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spk02: Greetings and welcome to the First American Financial Corporation fourth quarter and full year 2020 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. A copy of today's press release is available on First American's website at www.firstamerican.com. firstam.com forward slash investor. Please note that the call is being recorded and will be available for replay from the company's investor website and for a short time by dialing 877-660-6853 or 201-612-7415 and by entering the conference ID 137-14735. We will now turn the call over to Craig Barbario, Vice President of Investor Relations, to make an introductory statement.
spk00: Craig Barbario Good morning, everyone, and welcome to our 2020 fourth quarter and year-end earnings conference call. Joining us today will be our Chief Executive Officer, Dennis Gilmore, and Mark Seaton, Executive Vice President and Chief Financial Officer. Some of the statements made today may contain forward-looking statements that do not relate strictly to historical or current fact. These forward-looking statements speak only as of the date they are made, and the company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. For more information on these risks and uncertainties, please refer to this morning's earnings release and the risk factors discussed in our Form 10-K and subsequent SEC filings. Our presentation today contains certain non-GAAP financial measures that we believe provide additional insight into the operational efficiency and performance of the company relative to earlier periods and relative to the company's competitors. For more details on these non-GAAP financial measures, including presentation width and reconciliation to the most directly comparable GAAP financials, please refer to this morning's earnings release, which is available on our website at www.firstam.com. I will now turn the call over to Dennis Gilmore.
spk09: Good morning and thank you for joining our fourth quarter earnings call. 2020 was another strong year for First American. Our revenues were running well above the prior year and then the pandemic hit, impacting our business overnight. Our top priorities were to protect our people and serve our customers, and we achieved both. We quickly transitioned the majority of our employees to working from home and still closed over a million real estate transactions in 2020. This accomplishment testifies to the dedication of our people and their commitment to our customers. It also validates our many digital investments we have made to improve the customer experience. I'd now like to shift my comments to the fourth quarter results. We generated earnings per share of $2.49. Excluding realized investment gains, earnings per share were $2.11. Revenues in our title insurance segment were up 26% in the fourth quarter, and we effectively managed our expenses, achieving a 53% success ratio, which contributed to a pre-tax margin of 18.9%. Our focus in automating title production and digitizing the closing process paid off in 2020. In a year of rapidly surging volume, we closed 32% more orders this quarter than the prior year with just 6% more employees. Our direct purchase revenue rose 32% in the fourth quarter. We experienced an 18% increase in closed transactions and an 11% increase in the average revenue per order. This growth is a sign of the continued strength of the housing market. Refinanced revenue continued to benefit from low mortgage rates, with revenue rising 79% over the prior year. Commercial rebounded strongly in the fourth quarter. Since the onset of the pandemic, commercial has been slower to recover than residential. Commercial revenue was down 39% in the second quarter, 29% in the third quarter, and the fourth quarter improved to a 5% decline off an all-time high fourth quarter of 2019. We are encouraged that the order momentum over the last few months has picked up and we expect to have a strong commercial year in 2021. Turning to our specialty insurance segment, revenues were $141 million, a 7% increase over the prior year. As we disclosed in January, our property and casualty business entered into a book transfer agreement, which provide qualifying agents and customers an opportunity to easily transfer their policies. As of February 1, we are no longer quoting new policies and expect to discontinue policy renewals in May. We anticipate the transfer will be complete by the end of the third quarter of 2022. This transaction enables us to maintain focus on our core business and redeploy the capital to areas with higher expected returns. In the fourth quarter, we raised our quarterly dividend from 44 cents to 46 cents. and we repurchased 1.3 percent of our shares outstanding at an average price of $49.20 and have continued our buying in 2021. We believe both the short-term and long-term prospects of First American are stronger than the market is giving us credit for and as a result have aggressively repurchased shares. Turning to our outlook, early indications are that the real estate market will remain robust this year. The strong open order pipeline we built in the fourth quarter is converting to revenue at what is traditionally our slowest period. In January, our purchase orders were up 17%, and we opened 3,200 refinance transactions per day, continuing the same trend we experienced for the last several months. As previously mentioned, we think this will be another good year for our commercial business. While we are encouraged by the strength of our markets, We remain focused on the long-term opportunities of our business. In 2021, we will continue to invest in automation of our title production process and in the refinement of our digital closing platform. We plan to increase our technology span in the areas of product development, cloud migration, and security. And we are building digital solutions across our company to transform the customer experience. An example of this is Endpoint, our title and escrow company that was built from the ground up to deliver a reimagined closing experience. We believe these investments will enable us to continue to generate strong earnings for the years to come. I'd now like to turn the call over to Mark for a deeper dive into our financials.
