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Hello and thank you for joining the Stewart Information Services Third 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 Brian Glaze, Chief Accounting Officer. Please go ahead.

26th Earnings Conference Call. We will be discussing results that were released yesterday after the close. Joining me today are CEO Fred Eppinger and CSO 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 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 reference to 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 2026 earnings conference call. Yesterday, we released the financial results for the quarter. and I will kick off today's call with an overview of our outlook for housing followed by a review of our performance for the period and strategic direction broadly by business. I will then turn the call over to David so he can provide further commentary on our performance for the quarter. In the third quarter, the market began to set a new lower bar for residential housing. Market primarily driven by the rapid escalation in the 30-year mortgage rates moved higher than the same period a year prior. The rapid increase continued rates around 7.5% into October. As we've seen in the past few years, buyers will very quickly move to the sidelines in a situation where rates meet or exceed 7% or rates move up very quickly. In Q3, we experienced both these scenarios, resulting in a below $4 million existing home sales for two of the three months in the quarter, a decrease of about 3% to 4% year-over-year in August and September. We believe the residential market conditions will continue to decay into the next quarter, since those expenses will continue to capitalize on some of the market opportunities this disruptive market will create. For the third quarter, we delivered adjusted earnings per share of $1.33. Year-to-date, total operating revenue was up 22% and adjusted EPS growth was up 8%. For the quarter, growth slowed to 13% and our adjusted EPS delivery was below last year's third quarter as we saw a decreased margin for some of our businesses due to rapidly decreasing residential volume off historic lows. Our national commercial services business continues to deliver solid performance with overall commercial growth of 9%. Our credit position continues to improve. We did see a number of closing shifts in the fourth quarter, which is not uncommon in the changing market. We continue to be very positive on our improving competitive position and our future growth opportunity. In the third quarter, we also welcomed our title to the family, expanding our commercial energy and infrastructure team capabilities for servicing the telecommunications space. The acquisition of best-in-class talent has remained our strategic growth priority for the National Commercial Services Corporation. and the addition of Tower Title as well as the strategic hires we executed last quarter will help us further bolster this business for the long-term success as these new hires ramp up in their seats and begin to convert business in the coming quarters. We have had a lot of momentum in this space in the last three years and we will continue to encourage them. Overall, we will be positive on the large commercial and continue to see growth across multiple asset classes though that growth is often lumpy given the timelines and transaction sizes. Our direct operations bear the brunt of the slowing residential market and drove the majority of our margin reduction in title. Overall, our direct title operation business unit consolidated residential refinance of Main Street Commercial by 1% in the second quarter compared to the same timeframe last year. We saw residential volumes decrease by 3% and refi shrink 7%. That was offset by our mainstream commercial delivering 11% growth. Our growth plan for this business remains focused on strengthening our position in attractive MSAs through organic and inorganic efforts and continuing opportunities presented themselves in attractive geographies. Given market conditions, we will still focus on pursuing these opportunities, but we are sharpening our pencils even further to ensure they fit in our long-term financial goals. In the third quarter, we announced the acquisition of Radican Title, one of the oldest and well-respected title agencies in Texas servicing Fort Worth. This transaction is a great example of a strong strategic fit for Stewart as it strengthens our position in the Dallas Fort Worth marketplace, giving us a Fort Worth stronghold. Our centralized title operations, which are included in our direct title revenue summary, includes our, in the third quarter, we welcome ProTitle USA and Docky Solutions USA to this organization. The addition of these companies along with our existing offerings expand our scale of the title services for investors and capital market clients. In the third quarter, we grew this business 20% for these Finally, moving to our international operations, we focused on profitably growing our business. In the third quarter, we saw a slight deceleration of our non-commercial revenue by 1%. However, we have grown our revenue in this business unit by 4% year-to-date, which is solid during the Canadian residential marketplace that's been decelerating existing home sales since $7.3 billion in revenue. consistent sequentially with the second quarter, but behind the third quarter of 25 is we had a handful of very large transactions that closed the third quarter last year. We believe we are on the right track in our international operations, and we will continue to build on the strong positions in these markets and continue to grow share. Turning to agency services, in the third quarter, we saw net revenues by 11%. Compared to the third quarter of last year, we are pleased with this given that the agency has performed the same challenge to residential markets and direct operations. We are focused on growing this business of existing agents with the emphasis on 15 target states in addition to the experience of our commercial footprint for agencies. We continue to make good progress on these priorities with residential premiums up 7% and commercial premiums up 25% in the third quarter when compared to the same timeframe last year. As mentioned last quarter, we took advantage of some market disruption and expanded our agency team, which we have and will continue to see the benefit of as they ramp up and settle into their positions. while increasing market challenges will continue. Turning to our real estate solutions business, in the third quarter, we grew revenue by 68% and 7% after removing the impact of two acquisitions we made this year, MCS and NAN. Our adjusted pre-tax margins flipped from 11.3% last year to 10.5% this year. The margin was driven by a significant slowdown in orders and revenue from existing accounts in a form of research, our credit data business, and in appraisal. From a strategic perspective, we may focus on continuing to expand our coverage and servicing of the top 300 lenders. Our suite of products and services is truly business. I am pleased that we are able to maintain our double-digit margins in these conditions and believe we will get to low to mid-teens margin delivery to the execution of our strategic priorities in a more stable residential market environment over the next two to three quarters. I believe we are standing a new floor in the residential market that will likely continue into the next quarter. We will react to market changes by taking needed actions, but we'll be careful to retain the resources needed to serve our clients and react to opportunities I believe will come from this as a growing portfolio of operations that will deliver share growth and improving larger performance over the next two to three years. Thank you for your time, attention, and interest in Stuart as an enterprise. We are dedicated to being the premier title real estate services company. I'm proud to share that in the third quarter, we delivered our seventh dividend increase in just under six years. We did our annual dividend from $2.10 a share to $2.20 a share. We are committed to strengthening and growing the company for continual and lasting success while confronting the current challenging conditions. To our customers committed to serving you with excellence and to the Stewart team, I want to thank you for your dedication and perseverance. It takes considerable effort to grow a company and even more so to confront such a challenging residential housing conditions. Thank you for your commitment to the company. I look forward to seeing where we can take this company together. So, David, I'll now turn it over to you to provide an update on the results.

