Q2 2021 Alaris Equity Partners Income Trust Earnings Call
[music].
Good day, and thank you for standing by and welcome to the alerts Q2, 2021earnings release conference call. At this time, all participants are in a listen only mode.
After the Speakers' presentation there'll be a question answer session. The.
Question during the session you will need for star 1 on your telephone please.
Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Darren Driscoll Chief Financial Officer. Please go ahead.
Thank.
And good morning, ladies and gentlemen, and welcome to less equity partners conference call and webcast to discuss the financial results for the 3 and 6 months ended June 32021, as well as a brief corporate update I'm, Darren Driscoll Chief Financial Officer of less I'm joined on this call by Steve King President and CEO of.
For a short presentation from Steve and either will be of question.
The athletes for session and the lives of the placed on mute until then to avoid background noise before.
Before we begin.
To remind our listeners that all amounts given are in Canadian dollars unless otherwise noted.
Listeners are cautioned the comments made today may contain forward looking information. These forward looking information this for it and looking.
Looking at for patients based on a number of important fab.
And then assumptions and as a result actual results could differ materially.
Additional information concerning the underlying factors assumptions and risks is available on last night's press release.
And our MD&A for the period under the headings forward looking statements and risk factors copies of which are available on SEDAR at SEDAR dot com at the swells our website.
And the time for US that has also presented and may differ from the way other companies present such data.
And as with forward looking statements. Please refer to last night's press release, and our MD&A for the period for more clarification regarding those line of non <unk> measures.
We certainly appreciate everybody taking.
Taking time out of a sunny summer day to join us for our Q.
Nonetheless, we were certainly very excited to get these numbers out of some of the highlights I'll go through here.
Q2 revenue of $34.9 million of record for US ahead of $33.8 million guidance and that's despite some FX headwinds and debt due.
Due to some extra common dividends from FMC and <unk>.
Of note call of total common dividends of $1 million and the quarter.
And as well as the cash flow sweep accrual for SCR of $500000. In addition to the to the monthly amounts of Theyre paying us well.
Well ahead of Q2 numbers last year as Q2, 2020, you'll recall had nothing and revenue from planet fitness and body contour.
And the total from those 2 partners was $4 million and the current quarter.
To add to that of a bunch of new deployment of revenue made for a record quarter of revenue and the current quarter.
Q2, normalized EBITDA was $32.2 million.
Regaining regrettable typo in the press release said 31, too, but the MD&A has the correct.
For.
And the details behind it.
30.
$32..2 is well ahead of guidance well ahead of the $17 million on the prior year, obviously due to those new partner revenue and of soft Q2, 2020, due to planet fitness and body contours.
Our G&A of $1.9 million again, well under prior period prior year period as the trust conversion.
<unk> costs were significant last year.
And our Q2 numbers recent deployment and of course planet fitness returning to full distributions led to a decision to increase the annual distribution by 6.5% to of $1.32 annually or <unk> 33 per quarter.
Of note our run rate payout ratio.
Correct and that is still under 65% after this increase.
And I'd like to add that if we do get the redemptions as we're expecting from federal resources and kimco back before any further deployment of our payout ratio will still be below our target of 70%.
Also worth noting on the cash flow generating quarterly is not insignificant debt and for.
It will just shy of late yesterday, we paid down $7.7.
$7 million use of debt out of cash flow we've generated.
Our debt at September 30th was just under 2.6 times.
Since then we paid down some of them.
As noted above as well as of.
The funds from the Cc com redemption on.
For example, <unk>.
Our covenant shift back to normal at September 30th So if by chance, we're still over $2.5 at September I will have until December 31 to get it back on our $2.5 times, but nothing we're expecting any problems with.
From the financial statements on the balance sheet quite of few fair value changes and Q2.
July and aggregate, including the common units and increase of $16.2 million to our book value or <unk> 36 per unit.
And I'll hit some of the larger ones on.
Based on history.
And on July <unk>, and we received $11 million U.
And have fully exited the Tc comp.
The planet fitness.
Fair value of increase of U S $5 million for distributions restarted in July the bank covenants are in great shape and TTM EBITDA is increasing monthly and they've also seen membership levels get almost back to pre COVID-19 levels.
Federal resources.
The fair value of increase of $5.4 million U S.
And are continuing to close out on a redemption and the write up gets us closer to that redemption amount and we're getting more clarity of daily on this 1 and I would note that if the transaction that they are working on does not.
And.
Kind of completed.
And they will have the balance sheet wherewithal to take us out. So we certainly expected for the high degree of certainty and 2021.
Accent.
The fair value of increase of about $1.1 million U S.
Of that 1 is certainly looking like a top of the collar reset in 2022 and business is performing extremely well.
A couple.
The pieces to note LMS for 9 million Canadian reduction that's on.
Our only on collared partner.
C and some margin pressure with the rising price of steel so expecting of larger decrease and we were expecting last quarter.
But <unk> still of an excellent the ECR.
And we will always be our most volatile on the fair value of line.
All of <unk> for example for years ago, the fair value is $36 million.
For straight double digit adjustments with 2019 being close to a 40% increase to get to $52 million announced today, we're sitting at $47 million looking ahead to next year's reset.
Brian on sell out of fair value reduction.
A reduction of $3.3 million U S.
And Brian and settled for large projects, the timing of which can impact of monthly cash flows.
The first 5 months of the 2021 year and seeing some margin pressure due to project and customer mix as well as some of those large project delays, which results for the fair value decrease for the current quarter.
These projects.
Projects of since started their backlog is robust and they are and ECR over 1.2 times and so the long term business case is still well intact.
For Kimco, we didn't touch the fair value of this quarters and continue to proceed torque of redemption.
And we don't have as much certainty as we do of federal resources to increase the fair value to the redemption value of just yet.
The business continues to perform exceptionally and a load of the redemption doesn't occur kimco would still have 1 of our highest <unk> with no debt.
Worth, noting and they've been generating so much cash and the last day and the last 6 months, they've repaid $4 million of previous the unpaid distributions and 4 million of promissory notes.
On a fair value for the common units were up approximately $2 million and.
Planet fitness and carry were up offset by a small decrease the brown and settle.
And we know of 5 months of financial results for all of our partners and are starting to anticipate what our total aggregate resets for 'twenty 2 and currently expecting another increase.
And north of.
And dollars of 4.5 cents per unit.
On top of the call of resets from large revenue streams for planet fitness PWM and.
Body contours axiom DNT and FMC.
With the even with the Uncalled decrease from LMS is still looks like a real positive.
