Q1 2021 Safeguard Scientifics Inc Earnings Call
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Ladies and gentlemen, and thank you for your patience. Please safeguard scientifics first quarter 'twenty 'twenty on financial results, we will begin shortly.
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Ladies and gentlemen, and thanks for dialing in please safeguard scientifics third quarter 2021 financial results cool.
Martin and the Avi and I'll be coordinating your coach day shrink.
During the presentation, you will have the opportunity to ask a question by pressing star followed by one on your telephone keypad.
Our dialogue to 100, and she's not bothered with general counsel to begin Mark. Please go ahead.
Good afternoon, and thank you for joining us for this presentation of safeguard scientifics first quarter, 2020, one and financial results joining me on today's call and webcast for Eric Salzman, Safeguard Chief Executive Officer, and Mark Herndon, safeguard as Chief Financial Officer. During today's call Eric will provide some corporate and strategic updates on bulk and discuss our results afterwards growth on the call your quest.
<unk>.
Thanks presentation include forward looking statements and the <unk>.
And that's are subject to risks uncertainties and the risks and uncertainties that could cause actual results to differ materially include among others, our ability to make good decisions about the monetization of our ownership interest for maximum value oral and return on a value of our shareholders can go on and support our existing ownership interest.
Factor and artist interest may vary from period to period challenges to achieving liquidity from our ownership interest fluctuations and the market prices of any publicly traded ownership and it is competition.
Moving to attract and retain qualified employees.
Mark evaluations and sectors and what your ownership companies operate in.
And the ability to control our ownership interest.
And these to manage assets to avoid registration under the investment Company Act and $19 40.
And risk associated with ownership interest, including the fact that most of our interest to have a limited history and history of operating losses face intense competition and they never be profitable effective economic conditions and the visit.
And sector as much ownership interest operate including impact of COVID-19, and other uncertainties described in our filings with the SEC. Many of these factors are beyond our ability to predict or control.
As a result of these and other factors from past financial performance should not be relied on identification and future performance.
During the course of todays call words, such as expect anticipate lease and then we'll begin our discussion of goals or events and the future.
Management cannot provide any assurance that future results will gas described and our forward looking statements. We encourage you to read and safeguards filings with the SEC, including our form 10-K, which describe in detail the risks and uncertainties associated with managing our business. The company does not assume any obligation to update any forward looking statements made today I would now like to introduce Eric.
Thanks, Matt and thanks for joining us this evening.
As we've discussed on prior calls safeguards primary strategy and to maximize the exit values of our ownership interest and return capital to our shareholders.
Since our last call, we've exited and three companies just mixes and T. Rex both of which closed in Q1, and <unk>, which closed early in Q2.
These three transactions generated $25 million and consideration to safeguard and.
<unk> of $9 7 million of cash and an equity stake and bright house, which we value at $15 3 million.
Combined with our Sunobe exit in Q3 of last year, and our web Blake and Quanta combined exits and Q1 of this year. We have generated total consideration of $35 million of which 20 million was cash proceeds.
We also continued to reduce safeguards cash corporate expenses and the follow on capital in each of our remaining portfolio.
Taken together these efforts have allowed us to reduce our targeted liquidity threshold from $20 million to $18 million and announced $6 billion stock buyback via a <unk> one plan.
While modest in size, we view, both the asset sales and the stock buyback is continued evidence of progress on our strategy.
We expect additional asset sale activity and the second half of 2021.
And we will look to return cash as we exceed the $18 million liquidity threshold.
Our core portfolio now consists of 11 and minority equity interest plus our new steak and bright house.
This is a substantial reduction from a couple of years ago, and we believe these core positions will drive attractive returns for our shareholders over the near and medium term.
We continue to work closely with the management and boards of these 11 companies to drive operational and financial performance and help position them for exits.
As you know we tried to provide safeguard shareholders with as much visibility into portfolio developments and exited activities as is prudent.
