KINGSWAY Corp Q2 FY2023 Earnings Call

Good day, and welcome to the Kingsway's Second Quarter 2023 Earnings Call. At this time, all participants have been placed on a listen-only mode and the floor will be open for your questions and comments after the presentation. With me on the call are J.T. Fitzgerald, Chief Executive Officer; and Kent Hansen, Chief Financial Officer. Before we begin, I want to remind everyone that today's conference may contain forward-looking statements. Forward-looking statements include statements regarding the future, including expected revenue, operating margins, expenses and future business outlook. Actual results or trends could materially differ from those contemplated by those forward-looking statements. For a discussion of such risks and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statements, please see the risk factors detailed in the Company's annual report on Form 10-K containing the subsequent field reports on Form 10-Q as well as other reports that the Company files from time to time with the Securities and Exchange Commission. Please note too that today's call may include the use of non-GAAP metrics that management utilizes to analyze the Company's performance. A reconciliation of such non-GAAP metrics to the most comparable GAAP measures is available in the most recent press release as well as in our periodic filings with the SEC. Now I'd like to turn the call over to J.T. Fitzgerald, CEO of Kingsway. JT, please proceed.

Thank you, Matthew. Good afternoon, everybody, and welcome to the Kingsway Second Quarter 2023 Earnings Call. Thank you for joining us. Our second quarter results were largely in line with our expectations. While the macroeconomic conditions presented a bit of a headwind for our Extended Warranty business, we're pleased with the operating performance in our Xcelerator segment and are very encouraged by the increased level of activity related to potential acquisitions in the quarter. The pipeline is in great shape, and our OIRs are performing well. We believe the future is very bright for the Company. Our consolidated revenue for the second quarter was up 11% over the second quarter of last year. And as of June 30, 2023, our trailing 12-month consolidated adjusted EBITDA was $11.1 million, an increase of 40% over the comparable year ago period. Our combined pro forma adjusted EBITDA for Extended Warranty and KSX was $15.6 million for the trailing 12 months, an increase of 54% over the year ago period. Revenue and adjusted EBITDA increases were driven primarily by the continued growth of our Kingsway Search Xcelerator segment, which more than offset slightly challenging market conditions in our Extended Warranty segment over the last quarter. In Extended Warranty, second quarter pro forma revenues were down 1.6% from the same period in 2022 as slightly higher revenue from vehicle service agreements offset most of the decline in maintenance support revenues at Trinity. Pro forma adjusted EBITDA for the segment was down 26% compared to the second quarter of last year, which I will dive into more in a minute. As a reminder, our pro forma results in the Warranty segment exclude the results of PWSC, which was sold in the third quarter of last year. Diving into the Warranty segment. While our teams continue to execute and find opportunities for cost improvements, higher used car prices and increasing financing costs continue to pressure near-term industry demand constraining our growth initiatives. Importantly, though, the longer-term outlook for Extended Warranty remains healthy. Looking ahead, we continue to expect that declining used car prices will offset some of the impact of higher borrowing costs, particularly at the older end of the spectrum where our products are most relevant. The value proposition for extended warranties remains strong. Automotive dealers use extended warranties to acquire new customers, retain existing customers, enhance their profitability and maintain brand loyalty for their product offerings. While credit unions view extended warranties as a benefit to their members as well as protection for the asset securing the loan. We believe that all of these factors will help stabilize and be a catalyst for growth in our auto-related Extended Warranty businesses going forward. Extended Warranty pro forma adjusted EBITDA was down in the quarter, primarily due to increased automobile repair claims expenses incurred. While the number of claims or frequency were in line with expectations, the cost per claim or severity increased as a result of rising labor and parts costs. Claims in the quarter were $834,000 higher than the prior year quarter, which more than fully explains the negative comparison to last year. While we're still early in Q3, indications suggest that this spike in claims severity has abated. However, we are also proactively assessing our pricing to ensure that we are staying in front of any persistent claim severity increases. At Trinity, our