Exhibit 99.1

 

Stewart Reports Third Quarter 2018 Results



- Title revenues of $486.0 million compared to $485.4 million in the prior year quarter

- Commercial revenues of $52.0 million, an increase of $7.3 million, or 16 percent, compared to the prior year quarter

- Net income attributable to Stewart of $17.6 million, an increase of $6.6 million, or 60 percent, compared to the prior year quarter

HOUSTON, Oct. 25, 2018 /PRNewswire/ -- Stewart Information Services Corporation (NYSE: STC) today reported net income attributable to Stewart of $17.6 million ($0.74 per diluted share) for the third quarter 2018, compared to net income attributable to Stewart of $10.9 million ($0.46 per diluted share) for the third quarter 2017. Pretax income before noncontrolling interests for the third quarter 2018 was $24.8 million compared to a pretax income before noncontrolling interests of $18.6 million for the third quarter 2017.

Third quarter 2018 results included $6.8 million of third-party advisory expenses in the ancillary services and corporate segment relating to the FNF merger transaction and $3.4 million of net unrealized gains relating to changes in fair value of equity investments. Third quarter 2017 results included $1.4 million of acquisition integration costs in the title segment.

"Stewart delivered solid third quarter results as increased fee-per-file levels in both commercial and residential operations offset lower order counts," stated Matthew W. Morris, chief executive officer. "Even though order counts were down year-over-year as interest rates rose through the quarter, the growing mix of purchase transactions in our residential business and larger transaction sizes in our commercial business helped keep title revenues flat with the third quarter 2017. Our senior management team remains focused on the merger process as we continue to work with the FTC and the appropriate state regulators, and, as our results illustrate, all associates remain focused on delivering solid operating results."

Fidelity National Financial (FNF) Update
Since announcing our agreement and plan of merger with FNF in March 2018, we initiated the regulatory approval process, which included the submission of our Hart-Scott-Rodino Act filings to the Federal Trade Commission (FTC) and the Form A filings to the states of Texas and New York, the domiciles of Stewart's two main underwriters. Furthermore, the merger was approved by a majority of our stockholders during a special meeting held on September 5, 2018. We continue to work cooperatively with FNF, the FTC and state regulators in the ongoing review process, responding to data and information requests as they arise. Of note, in August, the Canadian Competition Bureau notified FNF that it had no opposition to the completion of the merger.

Selected Financial Information
Summary results of operations are as follows (dollars in millions, except per share amounts):


Quarter Ended Sept. 30,


Nine Months Ended
Sept. 30,


2018

2017


2018

2017







Total revenues

507.6

501.6


1,437.7

1,430.1

Pretax income before noncontrolling interests

24.8

18.6


52.8

57.6

Income tax expense

4.4

4.7


8.7

15.5

Net income attributable to Stewart

17.6

10.9


36.2

33.6

Net income per diluted share attributable to Stewart

0.74

0.46


1.53

1.43

Title Segment
Summary results of the title segment are as follows (dollars in millions, except pretax margin):


Quarter Ended September 30,


2018

2017

Change





Total operating revenues

486.0

485.4

0%

Investment income and other net gains

7.2

3.2

122%

Pretax income

36.0

24.6

46%

Pretax margin

7.3%

5.0%


Title operating revenues in the third quarter 2018 were comparable to the prior year quarter, as a result of higher commercial and independent agency revenues, which were partially offset by lower non-commercial direct title revenues. Pretax income improved $11.4 million in the third quarter 2018 compared to the third quarter 2017, primarily as a result of lower overall title operating expenses and higher investment income and other net gains. Included in the segment's results were $2.2 million of net unrealized gains relating to fair value changes of equity securities investments, which were being recorded to other comprehensive income prior to the adoption of a new accounting standard in 2018.

Direct title revenues information is presented below (dollars in millions):


Quarter Ended September 30,


2018

2017

Change





Non-commercial:




Domestic

136.2

141.7

(4)%

International

24.9

30.4

(18)%

Commercial:




Domestic

45.2

39.2

15%

International

6.8

5.5

24%

Total direct title revenues

213.1

216.8

(2)%

Included in the non-commercial domestic revenues were revenues from purchase transactions, which were roughly flat year-over-year, and centralized title operations (processing primarily refinancing and default title orders), which were down $5.7 million in the third quarter 2018 compared to the third quarter 2017. Total commercial revenues improved $7.3 million, or 16 percent, from the prior year quarter due to our continued focus on delivering quality service and underwriting to our domestic and international commercial customers. Total international title revenues in the third quarter 2018 decreased $4.2 million, or 12 percent, compared to the prior year quarter, primarily as a result of lower volumes from our Canada operations. Third quarter 2018 commercial fee per file increased 43% to approximately $8,400 due to increased transaction sizes, while domestic residential fee per file increased 10% to approximately $2,200 as a result of the mix shift to more purchase transactions.

