Stewart Information Services Corporation

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Your meeting is about to begin. Hello, and thank you for joining the Stewart Information Services second quarter 2026 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 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 second quarter 2026 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 Hisey. To listen online, please go to the Stewart.com website to access the link for this conference call. This conference call may contain forward-looking statements that involve a number of risks and uncertainties. Please refer to the company's press release and other filings with the FCC for a discussion of the risks and uncertainties that could cause our actual results to differ materially. During our call, we will discuss the 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 second quarter 2026 earnings conference call. Yesterday, we released the financial results for the second quarter. I will kick off today's call with an overview of our performance, followed by our outlook on the housing market. I will then cover our results and strategic direction by business. After my remarks, I'll then turn it over to David for additional commentary on the results. I am very pleased with the second quarter results. We sustained our growth momentum in each of our business lines and strengthened our future earnings Outlook by significantly investing in some additional business opportunities. Our results for the first half of the year reflects the efforts we have made to grow the company and improve earnings. Our year-to-date results demonstrated our success at growing both top and bottom lines. Year-to-date, we have grown revenues by 26% and grew adjusted pre-tax income by 45%, all while the housing market remains at multi-decade lows. Our momentum continued in the second quarter as we saw very strong revenue growth of over 24%. Earnings growth for the quarter was 13% with slower growth driven by a decision to make some significant additional investments in individuals and teams to boost our organic growth initiatives in three of our title businesses. In the quarter, we made additional investments in individuals and teams of around $8 million to capture these targeted business opportunities. I'm excited about these opportunities and believe we should see the full impact of these hires over the next two to four quarters. Even with those investments, I believe we can deliver earnings growth that will outpace revenue growth over the second half and for the full year for the overall company. I am very encouraged by our strong momentum in 26 when considering current housing market conditions. Growth in the existing home sales has been very modest again year over year, up 2% for the first half of 26, but still hovering around the 4 million annual units, continuing the multi-year slump. At the onset of 26, we expected existing home sales to improve around 6% to 8%. However, given the position of interest rates as a result of the macro and geographical conditions, we now anticipate a much softer improvement with growth more likely topping around 2% when compared to last year. keeping us solidly in the low $4 million existing house sales range. While May and June saw some positive existing home sales momentum every year, the annualized numbers remain in that $4 million to $4.1 million range. Home prices continue to hold and slightly increase by around 1.5% for the quarter, even as we see more inventory coming into place, reflecting the demand still built into the system. The charge of owners of under 3% rates continues to slowly shrink, coming in about 19.5% from the high of 25 of outstanding mortgages several years ago. This implies that life events are slowly inciting some buyers into the marketplace. Interest rates remain a critical factor for potential home buyers to consider determining when they enter the market. And in the first quarter, we felt the positive effects of rates moving down towards 6% range. and felt a dynamic shift as they moved back up around six and a half, which is where we are hovering throughout the second quarter. Turning to our business results, our national commercial services business continued to deliver strong growth in the quarter. Total domestic commercial premiums grew 20% year over year and are up 30% for the first half of the year when compared to 25. Energy continues to be our largest asset class, followed by strength in some of our larger asset classes, such as data centers, multifamily, and industrial properties. We are proud of how we have built this business over the last two to three years, and our lanes are focused on the continued expansion in this space. The acquisition of industry-leading talent is a critical activity for us to continue to grow our footprint, and we continue to seek opportunities to expand our talent base. In the second quarter, we made some significant investments in hiring additional teams to address some regional and sector opportunities, spending an additional $3 to $4 million this quarter to do so. We believe in these personnel investments and anticipate we feel the full impact of these hires over the next two to three quarters as they settle into their seat and begin to convert business. Our direct operations business unit grew consolidated residential refinance in Main Street commercial revenues by 7% in the second quarter compared to the same timeframe last year. Residential transactions grew 3% in the quarter, slightly better than the growth of existing home sales for the quarter. Main Street commercial delivered solid growth with revenue up more than 