Q2 2022 Tiptree Inc Earnings Call
Good day and welcome to the Tiptree incorporated second quarter 2022 earnings Conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May press.
Star then one on your Touchtone phone and to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Mr. Scott Mckinney Deputy CFO . Please go ahead Sir.
And welcome to our second quarter 2022 earnings call. We are joined today by our executive Chairman Michael Barnes.
Jonathan Alani CFO Sandra Bell.
Copy of our earnings release and Investor presentation are on our website Tiptree, Inc. Dot com.
Please note that some of our comments today will contain forward looking statements based on our current view of our business and actual future results may differ materially.
Please see our most recent SEC filings, which identify the principal risks and uncertainties that could affect future performance.
During the call today, we will discuss non-GAAP financial measures, which are described in more detail in our presentation.
Patients are non-GAAP financial measures and other associated disclosures are contained in our SEC filings.
Next to our presentation and posted on our website with that I'll turn the call over to Mike.
Thank you Scott and good morning to everyone.
<unk> is off to a solid first half of 2022 with each of our operating businesses producing positive results.
For Tegra had another excellent quarter, our premium growth and underwriting results.
Our marine business had its best quarter, yet from strong charter rates and the gain on sale of one dry bulk vessel and our mortgage business was profitable despite the headwinds from rising interest rates.
Revenues for the first six months increased 12% versus last year to $665 million and adjusted net income improved 12% to $29 million.
In June we closed on the 200 million dollar investment and for Tegra by Warburg Pincus.
As I have stated before we are extremely bullish on <unk> growth prospects and believe the partnership among tiptree.
And Warburg Pincus will lead to fruitful results for years to come.
<unk> posted premiums and equivalents of $1 2 billion up 16% from the prior year led by strength in the specialty admitted and E&S insurance lines.
<unk> adjusted net income was $40 million up 49% from 2021, which represented an adjusted return on equity of 26%.
Specialty markets remain favorable and we continue to see improvement in the combined ratio from operating efficiencies.
We remain focused on growing both our specialty insurance and warranty service contract businesses.
While we expect most of the growth to be organic through product and distribution expansion. We are always looking for complementary bolt on acquisitions. Our most recent acquisition ITC compliance further establishes <unk> footprint in the U K auto warranty sector.
During the first half of this year several market factors impacted our book value.
Interest rates rose dramatically.
Risk assets dropped significantly in the last quarter. The U S. Dollar also significantly appreciated against major foreign currencies.
As a result for.
<unk> fixed income portfolio like many insurance companies incurred a pre tax unrealized mark to market loss of $45 million through the first half.
In addition to other unrealized losses on invest another securities.
Our investment approach is geared toward the longer.
And that's protagoras fixed income portfolio remains conservatively positioned with a double a plus rating and relatively short duration. Additionally.
Additionally, we expect to recover most of the unrealized marks over the coming years as the bonds mature.
As I said on our last earnings call over the long term higher interest rates will benefit for Tegra.
As of the end of the quarter the investment portfolio stood at just over $1 billion.
We expect the rising interest rate environment environment will be a net positive as potatoes growing portfolio can be invested at higher yields.
In our marine business, we had an active first half with both drybulk and tanker investments producing solid returns.
Given the elevated valuations for dry bulk vessels, we decided to exit our drybulk positions, which will ultimately lead to gains of approximately $21 million or 45% above our carrying costs.
One of our three dry bulk vessels closed in the second quarter with the remaining two dry bulk vessels under contract expected to close in the third quarter of this year.
As we look forward, we believe there will be additional sale and purchase opportunities within the shipping sector.
Invest our largest publicly traded equity position continues to execute on its strategic initiatives to streamline its portfolio of senior care real estate.
Over the past 12 months. The company has sold just under $300 million of noncore assets with most of the proceeds used to reduce its overall debt profile.
Finally, our mortgage business produced positive returns in the first half driven by mortgage servicing fees and value appreciation on our MSR asset.
While volumes and margins have compressed in the beginning of 2000 22022 over the past two years. The business has grown retained earnings substantially and we now hold an MSR asset we're at $41 million on our balance sheet in.
In summary, we believe Tiptree is well positioned for the future. Our capital position is strong we are now debt free at the holding company after paying out $113 million in June and.
We continue to selectively buy back shares as opportunities present themselves with that I'll pass it to Sandra who will take you through the financial results in more detail.
Thank you Michael.
On page three of the presentation, we highlight tip trees key financial metrics compared to the prior year period.
In the second quarter, our results were impacted in several ways by the closing of the investment in four tag grabbed by Warburg Pincus.
In total the transaction resulted in a 63 million pre tax gain to tip trees equity.
This book gain was offset by $39 6 million of tax expense related to the tax deconsolidation up for Tegra.
Split between the income statement and equity.
GAAP accounting does not require an entity to record a deferred tax liability for differences in book and tax basis related to a subsidiary which is consolidated with its parent for tax.