Negatively impacting our companies or any processes underway.
For example, if gnosis once the unnamed company we highlighted on prior earnings calls that had commenced a sales process.
As you saw from our press release last month, the sales process culminated in the sale of ZIP notice and our receipt of cash and an equity stake and bright house.
We're excited to be shareholder and bright house and National integrated health care platform offering diversified health products and managed care services to customers.
The company has a world class management team and we have high hopes for its continued growth and success.
We'd like to provide and update on other M&A activity and the portfolio acknowledging the risks and uncertainty around any one situation.
On our last call, we mentioned that one of our companies have launched the sales process that process continues and we are cautiously optimistic about its prospects and.
In addition, three of our three of our other companies are and early discussions with investment bankers to explore strategic options.
While none of them have launched a formal sales process. We will keep you updated as these situations development developed.
Clearly the macro backdrop of strong economic growth robust M&A activity and record high stock market valuations and create positive tailwind for our companies, which mostly operating and high growth markets.
From 60000 foot level, you might conclude that given this backdrop, we should be forcing every company to immediately hire investment bankers and sell themselves.
While we appreciate this point of view every company has its own specific value creation roadmap and every situation is different.
For instance, one company and they need to post a couple of quarters of strong post COVID-19 revenue growth before explore and exit and.
Other company may be in the midst of securing or renewing our credit facility. Another and may have a new commercial relationship that has yet to ramp and.
Now there may be looking to hit certain revenue or EBITDA levels in order to maximize exit multiples and other may choose to raise a large growth equity round instead of selling as the investors believe it could become the category meter and its space.
We are actively involved in every situation with the goal of driving operational execution and exploring the best strategic options, we are balancing speed to exit with value maximization.
And as we've done in prior quarters I will not I will now provide some brief Q1 highlights for our companies.
I'll start with AD Tech.
Online advertising continues to enjoy strong post pandemic tailwind from growth and digital marketing and secular changes across the media landscape, especially related to connected TV E Commerce and data driven marketing.
Yet as this remains a complex industry and ecosystem.
Evidence by recent developments relating to cookies and potential new regulations legal challenges and emerging disruptive technologies.
Having said that public and private markets have embraced leading players from a valuation perspective and Q1, there were seven and tech deals valued at over $1 billion.
And public company valuations and multiples have continued to expand.
So what does that mean for safeguard as interest and media math and flash stocking.
Both <unk> and flash Hawking have scale and are major players in their areas.
For media math, the company has significantly enhanced its product portfolio its leadership team and improved its cost structure to best take advantage of its market position the.
The company has and the process of optimizing and a debt facility to support this transformation.
Flash stocking executed extremely well through the pandemic and continues to gain share and consolidated its leading position with fortune 500 global brands and 2021.
Our single and Mar Tech exposure company as clutch.
<unk> signed a partnership deal with Pfizer launched this hospitality partnership with NCR, and we expect growth and bookings throughout 2021 as its target markets, mostly retail and hospitality recover from COVID-19.
Turning now to health care.
And I had strong Q1 bookings, which points cautiously to a rebound as pharma reps begin returning to the field and a <unk>.
Post COVID-19 world momentum is improving but has not yet returned to 2019 levels.
Prognosis performing ahead of plan established and extended partnership with date event and rolled out and the data partners and features on its platform.
<unk> raised $68 million and new equity and expanded its strategic collaboration with Pfizer focusing on real world evidence.
Matsui is experiencing accelerated revenue and transaction growth and closed two new national Payors.
And equilibrium had its second best bookings quarter ever up five times year on year.
And since per share the same.
Three of 2020.
This quarter's net income was positively impacted by it most of the transaction and Eric address which resulted and again of $17 million as well as the 7.3 million dollar dilution gain is fine apps and we also referenced in a year and call.
And you may recall, 2020th net loss, including a variety of and payments totally and 11 30 million and severance charge of 1.7 day.