20% due to both transaction volumes and size. We remain focused on strengthening our position in attractive MSAs through organic and inorganic efforts and have begun to see more opportunities become available in our target geographies. In the second quarter, we invested approximately $2 million in incremental organic opportunities to acquire individuals and teams in support of our growth strategy and direct operations. Our centralized title operations, which include centralized refinance in our bulk business, confronted some tough comparables when compared to the second quarter last year, as our bulk businesses particularly can be very bumpy. These headwinds impacted our overall non-commercial direct business and drove results down about 1% when compared to the second quarter of 25. Our agency services business delivered 25% revenue growth the second quarter in a row, which we are especially pleased with given our agents confront the same headwinds as our direct operations offices. We are focused We are also committed to expanding our commercial footprint agency, and we continue to make good progress on both these priorities, with residential premiums up 30% and commercial debt premiums up 16% in the second quarter when compared to the same time frame last year. In the second quarter, we were also proactive and making additional investments in talent to take advantage of some disruptions we saw in a handful of our target markets. We invested another $2 to $3 million in additional customer-facing talent, which should enable us to build significant share in these target states. Our real estate solutions business grew revenues by 75% and adjusted pre-tax margins by 24% in the second quarter compared to last year. ending the quarter with a 13.6% margin. The year-over-year comparables in this segment benefit from our acquisition of MCS, our property preservation business, as well as our acquisition of NAN, our national appraisal network. When removing those contributions to our revenue, our legacy res business grew roughly 18%. We remain focused on continuing to expand our coverage and servicing of the top 300 lenders, and our suite of products and services is in good position and has given us even better ability to cross-sell and win business. Moving to our international operations, we are focused on profitably growing across our footprint of Canada, Australia and the UK. In the second quarter, we grew at non-commercial revenue by 4% and commercial revenue by 7% in challenged housing markets. We believe we can build on our strong position in these markets and continue to grow profitable shares. On the topic of inorganic growth initiatives, in 26, we have seen a meaningful pickup and attractive opportunities in our acquisition pipeline. In late 2025, we conducted a capital raise to put ourselves in a position in 26 to strengthen our competitive position and increase our earnings power. The vast majority of that capital has yet to be deployed. However, we are currently working on transactions that we anticipate will close in the next 60 to 120 days, and will be funded by the proceeds from our excess capital. Our significant growth in real estate solutions and commercial activity throughout the business life has resulted in an increase in our operating expense ratios. The real estate solutions, our other operating expenses are the largest expense category and our higher percent of our mix due to the mix of outside services, cost of data and our appraisal and property preservation contract workforce. Similarly, the commercial transactions often come with higher operating expenses given the cost of data and search fees. Throughout our journey, we have prioritized thoughtful investment in ourselves and our talent to position Stewart well for the marketplace. We have some of the best leaders and employees in the industry, and we continue to add to our roster with a relentless focus on adding personnel that will help us grow the company for the future. We believe strongly in these investments, These investments are necessary to propel the company to the next phase and are continuing to see real momentum for ourselves in the marketplace. We have increased our staffing in all our segments in line with our organic growth initiatives and have grown our headcount via acquisition, which has resulted in an increase of our employee costs of about 17% year to date. Even with this increased investment, year to date we have grown revenues by 26% and adjusted pre-tax income by 45%. We continue to anticipate earnings growth in excess of revenue growth for the full year, but could see the ratio of revenue to earnings come in in the second half without the benefit of improved market conditions, given our increased investment in the title segment. We continue to prioritize shaping the company for 12% adjusted margins when we get back to a 5 million unit existing homeless market and are focused on improving margins as we grow in a challenged market. Thank you for your time, attention, and interest in Stewart. As an enterprise, we are dedicated to being the premier title service company. We are focused on strengthening the company for lasting success through targeted multi-pronged growth plans by business to further fortify our position. To our customers and agent partners, thank you for your trust and dedication to Stewart. We are committed to serving you with excellence. And to our Stewart team, Thank you for your dedication and focus on growing this company together. We have made great progress, and I look forward to seeing what we can do together. David, I will now turn it over to you to provide an update on our results.