Organic growth again and the portfolio.
Of 2 million deployment and Q2 did include and the new investment and the Dnm of car leasing business out of Dallas Fort Worth Texas.
The $62.5 million of preferred units and $7.5 million and common.
I should note and these for these common units, we certainly don't expect any common dividends and the near term as there lots of growth opportunities to focus on.
Total capital deployed for the first 6 months is already a record year at $260 million.
A couple of and notes on our partners. The portfolio continues to perform extremely well our weighted average ECR is now over 175 times and at an all time high.
We know of 16 out of 20 partners.
So 80% of them that have and ECR of over 1.5 times.
And 9 of those 15 of over 2 times and no partners below 1.2 times.
Something Steve and I have talked about and 13 years of public company Investor presentation. Our diversity diversification goal is to have no partner grid and temporary.
And 10% and today I am pleased to say our largest partner is now 10%.
Our outlook for Q3.2021 calls for revenue of 37.5 million and our G&A.
<unk> well inside of the annual expectations.
For I hand, it over to Steve I would like to make a couple of comments on of certain section.
Section towards the end of the press release.
Being the CFO of <unk> is quite simply been the best job I could have ever had.
And I have certainly enjoyed every minute of it and im looking forward to assisting our new CFO of amount of freezer. During this transition period and having worked closely with her for the last 8 years and layers.
Certain she is going to do a tremendous job.
She and I have talked about this the last year or so and she is shadowed me for the Q2 process.
And I'll be here and here to assist her through Q3 results.
Whatever else, she and Steve and the rest of the team need for me over the next few months.
I want to thank my Pal since the late eighties, Steve for inviting me on this incredible.
The journey.
And also of huge thanks to the entire team of <unk>, Our board all of our partners, our shareholders and our business partners for making this such an amazing experience.
My wife, Sally and I are excited to head off on this new chapter of our lives and I cannot wait to be on the end of this conference call for many years to come so I'll pass it over to Steve for some more comments.
Moving to Q&A.
I'm not sure there's too much left for me.
And thanks, Darren and.
Yes.
I'll start with the quarter I am not aware of the meaningful statistic for a company that isn't at an all time high right now.
Our revenue earnings run rate capital deployment.
<unk> for us.
For the return on our individual investments coverage ratios and.
All of that levels of we've never seen before and 17 years.
This is not Q2.
Story this is.
And many years of work from our staff.
On the behind the scenes stuff.
Originally.
Based on the deals the diligence and the deal structuring the deals monitoring the companies once they are partners.
So I want to thank all of our staff really for and all of these incredible results that of.
And I'll come from a lot of hard work.
Looking forward and the deal pipeline continues to be very robust coming out of Covid, we're seeing.
<unk> of larger than usual number of companies coming of the market.
It's certainly a tricky time as an investor.
Pandemic has had a.
Significant impact on on most companies both good and bad in fact, I would say in general, we're probably seeing more positive bumps from COVID-19 and the negative.
So of determining what a normalized performed.
Original is on this environment becomes the challenge, but with the experience that we have internally and with our third party experts, we think this action and I would say.
And the opportunity for us.
We have several new partnerships and discussions and we also have a record amount of of follow on opportunities with our portfolio of companies coming out of Covid.
With that we'll be pursuing and the second half of this year.
Our decision to raise the dividend at this time was based on several factors, including the health of our portfolio.
As Darren mentioned the expected positive resets that we're tracking and also the accretive capital deployment that we've already done over the last 12 months.
All of these items contributed.
We added to our payout ratio dropping below 60% for the first time of our history.
And with the anticipated redemptions of chemical and federal resources as Dan mentioned, we're still going to be at 70% payout ratio with this new higher dividend rate.
But at that point, we will also have $200 million over $200 million of available capital.
And to deploy so the deployment of that capital will again drive our payout ratio down significantly.
So our goal is to continue to drive down that payout ratio, but we do want to give our shareholders of consistent dividend growth rate.
And I can't leave without commenting on the decision on my mind.
Mr Driscoll over here.
As Darren said, we've been best friends since the start of the University here in Calgary and.
And as he likes to say join me once <unk> is able to start paying salaries.
A few months after.
And the doors and January of 2000 and for so.
And the things that we've seen we can make a great book out of and.
And I, thank them for all of it.
You'd leaving layers of the at the strongest days and our history and we are also leaving the company and great hands on the successor Amanda.
Amanda has been of key cog for us for 8 years and even before then when we stole it from the diligence team at the Ernst and young working on our files and.
Amanda on the rest of our team.
And they were able to advance because of the Dan's departure are the present and the future of awareness and I can't wait to work with all of them for many years to come so matti will open it up to questions.
As a reminder to ask the question you'll need the press star 1 on your telephone.
And a question press the pound key.
Please standby, while we compile the Q&A roster.
And your first question comes from line of Scott Robertson of RBC capital markets.
Great Thanks, and good morning.
Good morning, Scott.
The first question is like the.
And on your sources of capital right now you kind of about $30 million of credit capacity and.
And as you mentioned you expect you could get up to $200 million of additional proceeds.
And kimco redeemed our investments.
But looking past these events.
The increase the scale of your available capital the.
And meeting with new.
The start banks to join the syndicate does their appetite for the existing members to increase their.
Their share how do you go.
And I just think about your sources of funds over the next years of view I've tried to deploy more capital.
I think it's the real blend of opportunity Scott.
Especially with the performance that we've had there's no shortage of of capital out there.
And looking for a home.
I think it would be of blend.
EBITDA continues to grow our debt facility can grow theres other banks that are looking to join that syndicate.
There is the there's the high yield market, which we've been approached on quite a bit here.
There is.
So I think and opportunity to have.
Co investors, if if we really needed that if we have large opportunities and maybe some things outside of the norm.
And having.
Almost the sidecar co invest type of.
Transaction might make some.
And then of course, the equity markets as well, but I would say at the at these prices the equity markets would be our last choice out of those.
Yeah.
Got it and I guess is there any line of sight on those.
And those additional.
Towards the capital and could you guys kind.
The $100 million deal come through the door tomorrow.
<unk>.
Is there and availability of the market to be able to fund and fund it without going to the equity markets.
We believe so yes.
Okay, Yes, Scott we've got we've got the last the last bank that joined US has stretched from each of the banks probably is a little bit of stretch.
We have another new bank debt currently.
Diligence Ing and then looked at because our EBITDA and out of our EBITDA run rates of over $140 million. So we have room to stretch that 400 and so.