maintenance support business revenues have been impacted by smaller average repair jobs. While the number of calls is consistent, the average revenue per job is lower due to ongoing supply chain backlogs for new equipment. Our mechanical and HVAC-focused warranty business at Trinity, equipment availability also continues to pose challenges. We have a healthy backlog of orders. As the supply chain frees up and those machines are shipped and installed, we expect associated revenues will revert to historical growth trends. Switching now to our Search Xcelerator, or KSX segment. Revenues grew by 121% compared to the second quarter of last year, while adjusted EBITDA of $1.7 million was up 79%, both due to the inclusion of CSuite and SNS for a full quarter in 2023. As a reminder, this segment of our business is currently comprised of three operating entities that we have recently acquired: Ravix, a provider of outsourced financial services and Human Resources Consulting; CSuite, a provider of financial executive services for both project and interim staffing engagements as well as search services for full-time placements of financial leaders; and Secure Nursing Services, or SNS, a staffing agency for the nursing and healthcare vertical. Ravix and CSuite, which are overseen by Timi Okah, are performing better than expectations as higher operating margins more than offset lower-than-expected revenues. Ravix recently hired a Business Development Specialist, a new position to catalyze further growth, while the CSuite team continues to refill its pipeline that was impacted during the softer M&A environment earlier in the year. At SNS, margins are slightly better than expected, and cash flows remained strong despite a shift in business mix from travel assignments to per diem assignments. We believe the long-term prospects for nurse staffing remain strong as an aging population drives demand, and there remains a persistent shortage of qualified nurses to deliver care. During the second quarter, we added two new Operators-in-Residence or OIRs to the Search Xcelerator platform, Peter Hearne and Davide Zanchi. Both Peter and Davide bring a wealth of experience in strategic and financial matters to Kingsway. Peter joined us from Centerview Partners, where he advised companies across a broad range of industries on strategic matters, including M&A. He has served as a management consultant at McKinsey and in a number of roles in capital markets and investment banking at Credit Suisse. Peter holds a JD and MBA from Northwestern University and a BA from Cornell University. Davide previously worked in large pharma at Eli Lilly and Roche as well as several venture capital firms focused on the biotech and pharmaceutical industries. Davide has a proven track record in due diligence, company formation, executive leadership and corporate development. He graduated with an MBA from Stanford Graduate School of Business and holds a PhD in Neuroscience from the University of Basel in Switzerland. We now have four highly talented and skilled professionals in the role of OIR or actively searching for new acquisitions. Also during the quarter, we announced the appointment of Charles Joyce to the newly created role of Vice President of Business Development for our KSX platform. Charlie is working diligently to build out our deal sourcing engine for future acquisitions. While the timing of closing transactions is somewhat difficult to predict, we are experiencing a marked increase in activity for potential acquisitions compared to the first quarter. We expect to have more specific news to share soon. But in the meantime, I want to reassure you that we're highly focused on acquiring great businesses at reasonable valuations. Growth through acquisition requires patience, diligence in our research and discipline to ensure potential targets align with our stated criteria and return hurdles. Our trailing 12-month adjusted EBITDA run rate of our operating business continues to be in the $18 million to $19 million range. While we believe that the higher-than-expected warranty claims costs incurred in Q2 will be at least partially offset by higher returns on our warranty float, we now believe the run rate is probably closer to $18 million than to $19 million. Our priorities for 2023 and beyond remain the same, strategically allocating capital to build a business that delivers sustainable long-term growth, generates positive cash flow from operations and provides an attractive return for our shareholders. We're targeting two to three new acquisitions per year that fit our clearly defined acquisition criteria and will generate annualized EBITDA in the range of $1.5 million to $3 million each. Now that most of the legacy debt and noncore investments are behind us and assuming we can execute our strategy, I believe that Kingsway is at an inflection point where the future looks dramatically better than the past. I'll now turn the call over to Kent for a review of our financial results. Ken?

