EX-99.1 2 si2070ex991.htm

Exhibit 99.1

Stewart Reports Earnings for the Year 2004

          HOUSTON, Feb. 16 /PRNewswire-FirstCall/ -- Stewart Information Services Corporation (NYSE: STC) 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.

          Stewart Information Services Corporation is a technology driven, strategically competitive, real estate information and transaction management company providing title insurance and related information services through more than 7,800 policy-issuing offices and agencies in the United States and several international markets.  Stewart delivers via e-commerce the services required for settlement by the real estate and mortgage industries.  Stewart also provides post-closing lender services, automated county clerk land records, property ownership mapping, geographic information systems, property information reports, flood certificates, document preparation, background checks and expertise in tax-deferred exchanges.  More information can be found at http://www.stewart.com.

          This press release may contain forward-looking statements, which include all statements other than statements of historical facts.  Forward-looking statements are not guarantees of performance and no assurance can be given that Stewart’s expectations will be achieved.  In particular, historical order counts do not necessarily indicate future revenues because Stewart cannot predict the number of orders that will result in closings.

Stewart Information Services Corporation

 

 

Three months ended
December 31

 

 

 

 

 

 

2004

 

2003

 

 

 

 

 

Revenues

 

$

622,848,000

 

$

610,643,000

 

Net earnings

 

$

20,279,000

 

$

20,782,000

 

Average shares - diluted

 

 

18,224,000

 

 

18,095,000

 

Earnings per share:

 

 

 

 

 

 

 

Basic

 

$

1.12

 

$

1.16

 

Diluted

 

$

1.11

 

$

1.15

 

 

 

Year ended
December 31

 

 

 

 

 

 

2004

 

2003

 

 

 

 

 

Revenues

 

$

2,182,859,000

 

$

2,239,030,000

 

Net earnings

 

$

82,518,000

 

$

123,755,000

 

Average shares - diluted

 

 

18,199,000

 

 

17,980,000

 

Earnings per share:

 

 

 

 

 

 

 

Basic

 

$

4.56

 

$

6.93

 

Diluted

 

$

4.53

 

$

6.88

 


STEWART INFORMATION SERVICES CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands of dollars, except per share amounts)

 

 

Three months ended
December 31

 

Year ended
December 31

 

 

 

 

 

 

 

2004
(A)

 

2003
(A)

 

2004

 

2003

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Title insurance:

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operations

 

 

231,784

 

 

195,516

 

 

880,697

 

 

888,454

 

Agency operations

 

 

366,172

 

 

391,255

 

 

1,207,642

 

 

1,249,800

 

Real estate information services

 

 

17,567

 

 

17,099

 

 

68,907

 

 

78,666

 

Investment income

 

 

6,272

 

 

5,220

 

 

22,514

 

 

19,800

 

Investment gains - net

 

 

1,053

 

 

1,553

 

 

3,099

 

 

2,310

 

 

 

 

622,848

 

 

610,643

 

 

2,182,859

 

 

2,239,030

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts retained by agencies

 

 

302,044

 

 

320,820

 

 

987,024

 

 

1,024,282

 

Employee costs

 

 

154,747

 

 

137,114

 

 

591,092

 

 

573,486

 

Other operating expenses

 

 

89,569

 

 

81,335

 

 

324,897

 

 

307,509

 

Title losses and related claims

 

 

30,560

 

 

28,266

 

 

100,841

 

 

94,827

 

Depreciation and amortization

 

 

8,044

 

 

6,741

 

 

31,025

 

 

25,240

 

Interest

 

 

449

 

 

158

 

 

1,248

 

 

721

 

Minority interests

 

 

3,803

 

 

2,225

 

 

13,518

 

 

13,462

 

 

 

 

589,216

 

 

576,659

 

 

2,049,645

 

 

2,039,527

 

Earnings before taxes

 

 

33,632

 

 

33,984

 

 

133,214

 

 

199,503

 

Income taxes

 

 

13,353

 

 

13,202

 

 

50,696

 

 

75,748

 

Net earnings

 

 

20,279

 

 

20,782

 

 

82,518

 

 

123,755

 

Average number of diluted shares outstanding (000)

 

 

18,224

 

 

18,095

 

 