We also we should get a little bit further along on a on a federal resources redemption, if the new deployment opportunity came and before.
We've had the full cooperation from our lenders and I am certain we can bridge. The bridge that if that was required so lots of lots of options. There. So we're not we're not slowing down and by any means we've got lots of deals we're looking at and and.
Nothing has changed as far as our sort of traditional path here and I would say that there's nothing in our pipe.
<unk> and that we believe will need to close before we'll get proceeds from 1 of those 2 transactions.
Got it and I guess have you given them the could drop dead date to decide whether or not the 1 pursuing a transaction with you guys.
The uncertainty of it can be lumpy I know you guys like to work.
With your partners, just wondering sort of thing.
Yes, and they certainly are pursuing a transaction was just on.
Honestly.
These types of things don't don't happen quickly. So we're just going through the process.
Okay.
And if not a matter of.
Should we do something they are doing something and it's just it's just closing it.
Got it.
And he gets the guys have any updates on the sandbox for the the theory filed from the past year.
Nothing nothing new on the sandbox front and the CRE are really nothing new either.
We're continuing to wait on a on the decision that's debt.
And was appealed by the CRA that if the CRA is unsuccessful.
We think that will be very very good for our position, but again nothing no further conversations on the settlement were sort of quietly waiting we still think we've got a real good position.
Physician here and we'll update people if anything happens but.
As I've learned over the last 17 years and nothing at the CRA those very quickly.
Got it thanks, I'll re queue.
Your next question comes from of Nick <unk> with CIBC capital.
Little market.
Yes. Thanks.
For the private company partner trends book overwhelmingly positive with respect to earnings and revenue growth on a year to date basis. There are only 2 of the student what's needed and wanted to ask about so.
<unk> and LMS it looks like it's down on a year to date basis, and I think you alluded to the earlier.
Certainly uncapped investment.
Recognize the had a big positive reset last year, but was wondering if you could just give us a sense for the scale of the year over year decline just trying to gauge how next years reset might be shaping up.
They are for fair value is based on the 20%. The decrease that's 1 of the based on the gross profit.
But that the commodity price impacts of their volume and sales of line is intact theyre still doing lots of work, but again the price of steel does this impact how much money. They make there is still a very very profitable and and.
And again their last for the increases were all in the teens, including a 30.
Because I think per cent a couple of years ago, so, giving a little bit of that back as the certainly nothing we're concerned about but you know this was 1 of the first investments we did.
It was uncovered and and we learned the hard way that we should have a collar on our investments that 1 went down in 2010 by a significant amount and every deal. We've done since then is how the collar.
[laughter] yeah, they are they're doing extremely well.
And activity and the in Western Canada, and and California's is extremely high but as Darren mentioned.
We've seen the everybody has seen a huge spike and.
And commodity prices.
Lumber steel et cetera. So.
And it certainly impacted them, we don't expect that to be of long term phenomena.
Yeah Fair enough, Okay, and then the only other 1 I wanted to ask about was I noticed the ECR range.
The decline on a sequential basis for Brown and settled I think it was the only 1 and the entire portfolio but.
And Thats, a new partner and revenue and EBITDA are down on a year to date basis I Wonder if you could just provide a little bit of color on what you're seeing there.
Yeah, you bet, so brown and settle as a site.
Site remediation site preparation company.
Mostly for the data center industry and Northern Virginia.
Virginia, which is the data center capital of the World and.
And so most of these projects are done for companies like Amazon and Microsoft and Google.
And there was and there are very large projects. So you can have some short term volatility when projects get delayed and may.
The 2 very large projects.
Thank you for both delayed in Q1.
Partly because of just internal decisions at the end user and which was with Amazon and partly because of the the severe weather storms that were in the east coast and in Q1 of you recall. So it can have a material impact on on a company like this but it's kind of more project related.
And so we just had a 1 quarter dip.
And therein.
I mentioned the projects are all active today and the company is making very good money on a quarterly basis now but.
In terms of the <unk>.
Trailing 12 months results it'll take a year or 2 to get rid of that Q1 out.
<unk> and what the TTM numbers so no.
And no concern there, but just something you have to live through and the company like that Nick on that.
And for those of of all of those the longtime you know federal resources as a company that debt did.
Experienced some fairly significant lumpiness, depending on the project the contract they were doing.
Quarter over quarter volatility was what's pretty.
Significant and so there was lots of bouncing around and you see our ranges and so.
On this 1 will be 1 of our.
A balance here.
And from a from an ECR standpoint.
So just something to keep an eye on.
We're very long term and our focus on our quarter.
Of the quarter of of delays really has no impact on our investment thesis on this 1.
Our backlog of double what it was last year. So this is a this is.
A very good company.
Understood. Okay. That's very helpful color that's it for me. Thank you.
Okay.
Just on.
To ask a question you will need to press star 1 on your telephone to withdraw your question press the pound key.
Our next question comes from the line of Zachary ever share with National Bank financial.
Good morning, everyone. Congrats on a great quarter.
Exactly.
So follow up on Scott's question.
And remind them what types of co investors would you be up and to work with.
That kind of stuff is nothing that I have gone down the road on because quite frankly, we just haven't needed it and I don't anticipate that we will anytime soon but.
I would tell you that the types of co investors would be.
The likely be pension.
Question.
Makes sense and then a bit of a housekeeping 1 for you and operating expenses for about 12, and a half million dollars on a run rate, but how will that book and a post COVID-19 environment when your travel expenses and partner events ramp back up.
Yes, I think I think it will still be around.
And fund 12 and a half.
I think we will probably be under 12 and a half this year.
We do have like last year, we had some spikes from the the trust conversion and and our legal team and a lot to do with working through the PPP loans the of usage of our partners. So it is a little bit hard to pin down but.
On a 150, some odd million dollars of revenue.
And if our 12 and a half goes the 13 or 13 and off we're not we're not too concerned about that but.
On a regular travel I think our travel will be less going forward, we're going to do a lot of our marketing.
Bye bye zoom and teams meetings.
But you will never.
Stopped doing the travel.
For the U S. EBITDA group, but went down on their last week for a sort of a force.
And for City tour and tour and that stuff will certainly ramp up now that we're allowed to go and come back without having the hunker down and our basement for a couple of weeks.
Got you thanks and.
Given given the on going forward with the CRA.
And sandbox do you guys have a bit of padding and that budget for a ramp up and legal fees and if it comes of that.
You bet, yes.
And with padding.
