Stewart(STC) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Stewart Company achieved strong financial results in Q2 2025, driven by significant growth in net income and EPS across business lines despite real estate market challenges Second Quarter 2025 Performance Overview Stewart Company achieved strong financial performance in Q2 2025 with significant growth in GAAP and adjusted net income and diluted EPS, driven by progress across business lines despite real estate market headwinds | Metric | Q2 2025 ($ million) | Q2 2024 ($ million) | Change | | :---------------------------------------- | :------------------ | :------------------ | :----- | | Net Income Attributable to Stewart | 31.9 | 17.3 | +84% | | Diluted EPS Attributable to Stewart ($) | 1.13 | 0.62 | +82% | | Adjusted Net Income Attributable to Stewart | 38.0 | 25.4 | +50% | | Adjusted Diluted EPS Attributable to Stewart ($) | 1.34 | 0.91 | +47% | | Pretax Income | 46.8 | 29.0 | +61% | | Adjusted Pretax Income | 54.9 | 39.6 | +39% | - CEO Fred Eppinger expressed satisfaction with the quarter's results, noting revenue growth across business lines indicating company progress and sound operational management leading to robust profitability[4] Key Financial Highlights (Consolidated) In Q2 2025, Stewart Company achieved significant year-over-year growth in total revenue, net income, and diluted EPS (GAAP and adjusted) | Metric | Q2 2025 ($ million) | Q2 2024 ($ million) | | :---------------------------------------- | :------------------ | :------------------ | | Total Revenue | 722.2 | 602.2 | | Adjusted Total Revenue | 721.5 | 602.7 | | Net Income | 31.9 | 17.3 | | Adjusted Net Income | 38.0 | 25.4 | | Diluted EPS ($) | 1.13 | 0.62 | | Adjusted Diluted EPS ($) | 1.34 | 0.91 | Consolidated Financial Performance This section provides an overview of Stewart Company's consolidated financial results, including operating performance, expense analysis, and cash flow from operations Summary Results of Operations (GAAP & Adjusted) Stewart Company achieved significant year-over-year growth in total revenue, pretax income, and net income for Q2 and H1 2025, alongside improved pretax margins Consolidated Summary Results of Operations | Metric | Q2 2025 ($ million) | Q2 2024 ($ million) | H1 2025 ($ million) | H1 2024 ($ million) | | :---------------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | | Total Revenue | 722.2 | 602.2 | 1,334.2 | 1,156.5 | | Pretax Income (before noncontrolling interests) | 46.8 | 29.0 | 52.7 | 36.2 | | Net Income Attributable to Stewart | 31.9 | 17.3 | 35.0 | 20.5 | | Adjusted Net Income Attributable to Stewart | 38.0 | 25.4 | 44.9 | 30.0 | | Pretax Margin | 6.5% | 4.8% | 3.9% | 3.1% | | Adjusted Pretax Margin | 7.6% | 6.6% | 5.0% | 4.2% | | Diluted EPS ($) | 1.13 | 0.62 | 1.24 | 0.73 | | Adjusted Diluted EPS ($) | 1.34 | 0.91 | 1.59 | 1.07 | Consolidated Expenses Analysis In Q2 2025, consolidated employee costs and other operating expenses increased due to revenue growth, higher incentive compensation, and increased headcount, yet improved as a percentage of total operating revenue - Consolidated employee costs increased by 16% ($28.5 million) year-over-year in Q2 2025, primarily due to higher incentive compensation and a 5% increase in average headcount[15] - Consolidated employee costs as a percentage of total operating revenue improved to 29.5% in Q2 2025 from 30.5% in the prior year quarter[15] - Consolidated other operating expenses increased by 14% ($21.2 million) year-over-year in Q2 2025, driven by higher real estate solutions service fees and increased title external search and premium taxes[16] - Consolidated other operating expenses as a percentage of total operating revenue improved to 24.6% in Q2 2025 from 25.9% in the prior year quarter[16] Cash Flow from Operations Net cash provided by operating activities significantly increased in Q2 2025, primarily driven by higher net income and reduced claims payments | Metric | Q2 2025 ($ million) | Q2 2024 ($ million) | Change | | :---------------------------------------- | :------------------ | :------------------ | :----- | | Net Cash Provided by Operating Activities | 53.4 | 21.1 | +153% | - Cash flow improvement was primarily driven by higher net income and lower claims payments[18] Segment Performance Analysis This section analyzes the financial performance of Stewart Company's Title, Real Estate Solutions, and Corporate segments, highlighting key revenue