give some color and maybe quantify the impact that would have in your revenues if that were to happen and ultimately in earnings?
Oscar Nieves: Yeah. Touching on rates, looking at data from the ICE Mortgage Monitor, I can see that once rates go below, say, 6%, the number of people with in-the-money mortgages increases significantly. Could you give some color and maybe quantify the impact that would have in your revenues if that were to happen and ultimately in earnings?
Speaker #7: And touching on on rates , looking at data from the Ice mortgage monitor , I can see that once rates go below , say , 6% , the number of with in the people mortgages increases significantly .
Speaker #7: color ? Maybe some Could quantify the give you in in your revenues if that were to happen and ultimately in , and earnings ?
Frederick Eppinger: Yeah. Again, there's a lot of talk about it. I don't know how scientific any of that is. But again, I look at last October, and we had a cup of coffee, a little bit under 6, and things jumped, right? So there is some optics around that 6. What I would tell you about our economics, our big swing of our economics is really Existing Home Sales, as we've said. And we've been sitting at 4 million for three years, right, with zero growth. And the reason it's such a swing for us is because it's the fixed-cost base for us. We have 500 locations. And particularly in Q1, when you're at that level, you've got so little volume going through the system, it's a real drag on your returns. And what I've said is if we got to 5 million, our margins go to 12%, right?
Fred Eppinger: Yeah. Again, there's a lot of talk about it. I don't know how scientific any of that is. But again, I look at last October, and we had a cup of coffee, a little bit under 6, and things jumped, right? So there is some optics around that 6. What I would tell you about our economics, our big swing of our economics is really Existing Home Sales, as we've said. And we've been sitting at 4 million for three years, right, with zero growth. And the reason it's such a swing for us is because it's the fixed-cost base for us. We have 500 locations. And particularly in Q1, when you're at that level, you've got so little volume going through the system, it's a real drag on your returns. And what I've said is if we got to 5 million, our margins go to 12%, right?
Speaker #2: yeah , Yeah , there's a lot of talk about it . I don't know how that But you is . scientific any of again I look know , October and we you know , cup of coffee a little bit we had a six and things under jumped right .
Speaker #2: So there is some there is some optics around that . Six what I would tell you about our economics , our big swing of our really economics is existing home sales , as we've said and we're above .
Speaker #2: at sitting 4 million about for three years , And right . zero growth . And the reason it's such a swing is know , because , you it's the cost base for us .
Speaker #2: With have We 500 locations and particularly in the first quarter that level , at you when you're got so little volume going through the system .
Speaker #2: It's a it's a real drag on your returns . I've said And what is if we get to 5 million , our margins go to 12% , right ?
Frederick Eppinger: But I don't have 12 because you're filling the excess capacity. And particularly if you want to go, if you can't sleep one night, look at our Q1 results in 2023, 2022, and 2021 when things were still really strong. It's an enormous swing for us, right? Now, we try to fill the bucket indirect through small commercial growth and some organic attempts around micromarkets, etc. So you can think about a straight line almost between the $4 million and the $5 million of leverage of our business. And again, it's a little seasonal because, again, the volumes are so low in Q1. But that's the way we think about it. And again, it's tied and so that's the big portion, but it's everywhere, right? By appraisal you go through the businesses, there's a fixed-cost portion of all those businesses.
Fred Eppinger: But I don't have 12 because you're filling the excess capacity. And particularly if you want to go, if you can't sleep one night, look at our Q1 results in 2023, 2022, and 2021 when things were still really strong. It's an enormous swing for us, right? Now, we try to fill the bucket indirect through small commercial growth and some organic attempts around micromarkets, etc. So you can think about a straight line almost between the $4 million and the $5 million of leverage of our business. And again, it's a little seasonal because, again, the volumes are so low in Q1. But that's the way we think about it. And again, it's tied and so that's the big portion, but it's everywhere, right? By appraisal you go through the businesses, there's a fixed-cost portion of all those businesses.
Speaker #2: And a half , 12 filling you're the capacity because particularly if you want to go , if and it can't sleep one night , look at the our first quarter results in 23 and 22 and 21 .
Speaker #2: When when things still really It's an strong . were enormous swing for us right now . We try to fill the bucket in direct through small commercial and some growth organic attempts around micro markets , etc.
Speaker #2: you can so think about a straight line almost between the 4 million and 5 million of leverage the of our business again . And , it's , you know , it's a little seasonal because again , the volumes are so low in but the way we think about it .