Thank you, JT. Before I get started, as a reminder, during the fourth quarter of 2022, we began executing a plan to sell one of our subsidiaries, VA Lafayette, a medical clinic, as part of our strategic shift away from the leased real estate segment. VA Lafayette is included in discontinued operations and its assets and liabilities are reported as held for sale. The results of its operations are reported separately and not included in the results I'm about to discuss. Loss from continuing operations was $1.8 million for the second quarter of 2023 compared to a loss from continuing operations of $3.2 million in the second quarter of 2022. Consolidated adjusted EBITDA was $1.8 million for the second quarter of 2023 compared to $3.1 million last year. TTM consolidated adjusted EBITDA was $11.1 million as of June 30, 2023, a 40% increase compared to last year. A reminder that these metrics include the results of PWSC through July of 2022. Combined operating income for Extended Warranty in KSX was $3 million for the second quarter of 2023 compared to $3.8 million in the prior year, while combined pro forma adjusted EBITDA, which excludes the results of PWSC that was sold last year was $3.4 million in the second quarter of 2023 and $3.3 million in the second quarter of last year. I would also like to note that TTM combined adjusted pro forma EBITDA was $15.6 million for the period or 54% higher than the prior TTM period. Now breaking this down by reportable segment. In the Extended Warranty, second quarter 2023 pro forma adjusted EBITDA was $1.7 million or 10.1% of pro forma Extended Warranty revenue compared to $2.3 million or 13.5% of pro forma revenue in the second quarter of last year. As JT mentioned earlier, revenues from our vehicle service agreements were slightly higher than prior year, yet we continue to be impacted by payment pressures incurred by end consumers as a result of rising interest rates and higher-than-expected prices for used automobiles. While the price of used automobiles has fallen since the beginning of 2023, the declines for the end consumer are not occurring as quickly as anticipated at the beginning of the year due to a persistent low level of used car inventory. Also impacting our auto extended warranties was an increase in claims expense during Q2 2023, as JT discussed earlier. Inflationary pressures have driven up the cost of labor and parts at unprecedented rates. However, our claims value remains in check. We anticipate that as these pressures ease, claims expense will be more in line with expectations. However, this is difficult to predict with certainty. We do believe that claims volume will continue to develop in a predictable fashion. The increase in claims expense was partially offset by a decrease in G&A expenses as cost-cutting initiatives put in place last year as well as continued scrutiny of expenses benefited the 2023 period. At Trinity, lower revenue was due to a decrease in its equipment breakdown and maintenance support services due to issues with long lead times for equipment and installations. The decrease in revenue was offset by a decrease in cost of services sold and a profit-sharing payment received from Trinity's primary insurer. Trinity leadership continues to focus on expanding its offerings of warranties in the HVAC and refrigeration sectors, and we believe there's a lot of room for growth in this area. Also contributing to Extended Warranty results is the investment income earned from our Float. For the 12 months ended June 30, 2023, investment income earned was $825,000 compared with $290,000 for the year ago period, an increase of over 280%. We invest our float in U.S. bonds, municipal bonds and high-quality corporate bonds with an average duration of two to three years. As prior investments mature, we are able to reinvest with the current higher interest rates. Our total float as of June 30, 2023, was approximately $44 million. For Extended Warranty on a trailing 12-month basis, pro forma adjusted EBITDA was $10.3 million or 14.9% of pro forma revenue compared to $7.8 million or $11.7 million of pro forma revenue in the previous trailing 12-month period. Turning now to KSX. Adjusted EBITDA was $1.7 million or 18.5% of segment revenue in the second quarter of 2023 compared to $948,000 or 22.9% of segment revenue in the second quarter of last year. As a reminder, last year, just included Ravix. First, at Ravix, results were relatively flat to the prior year. A decline in revenue was essentially offset by higher gross margin, 35% in '23 versus 29% one year ago and flat G&A expenses. The decline in revenue was due to a decrease in billable hours due to lower-than-expected number of new clients that was partially offset by an increase in billing rates. As J.T. mentioned, Ravix has recently hired an experienced business development person to focus on building a pipeline of new clients. In 2023, KSX also benefited from the addition of financial results from CSuite and SNS. At CSuite, revenue is being impacted by similar factors impacting Ravix, partially mitigated by a higher mix of revenue from search. Gross margin improved to 40%, up from 30% in the first quarter of '23, while revenue was essentially flat quarter-to-quarter. This helped adjusted EBITDA increased to $278,000 for Q2 of '23 from $135,000 for Q1 of '23. As JT mentioned, Timi has been taking proactive steps to refill the pipeline of opportunities since the acquisition closed and recently filled its open business development position with an internal promotion. At SNS, we continue to see a shift in mix from travel staffing to per diem staffing. Year-to-date, 55% of the shifts were per diem. The total number of shifts in Q2 2023 was flat to that in Q1 of '23, but the shift in mix to per diem staffing resulted in a lower operating margin than expected. For the quarter, SNS had adjusted EBITDA of $491,000, down from $650,000 in the first quarter. By focusing on current clients and collections, SNS has been able to build a strong cash balance and pay off its $350,000 revolver in Q2. Near-term growth is expected to come from expanding its base of travel nurses as well as an expansion into new geographic areas. SNS has more seasonality than our other businesses and the number of travel shifts is expected to go up as travel demand increases during the upcoming cold and flu season. Turning now to our balance sheet. At the end of the second quarter of 2023, we had cash and cash equivalents of $14.2 million compared to $64.2 million at the end of 2022. As a reminder, we repurchased a substantial portion of our subordinated debt in Q1 for $56.5 million. Cash used in operating activities from continuing operations was $8.6 million for the six months ended June 30, 2023, compared to cash provided of $4.3 million in the first six months of 2022. The current period is impacted by the following items: $5 million payment of TruPs deferred interest in Q1 of 2023, $2 million for the release of the Mendota escrow in Q1 of 2023; $1.8 million of management fees paid in Q1 and Q2 of this year related to the sale of commercial real estate investments, no inflows from PWSC, which was sold in July of last year and lower operating income from the Extended Warranty segment. Our total outstanding debt is comprised of bank loans and one remaining tranche of TruPs debt. Debt associated with the VA Lafayette is included in a separate line item on our balance sheet as liabilities held for sale. As a result, we had total outstanding debt of $42 million at the end of the second quarter of 2023 compared with $102.1 million at the end of 2022. Net debt decreased to $27.9 million as of June 30, 2023, compared to $37.9 million as of December 31, 2022. Earlier this year, the Board approved a one-year securities repurchase program. To date, we have repurchased 558,670 of our warrants and repurchased 68,446 shares of our common stock. After considering both stock and warrant repurchases, $7.4 million of stock repurchases or securities repurchases could be made through March 22, 2024. The repurchase of common stock is being held as treasury stock at cost and has been removed from our common shares outstanding. Year-to-date through August 7, 2023, about $1.8 million of our warrants have been exercised. You can see a breakdown by quarter in today's earnings release. These exercises have resulted in $8.8 million of cash to the Company. As of August 7, 2023, the Company had $2.1 million warrants outstanding that expire on September 15, 2023. During the second quarter of 2023, we also completed a cashless exercise of all warrants held in Limbach Holdings, Inc. and recorded an unrealized gain of $1.8 million related to the investment in the second quarter. Through August 7, 2023, we have sold 46,000 of Limbach common shares for cash proceeds of $1.2 million. In summary, while the Extended Warranty segment experienced some softness due to claims expense, overall, we are pleased with the performance of our business and progress in KSX. We made further progress reducing our net debt. We were able to repurchase a meaningful amount of our securities, and we have a robust pipeline of acquisition opportunities.

