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 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 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 pretax 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 existing home sales has been very modest, once 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 year-over-year, annualized numbers remain in that 4 million to 4.1 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 considering determining when they enter the market.

In the first quarter, we felt the positive effects of rates moving down towards 6% range, and felt the dynamics shift as they moved back up around 6.5, which is where we are hovering throughout the second quarter. Turning to our business results, our national commercial commercial services business continued to deliver strong growth.

In the quarter, total domestic commercial premiums grew 20% year-over-year and are 30%, 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, multi-family, and industrial properties.

We are proud of how we have built this business over the last two to three years and are laser-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 million 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, and main street commercial revenues by 7% in the second quarter compared to the same time frame 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 in direct operations. Our centralized title operations, which include centralized refinance and our bulk business, confronted some tough comparables when compared to the second quarter last year, as our bulk business is particularly could be very bumpy.

These headwinds impacted our overall non-commercial direct business and drove results down about 1% when compared to the same quarter of '25. Our agency services business delivered 25% revenue growth for 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 on growing this business through winning the business of new agents and expanding wallet share with existing agents, with emphasis on 15 target states. We are also committed to expanding our commercial footprint in agency, and we continue to make good progress on both these priorities, with residential premiums, residential premiums up 30% and commercial net premiums up 16% in the second quarter when compared to the same time frame last year.

In the second quarter, we were also proactive in making additional investments in talent to take advantage of some disruptions we saw in a handful of our target markets. We invested another $2 million to $3 million in additional customer-facing talent, which should enable us to build significant share in these target states.

Our real estate search solutions business grew revenues by 75% and adjusted pretax 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 them, both 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 30% 30 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 properly growing across our footprint of Canada, Australia, and UK. In the second quarter, we grew our 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 continually grow, continuing to grow profitable share. On the topic of inorganic growth initiatives, in '26, we have been we have seen a meaningful pickup in 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 lines 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 percentage of of a mix due to the mix of outside services, cost of data, and appraisal and property preservation contract workforce. Similarly, 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, in 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 staff staffing in all our segments in line and in 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 pretax 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 tighten in the second half without the benefit of improved market conditions, given our increased investment in title segment. We continue to prioritize shaping the company for 12% adjusted margins when we get back to a 5 million unit existing homes market and are focused on improving margins as we grow in a challenged market.

Thank you for all 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, multipronged growth plans by business to further fortify our position. To our customers and agent partners, thank you for your trust and dedicated dedication to Stewart.

We are committed to serving you with excellence. To our Stewart team, thank you for your dedication and focus on growing this company together.

We've 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, acquired 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 pretax 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 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, net 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 eight or $85 million, primarily driven by our recently acquired MCS business and growth in our credit information and valuation services business.

Real estate solutions adjusted pretax income more than doubled to $27 million from $12 million, while adjusted pretax 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 million, primarily driven by higher net income.

Again, thank you to our customers, 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.

Morning,

hey guys. Good morning.

Actually, first just on expenses. You guys noted a few factors that drove the expenses higher.

Just stepping back and looking at it more broadly, can you just talk about the annualized margin outlook, especially if we remain in this higher-for-longer, with mortgage rates at 6.5%?

Thanks, Bose. I think what for if I look at the whole year, right, I've told you I've given you 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.

Now there's some comparisons in the back half of the year, we had such extraordinary growth in commercial that will 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 4/10, might be 6/10.

Again, it has something to do with the comparisons because we had such outsized growth in commercial last year, particularly the fourth quarter. That kind of improvement.

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 I've reinvested a bunch of that because I want to sustain it. We one of the things to think about, our commercial business at the end of 2003 was $208 million.

Our last four quarters is $415 million. We've doubled that business.

It's important for us that's a people-driven business, and we really need to make sure we're covering sectors and 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, we've gone for it. We're kind of making investment in customer-facing to really shift share in, and you can imagine where they are, where the best markets.

I still think with all that, as I look at our momentum, and even with the earnout earn-in, I think we'll pick up another half a point. We're right on, I think.

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. It could be better than that depending on how quickly we ramp up some of these opportunities.

I also that by the way, that 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 due diligence that we've talked about, and obviously that would be additive likely to the equation.