Good morning, everyone, and thank you, Fred. I want to thank our employees and customers for their continued support and partnership as we navigate this even more challenging real estate market with early mortgage rates over 7% since mid-September. Yesterday was diluted EPS of $0.98 compared to the prior year's quarter net income of $44 million and diluted EPS of $1.55. On an adjusted basis, third quarter net income was $41 million while diluted EPS of $1.33 compared to net income of $47 million. were deleted EPS at $1.64 last year. A perfect example of press release shows adjustments to our consolidated segment results, primarily related to acquired intangible immunization, not realized and unrealized gains, which were used to evaluate operating performance. In the title segment, operating revenues increased 31 million or 5%, primarily driven by higher agency and direct commercial revenues. Title operating expenses increased 6% primarily due to higher revenues and higher employee costs related to select growth investments while beginning to address the market transition as Fred spoke about. Title free tax income in the third quarter was $47 million compared to $62 million last year. while on an adjusted basis pre-tax income was $52 million. In our direct title business, direct title revenues increased $6 million or 2% primarily due to increased commercial transactions. Domestic commercial revenues increased $7 million or 9% as closed orders improved 18% across multiple asset classes. while average fee per file decreased 8% to $16,300 due to reduced transaction sizes with less data center and energy activity. Domestic non-commercial revenue increased slightly by 3 million or 2% due primarily to a large commercial transaction last year. On our agency operations, gross agency revenues 25 million or 7% reflecting growth across a majority of our key agency states including Florida. Net of agent retention agency revenues improved 5 million or 8% compared to last year. On title losses, title loss expense for the third quarter increased primarily due to higher title revenues. while the title loss ratio was 3.4% comparable to last year. We expect our title losses to average from mid-3. In our real estate solution segment, title revenues increased 80 million or 68% primarily driven by the MCS acquisition and growth in our credit information and valuation services operations. Res adjusted pre-tax margin increased by $7 million, or 56%, compared to $13 million last year, while adjusted pre-tax margin was 10.4% compared to 11% last year. On our consolidated operating expenses, our employee cost ratio increased to 26% revenues, Well, the other operating expense ratio increased to 29% compared to 24%, primarily due to revenue growth in our real estate solutions segment, which typically incurs higher service costs as a percent of revenue, and as our real estate solutions segment grows as a percentage of total revenue. Our financial position is in the real estate market. Total cash and investments is approximately $300 million in excess of statutory reserve fund requirements. Total steward stockholders' equity was approximately $1.7 billion, representing book value of approximately $55 per share. Net cash provided by operations was $47 million. 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.