Your first question is coming from Adam Patinkin from David Capital.

Congratulations on the quarter, and it’s great to hear about the progress in the pipeline. I have a few questions regarding the M&A pipeline. I noticed that you mentioned it twice in the press release, indicating that some deals appear to be approaching closer. Could you first address your strategy for selecting banking partners, especially considering the banking crisis earlier this year, since you typically finance part of your acquisitions through the KSX Search Xcelerator? Additionally, have you observed any changes in the financing markets compared to a year ago?

Sure, we collaborate with traditional commercial banks to secure financing for our acquisitions. We have about five banks that we consistently engage with to present our opportunities and request term sheets. All of these banks have stable deposit bases, so we are not affected by the deposit flight that occurred in February and March. They are operational and available for business. Regarding the changes in terms, pricing is higher than it was a year ago, but we have not been looking for excessive leverage, typically around 2.5 to 3 times the debt-to-EBITDA ratio. The current indications are hovering closer to 2.5, partly because higher interest expenses require better fixed charge coverage, and banks are looking for increased covenant headroom. Thus, while bank financing is still accessible, the pricing has increased. Some amortization terms may have changed; previously, we might have obtained interest-only payments for the first year followed by a set period, but now it’s leaning more towards a straight-line amortization. Overall, availability of financing has not been an issue, and the banks we work with remain stable with consistent deposits. I hope that answers your questions.

So then it sounds like, obviously, there's little tweaks, but it sounds like the financing markets are generally open, and you have good competition between a number of different lenders who are willing to support the deals. Can you maybe talk a little bit about the deals that you're seeing? I mean, are you still seeing the possibility of getting deals in kind of the mid single-digit EBITDA range like what you've done in the past? Is the size of deals kind of similar to what you've seen in the past? Are they smaller or larger? I'd just love any color you have because it just seems like you've got a number of them in the pipeline, and it would be helpful to hear a little bit more about those.

Yes. Size and multiples sort of right down the center of the fairway. We talk about multiples in the 4x to 7x range. And really, that's just a function of the growth of historical and prospective growth of the target. But certainly kind of right in the middle of the fairway, both size and valuation.