spk05: Thank you, Dennis. In the fourth quarter, we earned $2.49 per diluted share. This includes net realized investment gains totaling $56 million, or $0.38 per diluted share. Excluding these gains, we earned $2.11 per share. In the title insurance and services segment, direct premium and escrow fees were up 24% compared with last year. This growth reflects a 32% increase in the number of closed orders, partially offset by a 6% decline in the average revenue per order. The average revenue per order decreased to $2,500 last due to a shift in the mix of direct title orders to lower premium refinance transactions. However, at the product level, we continue to see higher average revenue per order for all order types. The average revenue per order for purchase transactions increased 11%, refinance increased 3%, and commercial increased 2%. Agent premiums, which are recorded on approximately a one-quarter lag relative to direct premiums, were up 25%. The agent split was 79.1% of agent premiums. Information and other revenues totaled $282 million, up 39% compared with last year. A number of factors contributed to this growth, including the growth in mortgage origination that led to higher demand for the company's title information products and our acquisition of DocuTech, which isn't included in the prior year results. Investment income within the title insurance and services segment was $52 million, down 26%, primarily due to the impact of the decline in short-term interest rates on the investment portfolio and cash balances, partially offset by higher interest income from the company's warehouse lending business. This quarter, our investment income benefited from a $4.4 million catch-up related to our warehouse lending business. On a go-forward basis, we expect investment income to be somewhere in the neighborhood of $45 million per quarter with short-term rates at current levels. Personnel costs were $515 million, up 14% from the prior year. This increase is primarily due to higher incentive compensation and salary expense and higher costs as a result of recent acquisitions. Other operating expenses were $300 million, up 34% from last year. The increase was primarily due to higher production-related costs as a result of the growth in order volume. The provision for title policy losses and other claims was $81 million, or 5.0% of title premiums and escrow fees, an increase from a 4.0% loss provision rate in the prior year. To recap, we raised our loss provision rate in the first quarter of 2020 from 4% to 5%. due to the extreme economic uncertainty that existed. Economic factors are a key variable in title claims experience, and given the deterioration in some of those factors, we raised the loss provision rate. But the housing market and general economy have improved since then. By raising the loss provision rate 100 basis points, we have added $52 million of additional IV&R reserves on our balance sheet. Yet our incurred claims in 2020 We're $49 million below our internal expectation set at the beginning of 2020. Paid title claims show a similar trend, with claims $30 million below our expectation. As always, we will monitor our claims experience and market conditions when evaluating our reserves, and we'll evaluate it next in connection with our first quarter earnings report. Depreciation and amortization expense was $37 million in the fourth quarter, up 24% compared with the same period last year, primarily due to higher amortization of intangibles related to recent acquisitions. Pre-tax income for the title insurance and services segment was $377 million in the fourth quarter, compared with $284 million in the prior year. Pre-tax margin was a record 18.9%, compared with 17.8% last year. Excluding the impact of net realized investment gains, pre-tax margin was 16.8%, equivalent to the prior year. In the specialty insurance segment, pre-tax income totaled $27 million. We recorded a benefit of $18.3 million related to a reversal of an impairment initially taken in the third quarter relating to our property and casualty business. In the third quarter, this accrual was taken so the book value of our property and casualty business matched the expected proceeds from the sale. We subsequently determined that a book transfer rather than a sale was a more attractive alternative. This decision required us to reverse this accrual and our property and casualty business is currently carried at tangible book value. The ultimate proceeds we'll earn in the book transfer will be immaterial. Net expenses in the corporate segment were $22 million, up $4 million compared with last year, largely due to higher interest expense associated with our $450 million senior notes transaction, which closed in May. The effective tax rate for the quarter was 26.4%, higher than our normalized rate of 23% to 24%. The tax rate was adversely impacted by $7.4 million, or $0.07 per diluted share, due to a permanent tax difference related to the property and casualty business. I'd like to provide an update on matters arising from our 2019 information security incident. As previously disclosed, we received a Wells notice from the SEC in September 2020. We submitted our response in October, and have had no substantive communications with the Commission since. We continue to believe that the SEC matter, along with all other matters relating to the security incident, will be immaterial from a financial perspective. Finally, turning to capital management, 2020 was an active year for our balance sheet. We spent nearly $400 million on acquisitions, the largest of which being DocuTech, which has been a great addition to our company. We also returned significant capital to our shareholders. We paid nearly $200 million in dividends and raised the dividend by 5% on two separate occasions during the year. Pursuant to 10B51 plans, we also repurchased $139 million in stock at an average price of $43.44 in 2020. We continued our repurchases under these plans early in 2021, deploying an additional $27 million at an average price of $52.97. During 2020, we also invested $83 million in venture investments in the PropTech ecosystem, which gives us insights into high-growth technology companies, many of whom have become strategic partners. We believe our capital management activities have created value for shareholders and will continue to hunt for opportunities with attractive risk-adjusted returns. I would now like to turn the call back over to the operator to take your questions.
