Open Lending Corp Q4 FY2020 Earnings Call

Good afternoon, and welcome to Open Lending's Fourth Quarter 2020 Earnings Conference Call. As a reminder, today's conference call is being recorded. On the call today are John Flynn, Chairman and CEO; and Ross Jessup, President and COO; and Chuck Jehl, CFO. Earlier today, the company posted its fourth quarter 2020 earnings release to its Investor Relations website. In the release, you will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed on this call. Before we begin, I'd like to remind you that this call may contain estimates and other forward-looking statements that represent the company's view as of today, March 9, 2021. Open Lending disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to today's earnings release and our filings with the SEC for information concerning factors that could cause actual results to differ materially from those expressed or implied by such statements. And now I'll pass the call over to you, John, for your opening remarks.

Thank you, operator, and good afternoon, everyone. Thanks again for joining us for the fourth quarter 2020 earnings conference call. I'd like to start today by reviewing our fourth quarter and our full year 2020 highlights as well as the progress we've made on our growth objectives, then Ross is going to provide an update on our OEM opportunity. And finally, Chuck is going to review our Q4 financials in greater detail and discuss our outlook for 2021. During the fourth quarter, we certified 26,822 loans, which was an increase of 19% as compared to the fourth quarter of 2019. We reported revenue of $39.6 million, which was an increase of 52% and adjusted EBITDA of $24.8 million, which was an increase of 37% as compared to the fourth quarter of 2019. The fourth quarter was a great end to a very productive year for Open Lending. For the full year, we reported a 20% increase in certified loan growth, a 17% increase in revenue and a 7% increase in adjusted EBITDA. We also added 55 new customers in 2020, including large partnerships with several billion-dollar institutions. We experienced a strong OEM captive certificate growth despite COVID-19, which Ross is going to discuss shortly. We also enhanced our focus on direct lending and refinance channels and also made progress on our initiative to provide CECL relief to our OEM, bank and credit union customers. And of course, in 2020, we went public, which was an incredible milestone for us after building the business for the past 20 years. And with that, a strong board as well and an expanded management team, which has positioned us well for many years to come. Now I'm going to spend a few minutes on our fourth quarter 2020. Our lending partners continue to be very resilient during this time. A combination of a recent influx of deposits as a result of COVID in addition to a low-interest rate environment has led lenders to search for higher risk-adjusted yields. This has led to growth in auto loan originations further down the credit spectrum. During the quarter, we added 16 new customers and we currently have approximately 355 active customers on our platform that are generating certified loans this year. We continue to bring in additional resellers as well. We announced some new large partnerships in the fourth quarter as well, including OE Federal Credit Union, a $1.2 billion institution based in Livermore, California; Members First Federal credit union, a $5.3 billion institution based in Mechanicsburg, Pennsylvania, and Interra Credit Union, a $1.3 billion institution based in Goshen, Indiana. Our integration into the FIS originate platform is going well as well. We're currently live with 1 bank partner on the platform, and we continue to believe that this partnership is going to open up doors for us to market this to other banks that use that platform. Our enhanced focus on the refinance program to drive additional certified loan volume continues to be a great additional growth channel. During the quarter, we grew our business with existing channel partners, and we signed 8 new credit unions and banks to the refinance program. We've also been working on other funding sources with third parties to expand our funding sources outside the banks, credit unions and the OEMs that we currently partner with. And then lastly, on the insurance partner side, our current insurance partners include CNA and AmTrust. We are in active discussions with various top insurance carriers to potentially partner with as a third insurance relationship as we now feel there's enough volume to support 3 insurance carriers without jeopardizing our relationship with our 2 existing partners, and we'll provide an update on that when we have more details. So with that, I'm going to go ahead and turn it over to Ross, so he can jump into the OEM opportunity that we currently have in front of us.