In terms of the quality of the businesses you are evaluating, it appears that M&A activity has increased a bit in the markets. Have you noticed any specific trends regarding the quality of the businesses you are considering? Are they generally growing faster or slower? Do you find them to be comparable in quality to the asset-like businesses you've dealt with in the past? Are you still able to find the type of quality businesses that you aim for? What observations can you share about their characteristics?

I would say, in general, we have been leaning into and really screening for high-growth opportunities with very high gross margins. And if not high growth, then very, very high percentage of recurring revenue.

There's a good criteria to look for. I will ask one last question, and then I will jump off the line. And that's simply that I saw that for the first time the Company has started doing some buybacks of both shares, but then primarily actually of warrants. I know that the kind of warrant overhang, hopefully, will be cleared up in the next month or so when those warrants reach expiration. Can you maybe talk about what your thought process has been in terms of allocating capital towards buybacks and towards the warranties, especially with consideration of the upcoming expiration and potential exercise of a large number of warrants?

Yes, Adam. This is part of our overall approach to capital allocation. Our businesses are capital light, which means they don’t need a lot of investment for organic growth. We aim to increase our mergers and acquisitions, are reducing debt, and are also mindful not to hold onto excess cash. We have many promising acquisition opportunities and want to ensure we have enough capital to pursue them. Thus, we are balancing shareholder returns through buybacks while maintaining sufficient liquidity for our acquisition strategy. The buybacks of warrants allow us to effectively repurchase more shares with each dollar spent, minimizing the creation of new dilutive shares. We believe this is an excellent strategy for our repurchase efforts.

Your next question is coming from Douglas Ott from Andvari Associates.

And before I ask my questions, I'd like to say that we are officially shareholders now, myself personally and my clients. So first question is, you've got two pipelines when it comes to the Kingsway Search Xcelerator. One is the actual M&A pipeline, but also looking for operators in residence. Can you talk more about what it looks like for the search for new OIRs?

Yes. So obviously, we want to maintain an active pipeline of prospective OIR so that when we launch OIRs into the CEO seats and their acquisitions, that we don't lose momentum on the Search platform. So we've been very active. In fact, we have a signed offer letter. We hope to have another OIR joining us here in the third quarter, which is very exciting. I mentioned in the prepared remarks that we hired Charlie Joyce, who himself was a searcher and has a great network with his HBS classmates and things. Part of his role in business development, obviously, building the pipeline of M&A opportunities. But another big part of his job responsibilities is maintaining and building our recruiting pipeline. So as we head into the fall here, there are a lot of ETA search fund-related conferences. We'll be posting on the business school job boards, networking within personal networks of all our OIRs and CEOs and building that pipeline of additional OIRs for later this year and 2024.

And how has that evolved over the last two or three years, that search effort to find the searchers?

I believe that as we showcase our successes and demonstrate our support for individuals in successfully closing acquisitions, the ETA community is relatively small, and word spreads quickly. People conduct their research when considering ETA as a career and notice our achievements, prompting them to reach out. This creates a positive feedback loop that strengthens as we continue to develop our efforts. Additionally, the visibility of our advisory board has been extremely beneficial. For instance, Davide connected with us through Will Thorndike. Our growth, success, and the conversations surrounding Kingsway enhance our visibility, leading to higher-quality opportunities. We have traditionally recruited from business school campuses and will continue that practice. I believe that the combination of these factors will enhance our recruiting efforts in terms of both quality and numbers.

And speaking of Will and Tom, I was hoping you could share maybe if you think there are any underappreciated pieces of wisdom either from Will or Tom that you've come to appreciate over the last year or two since they've become advisors?

Yes, absolutely. I don't even know where to start. They are both amazing people, very generous with their time and insights, and extremely thoughtful. Earlier this year, we conducted a long workshop with Will, using his experience as an investor in search to help identify the traits that lead to successful search acquisitions. We pinpointed a couple of industries that typically possess those traits. This process was informed by his history as an investor and his access to the Stanford database of search fund returns, allowing for thorough attribution analysis. We had some incredible discussions around valuation, especially regarding a business with 98% gross recurring revenue and 105% net revenue retention, exploring how much you could pay while still achieving top decile returns. With Tom, we've built a strong personal relationship, and he has connected really well with each of our presidents. He is accessible via text, and they communicate frequently. As I've mentioned before, we've been utilizing Danaher Business System tools for quite a while, but having the person who actually helped create these tools teaching us the most effective ways to use them is incredibly valuable. We've gained a lot of insights into the tools, their implementation sequence, what to emphasize, and what to deprioritize. It's been truly remarkable.

