Industry News

HOUSTON,--  Stewart Information Services Corporation reported the results of its operations for the quarter ended March 31, 2008. (Dollar amounts in the table below are in millions, except for per share figures.)                                                     

 (a)  Includes a $3.2 million gain ($2.1 million after taxes, or $0.11 per share) from the sale of two subsidiaries. Also includes a charge of $5.1 million ($3.3 million after taxes, or $0.18 per share) relating to four large title losses.

Financial Highlights

• Revenues decreased 25.9 percent to $394.1 million in the first quarter of 2008 compared with $531.7 million for the first quarter of 2007. The Company reported a loss before taxes (and before minority interests) of $36.3 million for the first quarter of 2008 compared with a loss of $4.6 million for the same period in 2007.
• The revenue decline in 2008 was due to a significant decrease in title orders resulting from a decline in home sales and reduced financing activity relating primarily to tightening of mortgage lending practices and issues in the credit market, as well as lower home prices.
• The Company continues to respond aggressively to the decline in the real estate market and is taking appropriate steps to restore profitability.  In addition to workforce reductions, the Company continues     to consolidate branch offices and locations, and is pursuing the completion of title search and production efficiencies company-wide.  The Company's shared services initiative also remains on target and will generate benefits during 2008 in the areas of procurement and information technology infrastructure by reducing costs and enhancing service levels.
• Excluding acquisitions, divestitures and startups, the Company has reduced its employee count since December 31, 2005 by approximately 2,500, or 24.8 percent.  The Company reduced its employee count during the first quarter of 2008 by approximately 460, or 5.4 percent.  The Company will continue to incur significant costs relating to conversion of its technology to more efficient platforms.  Although other operating expenses have declined, they have not declined at the same rate as revenues due to the relatively fixed nature of some of these costs, such as rent and other occupancy expenses, and costs associated with our growing, profitable international and commercial businesses.
• Stewart's book value per share decreased to $40.48 at March 31, 2008 compared with $41.82 at December 31, 2007.
• Title orders declined in the first quarter of 2008 by 13.0 percent from the same period a year ago.  Orders were 26.3 percent lower in March 2008 than in March 2007.

"The first quarter of 2008 has been a challenging environment for profitability given the current adverse economic conditions, as well as the traditional negative impact of the seasonality of real estate sales," said Stewart Morris, Jr., co-chief executive officer and president. "Fannie Mae's current estimate is that a total of $499 billion of one-to-four family lending was completed in the first quarter of 2008 versus $612 billion in the first quarter of 2007 -- an 18.5 percent decline. In view of this, we continued our reduction in staffing levels in the first quarter of 2008.
"We continue the process of converting our legacy production systems to a new web-based production platform on our centralized ASP and data center. As this progresses during the year, we will eliminate three data centers, reduce the required level of personnel and reduce maintenance costs," said Morris.

"SureClose®, our industry-leading transaction management system, has been adopted by the Arizona Association of Realtors®, the seventh largest state association in the country," added Morris. It will serve more than 5,000 brokerage companies statewide. More than 80 percent of homebuyers already utilize the web to search for a home to purchase. The use of SureClose will now allow the buyer, seller, lender and Realtor® to track the progress of the closing via the web.

Source: Stewart Information Services Corporation