and expense drivers Title Segment The Title segment demonstrated strong financial performance, with increased operating revenue and improved pretax income, driven by growth in direct and agency title operations Title Segment Financial Results The Title segment achieved strong growth in Q2 2025, with a 19% increase in operating revenue and a 48% rise in pretax income, primarily due to improvements in direct and agency title operations and higher investment income Title Segment Performance Summary | Metric | Q2 2025 ($ million) | Q2 2024 ($ million) | Change | | :---------------------------------------- | :------------------ | :------------------ | :----- | | Operating Revenue | 592.5 | 496.2 | +19% | | Investment Income | 16.2 | 14.3 | +14% | | Net Realized and Unrealized Gains (Losses) | 0.8 | (0.5) | +258% | | Pretax Income | 49.3 | 33.4 | +48% | | Adjusted Pretax Income | 51.9 | 38.4 | +35% | | Pretax Margin | 8.1% | 6.5% | +1.6pp | | Adjusted Pretax Margin | 8.5% | 7.5% | +1.0pp | Title Segment Operating Revenues & Expenses Title segment operating revenue increased due to growth in direct and agency operations, with investment income also rising from higher interest and dividends, while expenses grew with revenue but employee costs, other operating expenses, and title loss expense as a percentage of revenue all improved - Title segment operating revenue increased by $96.3 million (19%), and investment income grew by $2.0 million (14%), primarily driven by higher interest and dividend income[8] - Total segment operating expenses increased by $83.6 million (18%), with agency retention expenses rising 26%, consistent with a 25% increase in agency gross revenue[9] - Combined employee costs and other operating expenses increased by $31.3 million (13%), primarily due to higher incentive compensation, increased external search and service fees, and higher headcount[9] - Title loss expense as a percentage of title operating revenue improved to 3.6% in Q2 2025 from 4.2% in the prior year quarter, primarily benefiting from continued favorable claims experience[10] Direct Title Revenues Breakdown In Q2 2025, total direct title revenue grew by 14%, primarily driven by a 46% surge in domestic commercial revenue due to larger average transaction sizes and increased commercial volumes, while domestic non-commercial revenue rose 6% from higher residential refinancing and real estate investor transactions Direct Title Revenues Breakdown | Category | Q2 2025 ($ million) | Q2 2024 ($ million) | Change | | :------------------------- | :------------------ | :------------------ | :----- | | Non-Commercial: | | | | | Domestic | 179.6 | 169.4 | +6% | | International | 29.7 | 28.1 | +6% | | Commercial: | | | | | Domestic | 74.6 | 51.0 | +46% | | International | 7.4 | 7.0 | +6% | | Total Direct Title Revenues | 291.3 | 255.5 | +14% | - Domestic commercial revenue increased by $23.6 million (46%), driven by a 25% improvement in average transaction size ($16,900 vs $13,500) and a 17% increase in commercial transaction volumes[11] - Domestic non-commercial revenue increased by $10.2 million (6%), primarily from higher residential refinancing and real estate investor transactions[11] Real Estate Solutions Segment The Real Estate Solutions segment demonstrated strong growth in operating revenue and pretax income, primarily driven by robust performance in credit information and valuation services Real Estate Solutions Segment Financial Results The Real Estate Solutions segment achieved a 22% increase in operating revenue and a 32% rise in pretax income in Q2 2025, primarily driven by strong performance in credit information and valuation services Real Estate Solutions Segment Performance Summary | Metric | Q2 2025 ($ million) | Q2 2024 ($ million) | Change | | :---------------------------------------- | :------------------ | :------------------ | :----- | | Operating Revenue | 112.7 | 92.2 | +22% | | Pretax Income | 6.7 | 5.1 | +32% | | Adjusted Pretax Income | 12.2 | 10.6 | +15% | | Pretax Margin | 6.0% | 5.5% | +0.5pp | | Adjusted Pretax Margin | 10.9% | 11.5% | -0.6pp | Real Estate Solutions Operating Revenues & Expenses Real Estate Solutions segment operating revenue increased due to growth in credit information and valuation services, with corresponding rises in employee costs and other operating expenses to support this expansion - Segment operating revenue increased by $20.5 million (22%), primarily driven by higher