Thank you, John. OEM captive certification originations were strong in the fourth quarter, which demonstrates tremendous growth despite the COVID-19 pandemic. As we laid out before, the OEM captive market is substantial with each captive opportunity representing a $30 million to $100 million annual revenue opportunity, and collectively, more than $1 billion annual revenue opportunity. As of today, we currently serve 2 OEM captives, which we expect to continue to ramp and will be key drivers of growth in 2021. Starting first with OEM #2, which came back online in October. They have begun to ramp production back up, and we are encouraged with the number of applications being submitted, loans booked and certified, and the opportunity ahead with this OEM. Moving onto OEM #1. We experienced certification growth of over 200% from April to December and are currently seeing applications from over 100% of their nationwide dealerships. We also officially launched our expanded credit score offering for them. In addition to the 560 to 619 credit scores in all regions, they are now utilizing our platform for 560 to 679 credit scores in 1 of their 4 regions they service and look to expand to the other 3 over the next few months. This is a great example of how our customer has expanded their usage and saw tremendous benefit from our product. We will also increase the opportunities at both current OEMs we launched convention at OEM #2 in January and are very encouraged by the opportunity ahead. In addition, we took our findings from the CECL relief that OEM #2 received from the SEC as well as their independent auditors and created a white paper on the topic. We only recently published the paper and have gotten many inquiries on how we can help others. Lastly, on OEMs, we have been very active in discussions with others and continue to build our pipeline and work together on data studies and the value proposition we offer our platform. Again, we do not have any additional OEMs in our 2021 guidance. We continue to focus on this significant opportunity. With that, I would like to turn it over to Chuck to discuss the financials in greater detail. Chuck?

Thanks, Ross. Now let's move to our solid Q4 and full year financial results before I review our outlook for full year 2021. We are pleased to report 2020 financial results that largely beat our expectations for the year. For the full year, as compared to 2019, total certified loans increased 20%. Total revenue increased 17%. Gross profit increased approximately 17%, and adjusted EBITDA increased 7%. In 2020, we signed 55 new contracts with auto lenders compared to 77 new contracts signed in 2019, with a focus on larger institutions in 2020. During the quarter ended December 31, we facilitated 26,822 certified loans and 16 new contracts were executed with new lenders. In addition, we have 14 active implementations with go-live dates in the next 60 days. Total revenue for the fourth quarter of 2020 increased 52% to $39.6 million as compared to fourth quarter 2019. With profit share making up $25.9 million, including $7.5 million from performance obligations that were satisfied in previous periods as a result of improved macroeconomic conditions and the continued overall portfolio performing better than we expected in the fourth quarter of 2020. Program fees were $12.4 million, and claims administration fees were $1.3 million in the fourth quarter 2020. Gross profit was $36.7 million in fourth quarter 2020, an increase of 54% due to higher levels of loans certified as compared to fourth quarter 2019 and the ASC 606 change in estimate discussed above. Gross margin was 93% in fourth quarter compared to 91.2% in the same period of 2019. Selling, general and administrative expenses were $12.4 million in the fourth quarter of 2020 compared to $6.4 million in the previous year quarter. The increase in SG&A cost is a result of incremental cost related to becoming a public company, as we continue implementing the internal control and compliance procedures required of public companies. Operating income was $24.3 million in fourth quarter 2020 compared to $17.4 million in the previous year quarter. The increase is primarily driven by a 19% increase in certified loans as compared to the fourth quarter of 2019 and the recognition of the $7.5 million in profit share related to historical vintages as a result of better-than-expected performance for the portfolio due to our enhanced underwriting standards and corresponding lower-than-expected defaults and claims. Net income for the fourth quarter of 2020 was $15.2 million compared to $17.4 million net income in fourth quarter 2019. The decrease was primarily due to one-time transaction costs associated with the merger and the incremental cost of becoming a public company. Adjusted EBITDA for the fourth quarter of 2020 was $24.8 million as compared to $18.1 million in fourth quarter 2019. A reconciliation from GAAP to non-GAAP financial measures can be found at the back of our press release. We exited 2020 with $294 million in total assets, of which $101.5 million was unrestricted cash and $89.3 million was contract assets. We had $267.4 million in total liabilities, of which $157.7 million was in debt and approximately $92.4 million associated with our obligations under the tax receivable agreement associated with the merger. On December 9, 2020, we announced the pricing of an upsized underwritten public offering of 9.5 million shares of our common stock at an offering price of $28 per share. Open Lending did not sell any shares, and we did not receive any proceeds from the offering. Upon closing the offering on December 14, 2020, we purchased from the selling stockholders approximately 1.4 million shares of our common stock for $37.5 million. Also, I wanted to briefly give you an update on our share count, post the offering. We had approximately 126.8 million shares outstanding at December 31, 2020. We posted an updated investor presentation and fourth quarter 2020 earnings supplemental to our Investor Relations site, which includes a slide that lays out our current share count. Now moving to our guidance for 2021. Based on fourth quarter results and trends into March, we are reaffirming our previously announced guidance ranges as follows: total certified loans to be between 161,000 and 206,000. Total revenue to be between $184 million and $234 million. Adjusted EBITDA to be between $125 million and $168 million and adjusted operating cash flow to be between $81 million and $111 million. Now with that, we'll turn it back over to the operator and are happy to take some questions from the group. Thank you.