spk02: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your question. Our first question has come from the line of Mark DeVries at Barclays. Please proceed with your question.
spk04: Yeah, thank you. I was hoping you could discuss kind of the net earnings impact to you of exiting the P&C business, both, you know, in terms of the revenue lost and, you know, and any offsets you may have from the redeployment of the capital that this frees up.
spk05: Yeah, thanks, Mark. So in 2020, our P&C revenue was about $138 million. And so we're sort of in a wind-down mode right now. We're not issuing any new policies, or we stopped quoting new policies as of February 1st. It's going to take us you know, roughly a year from the time we start non-renewing, which will be sometime around May. So it's going to take a little bit over a year to wind it down. We'll lose about $138 million of revenue. But, you know, again, you know, because of the losses and the loss rates in P&C, in 2020, even if you exclude, you know, the impairments that we took in terms of goodwill, we lost $31 million in 2020. So we think it's going to be earning accretive over time. We just have to, you know, finish winding it down here.
spk09: Yeah, let me just add on that, Mark, to be clear. The business has been at a loss for us, so it's a headwind, no question. That will continue for the first quarter, probably the second quarter, but we look for the P&L itself to improve pretty marketably by the third and the fourth of 2021.
spk04: Okay. Yeah, and in the press release, you mentioned kind of freeing up capital. How material is that, and is that part of where the accretion comes from, is being able to redeploy and more attractive uses?
spk09: Not really. The accretion comes from less losses, right? The business has just been under pressure performing-wise. And the capital, it's not a material amount to us, but we will ultimately redeploy back to the core.
spk05: Okay. About $70 million of obtainable capital as of 12-31.
spk04: Okay, great. And then, you know, I was happy to see the repurchases. It's obviously been a while since that was, you know – a meaningful part of your capital deployment strategy. Just curious as to kind of what's changed and that's made that, you know, for you an attractive use of the excess capital.
spk05: Well, you know, it's always been something that we've looked at. I think admittedly we've been, you know, conservative with respect to the prices that, you know, we buy max shares. I mean, we don't do it just because we have excess capital. We don't do it just to increase our earnings per share. We do it when we think it's, going to be a really good investment for our shareholders. We saw those conditions happen in March and April when we bought back shares. I mean, obviously, it was a big correction then, and we kind of knew that we were going to do better than what the market was giving us credit for. And those same conditions existed in the fourth quarter, too. I mean, when we look at our outlook, we just felt like, you know, it's a lot more optimistic than, again, what the market was getting us credit for. I'll say that, you know, we're not in the market at this moment right now, but I think there's a general consensus that we want to be more aggressive with buybacks in the future than we've been in the past.
spk09: Yeah, Mark, and I'll just add, you mentioned capital deployment overall. Our strategy has been very consistent, but what we've added is a new component to it. Mark mentioned it in his script. We deployed $80 million last year in venture investments, and over the last two years, we've deployed $200 million in venture investments, 12 individual companies. And we'll continue to look for those opportunities going forward, too. They really give us two things. Bring us closer to new gen customers and allow us to help. So part of also part of our innovation strategy. So that will also be part of our strategy going forward.
spk04: Okay. Got it. Thank you.
spk02: Thanks, Mark. Thank you. Our next question has come from the line of Jack Misenko with SIG. Please proceed with your questions.