Good morning, everyone, and thank you, Fred. Thank you to our employees and customers for their continued support and partnership as we navigate a residential real estate market that remains challenging. Yesterday, Stewart reported solid second quarter results with both revenue and profitability growth. Second quarter total revenues increased $177 million, or 25%, while net income improved $5 million, or 17%. Diluted EPS was $1.21 compared to $1.13. On an adjusted basis, net income was $43 million, or diluted earnings per share of $1.39. compared to $38 million and $1.34. Appendix A of our press release shows adjustments to our consolidated and segment results, primarily related to net realized and unrealized gains, required intangible amortization, and acquisition integration expenses. In our title segment, operating revenues increased 91 million, or 15%, driven by strong performance from our agency, and domestic commercial business. Title operating expenses increased 17% primarily due to expenses related to revenue growth and higher employee costs, as Fred noted, resulting from our continued investment in talent. As a result, title pre-tax income was comparable to last year. On our direct title business, direct title revenues increased $15 million or 5%, primarily driven by higher commercial and refinancing transactions, while purchase orders were comparable to last year. Domestic commercial revenues grew $15 million or 20%, driven by higher transaction volume across energy and other asset classes with continued data center benefit. Our average domestic commercial fee per file was comparable to last year at $16,900. Average domestic residential fee per file increased to 10% to $3,200, primarily due to a higher weighting of purchase transactions. Total international revenues increased 5%, primarily driven by higher transaction volumes. On our agency operations, gross agency revenues increased 25% to $377 million from $301 million last year, driven by improved residential and commercial activity across our key agency states. After agent retention, non-agency revenues increased 13 million, or 26%, compared to last year. On title losses, the title loss ratio improved to 3.2% in the second quarter compared to 3.6%, primarily due to continued overall favorable claims experience. We expect our title losses for the year to average from the mid-3 to 4% range. On our real estate solutions segment, total revenues increased 75% to $85 million, primarily driven by our recently acquired MCS business and growth in our credit information and valuation services business. Real estate solutions adjusted pre-tax income more than doubled to $27 million from $12 million, while adjusted pre-tax margin improved to 14% from 11%. On our consolidated expenses, our employee cost ratio improved to 27% compared to 30%, primarily due to revenue growth. Our other operating expense ratio increased to 27% from 25% primarily due to higher costs associated with increased revenues in the real estate solutions segment. Due to our real estate solutions segment growth, we expect our other operating expense ratio to be in the 27% to 28% range going forward. Our financial position remains strong and well positioned to support our customers, employees, and the real estate market. Total cash and investments were approximately $400 million in excess of statutory premium reserve requirements. Total Stewart stockholders' equity at June 30 was approximately $1.66 billion, representing a book value of approximately $55 per share. Net cash provided by operations increased to $60 million from 53, primarily driven by higher net income. Again, thank you to our customers and employees for their continued support. We remain confident in our ability to serve the real estate markets. I will now turn the call over to the operator for questions.

