NYSE:KFS Kingsway Financial Services Q2 2024 Earnings Report $9.00 +0.05 (+0.56%) Closing price 03:59 PM EasternExtended Trading$8.92 -0.08 (-0.89%) As of 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings History Kingsway Financial Services EPS ResultsActual EPS-$0.09Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/AKingsway Financial Services Revenue ResultsActual Revenue$26.45 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/AKingsway Financial Services Announcement DetailsQuarterQ2 2024Date8/6/2024TimeN/AConference Call DateTuesday, August 6, 2024Conference Call Time5:00PM ETUpcoming EarningsKingsway Financial Services' Q1 2025 earnings is scheduled for Wednesday, May 14, 2025, with a conference call scheduled on Thursday, May 8, 2025 at 5:00 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Kingsway Financial Services Q2 2024 Earnings Call TranscriptProvided by QuartrAugust 6, 2024 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:09Good day, and welcome to the Kingsway Second Quarter 2024 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. With me on the call are J. Operator00:00:30T. Fitzgerald, Chief Executive Officer and Kent Hansen, Chief Financial Officer. Before we begin, I want to remind everybody 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. Operator00:00:56For 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 ks and subsequent Form 10 Qs and Form 8ks filed with the Securities and Exchange Commission. Please note also 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 would like to turn the call over to J. T. Operator00:01:36Fitzgerald, CEO of Kingsway. J. T, please proceed. Speaker 100:01:41Thanks, Paul. Good afternoon, everyone, and welcome to the Kingsway earnings call for the Q2 of 2024. We had a solid quarter that was largely in line with our expectations. We saw improving performance in our extended warranty segment, which showed strong cash sales and moderating claims experience, and we exited the quarter with nice momentum heading into the back half of the year. Our KSX segment also performed well with EBITDA improving sequentially and year over year. Speaker 100:02:14Additionally, this quarter has been marked by very positive deal related activity. We have a couple of promising high quality prospects that we are working on, which if completed would significantly contribute to our growth trajectory moving forward. For the Q2 of 2024, consolidated revenue was $26,400,000 a modest increase of 1% compared to the prior year quarter, Our consolidated adjusted EBITDA was $2,400,000 a nice improvement over the $1,800,000 in the year ago quarter. For the extended warranty segment and the KSX segment, combined adjusted EBITDA was $3,400,000 in both the Q2 of this year and last year. In our extended warranty segment, the pricing adjustments that were implemented beginning in the second half of 2023 are having a positive impact and helping to offset claims expense, which increased only 2.9% over the prior year. Speaker 100:03:15You may recall that Q1 claims were 13.1% higher than last year. Also notably, our cash sales for the current quarter increased 4.6% over the prior year. Sequentially, adjusted EBITDA increased 12% from the Q1 of 2024 driven by higher earned revenue, a higher mix of extended warranty revenue at Trinity and our ongoing focus on controlling costs. As we talked about during our last earnings call, the challenges faced by the businesses in extended warranty have moderated and we feel that we hit an inflection point in the second quarter. Turning to our Search Accelerator or KSX segment, revenues increased 2% over prior year, primarily due to a favorable comparison resulting from the acquisitions of SPI and DDI in the second half of twenty twenty three. Speaker 100:04:12Ravex continues to perform both ahead of our original investment thesis and is trending nicely in 2024. The team at Ravex remains focused on increasing utilization rates, optimizing pricing and disciplined cost management. While revenues were down in the quarter, gross margins continue to hold around 37%, a 200 basis point improvement over prior year. EBITDA was essentially flat year over year in the quarter. At C Suite, the team is building a solid pipeline and we continue to believe the business is headed in the right direction despite persistently challenging market conditions. Speaker 100:04:49Revenue and adjusted EBITDA were lower in the Q2 compared to the prior year period. However, cost of sales and general and administrative expenses were also down from prior year. The pipeline of qualified new business opportunities look strong and the team is charting us course for accelerating revenue in the second half of twenty twenty four and beyond. At SNS for the Q2, revenue was flat sequentially, but both gross margin and adjusted EBITDA improved due to a higher mix of travel nurse shifts in the current quarter. Gross margin was over 200 basis points better in Q2 than in Q1. Speaker 100:05:29Travel shifts increased 35.4% from the Q1 and the number of nurses on travel assignment