There would be a little bit we have a reasonable amount for legal expenses each year, if anything really jumped and it would.
We have to add to that 12 and a half.
Yeah.
Understood. Thanks, all of my other questions have been answered I'll turn it over.
Thanks, Nick.
Your next question comes from the line of Lee head of group with Macquarie Capital.
I'd say good morning, but on a on the Aegean coast and Grease the dairy.
And the retirement isn't all of.
Yeah.
[laughter] sounds good to me [laughter] Darrin.
Congratulations on your retirement and congratulations to everyone on the on a great quarter and.
And I meant to ask and original question, but it's actually going to be more of a follow up because I.
I've gone through the of the press release and.
That bath on detail and gone back to some of the other filing statements and so forth and.
And.
And with regards to the 12 and a half million, it's tough for me to.
It's tough for me to kind of build that number up from.
And the executive compensation and so forth and.
You know and I.
And on an investment banker for better part of the 25 years on kind of know what travel costs and so forth are and and then I know theres kind of and some 1 time costs with the conversion and so forth.
For for those of us of maybe 2 or 3 steps behind us some of the analysts have been following and for quite a while.
And if you don't mind being a little bit pedestrian and.
For the likes of me if you could kind of walk me through that number and just on the face of it just seems the sticker shock as it is a little bit there.
Oh well.
Happy to add to that I mean, we were and when we were at $22 million of company of revenue.
And we had our G&A was probably 8 and a half for 9 there's just certain amount of cost debt.
And that are required to run a public company, we have 16 staff.
And this includes base salaries. This includes an estimate for an annual bonus thats been.
Of round and a million and a half so probably 3 of the.
And half of that is people power.
And then we would have our office rents travel.
Legal and accounting for and a public company is expensive we also spend money on our transactions.
Legal and loan would probably be a couple of million of year.
So.
And take too long to get to.
I don't have the exact numbers in front of me, but that would be the mix of legal and accounting.
Salaries benefits, including of bonus and then all of corporate and office so travel we host.
Conference once a year with all of our partners that come and we get.
Does the other.
And and network and get updates and build relationships with the with each of them and so.
And I'm quite proud of how low our G&A is and <unk>.
Especially as it's held held the line while our revenue has gone up significantly if we add a couple of more people.
Which we'll need.
To get we add 3 or 4 more partners, we're adding a few hundred thousand of that and we're adding 10 or $20 million of revenue for the top line and we've got a really neat graph and the and the and are.
At the back end of our slide deck that shows the the scalability and how our revenue is dramatic.
Dramatically outpaced our G&A.
<unk> and other.
Way of looking at it is we've got about $1.3 billion and investments right now and.
As you would know most fund managers, especially private equity fund managers would get about 2% of assets under administration.
And as their G&A amount that would equate to $26 million.
And at 12 and a half.
Including public company costs, So, we're keeping a very lean operation here and comparatively.
Okay. Thanks for your question.
And Joy Greece.
Mike.
Your next question comes from the line of Gary <unk> with Chardan capital markets.
Hey, Good morning, just the first question just on the distribution increase.
Can you maybe comment on your comfort and the the payout ratio and and looking out.
And if next year, you're successful and your capital deployment strategy again.
And payout ratio drops are you comfortable and raising that and moving back to a dividend growth story you can.
Yeah, So as I mentioned and in my little piece of R. R.
Our goal is to still drive down on that payout ratio of lower and lower.
I don't want to have 100% of our growth go to that though I think it will.
Will be the majority.
It is important for our cost of capital to have.
A valuation thats based on a growing dividend stream. So we did a very modest increase.
And as I mentioned.
Even with the.
The loss of chemical and federal resources.
We will still be at 70% payout ratio so it'll.
Within our target, but then we'll have 200 million to deploy.
Which will.
Be funded just with our senior debt facility at less than 4%. So.
Very accretive deployment of at that stage, which was.
Drastically reduce that 70% number and and keep us on the path towards a lower and lower payout ratio.
Obviously, we're very comfortable with.
With that dividend increase.
Got it Okay, and then second question sort of to go back of the G&A isn't there typically typically in Q.
For the the bonus payment I think there was something in the Q4 last year.
Any thoughts on what that number could be and we're kind of halfway through the year.
The starting to see it.
Last year, it was $1 million of half of it's based on a formula based on the on.
And then.
The distributable cash per share.
Recall, the bill it will be a little higher than last year, just because of our growth numbers, but I don't have too much clarity, but I would say somewhere in the 2.5 billion is probably.
On a reasonable guess at the moment, but it really depends on the.
The redemptions actually hurt that number.
So it depends.
And what has happened there is there is a number of things that can and changed at future plan that helps it.
So a little too early it Q3, I'll have a much better idea.
Okay got it and this is my.
Thanks, so much.
Thanks, Greg.
And your last question comes from the line of.
On 1 of the Reynolds with acumen capital.
The most of it.
Okay.
Hum.
Trevor we can't hear you.
Sorry, guys can you hear me now.
Yeah, that's better.
Hey, sorry about that.
Just curious about the market competition on deals of any change and since last quarter.
Not since last quarter.
It's still extremely competitive.
And we're going through a couple of bids right now where we're and the finals.
And.
And 1 of them at least for and against the certainly more than it does and bidders.
And so that we.
We've seen that for years to be honest, there's still a lot of capital of there all of these funds have been successful and raising new capital as well over the last quarter or 2 but.
You know the average higher story of the same.
And if an entrepreneur and wants to keep their business and enjoy more of the upside.
And our preferred shares are going to be a better fit for them than the common equity and so we.
We still don't have a head to head.
Competitor I would say in that marketplace.
And we're seeing that story resonate seemingly much more now than <unk> been in the past I think our business development guys have done an incredible job on getting our message out there and and finding kind of of the rate situations for us to get into.
That's helpful. Thanks.
And then just on the the minor decrease and the kimco expected.
Can you just touch on that.
And that's just simply because we've collected $8 million of it and the last few months they've paid prominent lets say of paid unpaid distributions. So so.
Of the total value of that we would set a while ago still holds but we've collected $8.8 million was already and our genes.
Okay I thought that was the case I just wanted to confirm.
The debt for me thanks, guys.
Thanks for.
And there are no more questions at this time for Mr. King do you have any closing remarks.
Yeah, I just wanted to thank everybody again for for.
For tuning in and as usual if you have any further questions, both there and and I and and Amanda are here to answer any of them and we look forward to seeing you on the Q3, thanks very much.
This concludes today's conference call.