Once again, that is star one to ask a question. Our first question today comes from Bose George with KBW. Your light is open.

Good morning. Good morning. Good morning. Actually, first, on the commercial side, so you guys noted some timing in terms of deals getting pushed out. Can you help quantify that? And also, are you seeing any broader signs of slowdown in the commercial pipeline, either related to political opposition at the local levels?

Yeah. So it's multiple millions that got pushed out. So it was meaningful to the quarter. And again, there's no indication it won't close in the fourth quarter, but there was some movement. Interesting enough, our pipeline, and you can see from the open orders and stuff, records and commercial, has been really strong for us. I have heard in the marketplace, and clearly among agents, I've heard of a slower in the small commercial market. I don't know the numbers yet, but there is talk that the small business is more debt-oriented. There is some slowing. On the data center thing, we have not seen any slowdown at all. And so, again, it's hard to know what could have been, I guess. It could be all the employees you see in the marketplace, but it's a pretty robust portfolio that we see. There's a lot about us, as you know. The last two years, we've doubled commercials, so we have a lot of quarters last year. We grew over 50, you know, 40, 50%. So some of our comparisons are a little odd for growth, but I really like the flow we're seeing. We have the best team we've ever had. They've been able to make some investments over the last year or so. and continue to see growth opportunity there for the company in the next couple of years.

Okay, great. Thanks. I might have missed the first part, but just on the amount.

It's a handful of billion, so it's not a small amount, and it's a handful of transactions.

Okay, great. And then actually just switching over to the services segment, can you just help us think about the drivers of the increase in expense relative to the revenues? Can you remind us how much of this segment is impacted by rates? And then you mentioned the margin outlook for that segment. And then how much of that, like to the extent we had that change that, can you just remind us what you said for margins for next year?

So what I've been saying, the portfolio we have, as you know, that portfolio is really made up of three pieces. It's made up of the appraisal business, the credit data, and then the default business. In all three of those now, we're the top three, four players. So we have critical mass, and again, there's some things happening in all those spaces around the importance of technology, and I feel good that we're going to continue to see consolidation and shared growth there. The two that are most, that are very sensitive to kind of the residential rate environment Our appraisal and the debt. It's worse than just closes. So we've had historical cancellations this quarter, probably up to 15% of the transactions. And we've had a big decrease. in kind of mortgage applications. So the way the data, for example, in the credit data, we get paid both when the mortgage application is open, right, because some of our work is done at verification of kind of the quality of the credit, et cetera. And then we get paid again at the close, right? So that as the market goes down, You obviously have less revenue. So our same, what I call same store growth. So we've had some new accounts, you know, about six, seven percent reduction in same store volume, which is a combination of the, you know, closed files, as you can imagine, but also more cancellations. So we've seen a decrease in the opening of mortgage apps. So That's where your margin goes because if you lose two-thirds of your revenue, which is kind of how to think about it between the opening of the application and then the closing, as those things, chances are going to go down. In appraisal, although we don't do a lot of pre-work in appraisal, most of that work is done afterwards. We don't have a lot of wasted costs. We've seen in those two businesses, you know, four or five percent of the reduction of volume with our current customers. So that's why the volume, so the margin, so the margin is in the ten, ten and a half, right? Right. All we need is a normalized market. I don't need it to go all the way back. I just need it to stabilize so you don't have these deltas and changes because the changes are what cost you. So, again, what I've said is that business, even at a 4.1, 4.2 kind of existing home sales, that's going to be about a 13% You know, 14% margin business. We built it to scale. We got the nice mix between the three businesses. And so this deck is going to, you know, for the next couple of quarters, we're going to see this kind of, in my view, kind of this level of margin in that business. But I like the long term. It's a more stable part of our portfolio because of the mix we have now. So Again, that's why I say it'll go migrate back up, I would say, after the next couple of two quarters.