[noise] safeguards cash cash equivalents and restricted cash at March 31st 2021 totaled $21.8 million and we have no debt obligations.
Subsequent to the quarter and we also received and additional 3.4 million of cash, resulting from and completion of a lotta Vaskevitch ask acquisition take.
Taken together with the production of our liquidity threshold from $20 million to $80 million disallowed us to announce a $6 million stock buyback.
Our general and administrative expenses or 2.5 million for the three months and it's March 31st 2021, which was lower than the 3.5 million reported and the comparable first quarter of 2020, due primarily to the lower 70 expensive point $8 million as compared to 2020.
Corporate expenses for the first quarter, which represents general and administrative expenses, excluding stock-based compensation, and seven expenses and non and other non recurring and other items.
For $1.2 million as compared to $1.5 million and the comparable quarter of 2020 and 18% decline.
And a sequential basis on quarterly corporate expenses were essentially flat at 1.2 million. However, we expect their downward trend to continue doing the remainder of 2021.
With respect to both general administrative costs and the corporate expense amount, we and continue to reduce the cash based employee compensation costs professional fees and office cough.
Partially offset by higher insurance expenses the.
The corporate expense measure continues to benefit from director fees being paid and equity a significant portion of management's compensation being paid and equity and this quarter's additional severance actions that have further reduced our base payroll level expected for the remainder of 2021.
But I also like to note that the corporate expense measure etzkowitz, and and <unk> and a curl, which is set aside for the transaction bonus plan and a commonly referred to as the <unk>.
Which is included as a component of general and administrative expenses.
And expected to exit value of those same ownership interest.
If the fair value of any one of our ownership interest declines below our carrying value, we would consider making any downward adjustment to the carrying value by recording net impairment.
We are also have a few ownership interest that are accounted for and other methods, including on repositioning and breakout which can have upward or downward adjustments from time to time, resulting from observable price changes if there are transactions and their securities.
These are observable price changes are recorded as gains or losses, and other income loss and net.
The first quarter of 2021 other income, including the gain resulted from the secondary sales of our ownership interest and T. Rex group, which resulted in $3 million of cash proceeds and the results and gain was <unk> $7 million.
As compared to the prior years first quarter, which included a variety of noncash impairments totaling $5 1 million and a $1 $5 million non cash gain four and observable price change at Slashdot.
The gain reported with respect to this it does just transaction this quarter as a result of the combined benefit from the $3 3 million of cash received our estimate of the fair value of Brighthouse Securities received a $15 three less our carrying value at the transaction day.
Note that as is the case as it's typical and M&A transactions and you may receive additional modest amounts of cash over the next year as various escrow amounts from soft.
Our share of the losses of our equity method ownership interest for the three months ended March 31 2001.
Was $4 5 million as compared to $2 8 million for the comparable period and 2020.
The quarters increase and loss is primarily the result of a nonrecurring income item and one of our companies that occurred in the prior year.
For the remainder of the equity entities our share of their results was relatively consistent.
The first quarter's overall equity income or loss also included the $7 3 million dilution gain related to sign ups raising equity during the quarter, which we discussed earlier and and our year end call.
I'd also like to remind everyone that we report our share of the losses from the equity method companies on a one quarter lag.
So this quarter share of losses reflect the fourth.
Quarter calendar period.
Many of our companies saw the initial impact from COVID-19. During the later stages of the first quarter of 2020.
And their results for the remainder of the year reflect the full quarters of operations and that environment.
We've also seen and expect to see again and in later quarters from time to time benefits to our companies, resulting from the PPP loan programs.
Also with respect to our ownership interest we can update you to the to the total third party debt and those 11 companies.
And we discussed previously and that amount has increased to about $345 million since our year and disclosure of about 325.
This is the result of a few companies obtaining additional financing to fund their growth.
Principally info bionic, and trace which Eric mentioned earlier.