And for participating you may now disconnect.
Okay.
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Thank you.
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[music].
Good day, and thank you for standing by and welcome to the Allure of Q2, 2021earnings release conference call at this time all.
And then on a listen only mode. After the speaker's presentation there'll be a question answer session.
And I ask a question during the session you will need for star 1 on the telephone.
Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero and I would now like to hand, the conference over to.
All parts of today, Darren Driscoll Chief Financial Officer. Please go ahead.
Thank you Manny and good morning, ladies and gentlemen, and welcome to leverage the equity partners conference call and webcast.
To discuss the financial results for the 3 and 6 months ended June 30th 2020.1.
All of this brief corporate update and Darren Driscoll Chief Financial Officer of.
I'm joined on this call by Steve King President and CEO.
After a short presentation from Steve and either will be a question and answer session and the lines will be placed on mute until then to avoid background noise.
Before we begin I'd like to remind our listeners that all amounts given are in Canadian dollars unless otherwise noted.
Listeners are cautioned the comments made today may contain forward.
Speaking of information these forward looking information this for it.
Looking information is based on on a number of important factors and assumptions and as a result of actual results could differ materially.
Additional information concerning the underlying factors assumptions and risks is available on last night's press release and.
And our MD&A and for the period under the headings forward looking statements.
We're looking at factors copies of which are available on SEDAR at SEDAR Dot com as well as our website. Non <unk> data is also presented and may differ from the way other companies present such data.
And as with forward looking statements. Please refer to last night's press release, and our MD&A for the period from our clarification regarding those 9 of non <unk> measures.
We certainly appreciate everybody.
And taking time out of of sending some of our day to day join US for our Q2 results were certainly very excited to get these numbers out some of the highlights I'll go through here.
Q2 revenue of $34.9 million of record for US ahead of $33.8 million guidance and.
<unk> and <unk>, some FX headwinds and.
Due to some extra common dividends from FMC and <unk> of note total total common dividends of $1 million and the quarter.
As well as the cash flow sweep accrual for SCR of $500000. In addition to the to the monthly amounts of they are paying us.
And well ahead of Q2 numbers.
And that's there as Q2, 2020, you'll recall had nothing and revenue from planet fitness and body contours and the total from those 2 partners was $4 million and the current quarter and add to that of a bunch of new deployment of revenue made for a record quarter of revenue and in the current quarter.
And our Q2 normalized EBITDA was $32.2.
$2 million.
Regrettable typo on the press release said $31.2 but the MD&A is the correct number and the details behind it.
Of that 33.
The $32.2 is well ahead of guidance well ahead of the $17 million of the prior year, obviously due to those new partner revenue and of soft Q2, 2020, due to the planet fitness and body contour.
<unk>, our G&A of $1.9 million again, well under prior period prior year period as the trust conversion costs for a significant last year.
And our Q2 numbers recent deployment and of course planet fitness returning to full distributions led to a decision to increase the annual distribution by 6.5% to $1.
2 annually or <unk> 33 per quarter.
Of note our run rate payout ratio is still under 65%. After this increase.
And I'd like to add that if we do get the redemptions as we're expecting from federal resources and kimco back before any further deployment of our payout ratio was still below be below our target of 70.
70%.
Also worth noting on the cash we're generating quarterly is not insignificant debt and for example, just shy of late yesterday, we paid down $7.7.
$7 million use of debt out of the cash flow we've generated.
Our debt at September 30th was just under 2.6 times.
Since then we've paid.
Pay down some of them.
As noted above as well as for.
Funds from the <unk> Com redemption on July 2nd.
Our covenant shift back to normal at September 30th So if by chance, we're still over $2.5 at September I will have until December 31 to get it back under $2.5 times, but nothing we're expecting any.
Okay.
And from the financial statements on the balance sheet quite of few fair value changes and Q2 and aggregate, including the common units and increase of $16.2 million to our book value of our 36 per unit.
I'll hit some of the larger ones on.
Any progress on the 3.
And on July <unk>, and we received $11 million U S and have fully exited the Tc comp.
Planet fitness.
The fair value of increase of U S $5 million, while distributions restarted in July the bank covenants are in great shape and TTM EBITDA is increasing monthly.
And they've also seen membership levels get almost back to pre COVID-19 levels.
The federal resources at the fair value of increase of $5.4 million U S.
They are continuing to close out on a redemption and this write up gets us closer to that redemption amount and we're getting more clarity daily on this 1 and.
And I would note that if the.
The transaction that they are working on does not.
Get completed.
They have they will have the balance sheet wherewithal to take us out. So we certainly expect this with a high degree of certainty and 2021.
Accident.
The fair value of increase of about $1.1 million U S.
That 1 is certainly looking.
The top of the call the reset in 2022 and <unk>.
This is performing extremely well.
A couple of decreases to know the LMS for $9 million Canadian reduction that's our only on collared partner they have seen some margin pressure with the rising price of steel so expecting of larger decrease and we were expecting last quarter.
And like I said, <unk> still with an excellent ECR and.
And we will always be our most volatile on the fair value of line.
For example of 4 years ago, the fair value is $36 million for.
And for straight double digit adjustments.
With 2019 being close to a 40% increase to get to $52 million and now today, we're sitting.
And at $47 million looking ahead to next year's reset.
Brian and sell at a fair value reduction of $3.3 million U S.
Brian and settled performs large projects, the timing, which can impact monthly cash flows.
The first 5 months of the 2021 year and seeing some margin pressure due to project and customer mix.
As well as some of those large project delays, which results for the fair value decrease for the current quarter East.
These projects of since started their backlog is robust and they have an ECR over 1.2 times until the long term business case is still well intact.
For Kimco, we didn't touch the fair value of this quarters and continue to proceed toward of redemption.
We don't have as much certainty as we do with federal resources to increase the fair value to the redemption value of just yet.
<unk> continues to form exceptionally and on a load of for redemption doesn't occur kimco would still have 1 of our highest <unk> with no debt.
Worth, noting and they've been generating so much cash and the last day and the last 6 months they've repaid.
$1 million of previous the unpaid distributions and 4 million of promissory notes.
On a fair value for the common units were up approximately $2 million as Pete planet fitness and carry were up offset by a small decrease the brown and settle.
And we know of 5 months of financial results for all of our partners and are starting to anticipate.
And what our total aggregate resets for 'twenty, 2 and currently expecting another increase.
And north of $2 million of 4 of 5 cents per unit.
The top of the call of resets from large revenue streams for planet fitness PWM and.