or TOA has more than doubled since the beginning of the year. For the first time in a long while, the company exits the quarter with more TOA than at the same point last year. We continue to believe the longer term outlook for the travel nurse market is promising. At Systems Product International or SPI, the team delivered strong revenue and adjusted EBITDA in Q2 with revenues increasing 24% sequentially. The company has contracted with a number of new clients this year and is executing on its strategy to grow annual recurring revenue. Speaker 100:06:13Since acquisition, the company has grown ARR by 12%. Percent. At Digital Diagnostics Imaging or DDI, revenue continues to be strong, increasing 14.6% over the prior year. EBITDA improved by 26.2% over the prior year period. To support its growth strategy and diversify its operational risk, DDI recently signed a new lease for a second operation center in Salt Lake City. Speaker 100:06:43We expect to have the location up and running in the second half of the year. The company continues to meet and exceed our original expectations. Based on the performance of our operating businesses, the 12 month run rate adjusted EBITDA remains at $16,000,000 to 17,000,000 dollars As a reminder, run rate is intended to capture the last 12 months of adjusted EBITDA for the businesses we currently own, including those we have recently acquired. Growth through acquisitions remain central to our corporate strategy, targeting opportunities that deliver predictably high returns on tangible capital in large and growing end markets. While the timing of completing transactions is challenging to predict, we are seeing a healthy level of activity related to potential transactions and believe we are on track to meet our target of 2 to 3 deals each year that can each generate $1,000,000 to $3,000,000 in annualized adjusted EBITDA. Speaker 100:07:44We currently have 4 highly talented operators and residents or OIRs who are actively searching for opportunities and are currently evaluating a number of attractive potential acquisition targets. In addition, we are actively recruiting new OIRs that can backfill and grow our bench of talent as our deal flow evolves. All in all, strong execution in the extended warranty businesses and continued progress against strategic objectives within our KSX businesses drove solid financial results for the Q2. I'll now turn the call over to Kent for some additional commentary related to our financials. Speaker 200:08:23Thanks, J. T. As a reminder, during the Q4 of 2022, we began executing a plan to sell one of our subsidiaries, VA Lafayette, which owns a medical clinic whose sole tenant is the U. S. Veterans Administration. Speaker 200:08:38As such, VA Lafayette is included in discontinued operations and its assets and liabilities are reported as held for sale. The results of operations are reported separately and not included in the results reported today. Taking a look at our balance sheet and cash flows. At the end of the Q2 of 2024, we had cash and cash equivalents of $9,600,000 compared to $9,100,000 at the end of 2023. Cash provided by operating activities from continuing operations was $500,000 for the 1st 6 months of 2024 compared to cash used in operating activities of $24,700,000 in the year ago period. Speaker 200:09:19Cash used in the prior year was primarily due to outflows related to the payment of fees, expenses and interest related to asset sales which was partially offset by operating income from the businesses in our operating segments. In May of this year, we amended our extended warranty loan to pay off all current extended warranty debt and replace it with a $1,000,000 revolver, a term loan of $15,000,000 and a delayed draw loan of $6,000,000 Maturity date was extended to May of 2029. This amendment now gives us additional capacity to fund future acquisitions. As of June 30, 2024, we had total outstanding debt, which is comprised of bank loans and subordinated debt of $47,300,000 compared to $44,400,000 at the end of 2023. Net debt increased to $37,700,000 as of June 30, 2024 compared to $35,300,000 at the end of 2023, primarily due to the extended warranty amendment. Speaker 200:10:26In March of this year, our securities repurchase program was extended for 1 year through March of 2025. Year to date, we have repurchased 141,550 shares of common stock for an aggregate purchase price of approximately $1,100,000 Also of note, in July 2024, we completed the purchase of the minority 10% interest in IWS that we did not previously own and as such IWS is now a wholly owned subsidiary of the company. I'll now turn the call back over to Paul to open the line for any questions. Paul? Operator00:11:04Certainly. At this time, we'll be conducting a question and answer The first question today is coming from Adam Patinkin from David Capital. Adam, your line is live. Speaker 300:11:48Hey, guys. Thanks for taking my question today. I just wanted to ask quickly about the warranty business, if you don't mind. So I think that you gave a little bit of color