Q3 2021 Real Matters Inc Earnings Call
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Non-GAAP.
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Good day, and thank you for standing by and welcome to the real matters third quarter, 2020.1 conference call.
At this time all participant lines are in a listen only mode.
After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star 1 on your telephone keypad.
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I would now like to hand, the conference over to Lynne will regard Vice President of Investor Relations. Thank you. Please go ahead.
Thank you operator, and good morning, everyone and welcome to real matters financial results Conference call for the third quarter ended June 32.
<unk> thousand 21.
With me today are real matters, Chief Executive Officer, Dwayne Lang, and Chief Financial Officer Bill Hinman.
This morning before market opened we issued a news release announcing our results for the 3 and 9 months ended June 32021, the real.
The accompanying slide presentation as well as the financial statements and MD&A and posted in the Investor Relations section.
Section of our website at no matters Dot com.
During the call we may make certain forward looking statements, which reflect the current expectations of management with respect to our business and the industry and which we operate however, there are a number of risks uncertainties and other factors that could cause our results to differ materially from our expectations.
We see the slide entitled.
We're sharing them regarding forward looking information and you can accompanying slide presentation for more detail and can also find additional information about these risks and the risk factors section of the company's annual information form for the year ended September 32020, which is available on SEDAR and and the Investor Relations section of our website.
As a reminder, we refer to non.
<unk> closures and our slide presentation, including net revenue net revenue margin adjusted EBITDA adjusted EBITDA margin.
Non-GAAP measures are described in our MD&A for the 3 and 9 months ended June 30, and 2021 where you will also find reconciliations to the nearest I FRS measures with that I'll now turn the call over.
Brian.
Thank you Lynn and good morning, everyone and thank you for joining us on the call.
I will kick things off today by discussing some of the highlights of our third quarter, Bill with and take a deeper dive into our segment financials and.
And I'll wrap up the call with some brief remarks prior to taking questions.
We posted record revenues and net revenues and our U S appraisal and Canadian segments, and the third quarter from net margin share gains and new client launches as well as a more robust mortgage market on both sides of the border Consol.
Consolidated revenues were up 9.6% and the third quarter.
As the strong performance of our U S appraisal and Canadian segments was offset in part by a decline in U S title revenues.
Third of which was related to the continued rationalization of the diversified title business.
Turning to slide 3 consolidated net revenue decreased $12.
Per cent year over year to $38.6 million and adjusted EBITDA decreased to $11.8 million from $20.9 million and the third quarter of fiscal 2020 due to the lower contribution from our U S title segment.
Yeah.
After the run.
1 and the 10 year Treasury and March 30 year fixed mortgage rates moved marginally lower during the quarter, which resulted in flat refinance activity year over year as a robust purchase season got underway.
U S appraisal segment revenues increased 17, 5% year over year.
Up to $85.3 million, driven by higher market volumes net market share gains and new client additions.
Origination only revenues were up 26% year over year.
Which compares to an estimated increase of 17, 1% and the addressable market.
Which takes into account the impact of veteran affairs volumes and waivers.
In the quarter, we launched 3 new lenders in U S. Appraisal. We also continued to rank at the top of lender scorecards, which drove market share gains and the main origination channel year over year.
Operational excellence.
A year and used to be our principal focus as we drive toward achieving our fiscal 2025 objectives and doubling our U S appraisal purchase and refinance market share and achieving net revenue margins of 26 day, 28% and adjusted EBITDA margins of 65% to 70%.
Continued.
And our U S. Total segment third quarter revenues were down 28, 8% year over year centralized title revenues were down 22.2 per cent compared with an estimated <unk>.
5% decrease and market volumes.
As we highlighted in prior periods and during.
And Investor Day last fall, we have been transitioning our client base and U S title for some time.
Making capacity for new franchise type clients like the tier 1 and tier 2 lenders we launched earlier this year.
To put this into context, let me give you a bit more color around timing.
And of this transition.
And as total volumes were surging late last year and with the launch of our first tier 1 customer on the horizon, we capped volume with some historical customers to ensure we have ample capacity to properly service the tier 1 and other new tier.
Tier 2 lenders.
As the 10 year yield moved up earlier this year, we did not receive as much volume as we would have otherwise received due to the caps we put in place.
<unk> and the first quarters of a new tier 1 launch.
Critical as was the case and appraisal and.
And we firmly believe that we made the right decisions for the long term.
We are very pleased with our performance and the market share progression, we have seen thus far with our new title clients and we also launched 2 new lenders and title in the third quarter.