Speaker #2: first quarter , And again , it's tied . And so that's the big right force . But it's everywhere appraisal . My the through the you go appraisal there , businesses like there's a fixed cost portion of all those businesses .
Frederick Eppinger: And once you're at a 30-year low, you strain kind of on the margin. That's why what I say in kind of lender services business, I think where we're 11 to 12 now, I think we're 12 to 13 is kind of where we're going for this kind of year. But if we got back to 5 million, that thing's going to get to mid-teens because all those businesses are affected too, right? A little less, but it's part of our equation. And one of the things that are most interesting about us is if you look at 2019 to 2024, for example, the volumes, all our competitors' margins went down more than ours because of the volume decrease. And ours went up, but that's because we started bad. So we've made improvements, but we're still very tied to that core metric and trying to get less metric.
Fred Eppinger: And once you're at a 30-year low, you strain kind of on the margin. That's why what I say in kind of lender services business, I think where we're 11 to 12 now, I think we're 12 to 13 is kind of where we're going for this kind of year. But if we got back to 5 million, that thing's going to get to mid-teens because all those businesses are affected too, right? A little less, but it's part of our equation. And one of the things that are most interesting about us is if you look at 2019 to 2024, for example, the volumes, all our competitors' margins went down more than ours because of the volume decrease. And ours went up, but that's because we started bad. So we've made improvements, but we're still very tied to that core metric and trying to get less metric.
Speaker #2: And when 30 year low you you're at a kind of on the margin . That's why what I strain say in a lender services , you know , I think , you know , we're at we're 11 to 12 now .
Speaker #2: think we're 12 to 13 is kind of I at the going for a normal this kind of where we're year . But if we got back to 5 million , that thing's going to get to mid-teens because all those businesses are affected too , write a less little .
Speaker #2: but it's But it's part of our equation . And , you know , one of the things that are most interesting about us at look is if you 18 to 24 , for an example , in the all our competitors margins went down more than ours because of the volume decrease and ours went up , went , went up .
Speaker #2: But that's because we started bad . So we've made improvements still we're very to that core , but metric tied to get less metric .
Frederick Eppinger: The other thing I would say, and I've mentioned a number of things in public settings, because I think there's some chance that the journey beyond 4.5 is going to take longer. I mean, I think we're going to get some improvement, but it could get stalled for various reasons. We're working hard to make that try to get to double-digit at 4.5. A lot of work to do. But with geographic focus, some product portfolio stuff we're doing, some operating model because I'd like us to be able to show kind of improvement if we get stalled at that kind of 4.5 because there is some chance it's just going to take a little bit longer to get to 5.
Fred Eppinger: The other thing I would say, and I've mentioned a number of things in public settings, because I think there's some chance that the journey beyond 4.5 is going to take longer. I mean, I think we're going to get some improvement, but it could get stalled for various reasons. We're working hard to make that try to get to double-digit at 4.5. A lot of work to do. But with geographic focus, some product portfolio stuff we're doing, some operating model because I'd like us to be able to show kind of improvement if we get stalled at that kind of 4.5 because there is some chance it's just going to take a little bit longer to get to 5.
Speaker #2: The other thing I would I say , and mentioned this a number of things in public settings , because I think there's some chance that it's the journey beyond four and a half is going to take longer .
Speaker #2: I mean , we're going to get some but it could get stalled for reasons various working . We're hard to to make that , you know , try to double get to digit at four and a half , you know , a lot of work to do .
Speaker #2: I think with geographic some But product focus , portfolio stuff , we're doing , some operating model because I'd like us to be able to show of kind improvement if we get stalled at that four and a half , because there is some chance that's just going little bit to take a to longer get to five .
Frederick Eppinger: So I'm optimistic on improvement, but I'm cautious about how quickly it gets to that 5.5 million, and really focusing on continuing earnings growth while we're getting there, so.
Fred Eppinger: So I'm optimistic on improvement, but I'm cautious about how quickly it gets to that 5.5 million, and really focusing on continuing earnings growth while we're getting there, so.
Speaker #2: So I'm kind of optimistic on improvement , but I'm cautious about quickly it gets to that . Five , 5.5 million and really focusing on and continuing earnings growth getting while we're there .
Oscar Nieves: Yeah. And maybe a last one, and I'll get back in the queue. You've highlighted efforts to grow agency in a few targeted MSAs, including Texas. With the Texas Department of Insurance finalizing the reduction in title premium rates effective 1 March, if you can walk us through how that change would flow through your financials and how you're thinking about the impact on the business, both near-term and longer-term.