For cash and the mountain held by these companies increased from nearly $95 million, so about $140 million driven by the debt raises and the <unk> equity raise and the collective net of the collective cash burn across the group.
Note that we have excluded from the year end values and previously disclosed the announced related because it knows this which is now excluded from the group due to the exit.
And they did not have a meaningful effect on the net debt total.
In terms of revenue performance.
I mentioned, our expectation for an aggregate of 15 and 20% for the calendar 2021 year.
And.
In terms of growth.
And I'm sure. Many of you noticed in our release, we reported an 8% decrease and our trailing 12 months disclosure for revenue.
However, I should note that the trailing 12 months amount and the releases on a one quarter lag.
And accordingly, the that disclosure was from a calendar 2020 year.
That decline was the result of a few different events, including profit headwinds throughout 2020.
For companies with retail are elective medical customers company specific issues.
And and company specific revenue increase and the fourth quarter of 2019 that did not recur in the fourth quarter of 2020.
So as a result, you may continue to see that weakness and the trailing 12 months disclosure in upcoming quarters and.
However, we continue to expect that our calendar 2021 results for this group of companies will result in 15% to 20% revenue growth.
I can also say that cannot and 11 companies that have already preliminary reported to us at a higher Q1, and 2000 and from one revenue.
And then in Q1 2020.
So I'll pause there and now it's time for us to turn to the Q&A segment of the call and so operator, if you could open up to provide the instructions for answering or for asking questions.
Thank you Marc ladies and gentlemen, if you'd like to ask a question. Please press star followed by one on the kind of think Pathmark, Inc.
And you changed your mind please stop by.
I'm on preparing to ask your question Pete and show you My opinion from Nike.
And as she is lining up those questions and I'll also just mentioned.
We hope this shift to an afternoon announcement has that helped us reach more of our shareholders on a live basis.
We have received some feedback that this time it might be more conducive.
Our west coast shareholders. So we're going to give that a shot.
As always we want to continue to look for additional ways to provide you with information and interact with you and support you and your evaluation of the safeguard is investment opportunity.
We do have a few questions now on the line. So our first question comes in lumps and bumps from Radian group.
And I had your line is now license.
Thank you Hi, I appreciate you taking some questions.
So quickly on media math.
We sold a piece of our interest.
A few years ago.
And since that time is that company going through a bit of a turnaround and would you describe it as coming out the other side at this point.
Sure.
Hey, Ross Thanks for question and so we did.
So let's see.
Use of our steak and was almost half of our stake back to the company back in 2000, and I think it was the summer of 2018 as part of our capital range that you do not have done at that time.
The company you are correct. The company has been going through a transformation over the let's say the last 18 months or so that includes a new senior management team you may have seen some.
Announcements, even as recent as this quarter as they continue to add senior talent. They also address certain.
Product gaps that they felt they had and the marketplace and they roll those out or and the process of rolling those out and.
Probably significant note and they took.
Opportunity during COVID-19.
Take significant fixed costs out of their business, mostly comp and benefits.
Brought down their revenue breakeven level significantly and as AD spend growth returns and obviously their revenues grow there will not be sort of a corresponding add back of that head count. So they brought sort of.
A much more.
Tractive operating leverage on.
Margin profile for that company, so as I indicated earlier and I think on last quarter's call. We view towards the second half of 2021 being a critical.
Period for media match and post accelerating revenue growth and.
And margin expansion.
Okay. That's helpful and then for this new breakout how withholding.
That actually looks like a pretty pretty big gain a pretty good deal, but how do you value the $15 million that were carrying it at is that are.
Looked at sort of based on and how might that change over time.
Yes.
Sure I'll answer that.
First off and we'll talk about the.
That's the valuation methodologies. So so we've got there.
For detailed process.
Evaluated using a number of different factors.
That would include evaluating cash rounds that other investors have invested and the company.
We look at comparable market companies.
On projections of.
And there.
And if their results and projections of course on what we think eventually will happen with it and.