I think we're right on track to what we thought.

Great. Thanks.

That's helpful. Actually, just on the acquisitions, when we think about the scale, is it similar to MCS?

Is the a lot of small ones? Any color there would be very

helpful. Sure.

When I talked about it, right, the categories we had talked about, there's a little bit 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. We did the NAN, which was in that category, and there's likely to be another one over the next 12 months.

Not that necessarily an 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 a couple, three in that category, and they could be a combination of res or commercial depending on the transaction.

They're in those categories that we've talked about. None of them are huge, none of them in the MCS-size kind of category.

We're at the point now where this is about, an NSI, local by local market, trying to change the economics. We're in kind of the business-by-business, whether it's our data business, our appraisal business, or our property preservation, to really just build scale in some of those areas.

They're all active. As I said, I would guess that we'd be able to deploy the full amount of what we raised, plus some, in the next probably, by the end of the year, is what I would say.

Great. Actually, just a quick one on commercial.

Was there any slippage of large deals? Your fee per file was flat year-over-year, but obviously down at least a margin just over the last couple of quarters, just big deals

move. It is very bumpy, and we had some a comparison, we had a couple really big ones last year.

I don't 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? We've had a couple, same in the fourth quarter of last year, we had just a tremendous big one in New Mexico.

There's going to be a little bit bumpy. I don't see any momentum shift, pipeline's good.

What I would tell you, though, it's just the comparisons are tough. We grew 30% first six months.

We grew 46% or 7% last year at the same time frame. We're building on big numbers.

If you recall, we grew a lot faster than the rest of the industry early, and so the comparison, some of these, last year was a big year. As I said, frankly, it started at the end of '23.

We've been cranking. I'm very, very comfortable with the 30 sitting on top of the 47.

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. I've got to keep we've got to keep hiring talent in commercial if we want to, keep closing the gap.

We've gone from about, I can't haven't done the obviously the numbers this quarter, but we've gone from about 9 to we were about 13.5%, 14% share. 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 can get it to 20. Now there'll be again, it's bumpy, our competitors have had great quarters, too, and they're very, very good competitors.

I look at that business is really about coverage and resource and our team, 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. It's kind of balancing that.

I think our team has done an excellent job doing that, and I continue that I continue to see good strong pipeline and potential.

Great. Thanks for the color.

Hey, Oscar. ):

Hey, Fred. Good morning.

My first one is on the title segment. When we look at the revenue trends in title, agency continues to outgrow direct.

Is that still consistent with the share-gain story in your target MSAs, or are you starting to see competitive or mixed pressures help with the amount retained by agents? Because if we look at that ratio this quarter, it came in at a little bit higher than the prior quarters, just wanted to see

if there's... That's a good observation.

The way I'm thinking about it, in our direct operations, we've now been what, four years in a flat market on res, which is a vast majority of our 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 grown at 15%, but I would argue our direct operations is probably under-penetrated in commercial still.

If you look at, I think we grew 3.5%, something like that, in res. We're holding our own, and our growth in direct has mostly been on the commercial side, that gets us to that 7.

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. The thing I mentioned in my call, we're starting to see disruption.

We're starting to hire and take teams organically. We spent another 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 that I keep talking about by MSA are emerging. We just announced one, a great brand in Texas on Fort Worth side of Dallas, where we were weak.

I'm really excited about this great brand, great company. It's not huge, but those kind of opportunities are starting.

As I said, in our pipeline, we have another three or four of those. We'll start seeing kind of that MSA growth shift a little bit with res.

Now, I don't see the market helping us, right, because I was hoping this year that I'd see 6%, 8%, 9% kind of a little bit of res growth, which would really shift for us. That's also a big margin lever because we have excess capacity in our direct operation.

To your point, to compare to agency, the team has done an amazing job, right? In a 1% or 2% or 3% growth res, we grew 30%.

What we're seeing is shifting share at a lot significant agents in some really attractive markets. Do I think that's going to come down a little bit?

Sure, I think we're probably in the 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.

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. I would tell you that, again, the inorganic activity, there's a lot more discussions right now.

Even though the market's flat, I think it's because commercial is 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. That is actually starting.