Oscar Nieves: Yeah. And maybe a last one, and I'll get back in the queue. You've highlighted efforts to grow agency in a few targeted MSAs, including Texas. With the Texas Department of Insurance finalizing the reduction in title premium rates effective 1 March, if you can walk us through how that change would flow through your financials and how you're thinking about the impact on the business, both near-term and longer-term.
Speaker #8: So .
Speaker #7: maybe and one and I'll get back in the queue . You've highlighted Yeah , efforts to grow in a agency few a last targeted MSAs , including Texas Texas with the Insurance Department of reduction in premium effective rates March 1st .
Speaker #7: If you can walk us through how that change will flow through your financials you're thinking about the impact on the and how business , both near longer term .
Frederick Eppinger: Yep. So the rate, again, is like 6. What they agreed to is a 6% reduction, and it's July or something. And so that's much less of an issue than it was when it was 10, first of all. But what we've done is we've addressed this through reviewing all our fees and services and stuff in Texas. And so it's low single-digit impact on earnings this year. So we've managed it well. Now, I'm concerned for some of our agent partners in rural places in particular because they don't make a lot of money, and that's a meaningful change. And so I do think it's going to cause some disruption in some of the agencies, particularly small agents in parts of Texas because there is, in my view, right now, there's not a ton of margin for agents given the rate structure.
Fred Eppinger: Yep. So the rate, again, is like 6. What they agreed to is a 6% reduction, and it's July or something. And so that's much less of an issue than it was when it was 10, first of all. But what we've done is we've addressed this through reviewing all our fees and services and stuff in Texas. And so it's low single-digit impact on earnings this year. So we've managed it well. Now, I'm concerned for some of our agent partners in rural places in particular because they don't make a lot of money, and that's a meaningful change. And so I do think it's going to cause some disruption in some of the agencies, particularly small agents in parts of Texas because there is, in my view, right now, there's not a ton of margin for agents given the rate structure.
Speaker #2: Yeah . So rate the the is like sixth , what that agreed to a 6% reduction . And it's like something July or .
Speaker #2: so And that's much an issue less of than it was when it was ten . First of all . But what we've done is we've addressed this through reviewing all our fees and services and stuff in Texas .
Speaker #2: so And it's low less it's single digit impact on This earnings . year . so I we've So , managed it well . I'm Now for some concerned of our partners in places in rural particular because don't make a lot of money .
Speaker #2: And that's a they change . And meaningful so I do think it's going to cause some disruption in the agency . of the Some agencies , particularly small agents in parts of Texas , because there is , you know , in my right view , now , there's not a ton of margin for agents , given the rate structure .
Frederick Eppinger: What's weird about our world, right, is that people think about it as a cyclical world, so they take a 3-year average or a 5-year average or whatever. The problem is that 2021 and 2022 are once-in-a-lifetime, never-happen-again kind of event. And if you weight them too much, you overreact to the excess earnings that were made in those two years. And I think Texas is a perfect example where that reduction's overstated given what today's environment is, and it's going to have some impact on agents. But for us, financially, I don't think it's going to be much, if anything. We put it in our plan and everything, but it doesn't change my expectations of growth of earnings or anything in our businesses.
Fred Eppinger: What's weird about our world, right, is that people think about it as a cyclical world, so they take a 3-year average or a 5-year average or whatever. The problem is that 2021 and 2022 are once-in-a-lifetime, never-happen-again kind of event. And if you weight them too much, you overreact to the excess earnings that were made in those two years. And I think Texas is a perfect example where that reduction's overstated given what today's environment is, and it's going to have some impact on agents. But for us, financially, I don't think it's going to be much, if anything. We put it in our plan and everything, but it doesn't change my expectations of growth of earnings or anything in our businesses.
Speaker #2: What's weird about our world , right , think is about it as a that people cyclical world . So three year they take a average or a five year average or whatever .
Speaker #2: problem is that 21 and 22 are lifetime . Never once in a again . Kind of And if you event . rate them too much , you overreact to the excess earnings that were made in happen And I think Texas those two years .
Speaker #2: is a perfect example where that overstated given what today's environment is . going to have And it's some impact on agents . But for us , it's financially , I don't not going to be think it's much , if anything , like I don't we put it in our plan and everything , but it doesn't change my expectations of growth , of earnings or anything in our businesses .
Oscar Nieves: All right. Thank you.