that the cost inflation there has moderated pretty significantly. And I think JT that you said it was up 2.9% year over year. Speaker 300:12:07Can you kind of provide a little bit more color there in terms of where your rates are trending relative to cost inflation and how you expect both of those to trend going forward over the duration of the year? Speaker 100:12:21Yes. Hi, Adam. Thanks for the question. Yes, so warranty claims were up 2.9% or so in the quarter, mostly driven by severity, not frequency. As you know, we started taking rate back half of last year and into this year. Speaker 100:12:39And I think in the aggregate across the businesses, the sort of price increases were in the kind of high single digits. How much of that sticks and how much of that comes through in shifting mix and stuff is always a little bit hard, but we're to determine, but we're seeing probably about 4% or 5% of that come through in rate. And so also as you know, beginning in late Q2 and really in the Q3 of last year, we saw accelerating claims inflation, severity inflation, predominantly parts and labor. And so we're coming up against much easier comps in the second half of the year for claims dollars. And so I would expect that year over year inflation will be much lower and that rate that I mentioned will still continue to come through. Speaker 300:13:44Got it. That's really helpful. I appreciate it. Thank you guys and rooting for some of these acquisitions to come through that I know you're getting close on or it sounds like you're getting close on. Appreciate it guys. Speaker 300:13:55I'll go back in the queue. Speaker 200:13:57Thanks, Adam. Operator00:14:00Thank you. And there were no other questions from the lines. I'd now like to pass the call to James for some email questions. Speaker 400:14:17Thank you, operator. Yes, we did have 2 questions come in on email. The first one is, it says, JT, you said at the Investor Day, you are very happy with the 2 most recent acquisitions. Although they are recent, the reported numbers of both these businesses don't doesn't yet demonstrate their superior attributes and performance. Can you talk about why you still like these businesses and how long before the performance starts to show up in the financials? Speaker 100:14:49Yes. I mentioned it a little bit in the prepared remarks. SPI, which we acquired in September of last year, vertical market software business serving the fractional ownership vacation property industry, has grown ARR since acquisition by roughly 12%. They've also added several new clients that they're in the process of onboarding. And so I would expect by the end of the year that we would have that we will have grown ARR by roughly 20% since inception. Speaker 100:15:27So I think that's really strong growth. Drew has done a great job transitioning in there and is focused on investing in growing the number of new customers on their software platform. And so I think a little bit of that would be sacrificing a little bit of near term profitability for growth in recurring revenue, very high margin recurring revenue to go out and capture more market share in his addressable market. And then DDI, as I mentioned, revenue in the quarter increased roughly 15% over the prior year prior to our ownership and EBITDA improved even more dramatically. And so those that financial performance is starting to come through in the financial statements. Speaker 100:16:24And it's just a really incredible opportunity here. Peter is doing a great job, really growing with the customers that he currently has who are sending him more facilities to onboard. And as I mentioned, in support of that growth and to create redundancy operationally and also tap a new labor pool for high quality EKG techs, we're opening a new facility in Salt Lake. So, yes, I think we're really excited about the trajectory of both of those businesses. Speaker 400:17:01Excellent. And the last question, again, something you may have touched on in opening remarks, but maybe something to reinforce and reiterate. The question is, are you seeing any signs of a turnaround in either C Suite or the nursing business? What might what facts might lead you to believe that better days are ahead for these two businesses? Speaker 100:17:26Yes. SNS, we'll start there. The nurse staffing business, for the first time, we exit the quarter with more travelers on assignment than we had at the same point in time last year. So that's a great fact. And our TOA shifts in the quarter increased 35% over the Q1 of the year. Speaker 100:17:49And so Charles is doing a great job of recruiting nurses onto the platform and getting more TOA shifts. And so that's been really nice progress there. I think broadly the industry is seeing gross margin compression start to abate and feels like we're kind of settling into a steady state and always in the second half of the year seasonally there's more demand for travel and per diem nurses as hospital census increases during cold and flu season. So I think we're in a good position to capture that growing demand in