revenues from credit information and valuation services[13] - Combined employee costs and other operating expenses increased by $18.7 million (23%), primarily due to higher service costs related to credit information and valuation services and increased employee costs to support revenue growth[13] Corporate Segment The Corporate segment's net expenses experienced a slight decrease in Q2 2025 | Metric | Q2 2025 ($ million) | Q2 2024 ($ million) | Change | | :---------------------------------------- | :------------------ | :------------------ | :----- | | Corporate Net Operating Expenses | 9.2 | 9.5 | -3.2% | Domestic Order Counts In Q2 2025, domestic commercial order opens and closes significantly increased, while purchase orders slightly decreased, and both refinancing order opens and closes grew Domestic Order Counts (Q2 2025 vs Q2 2024) | Order Type | Q2 2025 Opens | Q2 2024 Opens | Q2 2025 Closes | Q2 2024 Closes | | :--------- | :------------ | :------------ | :------------- | :------------- | | Commercial | 4,526 | 3,526 | 4,415 | 3,787 | | Purchase | 52,793 | 55,057 | 35,886 | 37,832 | | Refinance | 19,736 | 16,731 | 12,165 | 9,978 | | Other | 12,591 | 11,407 | 14,128 | 7,902 | | Total | 89,646 | 86,721 | 66,594 | 59,499 | Financial Statements This section presents Stewart Company's condensed statements of income, balance sheets, and detailed segment information for the reported periods Condensed Statements of Income This section provides detailed GAAP income statement data for the quarters and six months ended June 30, 2025, and 2024, including segment-wise revenues and various expenses Condensed Statements of Income (Selected) | Metric ($ thousand) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :---------------------------------------- | :------ | :------ | :-------- | :-------- | | Total Operating Revenue | 705,197 | 588,438 | 1,301,472 | 1,122,814 | | Investment Income | 16,257 | 14,306 | 28,913 | 27,207 | | Net Realized and Unrealized Gains (Losses) | 727 | (514) | 3,780 | 6,524 | | Pretax Income (before noncontrolling interests) | 46,776 | 29,005 | 52,676 | 36,151 | | Net Income Attributable to Stewart | 31,922 | 17,343 | 34,999 | 20,473 | | Net Cash Provided by (Used in) Operating Activities | 53,428 | 21,123 | 23,501 | (8,465) | Condensed Balance Sheets This section presents the company's financial position as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and stockholders' equity Condensed Balance Sheets (Selected) | Metric ($ thousand) | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Cash and Cash Equivalents | 178,101 | 216,298 | | Investments in Debt and Equity Securities | 689,743 | 669,098 | | Goodwill | 1,092,747 | 1,084,139 | | Total Assets | 2,781,157 | 2,730,145 | | Notes Payable | 446,000 | 445,841 | | Estimated Title Losses | 523,085 | 511,534 | | Total Liabilities | 1,334,875 | 1,319,056 | | Stockholders' Equity Attributable to Stewart | 1,437,751 | 1,402,142 | | Total Stockholders' Equity | 1,446,282 | 1,411,089 | | Book Value Per Share ($) | 51.46 | 50.50 | Segment Information (Detailed) This section provides detailed revenue and expense breakdowns by Title, Real Estate Solutions, and Corporate segments for the quarters and six months ended June 30, 2025, and 2024 Segment Information (Selected) | Metric ($ thousand) | Title Segment (Q2 2025) | Real Estate Solutions Segment (Q2 2025) | Corporate and Other (Q2 2025) | Total (Q2 2025) | | :---------------------------------------- | :------------------------ | :---------------------------- | :------------------------ | :-------------- | | Operating Revenue | 592,547 | 112,650 | - | 705,197 | | Investment Income | 16,233 | 24 | - | 16,257 | | Pretax Income (Loss) | 49,314 | 6,741 | (9,279) | 46,776 | | Operating Revenue (H1 2025) | 1,091,745 | 209,727 | - | 1,301,472 | | Pretax Income (Loss) (H1 2025) | 61,080 | 10,800 | (19,204) | 52,676 | Non-GAAP Financial Measures Reconciliation (Appendix A) This appendix provides explanations and reconciliations for Stewart Company's non-GAAP financial measures, offering additional insights into core operating performance Explanation of Non-GAAP Adjustments This section explains the non-GAAP financial measures used by management, including adjusted revenue, adjusted pretax income, adjusted net income, adjusted diluted EPS, and adjusted pretax margin, along with the rationale for their use - Adjusted revenue is reported revenue less net realized and unrealized gains and