18,199

 

 

17,980

 

Earnings per share - diluted

 

 

1.11

 

 

1.15

 

 

4.53

 

 

6.88

 

Segment information:

 

 

 

 

 

 

 

 

 

 

 

 

 

Title revenues

 

 

605,281

 

 

593,544

 

 

2,113,952

 

 

2,160,364

 

Title pretax earnings

 

 

32,897

 

 

34,108

 

 

130,024

 

 

187,435

 

REI revenues

 

 

17,567

 

 

17,099

 

 

68,907

 

 

78,666

 

REI pretax earnings (loss)(A)

 

 

735

 

 

(124

)

 

3,190

 

 

12,068

 


 

 

Three months ended
December 31

 

Year ended
December 31

 

 

 

 

 

 

 

2004
(A)

 

2003
(A)

 

2004

 

2003

 

 

 

 

 

 

 

Selected supplemental information (000):

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from operations

 

 

26,713

 

 

35,556

 

 

170,410

 

 

190,063

 

Title loss payments - net of recoveries

 

 

22,192

 

 

18,656

 

 

68,408

 

 

57,996

 

Other comprehensive earnings (loss) - net of taxes

 

 

1,262

 

 

1,349

 

 

(1,231

)

 

5,675

 

Average number of basic shares

 

 

18,114

 

 

17,975

 

 

18,097

 

 

17,862

 

Number of title orders opened

 

 

191.1

 

 

171.4

 

 

839.9

 

 

986.9

 

 

 

Dec 31
2004

 

Dec 31
2003

 

 

 

 

 

Stockholders’ equity

 

 

697,313

 

 

621,389

 

Number of shares outstanding

 

 

18,121

 

 

18,026

 

Book value per share

 

 

38.48

 

 

34.47

 

(A)

The fourth quarters of 2004 and 2003 include expenses of $4.4 million and $2.4 million, respectively, relating to litigation, which reduced net earnings by $2.9 million and $1.6 million, or $.16 and $.09 per share, respectively.  The fourth quarter of 2003 also includes $1.1 million relating to a loss on an REI mapping/automation project that reduced 2003 net earnings by $0.7 million, or $.04 per share.


STEWART INFORMATION SERVICES CORPORATION
CONSOLIDATED BALANCE SHEETS (condensed)
(In thousands of dollars)

 

 

December 31
2004

 

December 31
2003

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

121,383

 

 

114,202

 

Short-term investments

 

 

181,195

 

 

153,322

 

Investments - statutory reserve funds

 

 

401,814

 

 

375,421

 

Investments - other

 

 

68,793

 

 

59,035

 

Receivables

 

 

82,301

 

 

79,025

 

Property and equipment

 

 

83,391

 

 

74,174

 

Title plants

 

 

52,679

 

 

43,216

 

Goodwill

 

 

124,636

 

 

79,084

 

Intangible assets

 

 

16,988

 

 

3,783

 

Other assets

 

 

60,173

 

 

50,605

 

 

 

 

1,193,353

 

 

1,031,867

 

Liabilities

 

 

 

 

 

 

 

Notes payable

 

 

49,930

 

 

24,583

 

Accounts payable and accrued liabilities

 

 

101,544

 

 

82,147

 

Estimated title losses

 

 

300,749

 

 

268,089

 

Deferred income taxes

 

 

29,335

 

 

22,440

 

Minority interests

 

 

14,482

 

 

13,219

 

 

 

 

496,040

 

 

410,478

 

Contingent liabilities and commitments

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

Common and Class B Common Stock and additional paid-in capital

 

 

144,135

 

 

141,168

 

Retained earnings

 

 

543,295

 

 

469,107

 

Accumulated other comprehensive earnings

 

 

13,788

 

 

15,019

 

Treasury stock

 

 

(3,905

)

 

(3,905

)

Total stockholders’ equity

 

 

697,313

 

 

621,389

 

 

 

 

1,193,353

 

 

1,031,867

 

February 16, 2005

SOURCE  Stewart Information Services Corporation
          -0-                                                  02/16/2005
          /CONTACT:  Ted C. Jones, Director - Investor Relations of Stewart Information Services Corporation, +1-713-625-8014/
          /Web site:  http://www.stewart.com /