Thank you. If you'd like to ask a question, press star 1 on your keypad. To leave a queue at any time, press star two. Once again, that is star one to ask a question. And we'll take our first question from Bose George with KBW. Your line is open.

Morning. Hey, guys. Good morning. Hey, guys. Good morning. Actually, first, just on expenses. So you guys noted a few factors that drove the expenses higher. But just stepping back and looking at it more broadly, can you just talk about the annualized margin outlook, especially if you remain in this higher for longer with mortgage rates at 6.5%?

Thanks, Bo. So I think what, if I look at the whole year, right? I've told you I'm giving some guidance on the whole year, how to think about the changes If we stay flat, which I think we will, I don't think we'll see any growth in the res market for the rest of the year, I believe that we'll grow earnings, revenue probably 20% and earnings 30. That's kind of the range, I think. There'll be some comparisons in the back half of the year. We had such extraordinary growth in commercial that'll tighten some things, I think. So the improvement in margin I see is about a half a point for the company year over year. might be four-tenths, might be six-tenths. Again, it has something to do with the comparisons because we had such outsized growth in commercial last year, particularly the fourth quarter. But it's that kind of improvement. So I'm right on track. It's right where I wanted us to be. We outperformed a little bit in the first half of the year, which was great, and we've reinvested. a bunch of that because I want to sustain it. One of the things to think about, our commercial business at the end of 2003 was $208 million. Our last four quarters is $450 million. We've doubled that business and so it's important for us. That's a people-driven business and we really need to make sure we're covering sectors and reach geographies. The other thing you're seeing is a really significant step up in our agency business, we've had some nice movement. And we've seen a couple of markets that there's disruption. So we've gone for it. We're kind of making investment in customer facing to really kind of shift shares. And you can imagine where they are, where the best markets. But I still think with all that, as I look at our momentum and even with the earn out, earn in, I'm sorry, I think we'll pick up another half a point. So we're right on, I think, The title will be tighter. I think it'll be kind of the same as last year, but the overall company will be about a half a point. And it could be better than that, depending on how quickly we ramp up some of these opportunities. I also, by the way, those numbers do not include what I expect in the next 60 to 90 days. We have a number of these acquisitions we're going through to Dillon's that we've talked about and obviously that that would be additive likely to the equation but I think we're right on track to what we thought.

Okay great thanks that's helpful and actually just on the acquisitions you know when we think about the scale is it you know similar to MCS is you know they a lot of small ones if there's any color that would be great.

Yeah sure so when I talked about it right the categories we had talked about there's a little bit of of consolidation I'd like to continue to focus on in some of the RES services because it's quite very good incremental margin improvement for us to do that. So we did demand, which was in that category, and is likely to be in another one over the next 12 months. Not necessarily in appraisal, but in the RES services. There are also on the agency side, as I said, a lot more activity. and so I would see couple three in that category and they could be a combination of res or commercial depending on the transaction. And so they're in those categories that we've talked about. None of them are huge, so none of them are in the MCS size kind of category. We're at the point now where this is about MSI, local market trying to change the economics and we're in kind of the business by business, whether it's our data business, our appraisal business or our property press to really just build scale in some of those areas. So they're all active. As I said, I would guess that we'll be able to deploy the full amount of what we raised plus some. and the next probably, you know, by the end of the year. That's what I would say.

Okay, great. Actually, just a quick one on commercial. You know, was there any slippage of, like, large deals? I mean, your fee profile was flat year over year, but obviously down at least a bunch over the last couple of quarters.

Yeah, it was very bumpy, and we had some comparison. We had a couple really big ones last year. But the mix of us... and where we are when I look at the data center mix or I look at the energy mix, it's similar, right? But we've had a couple, same in the fourth quarter of last year, we had just a tremendous big one in New Mexico. So there's gonna be a little bit bumpy. I don't see any momentum shift, the pipeline's good. What I would tell you, though, it's just the comparisons are tough. I mean, we grew 30% for six months. We grew 46% or 7% last year at the same time. I mean, we're building on big numbers. If you recall, we grew a lot faster than the rest of the industry early. And so, you know, the comparison, some of these, you know, last year was a big year. And as I said, you know... Frankly, it started at the end of 23. We've been cranking. So I'm very, very comfortable with a 30 sitting on top of the 47. But I would also say that's a place, I've said time and time again, we're under clubbed in geographies. We're under clubbed in sectors. We've got to keep hiring talent and commercial if we want to keep closing the gap. We've gone from about I haven't done obviously the numbers this quarter, but we've gone from about nine to we were about 13 and a half, 14 percent share. And so that's a pretty big jump. I'd like to believe if we keep our focus and keep investing that business over the next couple of years, we could get it to 20. Now, again, it's bumpy. So our competitors are going to have great cores, too, and they're very, very good competitors. So I look at that business as really about coverage. and resource. And our team, you know, because the other thing I want to do is I don't want to take on so much so fast that we can't digest it. So it's kind of balancing that. But I think our team has done an excellent job doing that. And I continue to see a good, strong pipeline and potential.

Okay, great. Thanks for the call.

We'll move next to Oscar Nieves with Steven Zink. Your line is open.

Hey, Oscar.