And we use.
And I'll call it traditional valuation techniques and tons of discounting and.
Waiting the different methods together.
So and obviously, we'll go over that and follows.
The regulatory guidelines about how to and out of that value to companies and when we go over that.
And detail and turnover.
So.
It's a comprehensive.
Of process.
And once we come up with that specific amount.
We've recorded this quarter. It is essentially stays put and we're not this is not something that we would expect that.
Change period to period, except for a few circumstances.
Those circumstances.
The other.
Items that we talked about that are subject to the other.
Favorable price change right. So if the COVID-19 there was to go out and.
Is there any anything public publicly announced around when they might do something with that company that would.
Shine, a sort of a market light on what that actual value might be.
Yes, we've heard rumors and we can press reports, but thats something that we don't have specific information about.
Okay.
And then lastly, just and again. Thank you. So much lastly, just on the buyback at 6 million and is that something you would.
We anticipate growing over the course of 'twenty, one and it's more cash comes in or do you have a view on that.
Yes, I mean, our model there really hasnt changed much right and so we have this targeted liquidity thresholds right, that's the $18 million.
And so anytime that we have exits and cash that it can be over that amount, we need to make a decision about what to do with that cash and that's going to be the.
The model has to evaluate.
And the opportunity for a buyback or providing that cash directly back to shareholders via dividend.
Okay. Thanks, and just one more yes, I'll just add one more on the on the stock buyback.
I think we called it out.
So in Q3, we reduced the liquidity thresholds from.
25% to 20, and then this quarter, we reduced it to <unk> and.
And.
And that sort of is our fuel Max cash if you think about it from.
From the standpoint on that will carry and then and then cash above that we will aggressively and look to return to shareholders, whether that as Mark said through stock buybacks.
And our offers or dividend and we'll evaluate that.
We are.
Focused and committed to generating additional cash from hit so we can return cash to shareholders.
Great. Thanks, so much.
Thank you Ross on.
Next question is from Jason Stankowski from credit and partners. Jason. Your line is now like from please go ahead.
Hey, guys how are you.
Sure and you hear me.
Yep Yep Yep.
So maybe I'll just walk down.
And walked down the press release, a little bit and maybe we get relatively quickly I could get back and then Q, if I get too long and the tube.
And the buyback and the <unk> five.
Shay, Thanks, a lot and I think it's a great idea and happy to see you guys.
Proactively do that here and at a time, where we have a window of opportunity to do it.
On the yard explain the mechanics of the $15 3 million on the bright health can you.
Maybe just give more context to it like as you go through your process is that is that the number that you thought you were getting and value in the deal is it slightly less is it a lot less just conceptually how do you think about.
Understanding you have to go through these mechanics of the valuation and all of those things, but if that's all you get in the and.
Are you happy with that that's sort of the benefit and the bargain or or was it in your mind's eye and higher and this is appropriate and discounts given the minority nature you hold.
And you are expecting more some context around that would be helpful.
I can maybe starches and so.
As Mark alluded to the evaluation and became off with factors in both.
And lastly on value.
Forward public comps and some present value and what we think will exit and some sort of combination and methodology. So.
I think as shareholders.
First of all we're very supportive of the transaction.
Which resulted in us getting from 3 million in.
Cash and that's right on start so we are.
Definition.
Constructive and bullish on the company or we wouldn't have.
Support and taking equity and bright house I think the valuation to try to more directly answer your question.
<unk> and reflects our own internal valuation methodology that we've developed internally we share with our auditors Grant Thornton.
And it reflects a combination of let's call it last round public comps at a discount.
Counted exit value so.
It's hard to say.
That yes.
Yes, we are.
Constructive on the company we.
Our believe that they're playing.
They're on a very disruptive space and the insured tech industry.
And we'll see how they develop we believe they are a top tier management team.
We're bullish on our prospects.
And that's as far as I would sort of the context I would put.
And frankly.