The body contours accident, DNT and FMC.
With the even with the.
Florida decrease from LMS still looks like a real positive.
Organic growth again on the portfolio.
Deployment and Q2 did include and the new investment and the Dnm car leasing business out of Dallas Fort Worth Texas.
And $62.5 million of preferred units and $7.5 million and common.
I should note and these for these comments.
And certainly don't expect any common dividends and the near term as there lots of growth opportunities to focus on.
Total capital deployed for the first 6 months is already a record year at $260 million.
A couple of of notes on our partners. The portfolio continues to perform extremely well our weighted average ECR.
And so over 175 times and and at all time high.
Now of 16 out of 20 partners, that's 80% of them that have and ECR of over 1.5 times.
And 9 of those 15 of over 2 times and no partners below 1.2 times.
Something Steve and I have talked about and.
<unk> is now 13 years of public company Investor presentation, our diversity diversification goal was to have and old partner grid, and 10% and today I am pleased to say our largest partner is now 10%.
Our outlook for Q3.2021 calls for revenue of 37, 5 million and our G&A remains well inside of.
Of our annual expectations.
Before I hand, it over to Steve I would like to make a couple of comments on of certain section towards the end of the press release.
Being the CFO of layers is quite simply been the best job I could have ever had.
And I have certainly enjoyed every minute of it I am looking forward to assisting our new CFO of Amanda for either.
During this transition period, and having worked closely with her for the last 8 years and.
The layers I am certain she is going to do a tremendous job share.
And I have talked about this the last year or so and shadowed meat for the Q2 process.
And all of the here and here to assist her through Q3 results and.
And whatever else she and Steve.
Team need for me over the next few months.
I want to thank my Pal since the late eighties, Steve for inviting me on this incredible journey.
And also of huge thanks to the entire team of layers of our board all of our partners, our shareholders and our business partners for making this such an amazing experience my.
And my wife, Sally and I are excited to head off on this new chapter of our lives.
And the rest of and not wait to be on the end of this conference call for many years to come on.
I'll pass it over to Steve for some more comments for moving to Q&A.
I'm not sure there's too much left for me.
And thanks, Darren and.
Yes.
I'll start with all of the quarter.
Not aware of the meaningful statistic.
And for a company that isn't at an all time high right now.
Revenue earnings run rate capital deployment base, where the return on our individual investments coverage ratios and.
All of that levels of we've never seen before and then 17 years. So.
This is not Q2.
The story and this is.
And I can many years of work from our staff.
On the behind the scenes stuff.
Originating the deals the diligence and the deal structuring the deals monitoring and the companies once they are partners.
So I want to thank all of our staff really for and all of these incredible results that have come.
Come from a lot of hard work.
Looking forward the <unk>.
<unk> pipeline continues to be very robust coming out of Covid, we're seeing a larger than usual number of companies coming of the market.
And it's certainly a tricky time as an investor the pandemic has had a significant impact on most companies both good and bad in fact, I would say in general we're probably seeing more.
Positive bumps from Covid in the negative.
And so determining what a normalized performance level is and this environment becomes the challenge, but with the experience that we have internally and with our third party experts. We think this is actually in and out.
Standing opportunity for us.
We have several new partnerships and discussions and.
We also have a record amount of the follow on opportunities with our portfolio of companies coming out of Covid that we'll be pursuing and the second half of this year.
Our decision to raise the dividend at this time was based on several factors, including the health of our portfolio.
As Darren mentioned, the expected positive resets that we're tracking and.
And so the accretive capital deployment that we've already done over the last 12 months.
All of these items contributed to our payout ratio dropping below 60% for the first time on our history and.
And with the anticipated redemptions of chemical and federal resources and there I mentioned, we're still going to be at 70% payout ratio with this new higher dividend rate.
And all of them, but at that point, we will also have $200 million over $200 million of available capital to deploy so the deployment of that capital will again drive our payout ratio down significantly.
So our goal is to continue to drive down that payout ratio, but we do want to give our shareholders of consistent dividend growth rate.
And.
And I can't leave without commenting on the decision on my mind.
Mr Driscoll over here.
As Darren said, we've been best friends since the start of the University here in Calgary and.
And as he likes to say he joined me once hilarious is able to start paying salaries.
And a few months after I opened the doors in January.
Annual rate of 2000 and for so.
Things that we've seen we can make a great book out of and I. Thank them for all of it.
You're leaving the layers of the at the strongest days and our history and we are also leaving the company and great hands of the successor Amanda.
And so Amanda has been a key cog for us for 8 years and even before then we.
Stoller from the.
The diligence team at the Ernst and young working on our files.
And Amanda on the rest of our team.
And they were able to advance because of the Dan's departure.
The present and the future of <unk> and I can't wait to work with all of them for many years to come so matti will open it up to questions.
And as a reminder to ask a question you will need the press star 1 on your telephone to withdraw your question press the pound key please standby, while we can part of the Q&A roster.
And your first question comes from the of Scott Robertson of RBC capital markets.
Great Thanks, and good morning.
Thanks Scott.
The first question I'd like to start with is on your sources of capital. So right now you have about $30 million of credit capacity and as you mentioned you expect you could get up to $200 million of additional proceeds if the federal and kimco redeemed their investments but.
These events.
The increase the scale of your available capital.
And meeting with new thanks for joining us indicated that their appetite for the existing members to increase.
Their share how do you guys think about your sources of funds over the next years of view I'm trying to deploy more capital.
I think it's the real blend of opportunity Scott.
Especially with the performance that we've had there's no shortage of.
Of capital out there looking for a home.
So I think it would be a blend.
Our EBITDA continues to grow our debt facility can grow theres other banks that are looking to join that syndicate.
There is the the high yield market.
And looking at the share we've been approached on quite a bit here.
There is.
Also I think and opportunity to have.
Co investors, if if we really needed that if we have large opportunities and maybe some things outside of the norm.
And having a.
And with almost the sidecar co invest type of.
Transaction might make some sense and then of course, the equity markets as well, but I would say at the at these prices the equity markets would be our last choice out of those.
Got it and I guess is there any line of sight.
On those.
And those additional.
The capital you could do you guys kind of $100 million deal come through the door tomorrow.
The bill ability of the market to be able to fund funded without going to the equity markets.
We believe so yes.
Yes, Scott.
We've got the last the last bank that joined US has stretched room each of the banks probably is a little bit of stretch we of another new bank debt currently and diligence Ing and then looked at because our EBITDA and out of our EBITDA run rates of over $140 million. So we have room to stretch set for hundreds so.