Oscar Nieves: All right. Thank you.
Frederick Eppinger: Thank you.
Fred Eppinger: Thank you.
Kathryn Bass: Thank you. And once again, if you would like to ask a question, please press star and 1 on your keypad now. And we do have a follow-up from Oscar. Your line is open. Please go ahead.
Operator: Thank you. And once again, if you would like to ask a question, please press star and 1 on your keypad now. And we do have a follow-up from Oscar. Your line is open. Please go ahead.
Speaker #6: Right .
Speaker #7: you Thank .
Speaker #2: you Thank .
Speaker #4: Thank you. And once again, if you would like to ask a question, please press star and one on your phone now. We do have a follow-up from Oscar. Your line is open.
Oscar Nieves: All right. I guess this will be my last one. You've highlighted efforts to grow, sorry. You talked about prioritizing share gains in those key MSAs, both organically and through M&A. Can you give us a bit more color on how you're thinking about that strategy today, including whether you have a target level of capital that you plan to deploy this year and how that might be split between the title business and the real estate solutions business?
Oscar Nieves: All right. I guess this will be my last one. You've highlighted efforts to grow, sorry. You talked about prioritizing share gains in those key MSAs, both organically and through M&A. Can you give us a bit more color on how you're thinking about that strategy today, including whether you have a target level of capital that you plan to deploy this year and how that might be split between the title business and the real estate solutions business?
Speaker #4: open . Please ahead go .
Speaker #7: All . I guess my last one . it's You've had a lot of to efforts grow . Sorry . You talked about gains in those key messages .
Speaker #7: Both organically and through M&A . Can you give us a bit more how you're thinking that strategy color on about today , that including whether you target level of capital that you going to deploy this year have a , and how be split between the title business and the real estate solutions business .
Frederick Eppinger: Great. Great question. So to me, the direct, as I said, there's more of a kind of a fixed-cost minimum scale way to think about direct in MSA levels. And early on, the problem we had is we were an inch deep and a mile wide. So we had a lot of offices that were chronically unprofitable unless the market was at its peak. And so we shut some stuff down, reallocated capital. We actually purchased in about 30 MSAs some business because the scale difference, if you get over 10% share locally, the margins are much better. The ability to manage the ups and down is better. Your service consistency is better. Your ability to centralize things and variabilize the costs are better. So we reviewed the 140 MSAs. We said, "Which ones are mostly agent-oriented? Which ones are we strong?
Fred Eppinger: Great. Great question. So to me, the direct, as I said, there's more of a kind of a fixed-cost minimum scale way to think about direct in MSA levels. And early on, the problem we had is we were an inch deep and a mile wide. So we had a lot of offices that were chronically unprofitable unless the market was at its peak. And so we shut some stuff down, reallocated capital. We actually purchased in about 30 MSAs some business because the scale difference, if you get over 10% share locally, the margins are much better. The ability to manage the ups and down is better. Your service consistency is better. Your ability to centralize things and variabilize the costs are better. So we reviewed the 140 MSAs. We said, "Which ones are mostly agent-oriented? Which ones are we strong?
Speaker #2: Great . Great question . So you indirect , , to me , the a said , fixed minimum scale think way to cost MSA direct in levels .
Speaker #2: And on , early the problem we had is we were mile an inch wide . So we had a offices that were lot of chronically unprofitable the market deep in a was at peak .
Speaker #2: And so unless we shut some stuff down . We allocated We capital . actually purchased in 30 MSAs , some about business , its if you get over 10% share locally , is is the the margins are much The ability to manage the ups and better .
Speaker #2: And so unless we shut some stuff down . We allocated We capital . actually purchased in 30 MSAs , some about business , its if you get over 10% share locally , is is the the margins are much The ability to manage the ups and better .
Speaker #2: downs is Your service consistency is better . Your ability to and things centralize variable costs are better . and we have this . We've reviewed MSAs .
Frederick Eppinger: Which ones we like the market, but we're not where we need to be?" We have 30 or so MSAs in particular that we think we can move the dial, and it'd be good for the company to get to a higher share level in those areas. We also have what I call micromarkets, which is the suburbs of Nashville, the difference between Austin and San Antonio, the growth in between, where we can do fill-ins, acquisitions, and tie it to the bigger offices in those locations. So we have these targets that would materially both improve top line and bottom line for the company. For the last three years, we kind of didn't do really any because what happened is agents weren't making any money, and so their price expectations weren't going to get enough to be comfortable or happy about that.