I know there are.
There's interest on the secondary market for equity and bright house and we've heard that from from different some different places. So it is a company that has great prospects and Jonathan and equity holder, we're supportive of.
From the business and its trajectory.
Okay.
And there's anything you want to add to that.
Yes, I mean, I think one other sort of fundamental thing and we would always think about is.
When you think about it.
And then whatever value we've ascribed to it now.
Think about it and just the same as you would any other investment and it's appropriate.
And it's our view of the fair value.
So integrator and are making the investment on this day, we obviously have an expectation that it would.
Go up on what we've talked about our model being.
And the values are typically higher or expected exit value and typically higher than what we think fair value is because of the risk and time to get there to that point.
And right now this is one of these estimates that it certainly is subject to change and are on a judgment that goes into it but fundamentally yes, we continue to be and optimistic about the company and are happy to be shareholders and a larger organization right.
And Youre happy enough to be a day.
Net $50 million and snack and.
A little I guess think that that has come from our upside relative to just taking $18 six and cash if you could have done that.
Okay.
On the on the T Rex and web link.
And the mixture of those two.
And the next bullet point, you had already talked about the web link exit right. So basically <unk> is was not talked about before and that's that's a new data point with $3 million associated with that because <unk> Inc was.
Yes.
Okay equivalent and we call that in the year and as a subsequent event. So it gets a little confusing when we talk about the quarter cut off versus the what we know about at the call.
And then the same thing right on it right.
Lot of it is excluded from our results this quarter, but we've included it here because we thought it was meaningful enough to tell everybody that we've got another $2 million of cash.
Yes, yes, no I got it yes, just wanted to make sure on just aggregating the web link and T. Rex thing correctly based on what had already been disclosed that is helpful.
Sure.
And I think you went into a little bit.
And 10 out of 11 being companies setting up when you get when you get into the company performance.
Well, we will be able to see some of that you kind of go through some medium and average it.
Just stay on the the total is down eight doesn't really.
Help us that much but the context of the 10 or 11 and being up quarter over year over year in the quarter was Super Super helpful and.
Just because you have such a couple of big guys moving the numbers around it doesn't help us really understand and path of.
The rest of the other line or so.
Yes, Matt.
I'll give you a little extra because it has hit a couple of different pieces over the course of the year and.
And then I'm going to separate two topics for you so and one of.
The 8% decline is that trailing 12 months measurement so its calendar 2020.
Compared to calendar 2019, so during that time period, you had the.
This impact of the.
2020 range the year.
And we'll remember range.
And so that hit some companies harder than others right.
Companies that are.
And retail focusing.
Elective medical procedures.
Does it.
It hit pretty well.
We've talked about for multiple quarters.
And some of the company specific performance.
And the.
AD Tech space.
There's been negative so thats definitely is an impact there.
And then the other piece and.
The one the one company that had the kind of a one on one time positive event back on.
And then 2019 Q4 2019 net that impact.
And just kind of rolling through that 12 month comparisons and it just makes up for it.
It had a big benefit at that point in time, and so it makes the comparable harder.
A bit of and impact.
And that's on the health care space.
Now.
2021 quarter, the 10 out of 11, and there's just this first quarter sales.
And preliminary report and reports.
And a return of 11% across the board and they're up and I'm sorry.
And so there's more that happened and the comparable will be probably.
Beneficial and easier on a go forward basis, but and they are a lot more of the year to see how it plays out but.
That's where and we're starting.
Alright and cash.
That's helpful and.
And the Q and the and the presentation should be out and.
On the day Tomorrow.
Youre thinking, yes that would be on your expectation yet.
Okay, and then great job on the operating costs, it's great to see that continue to come in.
Appreciate the guidance on it and are continuing to trend lower and then I guess the last last one puzzle plus a little one the sign ups going backwards and in the.
In the year is that a function of kind of the onetime medical thing look back or I know they changed their business model and clearly someone decided to put $68 million and them so they're not expecting a.
