Stewart Reports Earnings for the Year 2004
February 16, 2005
HOUSTON, /PRNewswire-FirstCall/ -- Stewart Information Services Corporation (NYSE: STC - News) today reported results for the fourth quarter and year end 2004. Net earnings for the year 2004 were $82.5 million, or $4.53 per diluted share, compared to net earnings of $123.8 million, or $6.88 per diluted share, for 2003. Revenues for the year 2004 were $2.2 billion, a decrease of 2.5 percent compared to 2003.
Stewart earned $20.3 million, or $1.11 per diluted share, for the fourth quarter of 2004, compared to $20.8 million, or $1.15 per diluted share, for the fourth quarter of 2003. Revenues for the fourth quarter increased by 2.0 percent over the fourth quarter of 2003.
Book value per share increased 11.6 percent, from $34.47 at the end of 2003 to $38.48 at December 31, 2004. "As in 2003, Stewart paid a $0.46 cents per share annual cash dividend in December of 2004," said Malcolm S. Morris, chairman and co-chief executive officer. "Our story is clear -- pay reasonable dividends to our shareholders, increase book value per share and execute accretive acquisitions. Achieving this balance in an off-peak year for our business is what we work hard to deliver to our shareholders. To accomplish this, we are expanding internationally, growing our higher-margin commercial business, capturing a significant share of emerging market growth activity and providing a bundle of services, in addition to title insurance, that enhances the transaction process."
"We are dedicated to enhancing shareholder value and are focusing on the long-run increase in margins and revenues by attracting, retaining and training the best group of associates in the industry," said Stewart Morris, Jr., president and co-chief executive officer. "We have a seasoned management team that is changing the way we do business. We are providing our staff the technology tools to continue delivering magnificent service to our customers.
"Utilizing our Web-based transaction management system, SureClose(R), and our production systems accessible through TitleLogix(R), our Application Service Provider, proved their mettle this past year," added Morris. "This technology enabled our Florida offices to continue service to their customers despite the devastation of multiple hurricanes. As the systems become more widely used and incorporate electronic signatures and electronic courthouse filings, they will dramatically improve the way we do our daily business. At the same time, SureClose makes essential data available to consumers and real estate professionals 24/7, from electronic order entry to electronic delivery of our products and services. Our focus is on the future, and we have invested in recent years to provide for future productivity and profitability."
Stewart's incoming orders in the fourth quarter of 2004 were up 11.6 percent from the same quarter a year ago. Orders in the month of December 2004 were up 11.8 percent from December 2003. Nationally, industry- wide refinance activity made up 69 percent of all national residential lending activity in 2003 versus 51 percent in 2004 (preliminary) and is forecast at slightly less than 40 percent in 2005. Industry forecasts call for a modest interest rate increase in 2005, implying a further contraction in refi business.
Total one-to-four family residential lending nationwide declined from $3.8 trillion in 2003 to $2.8 trillion in 2004, a decline of 27 percent. The reduction resulted from a gradual shrinking of refinance activity. Operating profit margins decreased year-over-year due primarily to the fixed nature of most of the company's operating costs. Margins were also reduced due to the company's investments in growth, technology and new services. Excluding title agency retentions, employee costs are the largest component of the company's operating costs. Consistent with Stewart's strategy of balancing employee costs with its business volume over the long term, employee costs and order counts are continually monitored. The company works to balance staffing with customer service needs using scalable technology to allow for continued growth."
Stewart experienced increased costs in 2004 for the rollout of SureClose and its effective integration into company and customer use. SureClose is now installed at more than 725 company locations and independent title agencies and has more than 525,000 active files in process on the system.
Source: Stewart Information Services Corporation