First American Corporation (New)

Greetings and welcome to the First American Financial Corporation fourth quarter and full year 2023 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.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 enter the conference ID 13743995. We will now turn the call over to Craig Barberio, Vice President, Investor Relations, to make an introductory statement.

Good morning, everyone, and welcome to First American's fourth quarter and year-end earnings conference call for the year 2023. Joining us today on the call will be our Chief Executive Officer, Ken DiGiorgio. 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 and 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 yesterday's earnings release and the risk factors discussed on our 410 and subsequent SEC filings. Our presentation today also 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 yesterday's earnings release, which is available on our website at www.firstam.com. I would now like to turn the call over to Ken DiGiorgio.

Thank you, Craig. We were performing well in a challenging market ahead of the cybersecurity incident that occurred in late December. As previously disclosed, we elected to take systems offline while we assessed and remediated the situation. The incident materially impacted the company's operations and consequently our fourth quarter financial results. Our title orders and related product demand appear to have returned to normal levels, however, and we do not expect any significant ongoing impact from the incident. Looking to 2024, we expect challenging market conditions to persist. Housing affordability and lack of inventory will remain headwinds for our purchase business. Refinance activity will also remain subdued, given that most existing mortgages carry interest rates under 5%. Transactions in the commercial market should increase, albeit at lower prices as price discovery continues. While we expect to see modest revenue growth in both our residential and commercial businesses this year, This could change depending on the path of mortgage rates. Turning to order trends in our key markets, purchase open orders in January are up 6% compared with last year. Refinance open orders in January averaged over 300 per day, consistent with trough levels experienced throughout 2023. Commercial open orders for January are up 7% compared with last year. While some of these orders spilled over from December, these trends support our assessment that the cybersecurity incident will not have a significant ongoing impact on our business. Despite the uncertainty of the timing of a sustained recovery in our key markets, the strength of our business, along with our financial discipline and strong balance sheet, allow us to continue to invest for long-term growth while returning capital to our shareholders. We remain active in our share repurchase program, repurchasing $18 million of our shares in the fourth quarter for a total of $73 million for the full year at an average price of $55.18 per share. In closing, I want to acknowledge the significant support provided by our agents and customers and other industry participants during our cybersecurity incident. I also appreciate the patience our customers demonstrated as we worked through the process of returning to normal operations. In addition, we have consistently highlighted the importance of our people to the success of our business. The incredible dedication and resilience they demonstrated in response to the cybersecurity incident underscores this principle. I greatly appreciate their tireless efforts to serve our customers and restore our systems. Now I'd like to turn the call over to Mark for a more detailed discussion of our financial results.