Both gross and net revenues from independent agency operations in the third quarter 2018 increased 2 percent, compared to the third quarter 2017, as we maintained our focus on enhancing customer service and technology connectivity. The independent agency remittance rate in the third quarter 2018 remained comparable to the prior year quarter.

Ancillary Services and Corporate Segment
Summary results of the ancillary services and corporate segment are as follows (dollars in millions):


Quarter Ended September 30,


2018

2017

Change





Total revenues

14.5

13.0

12%

Pretax loss

(11.2)

(6.0)

(87)%

Third quarter 2018 segment revenues increased $1.5 million compared to the prior year quarter, primarily due to a $1.2 million net unrealized gain resulting from a fair value change of an equity investment with previously no readily determinable fair value. The segment's third quarter 2018 pretax results declined compared to the prior year quarter, primarily due to the $6.8 million of third-party advisory expenses incurred in the third quarter 2018 relating to the FNF merger transaction. Additionally, the segment's results for the third quarter 2018 and 2017 included approximately $5.8 million and $6.1 million, respectively, of net expenses attributable to parent company and corporate operations.

Expenses
Employee costs for the third quarter 2018 were $138.3 million, which was 1 percent lower compared to $140.1 million in the prior year quarter. Average employee counts decreased approximately 8 percent in the third quarter 2018 compared to the third quarter 2017, primarily related to volume declines in our title and ancillary services operations. The reduced employee counts resulted in the 8 percent decrease in salaries and other employee benefits, which was partially offset by increased commissions on higher commercial title revenues and higher incentive compensation. As a percentage of total operating revenues, employee costs for the third quarter 2018 improved 40 basis points to 27.7 percent compared to the prior year quarter.

Other operating expenses for the third quarter 2018 increased 3 percent to $90.8 million from $88.5 million in the third quarter 2017. The increase was primarily due to the previously mentioned higher third-party advisory expenses related to the FNF merger transaction, partially offset by lower cost of services in our centralized title operations and reduced costs related to third party outsourcing. As a percentage of total operating revenues, other operating expenses for the third quarter 2018 were 18.2 percent compared to 17.8 percent in the prior year quarter. Excluding the charges related to the FNF merger transaction and the acquisition integration during the third quarters 2018 and 2017, respectively, the other operating expenses ratio in the third quarter 2018 would have been 16.8 percent, 70 basis points lower compared to the prior year quarter.

Title loss expense for the third quarter 2018 decreased 15 percent to $21.5 million, compared to $25.4 million in the third quarter 2017, primarily as a result of better claims experience. Additionally, title losses were 4.4 percent of title revenues in the third quarter 2018 compared to 5.2 percent in the prior year quarter. We expect our title losses to range between 4.0 to 4.5 percent of title revenues for the year 2018.

Other
Net cash provided by operations in the third quarter 2018 increased to $36.4 million, compared to net cash provided of $31.5 million in the prior year quarter, primarily due to the higher net income generated in the third quarter 2018.

About Stewart
Stewart Information Services Corporation (NYSE:STC) is a global real estate services company, offering products and services through our direct operations, network of Stewart Trusted Providers™ and family of companies. From residential and commercial title insurance and closing and settlement services to specialized offerings for the mortgage industry, we offer the comprehensive service, deep expertise and solutions our customers need for any real estate transaction. At Stewart, we believe in building strong relationships – and these partnerships are the cornerstone of every closing, every transaction and every deal. Stewart. Real partners. Real possibilities.™ More information is available at the Company's website at stewart.com, or you can subscribe to the Stewart blog at blog.stewart.com, or follow Stewart on Twitter® @stewarttitleco.