Fred Eppinger: Which ones we like the market, but we're not where we need to be?" We have 30 or so MSAs in particular that we think we can move the dial, and it'd be good for the company to get to a higher share level in those areas. We also have what I call micromarkets, which is the suburbs of Nashville, the difference between Austin and San Antonio, the growth in between, where we can do fill-ins, acquisitions, and tie it to the bigger offices in those locations. So we have these targets that would materially both improve top line and bottom line for the company. For the last three years, we kind of didn't do really any because what happened is agents weren't making any money, and so their price expectations weren't going to get enough to be comfortable or happy about that.
Speaker #2: Said which, the 140 ones are agent mostly. Which ones are oriented? Which ones we like the market, but we don't need to be.
Speaker #2: And we where we have a 30 or so are we MSAs in particular that think we we can move the dial , and it'd be good for the company to get a to share level areas .
Speaker #2: micro in those is have what I know , the markets , We also suburbs of the , the . The Nashville , difference higher between Austin and call than growth San , you between in where we fill can do and acquisitions and the bigger office offices in those So locations .
Speaker #2: we have these tie it to targets that both improve line for the top line . For the last three years , we've not we've kind of didn't do really any we because what and bottom weren't making any money .
Speaker #2: And their price so expectations and you weren't they weren't going to get happy that . enough to be So they of kind talked to wasn't us .
Frederick Eppinger: So they kind of talked to us and communicated with us, but there wasn't a price point, even with an earnout. What has happened is as people have re-engineered their operations through getting through the tough times, they're making a little bit more money. They're seeing the improvement that I'm seeing. All of a sudden, in these target markets, those conversations are becoming more constructive, right, for those that are deciding this is one of the alternatives they want to consider.
Fred Eppinger: So they kind of talked to us and communicated with us, but there wasn't a price point, even with an earnout. What has happened is as people have re-engineered their operations through getting through the tough times, they're making a little bit more money. They're seeing the improvement that I'm seeing. All of a sudden, in these target markets, those conversations are becoming more constructive, right, for those that are deciding this is one of the alternatives they want to consider.
Speaker #2: But there communicate with a with an Earnout . What has is as people have their happened about operations us and through getting tough , tough through the price make a little bit more money .
Speaker #2: the improvement that I'm They're seeing seeing . sudden re-engineered All of a target those becoming conversations are more those that For are deciding , markets , alternatives they want to .
Speaker #2: the improvement that I'm They're seeing seeing . sudden re-engineered All of a target those becoming conversations are more those that For are deciding , markets , alternatives they want to consider so for me , I've said over the next three years , I've said times over the next three years , I $300 million , roughly of acquisitions in direct the channel see these kind of against markets .
Frederick Eppinger: And so for me, over the next three years, I've said a bunch of times, "Over the next three years, I see $300 million, roughly, of acquisitions in the direct channel against these kind of markets that would structurally improve our margin regardless of cycle in that business." And so what I'm saying and what I said in my script, I am much more optimistic that this year, some of that could start to happen. And I don't know when. And again, I only want people that want to be here. I only want it to work for both of us. So it's getting to that right trading price, no risk for us and no risk for them. And I think we're getting closer. And so that 300 in my mind over the next three years is kind of the way I've thought about it.
Fred Eppinger: And so for me, over the next three years, I've said a bunch of times, "Over the next three years, I see $300 million, roughly, of acquisitions in the direct channel against these kind of markets that would structurally improve our margin regardless of cycle in that business." And so what I'm saying and what I said in my script, I am much more optimistic that this year, some of that could start to happen. And I don't know when. And again, I only want people that want to be here. I only want it to work for both of us. So it's getting to that right trading price, no risk for us and no risk for them. And I think we're getting closer. And so that 300 in my mind over the next three years is kind of the way I've thought about it.
Speaker #2: That would structurally improve margin our regardless of cycle . In that business . And so I'm what saying , what I said in my script more optimistic that this year am much some of that could .
Speaker #2: happen start to And I when , don't know you know . And again want , I only want to be I only want here .
Speaker #2: it to work for both of us . So it's getting to that , right ? Trading price with no risk for and no risk for us them .
Speaker #2: and I think we're And closer . And so , I that getting over the next three years is kind of the way I've thought about it .