We are continuing to look at opportunities to buildup share should the rate environment.
<unk> be less favorable and the near term.
We remain confident with our strategy and long term objectives for this business to triple our market share to 6% to 8% by the end of fiscal 2025 and achieved net revenue margins in the 60% to 65 per cent range.
And adjusted EBITDA margins in the 50 to 55 per cent range.
Diversified total revenues were down 69% year over year and the third quarter in line with our strategic plan to rationalize this business and better support the growth of our centralized title services.
On a year.
Year to day basis. This represents a revenue decline of $12.9 million and our title segment.
And our Canadian segment third quarter revenues were up 149, 1 per se year over year.
Higher appraisal volumes from market share gains and a stronger mortgage origination market in cash.
Canada drove record volumes and the Canadian and appraisal business during the quarter.
We also benefited from foreign exchange and revenues and our insurance business increased with the relaxation of certain COVID-19 restrictions.
Adjusted EBITDA more than doubled to $1.3 million from <unk> 6 million and the third.
Third quarter of fiscal 2020.
With that I'll hand, it over to Bill Bill.
Thank you, Brian and good morning, everyone.
Turning to slides 4 and 5 for a closer look at our financial results consolidated.
Consolidated revenues increased and the third quarter.
Total 2021 compared to the same quarter last year due to record revenues and our U S appraisal and Canadian segments, which were partially offset by the decline and U S. Total revenues.
And our U S appraisal segment, we serviced higher origination volumes from higher market volumes net market share gains.
<unk> and new client additions.
Conversely revenues from home equity and default volume declined year over year due to lower market volumes for these services.
Transaction costs, and our U S appraisal segment increased 22, 5% year over year compared to the 17, 5% increase and revenues for the same period.
As a result net revenue was up 2.3% to $18.1 million, while net revenue margins declined 310 basis points to 21, 3% and 24, 4%, we posted and the same period last year.
This decline was due in part to the mix of mortgage origination volume and service.
And appraiser onboard and to serve as higher volumes, partially offset by servicing fewer low margin home equity volumes.
Operating expenses and our U S appraisal segment increased 9.7% to 7.6 million up from $6.9 million and the third quarter of fiscal 2020 due.
And increase in payroll and related costs from higher origination volume service.
As a result, adjusted EBITDA declined modestly to $10.5 million from $10.8 million and the third quarter of fiscal 2020.
Adjusted EBITDA margins and our U S appraisal segment decreased to 58.2.
And 2% and the third quarter of fiscal 2021 from the 61% we posted and the same quarter last year due to lower net revenue margins and capacity additions, we made to serve as higher volumes.
Turning to our U S titled segment third quarter revenues were down 28, 8% year.
Over year revenues attributable to centralized title services declined $7.1 million to $24.7 million and our average revenue per transaction was largely largely unchanged from the prior quarter compare comparative.
Diversified revenues totaled $1.6 million.
Representing a decline of $3.6 million from the third quarter of fiscal 2020.
The decrease and diversified revenues was due to lower commercial search and capital markets revenue attributed to lower market volumes and our strategic decision to reallocate internal resources to support centralized title.
Yeah.
The decline and other revenues was due to lower market activity for home equity services.
Transaction costs decreased 33, 5% and net revenue margins expanded to 67, 2% up from the 64, 9%, we posted and the third quarter of 2020.
Service fee expansion and net revenue margins was due to the flow of volumes and the third quarter, which saw us close a higher proportion of transactions relative to new orders received.
Operating expenses and our U S title segment increased $2.4 million to $14.4 million and the third quarter of fiscal 2021.
The year.
Increase in operating expenses is due to the capacity and you've seen us building for several quarters now to service higher volumes and to support our first tier 1 client launch.
Adjusted EBIT decreased to $4.3 million and the third quarter of fiscal 2021 down from the $13.3 million, we posted and the same quarter.
Last year, and adjusted EBITDA margins contracted to 22, 8% and 52, 7% we posted in the prior year period, owing to the impact of lower volumes relative relative to the existing cost base and the business.
As we've done and the path, we will continue to be prudent and managing costs to scale with.
Volumes, ensuring that we make the right decisions to support our long term objectives, we remain confident and our ability to achieve adjusted EBITDA margins of 50% to 55% by the end of fiscal 2025 based on the achievement of our market share objectives.
And Canada revenues increased 140.
9.1% on a year over year basis to $16.3 million, while net revenue margins contracted by 280 basis points due to the mix of mortgage origination volume service.