Hey Fred, good morning. My first one is on the title segment. When you look at the revenue trends in title, agency continues to outgrow direct. So is that still consistent with the share gain story in your target MSAs, or are you starting to see competitive or mixed pressure show up in the amounts retained by agents? Because if we look at the average of this quarter, it came in at... A little bit higher than the prior quarters, so just wanted to see.

So it's a good observation. So the way I'm thinking about it, in our direct operations, we've now been, what, four years in a flat market on REVS, which is a vast majority of what's in our direct operation. We're trying to expand the what I call Main Street commercial. They've done a pretty good job. They've run at 15%. But I would argue our direct operations is probably under penetrated in commercial still. So if you look at, I think we grew three and a half, something like that in res. So we're holding our own and our growth in direct has mostly been on the commercial side that gets us to that seven. And so we've done a pretty good job, but we haven't share shifted as much on the res side on direct ops. Now, two things are changing. One, we're getting good commercial traction, but the thing I mentioned in my call, we're starting to see disruption. We're starting to hire and take teams organically, and so we spent about a couple million dollars this quarter at that, and I can see the shift. The other thing that's happening in direct is the inorganic opportunities, and I keep talking about it by MSA, are emerging. We just announced one, a great brand in Texas on... Fort Worth, Dallas, where we were weak. And I'm really excited about this great brand, great company. It's not huge, but those kind of opportunities are starting. And as I said, in our pipeline, we have another three or four of those. So we'll start seeing kind of that MSA-grade growth shift a little bit with REST. Now, I don't see the market helping us, right? Because I was hoping this year that I'd see 6, 8, 9, 10, kind of little bit of res growth, which would really shift for us. That's also our big margin lever because we have excess capacity in our direct operations. But to your point, compared to agency, the team has done an amazing job, right? In a one or two or 3% growth res, we grew 30%. I mean, what we're seeing is Shifting share at a lot of significant agents in some really attractive markets. Do I think that's going to come down a little bit? Sure. I think that business will probably grow in the teens. The other thing, they've done a really good job is on the commercial side in agency. But it is, we are shifting share nicely on the agency side. I don't see the dynamic within the agents changing anything. I just think we're kind of shifting our share. But I would tell you, again, inorganic activity, you know, there's a lot more discussions right now. Even though the market's flat, I think it's because commercials are a little better. People's outlook is a little bit better. And so they've made a little bit more money. And so we can come to an agreement on a price that's fair for both. But that is actually starting. But it's a great opportunity because it's, for me, the direct operation swings. If commercial's outsized, it changes the dynamics dramatically. if we could get a little bit more res growth in Direct, it would change the dynamic. So those are the things that are moving it around. But I'm really pleased with the progress everywhere. I just, you know, I think that Direct is emerging because we're seeing this activity, and that team's done an amazingly good job on expense management, data management, and so we've been able to hold or increase our margins over the last three years because of good hard work they've done, even though there's been no growth. So I think we're pretty good in both.

That's super helpful. I have a couple, I want to double click on a couple of the things that you just mentioned. One is on commercial activity, which obviously has remained very strong. And one of your peers that reported yesterday mentioned on their press release that they are on track for a record year in commercial. So on that, can you give us your outlook for commercial revenue for the rest of the year and into 27? And also if you can share how the underlying drivers What are you seeing right now in terms of Fibra 5 versus order counts?