And our first question is from Ashish Sabadra with Deutsche Bank.

Good results. I was wondering if you can provide any update on OEM #3. You had talked about the data study that you had conducted for that OEM. Any progress on signing up OEM #3?

You bet, Ashish, this is Ross. Yes. So when we did a data study, we presented them late in 2020. It was kind of a one-sided study because at that point in time, they had not given us the statuses of whether they had approved or declined that. Well, they actually did provide that to us. About 2 weeks ago, we finished that side of it and presented that study back to them. Last week, the results were fantastic, basically of the applications they sent us, we provided them a 51% lift in approvals. 41% of those were actually as requested approval. So meaning there are no counters in that. So we're very pleased with that. And we presented that back to them. They are meeting this week on the results of that. In the meantime, they've actually asked us for a sample program agreement and insurance policy so that they can review that internally from an accounting side, basically from their interest in getting their arms around the CECL relief benefit.

And maybe just my follow-up question would be on the CECL relief. You talked about the white paper that was published. Can you just talk about the opportunity there, any conversation with regional banks? And how do you think about the CECL relief opportunity on the bank front?

Yes, absolutely. It has resonated with several institutions we've spoken with. We have another OEM captive that wanted to ask some specific questions, so we included our advisers in that call to assist with their inquiries. They also requested a sample copy of the program agreement and insurance policy last week, which we provided. We are optimistic that those discussions will progress, and we anticipate that happening. We have also shared that document with OEM #1 and the other parties we are engaging with. Additionally, we are conducting a webinar. Would you like to discuss that, John?

Yes. I believe you also inquired about the impact on the banking side. We currently have the highest number of bank prospects since the company's inception. This has been well received, with several larger banks showing interest in the CECL document we've developed. We've shared it with a few and now have two or three banks requesting the necessary data to conduct the same data study that Ross mentioned regarding our potential impact on these institutions. Overall, the response has been very positive. Additionally, we are in the process of organizing a webinar focused on the do's and don'ts of CECL. Our advisers will present for about 30 minutes on how to prepare for CECL, and we will provide some background on how our product meets that need. I believe it will be very well received.

Our next question is from Peter Heckmann with Davidson.

Could you give us a little bit of maybe a percentage relative percentage of third by the 2 OEMs in the quarter? And then maybe talk about any change in your relative expectations of where those OEMs may be able to ramp to probably, mid to the end of this year when they're fully ramped?

Yes, it's Chuck. In our supplemental filing on the website, we have the total number of OEMs listed. We do not separately disclose the figures for OEM 1 and 2. In the fourth quarter, we reported just under 8,000 certifications of our total 26,822 that were associated with OEM 1 and 2. As we look ahead to 2021, OEM 2 resumed operations in October, and we are optimistic about the progress it has made. However, we anticipate that the complete ramp-up for OEM 2 to reach the target of 8,000 to 10,000 certifications will occur later in the year. Regarding OEM 1, we noted that it experienced 200% growth from April to December and continues to expand into 2021. We expect that it will soon reach a monthly certification level of 1,000 and potentially grow to 1,200 to 1,500 by the end of the year.

Got it. Got it. Okay. And then just with some unusual comparisons with last year. Anything that's worth calling out just in terms of the cadence of quarterly earnings in the first half? I guess to the extent that you've reviewed the consensus that does it appear to be approximately in the right range? Or any additional color you'd like to give as regards to that issue?

Obviously, March is seasonality is a great month for the company, and we're encouraged by where we're heading into the year. If December into January was really good for us. And then I'll tell you that just like everybody in the United States, Texas got hit really hard on weather in February, about a week there. It was very difficult, and that will impact us a bit in the February period. But I'll tell you that as we reaffirmed our guidance today, we feel good about full year '21, which is why we reaffirmed it in the ranges. So you think about our growth, I mean, on the low end of the range, it's 70% year-over-year growth on the high end of the range, it's 120% growth. So we feel good about where we're heading for the year. In apps, app flow is really high and coming in strong and had a record at the company this month for apps coming in. So we feel encouraged.