spk07: Hi. Good morning, guys. You know, I guess the $64,000 question on the volumes is refi resiliency. I think, Mark, you called it out early a year ago, you know, stronger for longer. And here we are, 4Q, numbers are strong. The January numbers look strong. You know, maybe dating myself a little bit, I remember back in the day when we have normal refi cycles, there would be a little bit of a spike when rates moved a little bit higher, I think, as you had fence setters come off the sidelines. are the january and the in the late 4q trends is is that reflecting some of the move you know 10 basis points of mortgage rate isn't that much but or is that just core continued sort of backlog working its way through the system and how do you think about 21 i mean obviously you know purchase should be pretty good still and commercial should be good but You know, you had a good view last go-around about a year ago on refi. How do we think about – how are you thinking about that now?
spk09: Yeah, this is Dennis. This is Dennis. I'll start. We're optimistic going into 21. So you kind of mentioned really quick, purchase is going to be strong. We think of 21. I'll probably get a question on commercial, but commercial, very optimistic going into 21. Refinance is always a harder one for us to forecast, but last year we were anticipating – About 3,000 orders per day. And, you know, we hit it pretty close, actually. In the fourth quarter, we were running at 2,900 orders today. January, running at 3,200. So we think still the 3,000 a day is good. And I think it's going to stay there in the foreseeable future for a few reasons. Don't forget the lenders have all built a lot of capacity over 20, and they will deploy that capacity in 21, even if the spreads start to come in. And the other thing people should remember about us, too, I think it gets sometimes lost. is even if we start to trend down and refinance, let's say later in 21, what's probably happening is mortgage rates are starting to trend up and we're going to get the benefit in our investment income. So it goes both ways. If refinances start to go down and investment income kind of recovers, we'll still be doing very well.
spk07: Okay, thanks for that. And then you had about an $80 million a year of your growth rate in the information side. Obviously, DocuTech's in there. Can you sort of size for us how much of the year-over-year growth in dollars was driven by DocuTech versus volume growth versus growth in other products? You keep acquiring companies. Is there a way to sort of think of that 80 in three different buckets and sort of how we think about modeling that on a go-forward?
spk05: Yeah, so of the $80 million, we had about $22 million of that growth was DocuTech. So for DocuTech, we had $22 million in the fourth quarter of revenue, and we didn't own it a year ago, so zero a year ago. We've seen growth in our data and analytics business to the tune of about 19 million year over year. We continue to sell data and information products to customers, and that's growing very nicely. We also have 15 million of growth in kind of our centralized mortgage business where we do a lot of post-close activity. And then finally, I'll just point out our international business was up about $10 million in terms of year-over-year growth.
spk09: Yeah, I'm looking forward. This is Dennis. Looking forward in 2021. I think all those trends will continue. But I would like to highlight the data is really hitting its stride right now for two issues. Number one, the data is really coming together for us, as we've talked about over the last few years, for both internally for our own innovation efforts and our own automation efforts. And it's really moving forward fast on our opportunity to sell to our partners and our customers out in the field. All right. Thank you.
spk02: Thank you. Thank you. Our next question has come from the line of Bose George with KBW. Please proceed with your question.
spk06: Hey, guys. Good morning. The commercial recovery year over year, obviously, is strong. I'm just curious, do you think there's some sort of a catch-up happening in that sector? Or just curious how you characterize what's going on because it looks like you're getting close to somewhat normalized levels there.
spk09: Yeah, great question. I don't think it is a catch-up. And let me explain. We were down with 39% in the second quarter commercial, 29% down in the third quarter commercial. And then the fourth quarter rolls around, and we really gained momentum in November, December. The momentum's continued in January. We were only down 5% on revenue off the 4th of 19, which was a record quarter for us. And interesting enough, inside of those numbers, we were lagging still on large deals. And so it's broad-based. It's kind of, I call it more the run-of-the-mill kind of deals. And I actually think we have the opportunity to see the large deals just start to kick back up in 2021. I mean, I'm not sure. I doubt 2021 will be a record year for us, but it'll be a strong commercial year, number one, what I believe. Second, you know, I think also probably investors didn't appreciate through the whole cycle of 2020, we were meaningfully profitable through our commercial division the whole year long.
spk06: Okay, great. That's helpful. Thanks. And then, actually, just can you revisit normalized title margins? Given a range in the past, can you just talk about – Where do you see that, whether anything in terms of what happened this year, your business mix, et cetera, kind of changes up?
