Stewart Information Services Corporation

Hello, and thank you for joining the Stuart Information Services Third Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask a question during the question-and-answer session. Instructions will be given at that time. Please note that today's call is being recorded. Lastly, if you should require operator assistance, please press star zero. It is now my pleasure to turn today's conference over to Kat Bass, Director of Investor Relations. Please go ahead.

Thank you for joining us today for Stewart's third quarter 2024 earnings conference call. We will be discussing results that were released yesterday after the close. Joining me today are CEO Fred Eppinger and CFO David Heise. To listen online, please go to the Stewart.com website to access the link for this conference call. This conference call may contain forelooking statements that involve a number of risks and uncertainties. Please refer to the company's press release and other filings with the SEC for a discussion of the risks and uncertainties that could cause our actual results to differ materially. During our call, we will discuss some non-GAAP measures. For reconciliation of these non-GAAP measures, please refer to the appendix in today's earnings release, which is available on our website at stewart.com. Let me now turn the call over to Fred.

Thank you for joining us today for Stewart's third quarter 2024 earnings conference call. Yesterday, we released financial results for the quarter, which David will review with you shortly. I'd like to start the call by sharing our outlook on the overall housing market, followed by an update on the continued progress we've made in each of our core business lines. Before jumping into these discussions, I wanted to take a moment to express our sympathies for the many people affected by Hurricane Helene and Hurricane Milton. Our thoughts are with the many communities impacted by these storms, and we have and we will continue to find ways to support these communities in their efforts to rebuild. I am very pleased with the results for the quarter, given the continued contraction of the market. At the end of the quarter, we reached 37 consecutive months of year-over-year reduction in existing home sales. This quarter, we saw existing home sales decrease another 3%. In this environment, we continue to focus on growing our business and improving our operations and our offerings. We feel our performance reflects the effort we have put in over the past four years on our journey. We remain dedicated to positioning ourselves well for the market recovery and feel confident that we will have significant upside in a more normalized market from the actions we have taken to improve the company. This has been an interesting quarter for both the economy at large and housing in the U.S. While inventory has continued to improve over the past several months, the sentiment improved temporarily. The trend of historical low housing volumes lingers, with just 2.5% of homes changing hands year-to-date through August, one of the lowest turnover rates we have experienced in the U.S. in decades. Affordability remains a hardship and barrier to entry for many would-be buyers. In September, the Federal Reserve cut interest rates for the first time in four years, which resulted in some temporary green shoots by way of mortgage applications. But we see things leveling back off as mortgage rates have settled in around the mid-six level, and typical seasonality plays out. All of this is on top of the upcoming elections, which lends to a continuation of the very choppy market. Our view remains, however, that 25 will be a transitional year leading to a more normal housing market in 26, which we defined as a 5 million of existing homes sold on an annual basis. Turning to our operations, we remain focused on building an improved competitive position by executing upon a disciplined operating model while also identifying efficiencies to prepare ourselves for the market rebound. We are dedicated to growing share and attracting markets across all our lines of business, and we have positioned each business to do so. We have made great advancements in improving our customers' experience in all channels through upgrades in our technology capabilities and operations. We have implemented technologies to enhance our title production processes and are working on utilizing technologies to improve our data management and access. We continue to focus on attracting and retaining key talent. As we know, Stewart is becoming the best home for the industry-leading talent to grow with us as the market improves. We've been diligent in managing our direct operations segment to protect our corner of the market and our margin, as this segment most immediately feels the impact of a suppressed residential housing market. Strategically, our direct operations business remains focused on expansion efforts and targeted MSAs through both organic and inorganic means. We keep a pulse on the markets we are in, as well as those we're not, to ensure we are operating to our fullest potential across the country. Choppy housing market conditions have slowed acquisition-related activity in recent history. However, we remain very positive about the future outlook for opportunities and maintain a warm pipeline in preparation for an improved market. Our top priority in this business is to grow our share in attractive markets. Our commercial services businesses have been a strong performer over the last several quarters as we feel the positive effects of our efforts to grow our share in critical geographies and channels. We have made a lot of investments in talent across our commercial operations so that we have the right people in place to maximize our growth potential. We are also investing in upgrading technology to support our business and to provide a better customer experience for our clients. We expect our commercial transaction momentum to continue, but we know near-term commercial market challenges may present themselves depending on some of the economic variables that we previously mentioned. Our agenting team remains focused on driving share gains in attractive agency markets by adding new agent partners as well as growing our share with existing agents. We are focused on improving our position, particularly in 15 target states, and have seen solid progress in a number of these states already. Our improved support services and enhanced abilities around servicing commercial agents allows us to stand out to our agents. We will continue to build on these improvements to differentiate our service and offerings to better serve our agent partners. Our real estate solutions business maintains solid financial results and growth in the third quarter. The real estate solutions team is focused on gaining share with the top lenders and cross-selling our products as we leverage our improved portfolio of services. The current market poses some challenge to our cross-selling initiatives, but overall we continue to see share gains for both existing clients and new client introductions. We expect continued momentum in this space as the market improves. Across the enterprise, we are thoughtfully managing all lines of business and remain intentional with our investment and expense management. We have experienced an increase in other operating expense percentages, driven by significant growth in two of our businesses, commercial and real estate solutions. In commercial, we encounter higher outside data and search fees to service our customers. And in real estate solutions, other operating expenses are a higher percentage of VIX due to use of outside services and data. To date, we are very pleased with the margins we are achieving from our meaningful growth in agency services, data solutions, and in commercial. Overall, we remain prudent in our expense management to ensure we achieve both near and long-term goals. Our leadership team has an execution-based mindset that we feel will allow us to achieve low double-digit pre-tax margins as we return to a more normal 5 billion unit purchase market. We remain very positive about the long-term outlook for the real estate market, and are focused on our journey to become the premier title services company. We believe in the strength of the company and are committed to fortifying Stewart for long-term growth and performance. To reiterate this view, in September we announced an increase in our annual dividend from $1.90 a share to $2 a share. This is the fourth year in a row we have increased our dividend to shareholders. We have and will continue to position ourselves well to be able to capitalize on the opportunities that this housing market will provide. I want to thank our customers and agent partners for their continued trust. We are committed to doing the best to serve you with excellence. Finally, I'd like to end my remarks by extending my thanks to our employees. We would not be where we are today without the dedication of our employees and their commitment to bettering our company. Your efforts have had a tremendous impact on Stewart, and we are pleased to share this quarter that we were named as one of the 2024-25 Best Companies to Work by U.S. News & World Report. Thank you for your loyalty and efforts on our journey. David, I'll now turn it over to you to provide the update on our results.