Canadian segment operating expenses were <unk> 5 million and the third quarter up from zero point $4 million and the third quarter of fiscal 2020 and adjusted.
Adjusted EBITDA margins increased to 76% from 59, 8% and the same quarter last year as we leveraged our appraisal operation and a higher overall volume environment.
And total third quarter consolidated net revenue was down 12, 1% to $38.6 million from the $43.9 million.
And reported in the third quarter of fiscal 2020 from the lower contribution of our U S title segment, partially offset by higher net revenue margins recognized in this segment due to the flow and transaction volumes and the quarter.
Consolidated net revenue margins decreased to 29, 8% and the third quarter of fiscal 2021 down from $37.
Percentage in the third quarter of fiscal 2020, due to lower margins and our U S appraisal and Canadian segments, and lower net revenue generated by our U S title segment.
Consolidated adjusted EBITDA was 11.8 million and the third quarter of fiscal 2021 down from $28.9 million and the same quarter last year.
And consolidated adjusted EBITDA margins decreased to 35% and the third quarter of fiscal 2021 versus the <unk> 47, 6%, we posted and the third quarter of fiscal 2020 due to the capacity additions, we made and our U S title and U S appraisal segments.
Turning to the balance sheet, we ended the quarter.
2 cash and cash equivalents of $79.3 million down from $19.2 million at March 31.2021.
We purchased $4.4 million shares and the third quarter under our and CIB at a cost of $59.2 million.
In fiscal 2021, we have allocated more than $86 million.
Year to date to share purchases under our CIB by $6.2 million shares and support of our view of the company's intrinsic value.
Post quarter, and we purchased an additional 335000 shares under our NCI be.
With that I'll turn it back over to Bryan Bryan.
Order book.
Thanks Bill.
So in summary, our U S appraisal and Canadian segments posted great results from the third quarter setting new record highs.
And while we are in a transition phase and U S title, we are very pleased with our performance and progression with our newly launched.
<unk> clients.
We are also confident and our ability to grow the business with the right clients over the long term.
As Bill indicated in his remarks, we will continue to be prudent and manage our cost base to scaled with volume, while ensuring we make decisions that support our long term growth objectives.
We are focused on continuing to build a great business for the long term.
With that operator wed like to open it up for questions now.
Thank you.
Under <unk> to ask a question and we'll need to press star 1 on your telephone and again the Star followed day, 1 and your telephone keypad.
It's Roger.
The question just breast bankey.
And that will be compounded Q&A roster.
And your first question comes from the line of Thymus from a choppiness from.
From BMO capital markets.
Line is now open.
Hi, good morning.
Brian just going back to your comment about reallocating resources.
To focus on the ramp of larger lenders and title maybe.
And maybe can you draw and a bit on that I mean quite.
And with their constraint there why Couldnt you just may be hired more people to continue supporting the farmer customers, while also ramping large lines.
Or.
Is it really sort of the bottleneck in terms of just skilled experienced resources that you want to make sure.
That focusing on almost like ramps.
And with issue there.
Yes, Morningstar and OS and I think it lines up a little bit more with with the second observation that you made so so again, if we if we play back to the end of last year.
The volumes were surging, we had 50 to 70 basis point type rates.
And there was a tremendous amount of volume coming in.
And at the same time, we had a tier 1 and a big tier 2 in our line of sight.
And both of these of course would be those those longer term franchise customers, we talk about and so we needed to ensure.
Or that we had ample capacity.
And so in order to do that we had to cap some of the volume of historic customers.
As you know the 10 year moved up and.
And even this past quarter, we got up over 170 basis points and so so tenants, we simply had less volume.
And then we'd anticipated so back a year ago, we anticipated significant volume at those rates and and slightly less volume.
At the same time, we also made that decision to rationalize the diversified title business seemed to centralized title and.
We sort of discussed that since the start of the years, where we shut down commercial and this quarter.
Quarter, we shut down capital markets, and so and so that had a.
A third of the impact on title shortfall was from the diversified book. So so listen I mean, we're very confident and the runway we are performing well with the tier 1 and tier 2 that we launched we needed that capacity at the time to make sure first.
Patients count with these players.
And we can continue.
Continue to be very focused on our long term targets of tripling market share with that with the volume that the margins that we've shared.
And then just to clarify in terms of.
Tier 1 and.
And as far as those ramps are they progressing.
And price.
Initially and.
Volume was actually lower because of the rate environment that is in terms of from a market share perspective progressing as you thought.
Thanks, Dan and I've said, so they are so.