spk09: Yeah, I think, you know, we don't give a guidance on that. But I think what people should understand is regardless of what the market brings to us, we're always going to strive to have incrementally improving margins year after year. You know, and most of the time we can achieve that. So looking at 21, I'm optimistic that we've got a strong purchase market. At least for the beginning part of the year, we think we'll have a strong refinancing. market, which I think will last a little bit longer than people think, and commercial strong. We're seeing great leverage on the business right now. We're seeing real benefits from our automation, from title automation and our digital closing, and we're seeing real strength in our data businesses. So, you know, what we're going to always do is look to have top tier performance, top quartile margin performance, but never at the expense of the long term. We're going to continue to invest in this business, as I mentioned in the script. So it's always going to be a balanced force, but we think it's going to be a good year in 2021.
spk06: Okay, great. Thanks.
spk02: Thank you. Our next questions come from the line of Mark Hughes with Truist Securities. Please proceed with your questions.
spk01: ARPO is quite good in the quarter. Could you comment on how much of that might have been mixed versus home price appreciations?
spk05: Well, it's hard to know exactly. I think it was that. I mean, a lot of it was HPA. Typically, if housing prices rise a dollar, the rule of thumb is we'll get about $0.60 of that into our purchase fee profile. But we also did see a mix. I mean, our California business was up 15% on the direct side. Obviously, California has higher housing prices, so I would say most of it was HPA, but some of it was mixed. None of it was just raising rates. That's not something we've been doing, so we have no rate increases in there. It's just a matter of HPA and mix.
spk01: Rating expenses, the margin was obviously quite good. Are there any unusual items in that? When you look at it sequentially, it was up a bit. I'm just curious.
spk05: The question, any unusual items in the quarter? I couldn't quite hear you there.
spk01: Unusual items in the other operating expenses. Your margin was very good overall, but the other expenses were up a bit sequentially. So just curious.
spk05: No, no. I think in the other operating expense, line on, there was nothing unusual there.
spk02: Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Our next question has come from the line of John Campbell with Stevens. Please proceed with your questions.
spk03: Hey, guys. Good morning. Congrats on a great quarter.
spk02: Thank you.
spk03: Um, Mark, in the specialty segment, I'm getting to, I think about a 15% pre-tax margin for just the home warranty business for 2020. So first, is that about the right mark there? And then, um, if, if that's the case, would you guys expect a kind of an improvement on a run rate basis as you guys get away from some of the COVID driven kind of higher claims for the home warranty business?
spk09: Yeah, the answer is yeah. Yes. Um, We were impacted this last year as the whole industry was on the COVID. I call it the COVID-related claims in our appliance and our plumbing. They were up about 18%, by the way, in the fourth quarter. But the business is growing nicely, both in our real estate channel and our direct-to-consumer. So what we've done is adjusted our prices and some policy coverage issues, and those will flow in over the next 12 months as the policies renew.
spk03: Okay, and then I'm guessing we could probably get this in a 10K, but I don't know if you guys have this on hand, but what was the provision rate for just the home warranties business in 2020?
spk05: The loss provision rate? Right. The loss provision rate was 53% in 2020. And it was 50% in 2019. So, you know, we have seen, as we've been talking about, you know, higher claims. But, you know, obviously, you know, still pretty attractive loss rates for that business.
spk09: John, the one thing to remember in that business where it's difficult to forecast, though, is that we have extreme weather in the summer months. We're going to see an uptick in our air conditioning claims. So there is a weather component on that one in the summer months typically.
spk03: Okay, makes sense. And then on the macro, I mean, you guys have had a good crystal ball of late. I think, Dennis, I think you nailed the refi call last year for sure. I mean, it looks like the NBA is calling for, I don't know, down almost 25% year over year. That feels a little overly conservative to us. But, Dennis, you did say, you know, you said a couple times you expect a pretty healthy market this year. But just curious on your thoughts on that forecast. And then maybe, I don't know what Fleming has for you guys there internally, but kind of what he's pegging the market for for 2021.
spk09: Yeah, a little bit of my forecast on that one. That's not far off from our budget, what we anticipated for 21. We're a little more aggressive than the 25. But, you know, what I think is going to happen is the spreads are going to come in and the lenders are going to deploy this capacity, right? So I think it may last a little longer than people think. It's my call right now. Okay. Where I was going to go, though, is irrespective, we're starting really strong in the year. both purchase and refinance, which is obviously good for us in our typical seasonally slowest quarter. So a real strong start to the year, and we'll see how it plays out.
spk03: Okay, that's helpful. And then last one for me on commercial. As you guys kind of look at the pipeline, could you just kind of broadly talk to what that mix looks like, purchase versus refi, if that's pretty similar to Resi or if you guys are seeing a little bit more purchase strength?