It's a great observation, because it's for me, the direct operation swings if commercial is outsized, it changes the dynamics. If we get a little bit more res growth in direct, it would change the dynamics.

They're although those are the things that are moving it around. I'm really pleased with the progress everywhere.

I just, I think that direct is emerging because we're seeing this activity. We've done 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 the good, hard work they've done, even though there's been no growth.

I think we're pretty good in both areas. ):

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. One of your peers that reported yesterday mentioned on their press release that they are on track for a record year in commercial.

On that, can you give us your outlook for commercial revenue for the rest of the year and into '27? Also, if you can share how the underlying drivers, what are you seeing right now in terms of fee per file versus order counts?

They're solid. Again, my whole thing is just the comparisons from me, because we had a bunch of quarters, as in the last two years, we grew 50%, 47%, 50%.

That's a harder comparison, but we had a nice pipeline. We grew 30% the first six months this year.

I don't, 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.

To your point, we've had two great years in a row, right? With this last four quarters, it doubled the business.

We say 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. 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.

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. I don't, I like the breadth of our pipeline, I like what's happening.

I would say kind of what we did in the, could I see the percent growth be a little less because of the comparisons? It's not because of the market's not good, it's not because of the pipeline.

You can see our order count in 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, financing costs change, sometimes they'll kick it to the next quarter or they'll, accelerate it or something.

It tends to be these tend to be longer deals. They tend to be a little bit fickle about timing of closing.

I'm, 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. We just got to keep after it.

I do think the little bit of difference with us and some of the, the two big competitors are very big, and for me, I'm building capacity as fast as I can build capacity. 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.

There is this staffing that we got to continue to do because we are, we're bigger, 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, is much bigger than that, and I don't see anything changing the trends, right?

I just I kind of think they're all kind of similar. We'll see, but there's nothing to kind of report to say I'm worried about it.

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's probably more indicative.

):

Right. Yeah.

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

It's a small it's what I call a micro deal a little bit because it's basically a small deal. It's not a big deal.

The reason we announced it nationally is because their brand is amazing. 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 recognize the family and make the announcement nationally, but it is what I would call is a small. It's again, it fills in Dallas, is the way for us to think about that.

The ones we're doing following are bigger, a little bit bigger. A little bit different nature.

We're very I'm really pleased with it because Fort Worth has been a real we've had we have a really good position in Dallas, but it's been a hole. This is about as great as it can be is filling out that city for us.

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

):

Okay. That's super helpful.

I'll get back into the queue because I have an infinite list of questions, but I want to give other people a chance to speak, too.

Thanks, Oscar.

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?

Again, we don't Typically, you have a lead player in those deals, and you achieve those. It's not really a competitive, on a particular deal.

They typically get referred, and as you get better at certain categories, you tend to lead more. 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 they'd be joint venture businesses between the kind of the generators of the business and the underwriters, right?

There's some kind of sharing, if you will, of those deals that occur in pockets in different states. Could be say in a New York City or is one place you might have that.

There isn't 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 where we seem to be very good in places like energy because it's a lot of rural stuff and it's New Mexico or Indian reservations, whatever.

They tend to skew towards the people with skill. I And again, is it for all of us, I would guess, I don't know, but it's a higher margin business for everybody.

For us, it used to be subscale, 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?

You have the escrow and the float, and the investment income as well. Again, it that tends to be a little bit on a 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.

In those, you're seeing more shared accounts, right? They're just big, you have to have more shared.

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. There's a lot more shared transactions just because of the nature of the business and the size of the business.

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 in all our sectors.

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, it's the oligopoly is even tighter. Obviously, Old Republic has got some of it, too, but it's it because our skill sets are unique and our capital base is strong, that tends to be a business that's, there's the vast majority is going to be the three of us.

We need to be more present across the spectrum.

Gotcha. Okay.

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?

Not much. It's tough to call.

I tell people in commercial, you could have a two-year deal, right? 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. Again, we've had some of these complicated ones can take multiple quarters.

As I said, the other thing about them is they're very business-oriented. There's a trigger when they're doing the business case, if something happens with their carrying costs and stuff, they might kick it forward, they might kick it back, they might want to close the quarter with it.