And I've talked historically and shared our goals of getting tier ones and 2.5% to 10% and the first year and we are.
We're very well on track to do that we're only and the second quarter. So I think I think it looks very good progress there and in the case of the tier 2 we've even accelerated some of that timeline and the third quarter with them. So on both accounts, we feel very strong and our progression from a market share standpoint.
Okay, and then finally.
And obviously backed off and there's also the program by the Gse's tube promote refis among.
Lower income borrowers.
In terms of just what youre thinking of the business as of today are you seeing any kind of a.
Pick up on the back of those things or is it maybe.
Typically more of a delayed reaction in terms of rates versus real.
<unk> is picking up again.
Yes.
<unk> is the 10 year Treasury is what it is and this past year Santos, we've definitely seen some peaks and valleys and the 10 year. So I think the tenure will be what it is when we reflect back on the last quarter.
From a refinance standpoint.
And it was.
The volume was marginally negative based on on the rates. So I think a lot of it we're going to have to see what the rates look like going forward and.
And see whether there's much of an impact I think that will drive more of an impact than than some of the elements you outlined that have been happening sort of within the industry.
And I guess I'm, saying just from a real time basis and over the last couple of weeks with rates, having had a big moving because it's been and I'll take or is it kind of do you really not sure.
I apologize just just in the last couple of weeks.
What do you think we've seen a little bit of a move and what we've generally.
I think what's interesting right now Santos is we've got this.
<unk> 12, and a half million dollars.
Owner group in the U S. Net all are in a position to save over 50 basis points on their mortgages and frankly, we haven't seen necessarily the movement. There that we would have expected. So I think that's actually part of I think the interesting elements of human psychology is what's going on right.
Right now with the U S homeowner and and will they start taking advantage of the fact that the rates are very good and that they could save a fair bit of money on their mortgages. So I think that's that will be an interesting driver with rates, where they are right now.
And thank you very low cost line.
Yes.
Home next question comes from the line of being a channel from TD Securities. Your line is now open.
Hi, good morning.
And I'm just wondering how your discussions with the other tier ones are going on and getting onto the technical and business.
And then the pipeline continues to move.
As we've talked about in the past we've talked about.
I think a majority of the tier ones in conversations on title.
And that continues I think there is on the 1 hand, a little bit of wait and see as we've we've launched these first 2 and as we've talked about performance is incredibly important and so I think part of the reason we are confident about our market share.
The first 2 is because we are performing incredibly well and top of scorecard. So we're feeling really confident there and I think as I say, there's a bit of a wait and see.
With the other tier ones and twos, but conversations continue to progress our progress well.
Thanks, that's helpful.
And then.
Any update on the proportion of.
And again waived.
And as Q2.
And I'm, assuming that's answered dan's questions.
All right.
Thank you. Your next question comes from the line of Martin <unk> from <unk> capital markets. Your line is now open.
Hey, guys. Thanks, a lot.
Taking the question.
Can we can you tell us.
Assuming that based on the Rev Rec.
And titled this quarter that.
But you know.
Excess capacity and title can you kind of tell us what.
What that is and.
In order and based on your market share goals.
You'll be able to.
Ramp.
At and necessary rate going forward.
Sure. So so let's go back to the commentary around ensuring we have ample capacity Martin.
And that is a critical item for us when we are looking at.
These tier ones tier twos and these these longer term franchise customer and so you need to make sure that you've got that ample capacity I had mentioned over the last couple of quarters that we were we were building that capacity both at a network level as well as making sure that we.
And that the resources to do that.
I think we've done a fantastic job.
And the network. So so we're feeling incredibly bold about.
Where our network is on the title side.
And so now it's a matter of going forward managing volumes and costs and so I think we'll be very thoughtful about that as I say you need.
Need to make sure youre continuing to keep that ample capacity with the expectations.
And the tier ones and tier twos and the future.
As well as managing against the volumes that you have now so that will be the balance that we manage over the next couple of quarters as we as we make this transitional.
Move from our historic tier threes tier twos into the more tier 1 tier 2 base.
Thanks.
Is there a certain like.
The amount of cash.
Past or do you think you can add June every year, so like right now you're.
And that's a 2.5% share of U S title something in that range.
Is it.
Is there a maximum amount and you can add is at 1% just wondering if you and give us a feel there.
Martin and I missed the first part I think the question was around market share ramped to or expect.
Patients are tripling market share is that the question no. It was our own capacity like.
Capacity is and there's a certain amount of capacity you're able to add.