the back half of the year. C suite, it's I mentioned that the challenges are a bit persistent. Speaker 100:18:38A lot of their business is recruiting for permanent placement of accounting staff at private equity portfolio companies. I think with some challenges around business optimism, people have been slow to hire. We've got a huge backlog of retained searches and as well as interim CFO work. It's getting people to pull the trigger and close those deals. I think Timmy has been really trying to push those along and we're hopeful that the sentiment improves in the second half of the year. Speaker 100:19:14It's still hard to tell. But he's been the backlog or pipeline of deals that he has is as strong as we've seen it. Speaker 400:19:26Great. Thank you, JT. And operator, that's all from the questions on email. Operator00:19:33Okay, great. There were no other questions from the lines at this time. So would you like to conclude the call, ma'am? Speaker 100:19:41Yes. Thanks, everyone. Have a great evening. Appreciate your participating on the call. Operator00:19:47Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallKingsway Financial Services Q2 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Kingsway Financial Services Earnings HeadlinesKingsway Financial Services, Inc.: Kingsway to Report Financial Results for First Quarter 2025 on May 8May 6 at 6:29 PM | finanznachrichten.deKingsway Publishes Updated Investor Presentation to Company WebsiteApril 23, 2025 | gurufocus.comHere’s How to Claim Your Stake in Elon’s Private Company, xAIEven though xAI is a private company, tech legend and angel investor Jeff Brown found a way for everyday folks like you… To partner with Elon on what he believes will be the biggest AI project of the century… Starting with as little as $500.May 7, 2025 | Brownstone Research (Ad)Kingsway Financial Services Inc. (NYSE:KFS) Appoints Rob Humble as President and CEO of PWI and Penn WarrantyApril 2, 2025 | finance.yahoo.comKingsway Financial Services Appoints New CEO for Auto Warranty SegmentApril 2, 2025 | tipranks.comKingsway Financial Services Strengthens Board with New AppointmentsMarch 31, 2025 | tipranks.comSee More Kingsway Financial Services Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Kingsway Financial Services? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Kingsway Financial Services and other key companies, straight to your email. Email Address About Kingsway Financial ServicesKingsway Financial Services (NYSE:KFS), through its subsidiaries, engages in the extended warranty and business services in the United States. The company operates through two segments, Extended Warranty and Kingsway Search Xcelerator. The Extended Warranty segment markets, sells, and administers vehicle service agreements and related products for new and used automobiles, motorcycles, and ATVs. This segment also markets and distributes warranty products to manufacturers, distributors, and installers of heating, ventilation and air conditioning, standby generator, commercial LED lighting, and commercial refrigeration equipment; and provides equipment breakdown and maintenance support services to companies, as well as after-market vehicle protection services. The Kingsway Search Xcelerator offers outsourced finance and human resources consulting services, including operational accounting, such as bookkeeping, accounting, financial reporting, and analysis and strategic finance services; technical accounting comprising initial public offerings, Securities and Exchange Commission reporting, and international consolidation services; human resources, workforce management, and compliance support services; and advisory services. This segment also provides financial executive services for project and interim staffing engagements; search services for permanent placements; healthcare staffing services to acute healthcare facilities for short-term and day-to-day needs of hospitals; software products for the management needs of all types of shared-ownership properties; and fully managed outsourced cardiac telemetry services, as well as provides mobile monitors to the hospitals. The company offers its products and services through credit unions and dealers. Kingsway Financial Services Inc. was incorporated in 1989 and is headquartered in Chicago, Illinois.View Kingsway Financial Services ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Disney Stock Jumps on Earnings—Is the Magic Sustainable?Archer Stock Eyes Q1 Earnings After UAE UpdatesFord Motor Stock Rises After Earnings, But Momentum May Not Last Broadcom Stock Gets a Lift on Hyperscaler Earnings & CapEx BoostPalantir Stock Drops Despite Stellar Earnings: What's Next?Is Eli Lilly a Buy After Weak Earnings and CVS-Novo Partnership?Is Reddit Stock a Buy, Sell, or Hold After Earnings Release? 