Frederick Eppinger: As you know, most of the transactions in that space are small. They're $10 to 30 million. It's because you're geared to a market or a market opportunity. That, by far, if you look at our overall capital plan, I would say the other businesses I'm in are in. We don't need to do acquisitions. What I have said out loud recently is that in lender services, there's a couple of spots where we've got really good traction that it might make sense to consolidate some of the competitors. Again, those won't be. They wouldn't be big transactions. But what's emerging is we've got so much momentum with some of the big lenders that building on our network or buying some of those customer relationships could make some sense. So again, that's a little bit more opportunistic.
Fred Eppinger: As you know, most of the transactions in that space are small. They're $10 to 30 million. It's because you're geared to a market or a market opportunity. That, by far, if you look at our overall capital plan, I would say the other businesses I'm in are in. We don't need to do acquisitions. What I have said out loud recently is that in lender services, there's a couple of spots where we've got really good traction that it might make sense to consolidate some of the competitors. Again, those won't be. They wouldn't be big transactions. But what's emerging is we've got so much momentum with some of the big lenders that building on our network or buying some of those customer relationships could make some sense. So again, that's a little bit more opportunistic.
Speaker #2: And 300 in my—you know, most of the transactions in my mind are small, you know, $10 to $30 million. It's because they're tied to a market or a market opportunity.
Speaker #2: And that by if you look at our far , older overall capital plan , I would say the other businesses I'm in are in .
Speaker #2: We don't need to do . What I have said out loud recently is that in lender services , there's a couple spots acquisitions where we've got of really good traction it might make sense to some of the that competitors consolidate .
Speaker #2: wouldn't be Again , those they wouldn't But emerging is got so we've much momentum with some of the big be big that filling in our network or buying some of those customer transactions .
Frederick Eppinger: Again, I don't think you're going to see a $300 million those. Again, will it be a $20 million or $30 million opportunity? The other thing I would say is what Jeff just said. There are a handful of really teeny, like $3 million, $4 million, of tool sets that I do think will be available in some of these businesses that accelerate some of the development we want to do to make our service better and our delivery better because of what's happening with; it's not just AI. There's a bunch of things happening with certain development. So that's where our capital is. I don't think it's going to be a huge number. I think what happens quickly is the market comes back, and we improve margins. We generate a lot of cash. So I believe the majority of what we're going to be doing is self-funded.
Fred Eppinger: Again, I don't think you're going to see a $300 million those. Again, will it be a $20 million or $30 million opportunity? The other thing I would say is what Jeff just said. There are a handful of really teeny, like $3 million, $4 million, of tool sets that I do think will be available in some of these businesses that accelerate some of the development we want to do to make our service better and our delivery better because of what's happening with; it's not just AI. There's a bunch of things happening with certain development. So that's where our capital is. I don't think it's going to be a huge number. I think what happens quickly is the market comes back, and we improve margins. We generate a lot of cash. So I believe the majority of what we're going to be doing is self-funded.
Speaker #2: could some So little bit make more that's a . And again , it's not again , to see you're going a $300 million .
Speaker #2: tool sets that I do think will be some of these available in businesses that accelerate some of the development we want to to make our service better and our delivery do better what's because of with it's not just AI .
Speaker #2: There's a bunch happening in certain development where capital is . I our don't think . it's going to So that's be a huge number .
Speaker #2: I think what happens of things quickly is back and we comes the market improve margins . We generate a lot of believe the of what we're going .
Frederick Eppinger: I still believe that. It was just a timing thing here that I wanted to give ourselves some flexibility because of what I saw happening over the next 6, 9 months. I think in general, we should be able to self-fund what I'm talking about over the next 3 years.
Fred Eppinger: I still believe that. It was just a timing thing here that I wanted to give ourselves some flexibility because of what I saw happening over the next 6, 9 months. I think in general, we should be able to self-fund what I'm talking about over the next 3 years.
Speaker #2: majority doing is . believe I still self-funded . And So I that timing thing here that I to wanted give ourselves some flexibility and it of what I saw happening over the next six , nine months .
Speaker #2: I think But in general , we're we should be able to self-fund . talking about When over the next three years .
[Company Representative] (Stewart Information Services Corporation): Yep. I'm going to stick to my word. You answered the follow-up that I would have, but yeah.
Oscar Nieves: Yep. I'm going to stick to my word. You answered the follow-up that I would have, but yeah.
Frederick Eppinger: Thanks, Oscar.
Fred Eppinger: Thanks, Oscar.
[Company Representative] (Stewart Information Services Corporation): Thank you. Yeah.
Oscar Nieves: Thank you. Yeah.
Speaker #8: Yep .