They tend to be a little fickle about exactly when they close. This is why, by the way, our growth, we sometimes have excess expenses as we're some 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 till those deals close. 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 when you're growing 40%, the revenue, you're chasing all that work you're doing for the revenue that hasn't landed.

We've had to manage ourselves properly to do that with staffing and stuff like that. Again, it can be all over.

That's why I tell people, if you look at the ratios of open to closed, right, you can look at refi, you can almost call it, right? 65, 75 days, res will take about the same.

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 early days with alternative energy, where there was with the signing of the bill that incentivized 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.

That's why it's not a easy, straightforward answer, but they tend to be longer. A lot, kind of I would say a year, not a bad way to think about it, but they're all over the map.

So... Thank you.

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?

It's a good question, and it's something, we 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, well, if we need it, they'll work it out. It's like cell towers, right?

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 control security, etc., that trend could take off, and we could see a different profile of these data centers. 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. Again, it's, I look at it and say, if the demand's there, they're going to figure out how to address it.

We're just prepared to respond to the opportunity. Again, it, I would say, as David said, the average size, I think there's some chance that it reduces and you see less mega deals, and, the size gets a little bit more distributed, but I don't know that for a fact.

We just kind of read what you read, trying to understand all that. 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. Typically, a title thing is somewhere between 4 to 6 EBITDA, right?

If you have higher-margin service businesses, they can get all the way to 8 EBITDA. We as we think about them, they're all the IRRs for us when we think about it, 15% plus.

When we price these deals, we tend not to include the underwriting. What's really advantageous to us buying agents is our competitors have much higher share in the agency channel, they 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. Again, the economics for us are relatively attractive for these kind of transactions.

The other thing I said when we talked about raising the money in December, I just could see all the activity. The amount of activity is significant.

There was a lot of people outside the industry in '21 and '22 that we either do roll-ups and services or they were trying to thought they could do roll-ups of agencies, which is not a practical thing with no renewals. A lot of those people have all said, "I'm getting out," right?

You can see it. What's happening now, my view, is we're starting getting to conversations where pricing got realistic.

It wasn't the high prices that they may have paid, and so I just you can see all this activity right now. What we have to do is be very selective and very thoughtful.

Again, we have opportunities to enhance our portfolio and improve our margins, and so I could, we can see it. Now, I will tell you that these have taken a little bit, 60 or so days longer to get to close than I thought, could we have raised the money in March instead of December?

Probably, I wouldn't 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.

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 that likely to be on the market in the next 18 months.

Again, I just you can see how people are thinking about it, and some of these are very attractive. We just got to be prepared to assess and understand whether that makes sense for us.

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, and we'll see how these things play out because I just, everybody that put their toe in the water, I can't see any of them putting more money in the water.

I might be wrong. Maybe AI changes that in some areas, but I don't see it.

We should just be paying attention and thoughtful and try to take advantage of some of these.

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

Typically, if you

look... Stepping up at all?

The competitive nature of these transactions is very light, let me just say that.

Got it. All right, thank you.

Hey guys, yeah. 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. We 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. We have our reverse business in there, and we have our bulk business.

Both of those, those could be...

Investor.

The investor business that we've talked about, we bought that. That bulk business is very bouncy.

Last second quarter, you could see the or you just look at the orders, we closed a lot of orders in the second quarter. It's just the nature of that business, we'll get a big deals will come.

If you look at our open orders, you see that they're way up, for the next quarter. It's kind of bumpy.

It's kind of the nature of that business. I think it's important for us to build the skill of centralized transaction given potential technology-affecting trends and having more centralized purchase.

We built that. We built it around specialty businesses, and it's a good business, but it is bumpy, right?

That we probably saw a 20% reduction kind of in that business, which had some obviously some impact on earnings growth, too, in the $2 million to $3 million range. It's the nature of that business, and I see it coming right, again, you can see in the order trends it's going to come back.

Bose, just remember in that investor business, that executive order limiting institutional buying and then also that's included in the Revive the Housing Act, the market's normalizing for all that.

Great. Helpful.

Thanks.

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.

I'm very encouraged about our progress, and we will continue to be very thoughtful, making sure that we're trying to increase our earnings more than our revenue, and we will continue to do that as we march forward. Thank you very much.

Appreciate it.