spk05: You know, the mix hasn't really changed much. I mean, when you look at our commercial revenue, about 25% of our revenue is refi-related in the fourth quarter, and with the same number, it was 25% in the fourth quarter of 2019. So we've seen a pretty consistent mix of refi. Obviously, we don't have the volatility there that we have on the residential side. Okay, great.
spk02: Thanks, guys. Thank you. Thank you. Our next questions come from the line of Jeffrey Dunn with Dowling and Partners. Please proceed with your question.
spk08: Thanks. Good morning. Dennis, I wanted to get some higher-level thoughts from you on technology and digitization efforts. Can you just discuss a little bit, going forward, how important is automated underwriting of refi, automated underwriting of purchase, relative to really digitizing the front end and back end experience of the customer. It seems like we kind of blend the concept of digitization, but there's different aspects here in terms of what could be meaningful for production, meaningful from an expense standpoint, et cetera. So can you hash that out a little bit more?
spk09: Yeah, great question. We do blend them together, but they're separate issues, right? So let's break them down. At the fundamental and the title automation, which we've made great strides, and there are great strides to gain in the future, the core of that is the data, right? So we've made tremendous gains of the data. We have the largest public record database now. In the last couple years, we've made tremendous gains on the automated capturing of the data, so we're able to go larger content, larger geo right now, which leads us to build significantly more title plants in the years to come, and we're already the title plant leader. And why I bring that up, Jeff, is that's the fundamental for the title automation, both refinance and purchase. So now go to the title automation itself. We continue to add, I'll call it our data scientists and others, to refine the title automation on the purchase and the refinance, and there's more to go there. So that's that component. The second component is closing which will probably be more incremental because we have more, obviously, regional variations, but that's part of the DocuTech and many of the other things we're doing right now to, I'll call it, to digitize the closing process, including, by the way, our endpoint investment that I don't think people probably have focused in enough on. We launched a native digital company called Endpoint, I guess it's about a year and a half ago or so, 19 started to hit its stride and it's a completely reimagined way to close. No connection to how we've done it historically. We launched in Seattle. We've got a 2% and growing share there. We've launched in, I'm looking at Mark four or five, three more markets this year, more to come. And I think there's a lot of opportunity and endpoint. And by the way, that's been a $70 million commitment to us internally that we're going to continue to fund. to reimagine the closing aspect. And all that wraps back up, by the way, to the margin question. We're always going to strive for top-tier margin performance, but never, ever at the expense of the long-term investment to move this business forward to a digital future.
spk08: And what about the front-end experience aspect of it? Jeff, qualify a little bit so I know exactly what you mean by the front-end. It seems like we saw some news out of FNAP, and I believe you guys as well, about, you know, the – in terms of a secure digital opening site, and I think particularly escrow deposits and fraud prevention are another big area that's been focused on. I guess what I'm ultimately trying to get at is – Jeff, let me answer that.
spk09: Excuse me to cut you off there. We're doing the same thing. It's called our secure portal. We've been rolling that out for a number of years, making great strides. So, Think of that more as incremental, endpoint, more material, a different approach. So one's an incremental approach, making great strides. Endpoint, kind of I'll call it more revolutionary approach.
spk08: Okay, and I guess the ultimate conclusion I'm looking for here is it strikes me that this is more about better operating leverage on future business, not necessarily having to expand the expense base as much as you might have traditionally needed to on top-line growth, rather than a material expense reduction development. Is that the right way to think about technology?
spk09: It's absolutely the right way to think about it. I mentioned in my script we're upping our spend on technology, probably developing other things. We're trying to wrap up this year the majority of it in our cloud migration, which will allow us even greater flexibility. So if anything, Jeff, we are not cutting back expenses on technology. We're accelerating them. And you saw it in our fourth quarter numbers, by the way. Look at our orders were up 30%, and our head count was up 6%, 400 people. That would have never been the case, Jeff, as you know, five, ten years ago, ever. So this isn't about for us, you know, at all costs trying to cut expenses. This is about looking forward and getting greater automation out of the business. All right, great. Thank you. Appreciate the comments. Thank you.
spk02: Thank you. There are no additional questions at this time. That does conclude this morning's call. We'd like to remind listeners that today's call will be available for replay on the company's website or by dialing 877-660-6853 or 201-612-7415 and by entering the conference ID 137-147-35. The company would like to thank you for your participation. This concludes today's conference call. You may now disconnect.
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