I've got information on FHA delinquencies, and some of your reports are over like 11%, although they've been stabilizing. But the goals to foreclosure are just sort of getting started, and that's where the property preservation business helps. So it's a bit of an offset to what Fred was talking about.

Okay, great. But even in a flattish market next year, the margins go back up a few points as it's lagged.

Yes, I believe so. And again, there's a bunch of interesting changes with Vantage Scores, which we could get in at some point, that is going to position us really well to consolidate and grow share that market because we have a very unique product and solution for those that transition. Thank you.

And once again, if you'd like to ask a question, please press star and one on your keypad now. We'll go next to Oscar Navis with Stevens Inc. Your line is now open.

My first one is on the recent acquisitions that you announced, the one at the end of QQ and the ones at the end of September. Just wondering if you could walk us through those acquisitions to revenue and earnings and how big those deals were and when they closed or if they closed already. Go ahead, Matt. Hey Oscar, so we did three to four of sides this year. We did the appraisal one back in, I think it was April, Nationwide Appraisal Man. That just rolls into our Steward Valuation Intelligence business, so the appraisal business that Fred talked about, and it just gives a scale. That's one of the things that got us up to Now being like a top three player there. The other two are in title. So Pro Title talked about those both closed on 9-1. And then Tower Title that he also talked about. They just basically go into their respective businesses, right? So CTS will get Pro Title. Tower will get Pro. Commercial Again Tower, and they just add to those businesses. But we said that we typically buy those kind of businesses that these are title businesses, so four to six even up. These are higher margin, so I think you're maybe on the higher end. So if you just think about all the money we would have had to deploy at year end between May and June, and so you can sort of back into what economics you might be able to get out of that and you know you'll see the acquisitions number in our 10Q so it'll all be public.

I would say to you the last two were kind of late in this quarter so it was marginal impact at all in the quarter but in both cases again to me they're really important because Thank you for joining us. Portfolio Specialty Centralized Title. And these things will be institutional business to us, and I feel good about all of these.

Super helpful. My next one is, you know, Bill Polpy has made some tweets recently that have impacted title stocks. There's a lot of Thank you very much.

and again, we'll see how it plays out. I keep saying if it tests out, the whole thing is going to be pricing because it doesn't make sense. We are not really big in the refinance market and I don't think there's many scenarios that want to be big. But again, I don't see it. There's no big expansion from where we are, but the number of lenders that are participating is a little bit bigger. So, again, it doesn't have much impact.

And, Officer, another thing to keep in mind is if you look at our refi orders, like Fred said, we don't really have much in that centralized lender. Most of our refi orders came from customers that we issued a prior sewer policy on and didn't really impact them that much. I guess my last one, are you seeing any AI and automation fill up the margins yet, especially as you mentioned earlier that you expect a challenged market over the next few quarters?

Yeah, it's interesting. It's a great question, because I'm feeling pretty bullish on our AI initiatives. I think the financial impact is going to take 18 months to kind of see kind of the robust financial impact, although we are seeing it today, particularly in the search area. And, you know, I think... The search area is the place where there's the greatest opportunity for efficiency and accuracy and what I consider better turnaround time, for instance, for our agents, which I think matters to the combined economics. So, yeah, I mean, pretty much the other thing, obviously, we give the virtual underwriter, and it's given to, we have now limited it to our and other agents, which actually helps their efficiency in the work when they do the clearing of title and the underwriting of policies as an agent. But again, it's probably, I think I've mentioned to you, which is frankly about There's like 50 that are penciling already operationally that we track returns on. It's early days, but it is, in my view, going to be helpful, particularly if you see the residential market sit at 4-1 longer, which I think people are talking about, I think over the next You know, four or six quarters is going to be very helpful to us to manage expenses. But again, I think it also is really good about quality, some of the quality of delivery and some of the consistency of turnaround, which is really what, you know, particularly the agency.

Thank you.

Thank you. And once more, if you would like to ask a question, please press star and 1 on your keypad now. And at this time, there are no additional questions in queue. I will now turn the meeting back to Fred for any additional or closing remarks.

I want to thank everybody for their interest in Stuart and appreciate you joining us

Thank you that brings us to the end of today's meeting.