Stewart Reports Earnings for Third Quarter
October 27, 2004
HOUSTON, /PRNewswire-FirstCall/ -- Stewart Information Services Corporation (NYSE: STC) reported net earnings of $21.1 million, or $1.16 per diluted share, for the three months ended September 30, 2004, versus net earnings of $42.1 million, or $2.34 per diluted share, for the third quarter of 2003. Revenues in the third quarter decreased 16 percent to $530 million from $629 million for the same period last year. The growth in book value continued to $37.76 per share as of September 30, 2004 -- an all time record.
Total revenues for the first nine months of 2004 were $1.6 billion, down 4 percent from the same period a year ago. Earnings for the first nine months totaled $62.2 million, or $3.42 per diluted share, versus $103.0 million, or $5.74 per diluted share, for the first nine months of 2003.
"SureClose(R), our transaction management system, continues to grow in number of users and is our vehicle to go paperless in the title office," said Stewart Morris, Jr., president and co-chief executive officer. "It is also our method of delivering products, communicating on files and archiving closed files. SureClose is the most significant new technology in our tool kit. We make enhancements continually. We are now adding more than 20,000 documents to SureClose each working day. The system also proved itself as to security during the three hurricanes that recently tracked across Florida. Although twenty-one of our Florida offices incurred some operational interruption from hurricane damage, our customers and associates had immediate access to their files via the Internet. Paperless transactions are now a reality when using the latest SureClose release. Our company continues to enhance current systems and add new applications to improve customer service and associate effectiveness."
"Accolades for our financial performance continued in this past quarter," said Malcolm S. Morris, chairman of the board and co-chief executive officer. "Stewart was ranked 31st in Fortune magazine's list of the 100 fastest growing companies. We have been included on the Forbes Platinum 400 Companies -- the best big companies in the US, and as a member of the Fortune 1000, Russell 2000, 2500 and 3000 Value Indexes and Russell 2000, 2500 and 3000 Indexes. We also are on the S&P Small Cap 600. Sandler O'Neill & Partners, L.P. included Stewart in their first-ever Premium Players List for 2004, made up of the top 30 insurance companies that have consistently demonstrated exceptional growth and profitability and above-average performance in the past five years."
"Although tight inventory levels in many high end residential markets have moderated, the forecast for the upscale market continues to be strong," reported Laurie Moore-Moore, Stewart advisory director and president of The Institute for Luxury Home Marketing. "The affluent are still shifting dollars into real estate from other investments, home prices are rising, and luxury home demand is very healthy." Title orders per working day for the third quarter of 2004 were down 13 percent from the same period in 2003 primarily due to the decrease in refinancing transactions. Beginning in July 2003, orders fell to lower levels because of an increase in mortgage interest rates. However, in August and September 2004, interest rates averaged 30 to 40
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, new services and new offices. Employee costs are the largest component of the company's operating costs, excluding title agency retentions. Employee counts and order counts are monitored on a regular basis. However, the company's strategy is not to overreact to either increases or decreases in transaction volumes. Instead, the company works to maintain good service to its customers through a reasonably stable, dedicated employee work force allowing for continued growth.
The company continues to emphasize gaining commercial business, acquiring companies with higher margins and expanding internationally. The company believes these strategies will position it for future growth, diversification and strength.
Source: Stewart Information Services Corporation