Keep up the good work. Thank you.

Thanks for being a new shareholder. We appreciate it.

Thank you. We will now proceed to the next session.

Thank you, operator. We did have some questions that came in online. The first question is, can you give us an update on how CSuite and Secure Nurse Staffing are both doing?

Yes. So Kent talked about the financial performance in the prepared remarks. But from a very high level, we're really pleased. The model is really oriented to, first, transitioning out the retiring founder while learning the business, and then pivoting to building a great team and professionalizing that business, systems and processes that then create a platform for growth. CSuite and SNS are both now in that professionalization stage to create the foundation onto which they can go out and execute their growth strategy. I couldn't be more pleased with both Timi and Charles; they're performing admirably.

Just a couple of others as most of these are already answered. Moving to the next one. Generally speaking, what are management's principles when it comes to leveraging the OpCos? I understand that at acquisition, they are levered at roughly 3x EBITDA and debt is reduced over time through amortization. But in the long run, is there a sweet spot for leverage at the OpCos to enhance return on equity? For example, if in a few years' time Ravix gross and leverage is effectively 1x, would there be a scenario where management looks to relever it higher?

Yes. So for the first part, the roughly 3x. I think for us, 2.5x has been sort of our sweet spot, and that's sort of where the banks are these days. So I would say that's kind of where we're targeting. At a 5x deal, that's sort of the 50-50 leverage that we're targeting. On the second part about sort of relevering, I think we would like to keep all options on the table. Relevering is a viable scenario depending on the facts and circumstances at that time. A dividend recap is certainly something that we have in the toolbox to enhance our equity returns, right? Both the timing of the cash flow and the relevering and sort of taking our equity back, it really would enhance ROE and something that would absolutely be on the table. A few years ago, we relevered the Extended Warranty businesses in order to close on our acquisition of PWI. We're able to basically acquire most of that business with almost no equity contributed and very similar situation at CSuite. There's a flywheel effect after a few years of a business operating and delevering and growing that you can relever to finance essentially an equity-less acquisition. We think about this too as our acquired businesses become sort of platforms in their industries.

It looks like there are two more, one that just came in on email. How much cash are the warranty businesses bringing in on an annual basis that is deployable into the Search Xcelerator segment?

So our Extended Warranty businesses are covered by a loan. Obviously, the bank wants to keep as much cash in those companies as possible. But we're permitted to — the holding company is permitted to take out cash in one of two ways, one is through an excess cash flow metric and the other one is through tax distribution. First, under the excess cash flow metric, there's a calculation that we do that's spelled out in the debt agreement. For 2023, based upon the results from 2022, we're permitted to take out $3.3 million of cash. Last year, in 2022, for results for the prior year to that, we were allowed to take out $1.7 million. We were able to take out substantially more this year because our leverage ratio declined, and we were in a 50-50 share — I think it's 75-25 share with the bank where last year, we were 50-50. The other mechanism is tax distribution. Because we filed a consolidated tax return, our operating companies pay their airport tax to the holding company and not to the IRS. Our NOLs effectively shield all of our income taxes; we are not really cash taxpayers for federal purposes. Instead of paying tax to the government, they pay it to the holding company. For last year, the amount of tax distributions was about $1.6 million. That goes to the holdco, and we are permitted to allocate that, as JT said, we're capital allocators.

The last one that just came in that you may have touched on, but I guess they want it reiterated. One more question. Can management confirm they did share buybacks in the quarter and how many shares they acquired?

Yes. Yes, we did mention it. So we did two things. We bought back some warrants, and we bought back some shares. I'll just say from the beginning of the program — the program was announced in late March of 2023, so we didn't do anything in Q1 just because of when it was announced. But since then, through yesterday, we've repurchased 558,670 of our warrants and repurchased 68,446 shares of our common stock. I believe all the warrants were in Q2. Yes. And yes, all the warrants were in Q2, and I think a substantial portion of the common stock was actually purchased in the last four or five weeks. We have those breakdowns, I believe, are in our earnings release and a further breakdown in our 10-Q that was filed after market today as well.

Great. And that was the last question on email. So back to the operator.

Thank you, everyone. This concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.