Investors Title pany(ITIC) - 2025 Q2 - Quarterly Results

Second Quarter and Year-to-Date 2025 Financial Results Overview This section reviews the company's financial performance for Q2 and YTD 2025, detailing key results and management insights Second Quarter 2025 Performance Summary The company reported strong Q2 2025 performance with significant increases in net income and revenues, driven by real estate activity Second Quarter 2025 Key Financial Highlights (YoY Change) | Metric | Q2 2025 | Q2 2024 | Change | % Change | | :-------------------------------- | :------ | :------ | :----- | :------- | | Net Income | $12.3 million | $8.9 million | +$3.4 million | +38.2% | | Diluted EPS | $6.48 | $4.70 | +$1.78 | +37.9% | | Total Revenues | $73.6 million | $65.4 million | +$8.2 million | +12.6% | | Operating Expenses | $57.9 million | $54.1 million | +$3.8 million | +6.9% | | Income before Income Taxes (GAAP) | $15.8 million | $11.3 million | +$4.5 million | +39.8% | | Adjusted Income before Income Taxes (non-GAAP) | $13.7 million | $10.0 million | +$3.7 million | +37.0% | - Revenue increase of $8.2 million was driven by: * $4.0 million increase in net premiums written and escrow and title-related fees, primarily due to higher real estate activity levels * $2.7 million increase in other revenue from a gain on assets transferred to a joint venture * $1.2 million increase in non-title services revenue, mainly from like-kind exchanges and management services * $862 thousand increase in net investment gains due to changes in the estimated fair value of equity security investments[2] - Operating expenses increased by $3.8 million, largely due to: * Higher agent commissions, corresponding with growth in agent business * Increased provision for claims, driven by higher reserves on reported claims and a reduction in favorable loss development[3] Year-to-Date 2025 Performance Summary The company achieved positive year-to-date growth in net income and revenues, with lower net investment gains impacting overall results Six Months Ended June 30, 2025 Key Financial Highlights (YoY Change) | Metric | YTD 2025 | YTD 2024 | Change | % Change | | :-------------------------------- | :------- | :------- | :----- | :------- | | Net Income | $15.4 million | $13.4 million | +$2.0 million | +14.9% | | Diluted EPS | $8.16 | $7.10 | +$1.06 | +14.9% | | Total Revenues | $130.2 million | $118.8 million | +$11.4 million | +9.6% | | Operating Expenses | $110.4 million | $101.8 million | +$8.6 million | +8.4% | | Income before Income Taxes (GAAP) | $19.9 million | $17.1 million | +$2.8 million | +16.4% | | Adjusted Income before Income Taxes (non-GAAP) | $18.9 million | $13.4 million | +$5.5 million | +41.0% | - Overall year-to-date results were predominantly shaped by the same factors affecting the second quarter, with one notable exception: * Lower net investment gains for the first six months of 2025 compared to the prior year period, driven by negative changes in the estimated fair value of equity security investments and a decrease in realized gains from the sale of investment securities[5] Management Insights and Business Outlook Management is satisfied with the strongest quarterly performance in over three years, driven by broad-based revenue growth - The company reported its strongest quarterly performance in over three years, reflecting solid execution and broad-based revenue growth[6] - Increased profitability was largely driven by growth in title insurance revenues, supported by increases in non-title business segments, especially the like-kind exchange subsidiary[6] - Incoming order volumes in the second quarter exceeded those of the same period last year, leading to a stronger pipeline of open orders entering the third quarter, which is expected to drive continued momentum[7] - Investors Title Company's subsidiaries issue and underwrite title insurance policies, and the company also provides investment management services and services for tax-deferred exchanges of like-kind property[7] Consolidated Financial Statements This section presents the company's detailed consolidated financial statements, including operations, balance sheets, and premium breakdowns Consolidated Statements of Operations This statement details revenues and operating expenses for Q2 and YTD 2025, highlighting key drivers and significant costs Consolidated Revenues (in thousands) | Revenue Category | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------ | :------ | :------ | :------- | :------- | | Net premiums written | $54,496 | $51,416 | $100,841 | $91,596 | | Escrow and other title-related fees | $5,694 | $4,801 | $9,586 | $8,524 | | Non-title services | $5,477 | $4,304 | $10,086 | $8,608 | | Interest and dividends | $2,361 | $2,568 | $4,700 | $5,088 | | Other investment income | $609 | $890 | $1,019 | $1,001 | | Net investment gains | $2,104 | $1,242 | $925 | $3,664 | | Other | $2,908 | $161 | $3,057 | $360 | | Total Revenues | $73,649 | $65,382 | $130,214 | $118,841 | Consolidated Operating Expenses (in thousands) | Expense Category | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------ | :------ | :------ | :------- | :------- | | Commissions to agents | $29,077 | $26,550 | $53,934 | $46,420 | | Provision for claims | $2,080 | $905 | $2,403 | $1,815 | | Personnel expenses | $17,460 | $18,154 | $35,794 | $36,736 | | Office and technology expenses | $4,327 | $4,308 | $8,867 | $8,773 | | Other expenses | $4,907 | $4,198 | $9,365 | $8,033 | | Total Operating Expenses | $57,851 | $54,115 | $110,363 | $101,777 | Net Income and EPS (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------------- | :------ | :------ | :------- | :------- | | Income before Income Taxes | $15,798 | $11,267 | $19,851 | $17,064 | | Provision for Income Taxes | $3,520 | $2,396 | $4,402 | $3,668 | | Net Income | $12,278 | $8,871 | $15,449 | $13,396 | | Basic Earnings per Common Share | $6.51 | $4.71 | $8.19 | $7.10 | | Diluted Earnings per Common Share | $6.48 | $4.70 | $8.16 | $7.10 | Consolidated Balance Sheets This statement presents the company's financial position, showing increased assets and equity, with a slight decrease in liabilities Consolidated Assets (in thousands) | Asset Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $29,683 | $24,654 | | Total investments | $236,653 | $232,544 | | Premiums and fees receivable | $16,973 | $16,054 | | Property, net | $28,480 | $27,935 | | Goodwill and other intangible assets, net | $10,617 | $15,071 | | Total Assets | $345,824 | $333,571 | Consolidated Liabilities and Stockholders' Equity (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Reserve for claims | $38,051 | $37,060 | | Accounts payable and accrued liabilities | $29,791 | $34,011 | | Total liabilities | $79,647 | $81,798 | | Retained earnings | $265,355 | $251,418 | | Accumulated other comprehensive income | $822 | $355 | | Total stockholders' equity | $266,177 | $251,773 | | Total Liabilities and Stockholders' Equity | $345,824 | $333,571 | Direct and Agency Net Premiums Written This section details net premiums written by direct and agency channels, with agency consistently forming the majority Direct and Agency Net Premiums Written (in thousands) | Channel | Q2 2025 | % of Total | Q2 2024 | % of Total | YTD 2025 | % of Total | YTD 2024 | % of Total | | :------ | :------ | :--------- | :------ | :--------- | :------- | :--------- | :------- | :--------- | | Direct | $15,823 | 29.0% | $15,531 | 30.2% | $29,357 | 29.1% | $28,852 | 31.5% | | Agency | $38,673 | 71.0% | $35,885 | 69.8% | $71,484 | 70.9% | $62,744 | 68.5% | | Total | $54,496 | 100.0% | $51,416 | 100.0% | $100,841 | 100.0% | $91,596 | 100.0% | Non-GAAP Financial Measures Reconciliation This section reconciles non-GAAP financial measures to GAAP, providing adjusted views of revenues and income Non-GAAP Measures Reconciliation Management uses non-GAAP measures to evaluate operational performance by excluding net investment gains and losses for clearer internal views - Management uses non-GAAP measures, such as adjusted revenues and adjusted income before income taxes, to analyze Company performance by removing the impact of net investment gains and losses[17] - These non-GAAP measures are considered useful for evaluating internal operational performance from period to period as they eliminate the effects of external market fluctuations[17] Reconciliation of Non-GAAP Financial Measurements (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------------- | :------ | :------ | :------- | :------- | | Total revenues (GAAP) | $73,649 | $65,382 | $130,214 | $118,841 | | Subtract: Net investment gains | (2,104) | (1,242) | (925) | (3,664) | | Adjusted revenues (non-GAAP) | $71,545 | $64,140 | $129,289 | $115,177 | | Income before income taxes (GAAP) | $15,798 | $11,267 | $19,851 | $17,064 | | Subtract: Net investment gains | (2,104) | (1,242) | (925) | (3,664) | | Adjusted income before income taxes (non-GAAP) | $13,694 | $10,025 | $18,926 | $13,400 | Cautionary Statements Regarding Forward-Looking Statements This section outlines cautionary statements regarding forward-looking information, detailing inherent risks and uncertainties Cautionary Statements Regarding Forward-Looking Statements This section outlines forward-looking statements, subject to risks and uncertainties that could cause actual results to differ - The document contains forward-looking statements identified by words such as 'plan,' 'expect,' 'aim,' 'believe,' 'project,' 'anticipate,' 'intend,' 'estimate,' 'should,' 'could,' 'would,' and other expressions indicating future events and trends[8] - These statements involve risks and uncertainties that could cause actual results to differ materially from anticipated and historical results[8] - Key risks and uncertainties include: * Cyclical demand for title insurance due to real estate market changes * Occurrence of fraud, defalcation, or misconduct * Variances between actual claims experience and underwriting/reserving assumptions * Declines in investment performance * Changes in government regulations and policy, including tariffs and taxes * Changes in the economy, inflation, and interest rates * Loss of agency relationships or significant reductions in agent-originated business * Difficulties managing growth[8]