Negative paths going forward, but but it's just surprising to see that size of and investment with cliffs.
And I wouldn't have expected that that investment to be one of the ones and it's going slipping backwards for US is there any context you can put on that is it the revamping of our business model or.
Net yes.
Characterize that is that the.
And the onetime event that we talked about and take on.
Okay.
They had a regular kind of plus and the 90 day and then.
Quarter, So yes, okay with positive blip.
Alright, and then lastly can you can you just wondering who you guys are using for the buyback.
Yes.
Yes, it will be using Stifel.
Stifel.
Great.
Okay.
Good job keep up the good work and then last I'll leave you with this.
You guys have and I missed the first couple of minutes on the call for <unk>.
On number.
But.
Did you talk at all about.
You, obviously had one of the two exits that you thought were.
We are imminent and at least in the near term.
Is the second one is still on track and any any thoughts around timing.
Third quarter fourth quarter.
Yes, so we.
On our last call Youre right. We said there was one.
And one company that we were cautiously optimistic about where it was and that was the <unk> deal and then we mentioned on the last quarter that there was another company that had just begun and process. So that was.
Two months ago that call. It the company is progressing and.
And its sales process as you would expect and.
I wouldn't give a.
Timing.
Guidance on when that could close and would close.
But we remain.
We remain optimistic.
That process, but it is early because it's only been probably less than 60 days.
Okay. So do you get insight into that process.
And make it less or more encouraged.
Along the way or are you just going to kind of wake up and find out what happened like like the rest of us.
No no we.
And yes, we're on we get regular updates we know what's happening and we speak to and managed continues and we stick to.
The different advisors involved and.
As you know.
Even in this robust M&A environment deals are deals can be carriers and nothing's done until it's done and.
And this is at the beginning of the process. So we don't want to get ahead of our skis on it we will we will update you kind of as appropriate.
As it relates to where this.
Where the process is at our quarterly calls.
Okay, and nothing to update on any any new companies entering the process at this point and time.
Well, we mentioned we mentioned that there were three other companies that were having on preliminary conversations with investment bankers about strategic options.
We said that none of them have formally launched a process, but they are having those conversations now and great.
That is yes.
And again, we're very active and those discussions at a board level with the management teams.
Great that's great to hear thanks.
Thanks, guys.
Thanks, Thank you.
Thank you Jason.
Our next question comes from and Lee Alper from and how that can best case May. Your line is now <unk>. Please go ahead.
Thank you.
Primary and this group.
And on Brighthouse.
Will you be locked in and all once they go public.
Yes.
Good question.
Mark you want to kick.
Youre welcome.
Yes, so two wheel and preferred interest and what is cyclical and those arrangements and.
Is that.
And if they were to have some type of event and liquidity event could be locked and kind of for a period of time.
Sure that.
And that would be I would call. It normal normal course, jewelry I'm not asking you to disclose it here have you already worked out those terms with them or.
To be worked out.
So.
Preferred security has standard.
Kind of lockup provisions that were party to that agreement and so we would live by whatever visions are and that but a lot of times.
Things change between that point and time and if there were to be a transaction, but I think you can assume that we'd be treated if there were to be on IPO without.
The company would be treated.
Like any other kind of institutional preferred investors from that perspective.
Okay, great. Thanks.
Yes.
Okay.
And ladies and gentlemen on the mic ex you'd like to ask any questions. Please press star followed by rather under attack and keypad.
And looks like we didn't have any further questions. So if I have that weighted between the management team for any closing remarks.
Sure. Thank you thanks for joining us on our call today.
Thank you for your continued interest and safeguard and we'll be we'll be following up.
And for kind of a one on one calls over the next week or so and so if you're interested please please reach out to us and we look forward to continuing the dialogue with you and good evening.
Yes.
This concludes today's call. Thank you for joining and you may now disconnect your line.
Okay.
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