Yeah, they're both, they're solid. So again, my whole thing is just the comparisons for me, because we had a bunch of quarters, as you know, in the last two years, we grew 50%, 47, 50%. and so that's a hard comparison, but we had a nice pipeline. We grew 30% the first six months this year. I believe we continue to grow. I'm a little bit suspicious about the fourth quarter because we had such a big year in the fourth quarter last year. But to your point, we've had two record years in a row, right? And with this last four quarters, it doubled the business. So we see the same thing. The market is attractive. We hit our stride and our skill set got better at the right time. We were fortunate. Call us lucky. So we've been seeing this for the last couple of years. But we don't see, again, it's bumpy for us because we're smaller. So, you know, if you have one of these mega deals like we had in New Mexico, we had another one in Louisiana, I think it affects us a little bit. But I don't, you know, I like the breadth of our pipeline. I like what's happening locally. I would say kind of what we did in the, you know, could I see the percent growth be a little less because of the comparisons? Yeah, but it's not because the market's not good. It's not because of the pipeline. And you can see our order count and our numbers. Now, the one unknown always with commercial, you just have to keep in mind, is if there's a disruption in the marketplace and, you know, the financing costs change, sometimes they'll kick it to the next quarter or they'll You know, accelerated or something. So it tends to be these tend to be longer deals. They tend to be a little bit fickle about kind of timing and closing. But, you know, I'd be surprised if this year is not the best year we've ever had after last year being the best year we've ever had. And so we just got to keep after it. But I do think the little bit of difference with us and some of the, you know, the two big competitors are very big. and for me I'm building capacity as fast as I can build capacity so there's a little bit of a gate for us because I don't want to be stupid. I want to do it well. I want us to be considered excellent and so there is this staffing that we got to continue to do because we're a lot bigger than we were but I feel really good about the market. There's nothing about the market that I'm worried about. The early estimates in the market were about a 12% growth in commercial that you see these forecasts. Obviously, the first half is way out, you know, is much bigger than that. And I don't see anything changing the trends, right? I think they're all kind of similar. So we'll see.

But it's not the kind of report that say I'm worried about it. And Oscar, that $17,000 fee per file is probably more indicative. As Fred said, we had some really big deals in prior, but the $17,000 is probably more indicative.

Right, yeah. All right, that was going to be my next one because, yeah, it was a significant step down versus the prior two quarters. And I do have one last one. You recently announced the Ratican acquisition and just wondered if you could share some details on the size of that deal.

Excuse me.

Yeah.

It's what I call a micro deal a little bit because it's basically, it's a small deal. It's not a big deal. The reason we announced it nationally is because their brand is amazing. And it's one of the oldest and best known agents in Texas. It has an amazing commercial position. And so we felt it was important to, you know, recognize the family and make the announcement nationally. But it is what I would call, it's a small, again, it fills in Dallas is the way for us to think about that. And the ones we're doing following are bigger, a little bit bigger. So a little bit different nature. But we're very, I'm really pleased with it because Fort Worth has been a real, we have a really good position in Dallas, but it's been a hole. And this is about as great as it can be as filling out that city for us.

and Oscar, if you just think about the industry data, right, most agents are under 10 million in revenue. And so when you have a single market agent, right, that's probably the area that they're in.

Okay. Yeah, that's a great thing. I'll get back into queue because I have an infinite list of questions, but I'm going to give other people a chance to speak too.

Yeah. Thank you, Oscar.

And as a reminder for your questions, that is star one. We'll pause for a moment to allow further questions to queue. One moment while we queue. and we'll take a question from Michael Reindos with StoneX. Your line is... Hey, Michael. Hey, good morning, everybody.

Good morning. Hey, just drilling further into the commercial, can you talk about your win rate and the direction of win rate over the past couple quarters and how competitive is the market on pricing and which direction is that going?

Yeah, again, so we don't... typically you have a lead player in those deals and you achieve those. It's not really a competitive, you know, on a particular deal. They typically get referred and as you get better at certain categories, you tend to lead more. And then what ends up happening in some of the big deals is you share the deals given the scale and the size and the need for the surplus. As far as the price sensitivity, there really isn't a lot of price sensitivity. There is some segments of the market where there'd be joint venture businesses between the generators of the business and the underwriters. So there's some kind of sharing, if you will, of those deals that occur in pockets in different cities, particularly say in a New York City is one place you might have that. But we don't see that business being overly competitive. It has a lot to do with kind of your skill set, particularly on some of the rural land stuff. And we tend to be very good at places like energy because it's a lot of rural stuff and it's in New Mexico or Indian reservations, whatever. So they tend to skew towards the people with skill. And again, for all of us, I would guess, I don't know, but it's a higher margin business for Everybody, you know, for us it used to be subscale, so it wasn't, but we're now in the same category with all the others. Because the other thing that comes with commercial is float, right? So you have the escrow and the float and the investment income as well. So, again, that tends to be a little bit on higher margin business. It tends to be a very stable market. I would tell you right now the issue is We're skewing to larger accounts just because of the nature of what's happening with data centers, energy development, etc. And in those, you're seeing more shared accounts, right? They're just big. So you have to have more shared. And so there's a lead and then there's following. And so we're doing a lot more leading than we've had historically because we're bigger. But there's a lot more shared transactions because of the nature of the business and the size of the business. So So again, I like the business. It's very attractive. And again, I feel like for us, it's really important to be a bigger presence in commercial, and I mean in all our sectors. So more in our direct operations, I want more Main Street commercial. I want more international commercial. I want more agency commercial. Because again, in that business, the three of us, the whole monopoly is even tighter. Obviously, Old Republic's got some of it, too. because our skill sets are unique and our capital base is strong, that tends to be a business that's, you know, the battle for joy is going to be the three of us. And we need to be more present across the spectrum.