losses[27] - Adjusted pretax income and adjusted net income are reported pretax income and net income (less noncontrolling interests' earnings) adjusted for net realized and unrealized gains and losses, amortization of acquired intangible assets, and office closing and severance costs[27] - Management considers these metrics important performance indicators of its core earnings power and believes investors benefit from their presentation[27] Reconciliation of Consolidated Non-GAAP Measures This section provides reconciliation tables for consolidated GAAP financial measures to their non-GAAP counterparts for the quarters and six months ended June 30, 2025, and 2024, detailing adjustments for realized/unrealized gains/losses, intangible asset amortization, and office closing/severance costs Reconciliation of Consolidated Non-GAAP Measures (Selected) | Metric | Q2 2025 ($ million) | Q2 2024 ($ million) | H1 2025 ($ million) | H1 2024 ($ million) | | :---------------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | | Total Revenue | 722.2 | 602.2 | 1,334.2 | 1,156.5 | | Adjusted Total Revenue | 721.5 | 602.7 | 1,330.4 | 1,150.0 | | Pretax Income | 46.8 | 29.0 | 52.7 | 36.2 | | Adjusted Pretax Income | 54.9 | 39.6 | 66.1 | 48.7 | | Net Income Attributable to Stewart | 31.9 | 17.3 | 35.0 | 20.5 | | Adjusted Net Income Attributable to Stewart | 38.0 | 25.4 | 44.9 | 30.0 | Reconciliation of Segment Non-GAAP Measures This section provides reconciliation tables for GAAP financial measures to their non-GAAP counterparts for the Title and Real Estate Solutions segments for the quarters and six months ended June 30, 2025, and 2024 Reconciliation of Segment Non-GAAP Measures (Selected) | Metric | Title Segment (Q2 2025, $ million) | Title Segment (Q2 2024, $ million) | Real Estate Solutions Segment (Q2 2025, $ million) | Real Estate Solutions Segment (Q2 2024, $ million) | | :---------------------------------------- | :------------------------- | :------------------------- | :----------------------------- | :----------------------------- | | Revenue | 609.5 | 510.0 | 112.7 | 92.2 | | Adjusted Revenue | 608.8 | 510.5 | 112.7 | 92.2 | | Pretax Income | 49.3 | 33.4 | 6.7 | 5.1 | | Adjusted Pretax Income | 51.9 | 38.4 | 12.2 | 10.6 | | GAAP Pretax Margin | 8.1% | 6.5% | 6.0% | 5.5% | | Adjusted Pretax Margin | 8.5% | 7.5% | 10.9% | 11.5% | Company Information This section provides essential company information, including details for the Q2 earnings call, an overview of Stewart's services, and cautionary statements regarding forward-looking information Second Quarter Earnings Call Details Stewart Company will host a conference call on July 24, 2025, to discuss its Q2 2025 financial results, with details provided for participation and replay access - The conference call will be held on July 24, 2025, at 8:30 AM ET[19] - Participants can join by dialing 800-245-3047 (US) or 203-518-9765 (International), using access code STCQ225[19] - A replay of the call will be available from 11:00 AM ET on July 24, 2025, until midnight on July 31[19] About Stewart Stewart is a global real estate services company offering products and services through its direct operations, Stewart Trusted Providers™ network, and family of companies, striving to be the premier title services company - Stewart (NYSE-STC) is a global real estate services company[20] - It provides residential and commercial title insurance, closing and settlement services, and specialized services for the mortgage and real estate industries[20] - The company is committed to being the premier title services company by partnering with customers for mutual success[20] Cautionary Statement Regarding Forward-Looking Statements Certain statements in this press release are forward-looking and subject to various risks and uncertainties that could cause actual results to differ materially, with no obligation for the company to update these statements - Certain statements in the press release, including those regarding Stewart's future business plans and expectations, are "forward-looking statements"[21] - Forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially, including fluctuating economic conditions, tariffs, trade restrictions, geopolitical tensions, and adverse changes in real estate activity levels[21] - The company expressly disclaims any obligation to update, amend, or clarify any forward-looking statements in this press release unless required by applicable law[21]