Our next question is from Randy Binner with B. Riley.

I wanted to just focus on the expense line a little bit. You mentioned in your script that there are some public company expenses, but like G&A was a little bit higher and that there was kind of an other expense item of $4.4 million. So I just wanted to clarify why each was elevated, if the G&A was just elevated to map higher revenue and then where the public company expense fit into that?

Yes, it's Chuck. In Q4 '20 compared to '19, we hired 27 people in 2020 as we transitioned to a public company, going public in June. This led to increased compensation and benefits for those hires, along with accounting and legal expenses related to the public offering and preparing for Sarbanes-Oxley compliance, as well as some insurance costs, particularly D&O. This is what I referred to in my prepared remarks about increased costs in the SG&A line. Regarding the $4.3 million in the other expense line that you mentioned, we will file our 10-K later this week. This amount is a non-cash charge tied to a change in the measurement of our tax receivable agreement from the merger transaction. Specifically, a change in the state apportionment rate for state taxes in Q4 caused this increase, and we adjusted it out of EBITDA. When you review the reconciliation on the table, you'll see that this was just a merger-related transaction cost associated with that rate change.

Okay. And that's one time. That's caught up?

That's right.

Our next question is from Joseph Vafi with Canaccord.

It's great to see all the continued progress. Just circling back on the OEMs. Is it fair to say do you think that after OEM #1 ramps, those increased FICO score ranges across those 3 extra regions that you'd say kind of OEM #1, at that point, kind of fully ramped other than their own organic growth in their business? And then is there any OEM #4 discussions that's worth talking about right now? And then I have a quick follow-up.

Yes, Joe, it's great to connect. Regarding OEM #1, I believe there is still significant potential even after the rollout in the three different markets. We are actively discussing the possibility of them adopting a subvention model. We have provided them with information and a document outlining the data points we need through our API to facilitate sub-vented approvals. They are currently reviewing that, and we will continue those discussions soon. As for OEM #4, we have been in talks with them for some time, and I'm happy to report that they are back and engaged with us. They have shown interest in a data study, and we received the relevant information from them yesterday. Our risk team will analyze the numbers to determine the potential lift we can offer them. This is very recent news and represents a promising opportunity that aligns well with our product capabilities. And I think one thing I'd add to that is that we've really enhanced the refi channel partner.

Absolutely.

And again, I'll just mention that you've heard me discuss Pentagon launching a few of those. Their volume has doubled in the last 2 months, and that's with only launching 1 of the 6 refi channel partners on their list to launch. So we're starting to see significant growth in same-store sales, which I believe will contribute greatly this year.

I guess the growth in CU and bank certs were flattish, up a little bit year-over-year, while the OEM certs, obviously, up tremendously. Just your thought on the growth rate of the credit union and bank certs in 2021 and the long-term potential.

Sure. If you recall some previous discussions, we intentionally adjusted the book-to-look ratio by implementing some underwriting changes. We previously reduced the advance from 100% of clean trade to 95%. Currently, we are considering reverting that advance back to 100%. Our analysis indicates that if the book-to-look ratio had remained at its previous level, there would have been about 11,500 more certs completed in that same period by the credit unions. This change was made with purpose. We are also in the process of signing agreements with some larger credit unions that we aimed to target.

14, right?

Yes. We had a bunch of them signing up near the end of 2020 that didn't get launched through at the end of the year, so they're launching now.

Yes, I'll jump in there, Bob. And so the 55 customers that we had that we signed up in 2020 we had 30 of those, 14 went live in Q4, and then 16 of those are going live in January and February. So a lot of the implementation delay, COVID-19 and the difficulty there and the challenges. But we're really encouraged by those going live now coming back on and ramping, and that will help in our growth going into '21 for the credit union banks.

I think one thing I'd add to that, and I alluded to earlier, is we've really enhanced the refi channel partner program. The support structure there is ramped well and we expect it to continue to perform well. We've seen significant growth in those partnerships.

Great. You addressed my next question about refinancing, so I guess I’ll sneak in a third. As you evaluate your public company, you're currently utilizing a strong model that generates attractive returns and cash flows. What concerns do you have? How do you view competition? Given that you have a compelling model that both competitors and customers can see, are there specific areas where you feel uneasy about competition? How do you ensure that you stay ahead of that?