They per year.
Is it 1% or I'm, just trying to get my head around will there.
Capacity issue happen again.
Okay.
And it's the question is can we ramp capacity when we need to if you've seen from this past year, we have ramped up significantly our capacity from where it was over a year ago.
So so we can as you know the big sort of focus for us longer term Martin is the.
Hell of the business I mean thats really.
A big chunk of the value of the franchise is the ability for this business to scale and so and a more mature business like if you take a look at our Canadian business Youll see that expenses.
And went up very minimally this past quarter, whereas volume was up almost 150%. So we're.
The scale and scale up in a mature environment, and incredibly well and and and scaled down as need be.
So where we are with title again, it's this transitional crossing the chasm, where we need to make sure that we've got enough capacity for the new customers that we are out income.
And conversations with.
And we're able to making sure of course, and we deliver the right type of economics on the current business that we have now so we can flex up and down as required but of course, where we where we're moving towards is starting to get some of the leverage off of the scale of our business longer term.
And.
How much share.
Sure.
Did the <unk>.
Customers that you lost share with this quarter represent.
Yeah.
So Martin and we don't I don't have a track on that particular number. So we've recapped this a fair bit of time ago and.
So when we take a look and how their volume ramps versus our tier ones and tier twos, it's driven by the market. It is driven by us winning market share with some customers.
And some of them maintaining that cap cap volume that we have so I apologize I don't I don't have an easy answer for that question.
Yes, no problem and the customers that you lost share with did you lose any of them entirely or and if not what's your level of confidence that youll bring it back overtime.
And so listen I.
I think where we're focused again I think the confidence and.
Customers were bringing on focusing on those longer term franchise customers. The ones that are interested and focused on performance on quality and speed Martin and those are the ones that we will continue to grow that we're focused on increasing market share with and we feel very confident that we are performing right now and that we will continue.
Continue to increase market share with them. So that's really that's really where the team's focused market share increase with tier ones and twos market share increase with the right customers within our historical base as well as bringing in more new customers. So we mentioned and we brought into this past quarter.
We will definitely be bringing in more than 2 this upcoming quarter and thats really where the focus is.
Okay I appreciate that okay. Thanks for taking my questions.
Right. Thanks Man.
Brian to funding and onto the next question. When the question came up and then the update on appraisal wafer and it wasn't audible to certain purchase.
Participants on the call. If you can maybe repeat the answer to what is and our update on the principal and interest right now.
For sure and my apologies and lean and line if it does kind of.
And on on appraisal waivers. So in Q2, we talk about the impact on the addressable market and so in Q.
You too and we reflect back.
The waivers had a 31% impact on the market.
When we look at Q3 that impact is 22% so fairly decent drop in.
And the impact of waivers on the addressable market a good chunk of that is the mix that we've talked about in the past which is the proportion.
And.
Purchase transactions.
Versus cash out and vs right refi and so with cash and it's coming up with rate refi being flat or slightly negative and with purchase up.
And the 30% range, we've definitely seen and moving that mix. You also then pair that with.
Our estimates that the gse's or a slightly smaller proportion of the overall market and you take those 2 together and you see a fairly decent drop in the impact of waivers.
Your next question comes from the line of Richard Tse from National Bank.
Proportions and I is now open.
Hi, this is calling in for Richard.
Just wanted to ask on <unk>.
And as data on our side.
Any update on that.
And here, we continue the conversations and and the work that we're doing on our data strategy. So.
And we've we've our corporate development team has been very busy this past quarter and we've continued to evolve I think our view on the verticals and the.
And we've interacted with the right type of customers in that space and so I think we're feeling like that that strategy is definitely.
And moving moving forward.
Okay and.
Then just on inflation and I was just wondering if youre seeing and the impact of the business.
Regarding up.
No I don't think right now at least in the past quarter and here, we haven't seen any of the.
And inflationary discussion really having an impact I mean as you probably are aware.
It's much more based on the macro dynamics of the mortgage market. So we've seen purchases up.
Fairly significantly we've seen.
The refinance market and as we've talked about relatively flat.
Your line is <unk>.
5%, So that's really I think the drivers.
Okay, and then just 1 last 1 just obviously you guys have been pretty aggressive.
Share buybacks, just wondering how we should think about profit over and Florida.
Yeah.
Sure. So we work very closely with our board around the.
Buyback and so you can see by our productivity $60 million spend in.
And the last quarter of $4.4 million shares.
<unk> really believes in the long term intrinsic value of the business and and so we definitely leaned in and this past quarter.