Forward-looking statements. Certain statements in this news release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to future, not past, events and often address our expected future business and financial performance. These statements often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "will," "foresee" or other similar words. Forward-looking statements by their nature are subject to various risks and uncertainties that could cause our actual results to be materially different than those expressed in the forward-looking statements. These risks and uncertainties include, among other things, the challenging economic conditions; adverse changes in the level of real estate activity; changes in mortgage interest rates, existing and new home sales, and availability of mortgage financing; our ability to respond to and implement technology changes, including the completion of the implementation of our enterprise systems; the impact of unanticipated title losses or the need to strengthen our policy loss reserves; any effect of title losses on our cash flows and financial condition; the ability to attract and retain highly productive sales associates; the impact of vetting our agency operations for quality and profitability; independent agency remittance rates; changes to the participants in the secondary mortgage market and the rate of refinancing that affects the demand for title insurance products; regulatory non-compliance, fraud or defalcations by our title insurance agencies or employees; our ability to timely and cost-effectively respond to significant industry changes and introduce new products and services; the outcome of pending litigation; the impact of changes in governmental and insurance regulations, including any future reductions in the pricing of title insurance products and services; our dependence on our operating subsidiaries as a source of cash flow; the continued realization of expense savings from our cost management program; our ability to successfully integrate acquired businesses; our ability to access the equity and debt financing markets when and if needed; our ability to grow our international operations; seasonality and weather; and our ability to respond to the actions of our competitors. These risks and uncertainties, as well as others, are discussed in more detail in our documents filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2017, and if applicable, our Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K. All forward-looking statements included in this news release are expressly qualified in their entirety by such cautionary statements. We expressly disclaim any obligation to update, amend or clarify any forward-looking statements contained in this news release to reflect events or circumstances that may arise after the date hereof, except as may be required by applicable law.


STEWART INFORMATION SERVICES CORPORATION

CONDENSED STATEMENTS OF INCOME (UNAUDITED)

(In thousands of dollars, except per share amounts and except where noted)



Quarter Ended
September 30,


Nine Months Ended
September 30,



2018

2017


2018

2017


Revenues:







Title revenues:







Direct operations

213,134

216,830


622,886

635,921


Agency operations

272,875

268,545


756,986

736,301


Ancillary services

13,227

12,674


38,790

45,096


Total operating revenues

499,236

498,049


1,418,662

1,417,318


Investment income

4,781

4,567


14,732

14,179


Investment and other gains (losses) - net

3,623

(1,047)


4,345

(1,436)



507,640

501,569


1,437,739

1,430,061


Expenses:







Amounts retained by agencies

224,966

221,460


623,967

605,192


Employee costs

138,288

140,054


423,389

419,184


Other operating expenses

90,810

88,489


257,029

255,593


Title losses and related claims

21,503

25,428


59,181

70,591


Depreciation and amortization

6,221

6,578


18,609

19,397


Interest

1,076

963


2,722

2,492



482,864

482,972


1,384,897

1,372,449


Income before taxes and noncontrolling interests

24,776

18,597


52,842

57,612


Income tax expense

4,371

4,686


8,679

15,536


Net income

20,405

13,911


44,163

42,076


Less net income attributable to noncontrolling interests

2,851

2,967


8,012

8,475


Net income attributable to Stewart

17,554

10,944


36,151

33,601









Net earnings per diluted share attributable to Stewart

0.74

0.46


1.53

1.43


Diluted average shares outstanding (000)

23,699

23,564


23,667

23,571









Selected financial information:







Net cash provided by operations

36,366

31,517


43,733

48,048


Other comprehensive (loss) income

(907)

3,873


(17,451)

10,763


Monthly Order Counts:










Opened Orders 2018:

Jul

Aug

Sept

Total


Closed Orders 2018:

Jul

Aug

Sept

Total


Commercial

2,654

2,655

2,188

7,497


Commercial

2,112

2,255

1,842

6,209


Purchase

20,880

21,095

16,953

58,928


Purchase

15,934

16,810

13,297

46,041


Refinancing

6,786

7,501

6,154

20,441


Refinancing

4,319

4,855

3,972

13,146


Other

755

582

488

1,825


Other

552

552

310

1,414


Total

31,075

31,833

25,783

88,691


Total

22,917

24,472

19,421

66,810














Opened Orders 2017:

Jul

Aug

Sept

Total


Closed Orders 2017:

Jul

Aug

Sept

Total


Commercial

3,372

3,851

3,462

10,685


Commercial

2,352

2,660

2,631

7,643


Purchase

20,804

21,515

17,360

59,679


Purchase

16,304

17,173

14,955

48,432


Refinancing

8,062

10,157

8,936

27,155


Refinancing

5,619

6,404

5,942

17,965


Other

1,790

1,416

1,359

4,565


Other

853

1,127

892

2,872


Total

34,028

36,939

31,117

102,084


Total

25,128

27,364

24,420

76,912




















STEWART INFORMATION SERVICES CORPORATION

CONDENSED BALANCE SHEETS

(In thousands of dollars)



