First American Financial (FAF) Q4 2023 earnings summary

Executive summary

• Q4 revenue was $1.43B, down 15% YoY; diluted EPS was $0.33, or $0.69 adjusted. Results were materially affected by the late-December cybersecurity incident.

• FY2023 revenue was $6.00B, down 21% YoY; diluted EPS was $2.07, or $3.80 adjusted.

• Title orders and related product demand appeared to return to normal; management expected no significant ongoing impact from the cyber incident.

Financial highlights

• Q4 adjusted revenue was $1.47B, down from $1.80B YoY; adjusted net income was $72M vs. $148M, and adjusted diluted EPS was $0.69 vs. $1.41.

• FY adjusted revenue was $6.21B vs. $8.12B; adjusted net income was $398M vs. $682M, and adjusted diluted EPS was $3.80 vs. $6.35.

• Q4 net investment losses were $42M vs. $113M a year earlier; FY losses were $206M vs. $516M.

• Q4 effective tax rate was 10.7%, including a 5-cent-per-share benefit from R&D tax credits vs. a normalized 24% tax rate.

Outlook and guidance

• Management expected difficult market conditions to persist in 2024, with modest growth in residential and commercial businesses; outlook could change with mortgage-rate movements.

• Management expected no significant ongoing operational impact from the cyber incident as title orders and product demand returned to normal levels.