Sure.
This is our biggest quarterly investment to date is as no doubt and here Youre aware so going forward, we're going to continue to work with the board, it's very disciplined approach and and we will evaluate as part of our overall.
Our capital allocation strategy and consider it both against others.
<unk> strategic elements, we're looking at as well as growth opportunities going forward.
Okay. Thanks, Paul and thank you for taking my question Bob Hospital.
Thanks, Matt.
Your next question comes from the line of parts Shah from Canaccord Genuity. Your line is now open.
Hi, This is Rob young on for Pars I'm.
First question from me would be related to the the 1 third of the shortfall related to the.
The diversified.
Title. The remaining 2 thirds is there a way to parse that out and give an indication of how much was related to the the accounts that you had capped off late.
Late last year, or maybe just to get a sense of how much of that shortfall is related to strategic decisions that you're making as a management team versus market related.
Sure Rod so a good portion would be related to our decisions around capping.
Historical customers.
I would say that the tier ones and tier twos tier 1 tier 2 and we launched this year as we've discussed have been progressing.
From a market share standpoint so.
And a decent proportion is the capping that we thought made tremendous sense back and a very different market at the end of.
For last year.
Okay, Great and then.
And just to continue on I think the <unk>.
Martin.
A question on <unk>.
Permanence of that decision there what about the diversified industry or the diversified parts are those permanent decisions that you are moving away from those businesses or is that a temporary resource.
<unk> that you might.
Yes.
Go back into those markets.
Rob we've talked about the diversified total over the years.
As you know, it's a lumpy business.
Project based and it's not it's not built in like our scaled networked.
Platform model so.
We started making those comments last year around looking at rationalizing. It we made the comment earlier and the year around commercial where we shut that down and we've shut down cap markets and so.
That's pretty well most of the diversified business, Rob that's now shut.
Down and we're going to rationalize that into the growth on centralized title. That's our scale business. That's the long term business.
So thats I think the way we're looking at diversified total great.
Great. Okay, and then maybe last question you had said just a couple of minutes ago that youre seeing and an uptick in new clients.
Wins and subsequent to the quarter or is there any other color you can provide around that whether it's tier 2 or smaller and maybe any any additional color would be helpful. Then pass line.
Yes, no I think the comment around we launched a couple of last and I feel confident that we will launch more of that this quarter.
The sales pipeline.
Blind and the focus from our sales team on new customers has been quite strong. So it's going to be a mix, we'll have to see Rob which ones land, but we've got a very good mix.
Our focus on tier ones and twos and and then of course, we are just as focused on the right types of customers in the tier 2 or 3 or 4 categories.
So as I say it just depends on how they launch and how they they land and I will definitely comment on that next quarter.
Thanks.
Okay and as a reminder to ask a question. Please press star 1 again net of Star 1 to ask a question.
Your next question comes from the line of Martin sooner from <unk> capital markets. Your line is now open.
Hey, guys. Thanks, 2 quick follow up number more and where do you send.
Your line title and lower margin and then number 2 will the removal of the adverse market and fee for.
So that give.
Refinance market the boost.
Let me address your second question Martin and then I'll have bill address the margin question on D. G.
So the adversity I think listen on the adverse fee came in and.
I guess late last year when the adverse she came in.
And our commentary around that Martin was that we thought.
There was a very good chance that the banks would take that into the spread and the margin on the business, which is what we generally saw.
And so our view right now is that we don't think that will have a big impact on the business.
And is 50 bps. It is 0.1 and 2.5% depending on the loan size.
But we think it probably won't have a significant impact I think it's.
The conversation and when the market will see in August of course, when it hits the conversation from a from a market standpoint with a bunch of lenders is.
And very well either may not be enacted too much or may not have too much of an impact on their customer base.
Great numbers and centralized title margin profile relative to central line.
Yeah, So bill.
Yeah, and you hear me all right.
Yep.
Excellent so Martin.
That is even though the the decentralized diversified diversified.
Revenue stream was project based a little bit lumpy it actually share at a very similar and net revenue margin profile to centralized title, so thinking that 60% to 65% range on a on a blended basis across all of the service offerings that.
And that constituted the diversified service.
Revenue stream and so very similar is the short answer to UCT.
Got it thank you very much.
Good afternoon.
Thank you we have no further questions and the queue. This concludes the real matters third quarter 2021conference call.
And we're participating you may now disconnect.
Thank you.
Yeah.
And <unk>.
[music] and Julio.
<unk> flow.
[music].