Speaker #7: I'm going to stick to my word. You answered the question that I would follow up on, but I have.
Kathryn Bass: Thank you. We'll go next to Geoffrey Dunn with Dowling & Partners.
Operator: Thank you. We'll go next to Geoffrey Dunn with Dowling & Partners.
Speaker #2: Yeah , thanks .
Speaker #7: Thank you .
[Company Representative] (Stewart Information Services Corporation): Hey, Jeff.
Fred Eppinger: Hey, Jeff.
[Analyst] (Dowling & Partners): Thanks. Sorry. Just a couple of number questions. David, could you update us on what you saw January trend-wise for orders and also share your thoughts for investment income in the coming year relative to 2025?
Geoffrey Dunn: Thanks. Sorry. Just a couple of number questions. David, could you update us on what you saw January trend-wise for orders and also share your thoughts for investment income in the coming year relative to 2025?
Speaker #2: . Yeah
Speaker #4: Thank you .
Speaker #4: Thank you .
Speaker #4: next to Jeffrey Dunn with go and Partners .
Speaker #6: questions . Sure . number David , could you just a update on you what saw ? January trend wise for orders and also share your thoughts for investment income in the coming year relative to
David Hisey: Yeah, Jeff. I mean, with respect to orders, I think Jeff or Fred just covered it a little bit. Things have been opening up a little, particularly relative to last year's quarter. They're up a bit. We just have to see how things play out here because rates have been a little volatile, as you've seen. But right now, things seem to be a little bit better than last year. With respect to interest income and this also goes to Fred's comment on the float benefit of getting commercial. So as it stands now, if you plan on maybe one or two rate cuts and assume most escrow earnings are tied to short-term rates, we may come down a little bit, but we don't expect it to come down that much. And the main reason is because the escrow balances will grow and offset it.
David Hisey: Yeah, Jeff. I mean, with respect to orders, I think Jeff or Fred just covered it a little bit. Things have been opening up a little, particularly relative to last year's quarter. They're up a bit. We just have to see how things play out here because rates have been a little volatile, as you've seen. But right now, things seem to be a little bit better than last year. With respect to interest income and this also goes to Fred's comment on the float benefit of getting commercial. So as it stands now, if you plan on maybe one or two rate cuts and assume most escrow earnings are tied to short-term rates, we may come down a little bit, but we don't expect it to come down that much. And the main reason is because the escrow balances will grow and offset it.
Speaker #3: Jeff , I 25 ? Yeah , mean , with to respect Jeff or orders , I think Fred just it a little bit .
Speaker #3: Covered things to know, things opening up. Particularly, a little up over last quarter. They're up over a year ago. We just have to let things play out here.
Speaker #3: Because rates have see how volatile . As you've But right know , things seem to be a now , you little that a little bit better than year last with to respect seen .
Speaker #3: income this also Fred's . goes to And comment on the float benefit of getting commercial . So as it now , you know , if you on maybe stands a 1 or 2 rate cuts and relative plan you know , assume escrow earnings are tied short term rates , we may come down a bit little , but most we don't expect it to come down that the main reason is because the much .
[Analyst] (Dowling & Partners): Okay. So largely a volume offset to rate cut impact?
Geoffrey Dunn: Okay. So largely a volume offset to rate cut impact?
Speaker #3: escrow will balances grow and offset it . And
David Hisey: Yeah. I mean, I would say it could come down a bit, like $several million or so. But it's really a function of how quickly if they don't drop rates till the fall, right, and volume continues to pick up, then you're sort of holding, maybe increasing a little, right? If volume doesn't pick up as quickly and they drop rates at the next meeting or two, right, then you could go down a little bit.
David Hisey: Yeah. I mean, I would say it could come down a bit, like $several million or so. But it's really a function of how quickly if they don't drop rates till the fall, right, and volume continues to pick up, then you're sort of holding, maybe increasing a little, right? If volume doesn't pick up as quickly and they drop rates at the next meeting or two, right, then you could go down a little bit.
Speaker #6: So largely a volume, okay. Cut offset to impact.
Speaker #3: Yeah , I would say down it could mean , I bit like , you come several million or so , but really a function of it's how quickly , you know , like if they a don't drop rates till the fall .
Speaker #3: And volume continues to pick then of up , you're sort maybe holding increasing a little . Right . If volume doesn't pick up as quickly and they've Right .
[Analyst] (Dowling & Partners): Okay. All right. Thank you.
Geoffrey Dunn: Okay. All right. Thank you.