September 30,
2018
(Unaudited)

December 31,
2017

Assets:



Cash and cash equivalents

149,669

150,079

Short-term investments

23,954

24,463

Investments in debt and equity securities, at fair value

662,089

709,355

Receivables – premiums from agencies

31,656

27,903

Receivables – other

48,623

55,769

Allowance for uncollectible amounts

(4,925)

(5,156)

Property and equipment, net

64,471

67,022

Title plants, at cost

74,737

74,237

Goodwill

247,190

231,428

Intangible assets, net of amortization

10,843

9,734

Deferred tax assets

4,186

4,186

Other assets

57,936

56,866


1,370,429

1,405,886

Liabilities:



Notes payable

106,440

109,312

Accounts payable and accrued liabilities

97,233

117,740

Estimated title losses

476,870

480,990

Deferred tax liabilities

13,152

19,034


693,695

727,076

Stockholders' equity:



Common Stock and additional paid-in capital

185,432

184,026

Retained earnings

510,068

491,698

Accumulated other comprehensive loss

(21,890)

(847)

Treasury stock

(2,666)

(2,666)

Stockholders' equity attributable to Stewart

670,944

672,211

Noncontrolling interests

5,790

6,599

Total stockholders' equity

676,734

678,810


1,370,429

1,405,886







Number of shares outstanding (000)

23,741

23,720

Book value per share

28.50

28.62

STEWART INFORMATION SERVICES CORPORATION

SEGMENT INFORMATION (Unaudited)

(In thousands of dollars)


 

Three months ended:

September 30, 2018


September 30, 2017


Title

Ancillary
Services
and
Corporate

Consolidated


Title

Ancillary
Services
and
Corporate

Consolidated

Revenues:








Operating revenues

486,009

13,227

499,236


485,373

12,676

498,049

Investment income

4,781

-

4,781


4,567

-

4,567

Investment and other gains (losses) - net

2,396

1,227

3,623


(1,328)

281

(1,047)


493,186

14,454

507,640


488,612

12,957

501,569

Expenses:








Amounts retained by agencies

224,966

-

224,966


221,460

-

221,460

Employee costs

131,485

6,803

138,288


132,331

7,723

140,054

Other operating expenses

73,871

16,939

90,810


79,249

9,240

88,489

Title losses and related claims

21,503

-

21,503


25,428

-

25,428

Depreciation and amortization

5,362

859

6,221


5,534

1,044

6,578

Interest

-

1,076

1,076


-

963

963


457,187

25,677

482,864


464,002

18,970

482,972

Income (loss) before taxes

35,999

(11,223)

24,776


24,610

(6,013)

18,597








 

Nine months ended:

September 30, 2018


September 30, 2017


Title

Ancillary Services and Corporate

Consolidated


Title

Ancillary Services and Corporate

Consolidated

Revenues:








Operating revenues

1,379,872

38,790

1,418,662


1,372,133

45,185

1,417,318

Investment income

14,732

-

14,732


14,179

-

14,179

Investment and other gains (losses) - net

3,118

1,227

4,345


(1,455)

19

(1,436)


1,397,722

40,017

1,437,739


1,384,857

45,204

1,430,061

Expenses:








Amounts retained by agencies

623,967

-

623,967


605,192

-

605,192

Employee costs

401,234

22,155

423,389


390,688

28,496

419,184

Other operating expenses

218,543

38,486

257,029


225,946

29,647

255,593

Title losses and related claims

59,181

-

59,181


70,591

-

70,591

Depreciation and amortization

15,929

2,680

18,609


16,081

3,316

19,397

Interest

8

2,714

2,722


5

2,487

2,492


1,318,862

66,035

1,384,897


1,308,503

63,946

1,372,449

Income (loss) before taxes

78,860

(26,018)

52,842


76,354

(18,742)

57,612

Appendix A
Adjusted revenues and adjusted EBITDA
Management uses a variety of financial and operational measurements other than its financial statements prepared in accordance with United States Generally Accepted Accounting Principles (GAAP) to analyze its performance. These include: (1) adjusted revenues, which are reported revenues adjusted for any net investment and other gains and losses and (2) net income after earnings from noncontrolling interests and before interest expense, income tax expense, and depreciation and amortization and adjusted for net investment and other gains and losses and other non-operating costs such as strategic alternatives (FNF merger) expenses and other third-party advisory costs (adjusted EBITDA). Management views these measures as important performance measures of core profitability for its operations and as key components of its internal financial reporting. Management believes investors benefit from having access to the same financial measures that management uses.