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There are 5 speakers on the call. Operator00:00:09Good day, and welcome to the Kingsway Second Quarter 2024 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. With me on the call are J. Operator00:00:30T. Fitzgerald, Chief Executive Officer and Kent Hansen, Chief Financial Officer. Before we begin, I want to remind everybody 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. Operator00:00:56For 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 ks and subsequent Form 10 Qs and Form 8ks filed with the Securities and Exchange Commission. Please note also 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 would like to turn the call over to J. T. Operator00:01:36Fitzgerald, CEO of Kingsway. J. T, please proceed. Speaker 100:01:41Thanks, Paul. Good afternoon, everyone, and welcome to the Kingsway earnings call for the Q2 of 2024. We had a solid quarter that was largely in line with our expectations. We saw improving performance in our extended warranty segment, which showed strong cash sales and moderating claims experience, and we exited the quarter with nice momentum heading into the back half of the year. Our KSX segment also performed well with EBITDA improving sequentially and year over year. Speaker 100:02:14Additionally, this quarter has been marked by very positive deal related activity. We have a couple of promising high quality prospects that we are working on, which if completed would significantly contribute to our growth trajectory moving forward. For the Q2 of 2024, consolidated revenue was $26,400,000 a modest increase of 1% compared to the prior year quarter, Our consolidated adjusted EBITDA was $2,400,000 a nice improvement over the $1,800,000 in the year ago quarter. For the extended warranty segment and the KSX segment, combined adjusted EBITDA was $3,400,000 in both the Q2 of this year and last year. In our extended warranty segment, the pricing adjustments that were implemented beginning in the second half of 2023 are having a positive impact and helping to offset claims expense, which increased only 2.9% over the prior year. Speaker 100:03:15You may recall that Q1 claims were 13.1% higher than last year. Also notably, our cash sales for the current quarter increased 4.6% over the prior year. Sequentially, adjusted EBITDA increased 12% from the Q1 of 2024 driven by higher earned revenue, a higher mix of extended warranty revenue at Trinity and our ongoing focus on controlling costs. As we talked about during our last earnings call, the challenges faced by the businesses in extended warranty have moderated and we feel that we hit an inflection point in the second quarter. Turning to our Search Accelerator or KSX segment, revenues increased 2% over prior year, primarily due to a favorable comparison resulting from the acquisitions of SPI and DDI in the second half of twenty twenty three. Speaker 100:04:12Ravex continues to perform both ahead of our original investment thesis and is trending nicely in 2024. The team at Ravex remains focused on increasing utilization rates, optimizing pricing and disciplined cost management. While revenues were down in the quarter, gross margins continue to hold around 37%, a 200 basis point improvement over prior year. EBITDA was essentially flat year over year in the quarter. At C Suite, the team is building a solid pipeline and we continue to believe the business is headed in the right direction despite persistently challenging market conditions. Speaker 100:04:49Revenue and adjusted EBITDA were lower in the Q2 compared to the prior year period. However, cost of sales and general and administrative expenses were also down from prior year. The pipeline of qualified new business opportunities look strong and the team is charting us course for accelerating revenue in the second half of twenty twenty four and beyond. At SNS for the Q2, revenue was flat sequentially, but both gross margin and adjusted EBITDA improved due to a higher mix of travel nurse shifts in the current quarter. Gross margin was over 200 basis points better in Q2 than in Q1. Speaker 100:05:29Travel shifts increased 35.4% from the Q1 and the number of nurses on travel assignment or TOA has more than doubled since the beginning of the year. For the first time in a long while, the company exits the quarter with more TOA than at the same point last year. We continue to believe the longer term outlook for the travel nurse market is promising. At Systems Product International or SPI, the team delivered strong revenue and adjusted EBITDA in Q2 with revenues increasing 24% sequentially. The company has contracted with a number of new clients this year and is executing on its strategy to grow annual recurring revenue. Speaker 100:06:13Since acquisition, the company has grown ARR by 12%. Percent. At Digital Diagnostics Imaging or DDI, revenue continues to be strong, increasing 14.6% over the prior year. EBITDA improved by 26.2% over the prior year period. To support its growth strategy and diversify its operational risk, DDI recently signed a new lease for a second operation center in Salt Lake City. Speaker 100:06:43We expect to have the location up and running in the second half of the year. The company continues to meet and exceed our original expectations. Based on the performance of our