Gotcha. Okay. And how long does it take from an order open to an order close in commercial on average? And what's the direction there? And what does that tell us, if anything? Okay.

Not much. It's tough to call. So they'll be like, in commercial, you could have a two-year deal, right? So again, the complexity, the size, you don't have a lot of 60-day deals, right? These deals are kind of going to be three-quarters or so to a year. But again, we've had some of these complicated ones can take multiple quarters. And as I said, the other thing about them is they're very business oriented. So there's a trigger when they're doing a business case. If something happens with their carrying costs and stuff, they might kick it forward or they might kick it back. They might want to close the quarter with it. So they tend to be a little fickle about exactly when they close. But this is why, by the way, our growth, we sometimes have excess expenses as were a lot of the search fees and stuff like that. What happens is you do a lot of that work and you don't get compensated until those deals close. So there can be a lag in those businesses of a lot of costs and expenses that you have while you're doing the work before they close. It's just the nature of the business. Now, over time, that evens out. But for somebody like us, that's been challenging because we're growing like a – well, you're growing 40%. You know, revenue, you're chasing all that work you're doing for the revenue that hasn't landed. So we've had to manage ourselves properly to kind of, to do that with staffing and stuff like that. But again, it could be all over. That's why I tell people, if you look at the ratios of open to closed, right, you can, you look at refi, you can almost call it, right, 65, 75 days. Res will take about the same. and so the commercial, it's all over, right? You can have a rush of orders and then closes get kicked back. That particularly was true for us with early days with alternative energy where it was with the signing of the bill that incented it, we had all these opens and a lot of those deals took a very long time and the nature of what the project was changed over time. So that's why it's not an easy straightforward answer but they tend to be longer. I would say the year is not a bad way to think about it, but they're all over the map.

It seems like in some states the political environment is becoming more difficult around permitting for data centers. Can you comment a little bit about how that is affecting you currently, what the outlook might be for some of the markets where you are?

Yeah, it's a good question, and it's something you all read all about, whether it's Maine or other communities that said, not in my community. It may have some impact. It's hard to know. We're such above average right now that could we be more robust than we have? But it's hard to really say. My prediction is that if we need it, they'll work it out. It's like cell towers. They'll find places to locate them. If we need the demand, it'll happen. Matter of fact, in my view, some of the readings about people going on premise and having smaller data centers to kind of control security center, that trend could take off and we could see a different profile of these data centers. So, again, it could, but I don't, because it's so robust and it's more than we've ever historically seen. And we don't see stuff slowing down per se. It's hard to say for me. And again, I look at it and say if the demand's there, they're going to figure out how to address it. And so we're just prepared to kind of respond to the opportunity. Again, I would say, as David said, the average size, I think there's some chance It reduces and you see those mega, mega deals. And, you know, the size gets a little bit more distributed, but I don't know that for a fact. I just kind of read what you read, trying to understand all that. So I feel good about where we are and the trends that we see.

Gotcha. For some of these inorganic transactions that you're looking at over the next year, can you comment a little bit about how these deals are priced on either revenue or profits?