The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the quarter and nine months ended September 30, 2018 and 2017 (dollars in millions).


Quarter Ended
September 30,


Nine Months Ended
September 30,


2018

2017

%
Change


2018

2017

%
Change









Revenues

507.6

501.6



1,437.7

1,430.1


Less: Investment and other (gains) losses

(3.6)

1.0



(4.3)

1.4


Adjusted revenues

504.0

502.6

0%


1,433.4

1,431.5

0%









Net income attributable to Stewart

17.6

10.9



36.2

33.6


Noncontrolling interests

2.8

3.0



8.0

8.5


Income taxes

4.4

4.7



8.6

15.5


Income before taxes and noncontrolling interests

24.8

18.6



52.8

57.6


Strategic alternatives/FNF merger expenses

6.8

-



9.7

-


Acquisition integration expenses

-

1.4



-

1.4


Loss reserve adjustments, net

-

-



(0.1)

-


Investment and other (gains) losses

(3.6)

1.0



(4.3)

1.4


Adjusted income before taxes and noncontrolling interests

28.0

21.0



58.1

60.4


Depreciation and amortization

6.2

6.6



18.6

19.4


Interest expense

1.1

1.0



2.7

2.5










Adjusted EBITDA

35.3

28.6

23%


79.4

82.3

(4)%



CONTACT: Nat Otis, SVP - Finance and Director of Investor Relations (713) 625-8360

View differences made from one to another to evaluate Stewart Information Services Corp's financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Stewart Information Services Corp.

Continue

Never Miss A New SEC Filing Again


Real-Time SEC Filing Notifications
Screenshot taken from Gmail for a new 10-K Annual Report
Last10K.com Member Feature

Receive an e-mail as soon as a company files an Annual Report, Quarterly Report or has new 8-K corporate news.

Continue

We Highlighted This SEC Filing For You


SEC Filing Sentiment Analysis - Bullish, Bearish, Neutral
Screenshot taken from Wynn's 2018 10-K Annual Report
Last10K.com Member Feature

Read positive and negative remarks made by management in their entirety without having to find them in a 10-K/Q.

Continue

Widen Your SEC Filing Reading Experience


Increased Reading Area for SEC Filings
Screenshot taken from Adobe Inc.'s 10-Q Quarterly Report
Last10K.com Member Feature

Remove data columns and navigations in order to see much more filing content and tables in one view

Continue

Uncover Actionable Information Inside SEC Filings


SEC Filing Disclosures
Screenshot taken from Lumber Liquidators 10-K Annual Report
Last10K.com Member Feature

Read both hidden opportunities and early signs of potential problems without having to find them in a 10-K/Q

Continue

Adobe PDF, Microsoft Word and Excel Downloads


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshots of actual 10-K and 10-Q SEC Filings in PDF, Word and Excel formats
Last10K.com Member Feature

Export Annual and Quarterly Reports to Adobe PDF, Microsoft Word and Excel for offline viewing, annotations and analysis

Continue

FREE Financial Statements


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshot of actual balance sheet from company 10-K Annual Report
Last10K.com Member Feature

Get one-click access to balance sheets, income, operations and cash flow statements without having to find them in Annual and Quarterly Reports

Continue for FREE

Intrinsic Value Calculator


Intrinsic Value Calculator
Screenshot of intrinsic value for AT&T (2019)
Last10K.com Member Feature

Our Intrinsic Value calculator estimates what an entire company is worth using up to 10 years of financial ratios to determine if a stock is overvalued or not

Continue

Financial Stability Report


Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
Last10K.com Member Feature

Our Financial Stability reports uses up to 10 years of financial ratios to determine the health of a company's EPS, Dividends, Book Value, Return on Equity, Current Ratio and Debt-to-Equity

Continue

Get a Better Picture of a Company's Performance


Financial Ratios
Available Financial Ratios
Last10K.com Member Feature

See how over 70 Growth, Profitability and Financial Ratios perform over 10 Years

Continue

Log in with your credentials

or    

Forgot your details?

Create Account