I'll let the team add to that, this is John Flynn. We feel strongly that, as I've mentioned before, we're a 20-year-old company. It has taken this long to develop our models, interfaces, and relationships. Ross has pointed out that if a large bank were to create something similar to what we have, we wouldn't see 350 credit unions trying to run their businesses through a bank or anyone else other than an impartial entity like us. We have two decades of data that we continue to refine. Our exclusive partnerships with carriers remain intact. Attracting another carrier willing to replicate what we've developed over the years would require significant effort. Thus, I believe we've established a solid competitive advantage. Despite this, the market is vast, valued at $250 billion. Last year, we underwrote $2 billion in loans, and there is ample opportunity in this sector for potential competitors.

Yes, there is a significant opportunity in the Total Addressable Market. As John mentioned, we are only penetrating about 1% and continuing to grow. The key point is that we are not complacent about our current underwriting performance. We are actively seeking enhancements by incorporating additional alternative data scorecards and utilizing top-tier underwriting practices. Our risk team is dedicated to ensuring we stay ahead in this area.

Our next question is from Vincent Caintic with Stephens.

First, I have two questions, actually just a quick follow-up. Regarding the non-OEM opportunity, could you share how much of 2020 was from refinancings and what your outlook is for refinancings going forward?

Yes. If you consider the full year search for 2020, the refinancing is likely around 12% to 13% of that year. One thing to keep in mind, Vincent, is that as the OEMs grow, that percentage will be diluted by the growth of the OEMs.

Even though the actual order.

We didn't really focus on refinancing until COVID hit. A significant portion of our business was both indirect and direct, and we pivoted our sales team to begin engaging with the channel partners we were forming relationships with. So, I don't believe we saw any noticeable increase from the refinancing side before June or July in terms of real volume. Essentially, you are looking at about six months of the year when considering a percentage.

Yes. That's a great point. In our investor presentation, not the supplement, we've got a slide that talks about the refi program. And I think February over February, 2020 to 2021 applications up on refi 51%.

Okay. Our next question is from David Scharf with JMP Securities.

Maybe first on the guidance, and this is more a sort of general question observation. It's a fairly wide range still from the top to the bottom end of all the guidance metrics, approaching sort of 30% CASM between the low end and high end. And just trying to get a sense, I mean, you've painted a picture of fairly good visibility into the progress of the OEMs into the go-live roadmap over the next 60 days of a lot of new bank partners and so on and so forth. Is maintaining this 30% gap between high and low end primarily a function of still COVID-related uncertainty, sort of macro issues? Is it related more to industry competitive factors, other unknowns? Just trying to get a sense for how we ought to be thinking about what are some of the major factors that would lead one to navigate to the low end versus the high end?

Yes, Dave, this is Chuck. It's still early in the year, and we feel encouraged by the progress from Q4 into March. You mentioned the uncertainties surrounding COVID, including the second wave and vaccination rollout. We believe it was wise to reaffirm our guidance, and we feel positive about the ranges, even if they are somewhat broad. Achieving 70% growth on the low end compared to 120% is still outstanding growth within that range. The midpoint stands at 95%. The period between now and the full year reporting for 2020 to Q1 is relatively short, and we will keep a close watch on March, which has historically been a strong month for us seasonally. We will provide more insights regarding the full year 2021 when we reconvene in May for further discussion.

Got it. And no, no, clearly, there are a few companies very few that would be disappointed with the low end of your growth range. Just a context for the different variables at play. Just a quick follow-up. On the carrier side, kind of looking at my notes, I believe that you had mentioned on the third quarter call that a third carrier was kind of getting close to the short strokes that they may actually be on board April, May this year. Is that still the case? It sounded like perhaps you were widening the net in terms of who you're talking with?

This is John Flynn. Due to some incoming calls from our existing carriers, we decided to slow down and ensure we had the necessary volumes to support the various carriers we brought on board. As a result, with our broker and independent actuarial firm, we've identified four to five additional carriers who are very interested in our operations. We have non-disclosure agreements with many of them and are assessing which ones align best with our growth objectives and what introductions they can facilitate. We want to ensure we're selecting partners that can help us expand, whether through geographic opportunities or other areas. We are currently narrowing our options and believe we will have one carrier on board this year, as we mentioned in previous calls. Based on the interest and the volumes we expect from different OEMs and banks, we might potentially onboard two carriers. This reflects strong interest from insurance carriers; our focus has been on making sure we choose the right partners.