operating businesses, the 12 month run rate adjusted EBITDA remains at $16,000,000 to 17,000,000 dollars As a reminder, run rate is intended to capture the last 12 months of adjusted EBITDA for the businesses we currently own, including those we have recently acquired. Growth through acquisitions remain central to our corporate strategy, targeting opportunities that deliver predictably high returns on tangible capital in large and growing end markets. While the timing of completing transactions is challenging to predict, we are seeing a healthy level of activity related to potential transactions and believe we are on track to meet our target of 2 to 3 deals each year that can each generate $1,000,000 to $3,000,000 in annualized adjusted EBITDA. Speaker 100:07:44We currently have 4 highly talented operators and residents or OIRs who are actively searching for opportunities and are currently evaluating a number of attractive potential acquisition targets. In addition, we are actively recruiting new OIRs that can backfill and grow our bench of talent as our deal flow evolves. All in all, strong execution in the extended warranty businesses and continued progress against strategic objectives within our KSX businesses drove solid financial results for the Q2. I'll now turn the call over to Kent for some additional commentary related to our financials. Speaker 200:08:23Thanks, J. T. As a reminder, during the Q4 of 2022, we began executing a plan to sell one of our subsidiaries, VA Lafayette, which owns a medical clinic whose sole tenant is the U. S. Veterans Administration. Speaker 200:08:38As such, VA Lafayette is included in discontinued operations and its assets and liabilities are reported as held for sale. The results of operations are reported separately and not included in the results reported today. Taking a look at our balance sheet and cash flows. At the end of the Q2 of 2024, we had cash and cash equivalents of $9,600,000 compared to $9,100,000 at the end of 2023. Cash provided by operating activities from continuing operations was $500,000 for the 1st 6 months of 2024 compared to cash used in operating activities of $24,700,000 in the year ago period. Speaker 200:09:19Cash used in the prior year was primarily due to outflows related to the payment of fees, expenses and interest related to asset sales which was partially offset by operating income from the businesses in our operating segments. In May of this year, we amended our extended warranty loan to pay off all current extended warranty debt and replace it with a $1,000,000 revolver, a term loan of $15,000,000 and a delayed draw loan of $6,000,000 Maturity date was extended to May of 2029. This amendment now gives us additional capacity to fund future acquisitions. As of June 30, 2024, we had total outstanding debt, which is comprised of bank loans and subordinated debt of $47,300,000 compared to $44,400,000 at the end of 2023. Net debt increased to $37,700,000 as of June 30, 2024 compared to $35,300,000 at the end of 2023, primarily due to the extended warranty amendment. Speaker 200:10:26In March of this year, our securities repurchase program was extended for 1 year through March of 2025. Year to date, we have repurchased 141,550 shares of common stock for an aggregate purchase price of approximately $1,100,000 Also of note, in July 2024, we completed the purchase of the minority 10% interest in IWS that we did not previously own and as such IWS is now a wholly owned subsidiary of the company. I'll now turn the call back over to Paul to open the line for any questions. Paul? Operator00:11:04Certainly. At this time, we'll be conducting a question and answer The first question today is coming from Adam Patinkin from David Capital. Adam, your line is live. Speaker 300:11:48Hey, guys. Thanks for taking my question today. I just wanted to ask quickly about the warranty business, if you don't mind. So I think that you gave a little bit of color that the cost inflation there has moderated pretty significantly. And I think JT that you said it was up 2.9% year over year. Speaker 300:12:07Can you kind of provide a little bit more color there in terms of where your rates are trending relative to cost inflation and how you expect both of those to trend going forward over the duration of the year? Speaker 100:12:21Yes. Hi, Adam. Thanks for the question. Yes, so warranty claims were up 2.9% or so in the quarter, mostly driven by severity, not frequency. As you know, we started taking rate back half of last year and into this year. Speaker 100:12:39And I think in the aggregate across the businesses, the sort of price increases were in the kind of high single digits. How much of that sticks and how much of that comes through in shifting mix and stuff is always a little bit hard, but we're to determine, but we're seeing probably about 4% or 5% of that come through in rate. And so also as you know, beginning in late Q2 and really in the Q3 of last year, we saw accelerating claims inflation, severity inflation, predominantly parts and labor. And so we're coming up against