We also get.
Get a little bit further.
On a federal resources resumption, if if if the new deployment opportunity came and before that.
Full cooperation from our lenders and.
And we can bridge bridge that if that was required so lots and lots of options. There. So we're not we're not slowing down by any means we've got lots of deals we're looking at them.
And nothing has changed as.
As far as our sort of traditional path here and I would say that there is nothing and our pipeline that we believe will need to close before we'll get proceeds from 1 of those 2 transactions.
Got it and I guess have you given them like a drop dead date to decide whether or not they want to pursue on a transaction.
And with you guys.
The uncertainties and it can be tough and I'm, saying that you guys like to work with your partners.
Wondering sort of.
And think about that.
Yes.
We are pursuing and transactions obviously.
These types of things don't don't happen quickly and we're just going through the process.
Okay.
It's not a matter of.
Saying should we do something they are doing something and it's just it's just closing it.
Got it.
And I guess you guys have any updates on the sandbox for the.
The theory filed from the past year.
Nothing.
2 on the sandbox front and the CRE are really nothing new either we're continuing to wait on a on the decision that's.
Debt was appealed by the CRA that if the CRA is unsuccessful were.
We think that will be very.
Good for our position, but again nothing no further conversations on.
And the settlement were sort of quietly waiting we still think we've got a real good position here and we will update people as to if anything happens but.
As I've learned over the last 17 years and nothing at the CRA those very quickly.
Got it thanks, and I'll re queue.
Your next question comes from line of Nick <unk> with CIBC capital markets.
Yes. Thanks.
So the private company partner trends book overwhelmingly positive with respect to earnings and revenue growth on the year to day basis are there are only 2 of the studio what's needed and wanted to ask about it so.
And you and.
It looks like it's down on a year to date basis, I think you alluded to this earlier, but that's the only uncapped investment I recognize it had a big positive reset last year, but I was wondering if you could just give us a sense for the scale of the year over year decline just trying to gauge how next year's reset might be shaping up.
They are for our fair value is based on the 20th.
The decrease that's 1 of the based on gross profit.
Because of the commodity price impacts of their volume and sales of line is intact theyre still doing lots of work, but again the price of steel does such as impact and how.
Much of money. They make there is still a very very profitable and and and.
And again their last for.
The increases were all on the teams, including a 30 something percent a couple of years ago, So, giving a little bit of that back as the certainly nothing we're concerned about but this is 1 of the first investments we did and it was uncovered and and we learned the hard way that we should have a collar on our investments that 1 went down in 2000.
And by a significant amount and every deal we've done since then is how the caller.
And.
Yes.
And they're doing extremely well.
The.
Activity in the.
And Western Canada, and and California's is extremely high but as Darren mentioned.
We've seen all year.
What are you seeing.
And Deutsche Spike and.
And commodity prices lumber steel et cetera. So.
It certainly impacted them, we don't expect that to be of long term phenomena.
Yeah Fair enough, Okay, and then the only other 1 I want to ask about was I noticed the ECR range <expletive>.
Client.
He was the basis for Brown and settled I think it was the only 1 and the entire portfolio, but given the that's a new partner and revenue and EBITDA and are down on a year to date basis I Wonder if you could just provide a little bit of color on what youre seeing there.
Yeah, you bet, so round and settle as a site.
The site remediation site preparation company.
Mostly for the data center industry, and Northern Virginia, which is the data center capital of the World and so most of these projects are done for companies like Amazon and Microsoft and Google.
And there was and there are very large projects. So you can have some short term volatility.
On a see projects get delayed and.
And they have 2 very large projects that were both delayed in Q1 and.
Partly because of just internal decisions at the end user and wishes with Amazon and partly because of the the severe weather storms that were in the east coast and in Q1 of you recall so it can have a material impact.
On on a company like this but it's kind of more project related.
And so we just had a 1 quarter.
Dip.
As Darren mentioned the projects are all active today and the company is making very good money on a quarterly basis now but were going on.
In terms of the tray.
Trailing 12 months.
The results it'll take a year or 2 to get rid of that Q1 out of the TTM numbers. So no.
No concern there, but just something you have to live through and a company like that Nick on that.
For those of the fall of this a long time, you know federal resources as a company that debt did experience some fairly significant lumpiness, depending on the project the cost.
Were doing.
Quarter over quarter volatility was pretty significant and so there was lots of bouncing around and ECR ranges and so.
On this 1 will be 1 of our.
Our balance here.
1 is from the from an ECR standpoint.
So just something to keep an eye on.
They were very long term and our focus on a quarter a quarter of of delays and really has no impact on our investment thesis on this 1.
Their backlog of double what it was last year. So this is a.
The very good company.
Understood. Okay. That's very helpful. That's it for me. Thank you.
Okay.
Yeah.
Just a reminder to ask the question you will need to press star 1 on your telephone to withdraw your question press the pound Keane and our next question comes from the line of Zachary ever share with National Bank financial.
Good morning, everyone. Congrats on a great quarter.
Thanks.
So follow up on Scott's question, what types of co investors would you be open to work with.
That kind of stuff is nothing that I have gone down the road on because quite frankly, we just haven't needed it and I don't anticipate that we will anytime soon but.
I would.
Okay got it and the types of co investors would be would be likely be pension funds.
Makes sense and then a bit of a housekeeping 1 for you and operating expenses of about 12, and a half million dollars on a run rate, but how will that book and a post COVID-19 environment, when you're traveling expenses and partner.
And it has ramped back up.
Yes, I think I think it will still be around 12 and a half.
I think we will probably be under 12 and a half this year.
We do have the like last year, we had some spikes from the trust conversion and and our legal team and a lot to do with working through the PPP loans the of usage of our partners. So it is a little bit hard to pin down.
And.
On a 150, some odd million of revenue, if our 12 and a half goes the 13 or 13 and off we're not we're not too concerned about that but.
And our regular travel I think our travel will be less going forward, we're going to do a lot of our marketing.
Bye bye zoom and teams meetings, but.
But you will net youll never.
Stopped doing the travel for the U S. EBITDA group, but went down on their last week for a sort of a force.
And for City tour and.
Tour and that stuff will certainly ramp up now that we're allowed to go and come back without having the hunker down and our basement for a couple of weeks.
Got you thanks.
But and.
Given given the ongoing slug of with the CRA and sandbox do you guys have a bit of padding and that budget for a ramp up and legal fees and if it comes of that.
The padding.