Our next question is from John Hecht with Jefferies.

I want to revisit the profit share because I understand you've reclaimed some revenue that you anticipated during the uncertain times last year. However, I noted that you adjusted your underwriting fees mid-year to reflect increased credit risk, which made sense at the time, yet we haven't experienced that credit cycle yet. So my questions are: are you underwriting for increased risk or decreased risk? And shouldn't we expect the margins in the profit share to at least stay elevated compared to previous levels until we observe that charge-off cycle?

Yes, John, this is Ross. You're absolutely correct. When vehicle valuations dropped back in April, we decided to lower the value of the vehicles by 5%, and we have kept that in place. This decision made sense at that time, especially with the ongoing risks related to the Hertz situation. We are actively encouraging our banking partners to reconsider and adjust the valuations back to where they were before COVID. This adjustment will help our values align with the trends reflected in the Manheim Index, leading to lower interest rates and higher close ratios. We conducted a study on the top 20 lenders based on credit scores and observed that their interest rates decreased in the last quarter, whereas our rates were rising. Thus, we see this as a strategic move to enhance our competitiveness. If we remove that 5% decrease, which is reflected in our future assumptions, we believe it could potentially increase our future profit share if values normalize.

As we look ahead to 2021, we are still experiencing some pressures on our profit share due to uncertainties related to the vaccine and COVID. These pressures remain a factor given the unknowns involved.

And some of that could free up, it would.

Our next question is from Mike Grondahl with Northland Securities.

With OEM 3 and potentially OEM #4, clearly, you're working with them, exchanging some data but everything takes time. What sort of the odds or is it practical that they could be delivering certs later this year?

Yes. Mike, this is Chuck. As I'm learning the business with John and Ross, these OEMs and large banks have long sales cycles, and our guidance for 2021 is just 1 and 2. We are doing everything we can, and Ross is fully focused on it along with the team. We prefer to discuss this in the past tense rather than speculate on potential outcomes. However, we remain dedicated to this and are working hard every day to achieve it.

Our next question is from Matt O'Neill with Goldman Sachs.

Just had a couple of sort of nuanced follow-ups and thanks for all the transparency around the business and the update here. So I guess, first, could you help us just think through the sort of the constituents or pillars in the decisioning around the remeasurement. And I know we've talked a lot about it so far. But as far as like what are the kind of 1, 2, and 3 biggest factors that you guys look at, whether it's the kind of credit performance, used car prices. I was just kind of wondering if there's a way to rank order those types of things so that we could think about how they the measurement may trend going forward, understanding that we've gotten much of the way back to kind of where we were a year ago?

I believe a significant part of the discussion relates to defaults. We need to assess whether defaults have occurred to the extent we anticipated and if claims are being filed at higher levels than expected. By monitoring this data, we’re trying to determine if we’re avoiding issues now that will arise later. However, we are not observing this. We collect data from the bureaus regarding 30, 60, and 90-day delinquency trends, and these trends closely align with the timeline for potential claims, which are significantly lower than we initially expected and what we had projected. Additionally, regarding claims severity, we are noticing that claims are coming in at a much lower severity compared to previous levels in dollar terms, primarily due to increased vehicle values stemming from limited new car inventory and high demand. These two factors are the most significant components of our assessment.

And just from the macro perspective, I mean, strengthen car sales, you think about used car values, the Manheim index and unemployment rates and things like that. Obviously, we're focused on that.

Yes, that's really helpful. As a follow-up, it seems you're experiencing an increased amount of interest from potential third and possibly fourth insurance partners. Can we assume that the existing economic share you have with your two primary providers is essentially the baseline as you engage with additional insurers? Otherwise, it would seem you would not be economically indifferent regarding which insurer to pair with for subsequent loans if they weren't in a similar economic arrangement as your first two partners. Does that make sense?

Yes. That would be identical.

And we have reached the end of the question-and-answer session. And I'll now turn the call over to John Flynn for closing remarks.

We truly appreciate you taking the time to listen and discuss these questions. We're completely open about our direction and past experiences with the company. Thank you for your support, and we look forward to growing in the coming year. Thank you.

Thanks, everyone, for your time.

And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.