Speaker #3: meeting or two , right ? Then rates you could go down a little bit .
Kathryn Bass: Thank you. We'll now move to Bose George with KBW. Please go ahead.
Operator: Thank you. We'll now move to Bose George with KBW. Please go ahead.
Oscar Nieves: Hey, guys. One more from me as well. Petrie, can you give us an idea about the revenue contribution from MCS? And is there much seasonality there as that comes in?
Bose George: Hey, guys. One more from me as well. Petrie, can you give us an idea about the revenue contribution from MCS? And is there much seasonality there as that comes in?
Speaker #4: Thank All now Bose George with CCB , move to go please .
Speaker #5: Yeah . One more for me as well . Hey , guys . an idea about you give us revenue Can contribution from mix the and is there much seasonality there .
Frederick Eppinger: Yeah. Both good questions. So there is a little seasonality, particularly Q1, okay, for that business. And I think when we bought the company, we talked. You want to go through Dove, Logan?
Fred Eppinger: Yeah. Both good questions. So there is a little seasonality, particularly Q1, okay, for that business. And I think when we bought the company, we talked. You want to go through Dove, Logan?
Speaker #5: Is . and that comes in
Speaker #5: .
Speaker #5: .
Speaker #2: questions . So there is a little seasonality . Particularly the Yeah . first quarter For okay . business . It is . And we company think when we bought the talked .
David Hisey: Yeah. Yeah. Bose, I think we had covered this a little bit in different forms, but it's about $165 million a year revenue company, sort of in the $40 million EBITDA or so range. We'll just have to see where it goes from there because foreclosures have been increasing, as you've seen. FHA delinquencies have been increasing, but that's about how they're running now.
David Hisey: Yeah. Yeah. Bose, I think we had covered this a little bit in different forms, but it's about $165 million a year revenue company, sort of in the $40 million EBITDA or so range. We'll just have to see where it goes from there because foreclosures have been increasing, as you've seen. FHA delinquencies have been increasing, but that's about how they're running now.
Speaker #2: You want to go . through .
Speaker #3: think we Yeah . this a had covered little bit in different forms . But about
Speaker #3: it's 165 million a year But I revenue company . You know , sort of in the 40 million EBITDA or so range I .
Speaker #3: And , you know , we'll just have to see where it goes from there because see , you know , foreclosures increasing have been , as you've seen FHA delinquencies have been increasing .
Frederick Eppinger: Yeah. So a little lower in Q1 back then.
Fred Eppinger: Yeah. So a little lower in Q1 back then.
Speaker #3: But that's about how they're now .
Oscar Nieves: Okay. Great. Okay. Thanks a lot.
Oscar Nieves: Okay. Great. Okay. Thanks a lot.
Frederick Eppinger: Thank you.
Fred Eppinger: Thank you.
Speaker #2: Yeah . So a little lower in the
Speaker #2: .
Kathryn Bass: Thank you. At this time, there are no further questions in queue. I will now turn the meeting back to management for closing remarks.
Operator: Thank you. At this time, there are no further questions in queue. I will now turn the meeting back to management for closing remarks.
Speaker #5: Okay . Great . Thanks a Okay . lot .
Speaker #2: you Thank
Speaker #2: . just want I everybody for to thank their interest in I said Stuart . earlier As , I'm very pleased We made good progress and have good momentum .
Frederick Eppinger: I just want to thank everybody for their interest in Stewart. As I said earlier, I'm very pleased with 2025. We've made good progress, and we have good momentum. I believe that momentum will continue into 2026 if we stay focused. So, thank you for all your attention and interest in the company. Thanks.
Fred Eppinger: I just want to thank everybody for their interest in Stewart. As I said earlier, I'm very pleased with 2025. We've made good progress, and we have good momentum. I believe that momentum will continue into 2026 if we stay focused. So, thank you for all your attention and interest in the company. Thanks.
Speaker #4: you . At this time , there are no Thank further
Speaker #4: questions . Q And I will now running turn the meeting back to management for first quarter of that remarks .
Speaker #2: with 25 . believe that momentum will and we continue into 26 if we stay I focused . thank you So for all your interest in attention and the company .
Speaker #2: with 25 . believe that momentum will and we continue into 26 if we stay I focused . thank you So for all your interest in attention and I thanks for Thanks .
Kathryn Bass: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.
Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.
Speaker #4: Thank you . This brings us to the end of meeting . We appreciate your time today's and participation . may now You disconnect .