And there would be a little bit we have a reasonable amount for legal expenses each year, if anything really jumped in it with.
And we probably have to add to that 12 of the half.
Yes.
Understood. Thanks, all of my other questions have been answered I'll turn it over.
Thanks, Nick.
Your next question comes from the line of Lee head of group with Macquarie Capital.
I would say good morning, but on the.
UGI and closed and grease, the Darren the retirement isn't all that bad.
Yeah sounds good to me.
And Darren.
Congratulations on your retirement and congratulations everyone on the on a great quarter.
And I met the ask and original question, but it's actually going to be more of a follow up because.
Because I I.
<unk> gone through the the.
The press release and in some detail and.
And back to some of the other filings.
Filing statements and so forth and and.
And.
With regards to the 12 and a half million and it's tough for me to.
It's tough for me to kind of build that number up from.
You know the executive compensation, and so forth and the.
You know and I.
And an investment banker for better part of the 25 years on kind of know what travel costs and so forth are and.
And then I know, there's kind of some 1 time costs with the conversion and so forth but for.
For those of the bunch of maybe 2 or 3 steps.
Some of the analysts have been following it for quite a while that if you don't mind being a little bit pedestrian and.
For the likes of me if you could kind of walk me through that number and it just on the face of it just seems the sticker shock as it is a little bit there.
Well I'm on.
Happy to answer.
For that I mean, we were and when we were at $22 million of company of revenue. We had our G&A was probably 8 and a half for 9 there's just certain amount of costs that are that are required to run a public company. We have 16 staff.
This includes base salaries. This includes and estimate for an annual bonus thats been.
A round of a million and a half so probably 3 and a half of that is people power.
And then we would have our office rents travel.
Legal and accounting for and a public company is expensive we also spend.
On our transactions.
Legal and loan would probably be a couple of million of year.
And so it doesn't take too long to get to.
I don't have the exact numbers in front of me.
That would be the mix of legal and accounting.
Salaries and benefits, including a bonus and then all corporate and office so travel we host.
The conference once a year with all of our partners that come in and we get together and.
And the network and get updates and build relationships with the with each of them and so.
And I'm quite proud of how low our G&A is and especially as it's held held the line while our revenue has gone up significantly.
Difficultly, if we add a couple of more people.
Which we will need to do if we add 3 or 4 more partners. We're adding a few hundred thousand of that and we're adding 10 or $20 million of revenue for the top line and we've got a really neat graph and the and the and are at the.
The back end of our slide deck that shows the the scalability and how our revenue is.
The dramatically outpaced our G&A and other way of looking at it is we've got about $1.3 billion and investments right now and.
As you would know most fund managers, especially of private equity fund managers would get about 2% of assets under administration.
And as their G&A amount.
Equate to $26 million.
So at 12 of the half, including public company costs. So, we're keeping a very lean operation here and comparatively.
Okay. Thank you for your question.
Enjoy great.
Right.
Your next question comes from.
And Gary how would the Sharon's capital market.
Hey, Good morning, just the first question just on the the distribution increase can you maybe comment on your comfort and the the payout ratio and and looking out.
And if next year, you're successful and your capital deployment strategy again.
And and payout ratio drops are you comfortable and raising that and moving back to a dividend growth story you can.
Yeah, So as I mentioned and in line a little piece of our our goal is to still drive down on that payout ratio lower.
The line of work.
I don't want to have 100% of our growth go to that though I think it will be the majority I think it's important for our cost of capital to have.
Evaluation and Thats based on growing dividend stream. So we did a very modest increase.
And as I mentioned.
And even with the.
The loss of chemical and the federal resources, we will still be at 70% payout ratio. So at all.
Within our targets, but then we'll have 200 million to the POI, which were.
Will.
Be funded just with our senior.
The debt facility is less than 4%. So it's a very accretive deployment of at that stage, which will drastically reduce that 70% number and and keep us on the path towards a lower and lower payout ratio.
We're obviously, we're very comfortable with.
With that dividend increase.
Got it okay.
And then second question sort of go back of the G&A isn't there typically typically in Q for the the bonus payment I think there was something in the Q4 last year and.
The thoughts on what that number could be and we're kind of halfway through the year.
Are you starting to see.
I think last year, it was $1 million of half of its based on a formula based on the.
And an increase of the distributable cash per share.
It will probably be it will be a little higher than last year, just because of our growth numbers, but.
I don't have too much clarity, but I would say somewhere in the $2.5 billion is probably a.
On a reasonable guess at the moment.
I mean, it really depends on you know.
All of the redemptions actually hurt that number.
So depending on when those happen.
There's a number of things that can can change the future employment helps it.
So a little too early of Q3, I will have a much better idea.
Okay got it and it doesn't of my questions. Thanks.
And so much thank you Sir.
Right.
And your last question comes from the line of Trevor Reynolds with acumen capital.
Just on the most of it.
Hum.
Trevor we can't hear you.
Yeah.
Sorry, guys can you hear me now.
And that's better.
Okay, sorry about that.
Just curious about the market competition on deals of any changed and since last quarter.
A lot since last quarter no. It's a it's still extremely competitive.
We're going through a couple of bids right now where we're and the finals.
And 1 of them at least wear and against the certainly more than a dozen bidders.
And that.
We've seen that for years to be honest, there's still a lot of capital out there all of these.
The funds have been successful and raising new.
Apple as well over the last quarter or 2 but.
Average higher story of the same.
If if and entrepreneur and wants to keep their business.
And the enjoy more of the upside.
The preferred shares are going to be a better fit for them than the common equity and so.
We still don't have a head to head competitor I would say and that marketplace and we're seeing that story resonate seemingly much more now than the than in the past I think our business development guys have done an incredible job and getting our message out there and and finding kind of the.
The right situations for us to get into.
That's helpful. Thanks.
And then just on the the minor decrease and the Kimco expected proceeds can you just touch on that.
And that's just simply because we've collected $8 million of it and the last.
A few months they pay prominent lets say of paid unpaid distributions. So so the total value of that we would have said a while ago still holds but we've collected.
The 8 million was already and our genes.
Okay I thought that was the case, so I just wanted to confirm.
The debt for me thanks, guys.
Thanks for.
And then.
And there are no more questions at this time for Mr. King do you have any closing remarks.
Yeah, I just wanted to thank everybody again for.
For tuning in and as usual if you have any further questions, both there and and I and and Amanda are here to answer any of them and we look forward to seeing your line for Q3, thanks very much.
This concludes today's conference call. Thank you for participating you may now disconnect.