Sure. So typically a title thing is somewhere between, you know, four to six EBITDA, right? If you have higher margin service businesses that could get all the way to eight EBITDA. We, as we think about them, they're all the IRRs for us where we think about it 15% plus. And when we price these deals, we tend not to include the underwriting. and so what's really advantageous to us buying agents is our competitors have much higher share in the agency channel so if they buy an agent, they're buying their own underwriting back. We actually get that for free and shift share in a high margin part of the business. So again, the economics for us are relatively attractive for these kind of transactions and the other thing I said when we talked about raising the money in December, I just could see all the activity. I mean, the amount of activity is is significant. There was a lot of people outside the industry in 21 and 22 that were either doing roll-ups in services or they were trying to thought they could do roll-ups of agencies, which is not a practical thing with no renewals. And a lot of those people have all said, I'm getting out, right? And you can see it. And so what's happening now, my view is we started getting to conversations where pricing got realistic. It wasn't high prices that they may have paid and and so I just you can see all this activity right now and so what we have to do is be very selective and very thoughtful but again we have opportunities to enhance our portfolio and improve our margins and so I could you know we could see it now. I will tell you that these are taking a little bit you know 60 or so days longer to get to close than I thought so could we have raised the money in March instead of December? Probably I would have had the overhang, but it's all come through. We're going to deploy the excess capital nicely and I'm very comfortable with kind of what we did and what we're doing now with it. And so, but I do think this, it's not going to stop. By the way, I just, I mentioned, I just think there's going to be some really interesting properties likely to be on the market in the next 18 months. And again, I just, you can see how people are thinking about it. And some of these are very attractive. And so we just got to be prepared to assess and understand whether that makes sense for us. But there's some really positive opportunity. The other thing I would tell you is that we're in a phase because of this, the rate long kind of down market. I do not see a lot of capital from outside of the industry coming in. This is one of those situations. If you're in the business, it's really good. The economics are great. If you're not in the business, I'm not sure it's that attractive. And that's why this is an interesting time in the industry. We'll see how these things play out. Because, you know, everybody that put their toe in the water, I can't see any of them putting more money in water. I might be wrong. Maybe AI changes that in some areas, but I don't see it. And so we should just be paying attention and thoughtful and try to take advantage of some of these.

I understand that you're not seeing any outside bidders. Are you seeing any competitive bidders from the other three large players in this group?

Is that picking up at all? The competitive nature of these transactions is very light. Let me just say that. Got it.

All right. Thank you.

We'll take a follow-up from Bose George with KBW. Your line is open.

Hey, guys. Just a quick follow-up. Fred, you'd mentioned the centralized title and some challenges there. Can you just elaborate on that a little bit?

Sure. So we have a centralized unit where we have the place where we have our centralized refi, which is a small business for us. We also have our specialty businesses. So we have our reverse business in there. and we have our bulk business, both of those, you know, the investor business that, you know, we talked about, we bought that. That bulk business is very bouncy. And so last second quarter, you could see, like, you just look at the orders, we closed a lot of orders in the second quarter. But it's just, it's the nature of that business. We'll get big deals, they'll come. And if you look at our open orders, you see that they're way up, you know, for the next quarter. So It's kind of bumpy. It's kind of the nature of that business. You know, I think it's important for us to build the skill of centralized transaction, given potential technology affecting trends and having more centralized purchase. And so we built that. We built it around specialty businesses. And it's a good business, but it is bumpy, right? So we probably saw a 20% reduction kind of in that business, right? which had obviously some impact on earnings growth too in the two or three million range. But it's the nature of that business and I see it coming right, you know, again, you can give me orders, you can come back.

Remember in that investor business, that executive order limiting institutional buying and then also that's included in the Road to Housing Act. So the market's normalizing for all that.

Okay, great. Thanks.

I show no further questions at this time. I would now like to turn the call back to Fred for any additional or closing remarks.

I want to thank everybody for their interest. As I said earlier, I'm just thrilled about our momentum as a company. I think we're investing in the right places. I want to thank our folks for their effort because it's been very, very busy. But I'm very encouraged about our progress, and we will continue to be very thoughtful of making sure that we're trying to increase our earnings Thank you very much. Appreciate it.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.