much easier comps in the second half of the year for claims dollars. And so I would expect that year over year inflation will be much lower and that rate that I mentioned will still continue to come through. Speaker 300:13:44Got it. That's really helpful. I appreciate it. Thank you guys and rooting for some of these acquisitions to come through that I know you're getting close on or it sounds like you're getting close on. Appreciate it guys. Speaker 300:13:55I'll go back in the queue. Speaker 200:13:57Thanks, Adam. Operator00:14:00Thank you. And there were no other questions from the lines. I'd now like to pass the call to James for some email questions. Speaker 400:14:17Thank you, operator. Yes, we did have 2 questions come in on email. The first one is, it says, JT, you said at the Investor Day, you are very happy with the 2 most recent acquisitions. Although they are recent, the reported numbers of both these businesses don't doesn't yet demonstrate their superior attributes and performance. Can you talk about why you still like these businesses and how long before the performance starts to show up in the financials? Speaker 100:14:49Yes. I mentioned it a little bit in the prepared remarks. SPI, which we acquired in September of last year, vertical market software business serving the fractional ownership vacation property industry, has grown ARR since acquisition by roughly 12%. They've also added several new clients that they're in the process of onboarding. And so I would expect by the end of the year that we would have that we will have grown ARR by roughly 20% since inception. Speaker 100:15:27So I think that's really strong growth. Drew has done a great job transitioning in there and is focused on investing in growing the number of new customers on their software platform. And so I think a little bit of that would be sacrificing a little bit of near term profitability for growth in recurring revenue, very high margin recurring revenue to go out and capture more market share in his addressable market. And then DDI, as I mentioned, revenue in the quarter increased roughly 15% over the prior year prior to our ownership and EBITDA improved even more dramatically. And so those that financial performance is starting to come through in the financial statements. Speaker 100:16:24And it's just a really incredible opportunity here. Peter is doing a great job, really growing with the customers that he currently has who are sending him more facilities to onboard. And as I mentioned, in support of that growth and to create redundancy operationally and also tap a new labor pool for high quality EKG techs, we're opening a new facility in Salt Lake. So, yes, I think we're really excited about the trajectory of both of those businesses. Speaker 400:17:01Excellent. And the last question, again, something you may have touched on in opening remarks, but maybe something to reinforce and reiterate. The question is, are you seeing any signs of a turnaround in either C Suite or the nursing business? What might what facts might lead you to believe that better days are ahead for these two businesses? Speaker 100:17:26Yes. SNS, we'll start there. The nurse staffing business, for the first time, we exit the quarter with more travelers on assignment than we had at the same point in time last year. So that's a great fact. And our TOA shifts in the quarter increased 35% over the Q1 of the year. Speaker 100:17:49And so Charles is doing a great job of recruiting nurses onto the platform and getting more TOA shifts. And so that's been really nice progress there. I think broadly the industry is seeing gross margin compression start to abate and feels like we're kind of settling into a steady state and always in the second half of the year seasonally there's more demand for travel and per diem nurses as hospital census increases during cold and flu season. So I think we're in a good position to capture that growing demand in the back half of the year. C suite, it's I mentioned that the challenges are a bit persistent. Speaker 100:18:38A lot of their business is recruiting for permanent placement of accounting staff at private equity portfolio companies. I think with some challenges around business optimism, people have been slow to hire. We've got a huge backlog of retained searches and as well as interim CFO work. It's getting people to pull the trigger and close those deals. I think Timmy has been really trying to push those along and we're hopeful that the sentiment improves in the second half of the year. Speaker 100:19:14It's still hard to tell. But he's been the backlog or pipeline of deals that he has is as strong as we've seen it. Speaker 400:19:26Great. Thank you, JT. And operator, that's all from the questions on email. Operator00:19:33Okay, great. There were no other questions from the lines at this time. So would you like to conclude the call, ma'am? Speaker 100:19:41Yes. Thanks, everyone. Have a great evening. Appreciate your participating on the call. Operator00:19:47Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by