Once our subsidiary is no longer consolidated for tax the deferred tax liability is recorded in the parent's books for.
That reason, we recorded $25 5 million of deferred tax in the income statement related to the cumulative impact of our growth in book value since we acquired before Tegra.
The remaining amounts offset the pretax gain from the transaction and was recorded directly to equity.
This deferred tax liability is only do if and when we decide to sell any of our four tegra shares future.
Future primary issuances by for Tegra would not trigger any tax liability.
For the quarter, we incurred a net loss of $22 million driven primarily by the previously mentioned tax expense.
Along with unrealized losses on investments as compared to gains in the prior year period, partially offset by growth in insurance and shipping.
Excluding investment gains and losses revenues were up 16% for the quarter driven by growth in insurance operations and increases in vessel charter rates are.
Adjusted net income for the quarter was 14 million, representing a 12, 3% annualized adjusted return on average equity.
Book value per share of <unk>.
$10.75 increased by two 7% compared to the prior quarter, primarily as a result of the gain on investment in for Tegra, which was partially offset by unrealized losses on our fixed income securities driven by the higher interest rate environment and the.
Strengthening U S dollar.
Our business is strong operating cash flows provide us the ability to hold these securities to maturity.
Turning to page five we highlight for Tegra as results for the quarter, where we continued to see strong momentum.
In the second quarter premiums that equivalent of 595 million increased by 8% year over year, driven by growth in specialty commercial and warranty lines.
Deferred revenues and unearned premiums, which represent future earnings potential stood at $1 8 billion up 26% year over year.
The combined ratio improved by 120 basis points year over year to 99%.
Operating efficiencies contributed to an improved expense ratio.
Despite continued investment in people and technologies to fund our growth.
While the underwriting ratio increased modestly due to changes in business mix.
For Tegra is 13, 7% expense ratio for the quarter continues to benefit from economies of scale with underwriting and see revenues growing faster than operating expenses.
Adjusted return on equity was approximately 26% on an annualized basis going forward for Tegra scalable efficient platform remains positioned for growth and consistent returns on equity.
On page six you can see the insurance company financial trends over time.
Gross written premiums and equivalents have increased 28% over this period with a 22% organic organic growth rate.
Specialty commercial lines have grown 46% per annum. So the addition of new agents and programs and the expansion of E N S offerings.
Personal lines have grown at a steady or 5% and benefited from increased consumer spending in 2021 in early 2022.
Lastly, warranty lines had tripled through increased market penetration and geographic expansion.
The combined ratio is not only stable, but has shown consistent improvement over time moving from 93, 3% in 2019, 297% in 2022.
Adjusted net income increased to 40 million for the first half representing a 42% growth rate over the past three years.
Adjusted return on equity has improved from 11% to 26% over the respective periods.
No. It's puts for Tegra adjust above 80 million of trailing 12 month adjusted net income a new milestone and one we expect to continue to improve upon in future periods.
Turning to the insurance investment portfolio on page seven total investments and cash and cash equivalents ended the quarter at just above 1 billion up 24% year every year in line with the underlying premium growth.
92% of the portfolio is invested in high credit quality and liquid securities with an average rating of double a plus.
The fixed income portfolio has a relatively short duration at two six years as we mentioned earlier well unrealized marks have impacted book value. We generally have the ability to hold these securities to maturity.
We view reinvestment as an opportunity for improvement in investment income with rising rates a positive for tankers investment portfolio in the long run.
For Tegra as capital and liquidity remained strong.
With $325 million of stockholders' equity.
Strong cash flow from operations and debt capacity of nearly 200 million all of which put the business in a solid position for future growth.
On page nine we present the results of Tiptree capital, which consists of our mortgage and shipping operations as well as our invest shares.
Pretax income for the quarter was $9 1 million compared to $8 4 million in the prior year driven by the performance of our shipping investments.
Our shipping investments contributed $13 8 million of pretax income.
The dry bulk and tanker charter rates remained at robust levels.
As Michael mentioned, we expect to recognize a gain of 21 million on the sale of our three dry bulk vessels, only 7 million of which impacted the second quarter with the remaining $14 million expected in the third quarter.
Given elevated charter rates and strong demand for shipping assets. We believe the fair value of our remaining two vessels is in excess of our second quarter net book value of $34 5 million.
In the past two years, our mortgage business benefited from several tailwind, including higher refinance volumes supported by both low rates and rising home prices as well as the drilling servicing book.
These tail winds drove significant returns on our investment in this business, which as of June 32022 had grown to 58 million.
Rising mortgage rates and declining affordability has impacted originations across the industry.
As a result, we've seen our mortgage origination volumes declined 17% from the prior year and margins compress to pre COVID-19 levels.
While we believe our mortgage servicing portfolio will offset some of the impact on originations as rates rise, we expect to continue to face headwinds in volumes and margins for at least the remainder of this year.
Turning to page 11, we highlight tiptree as some of the parts value, reflecting the impact of the investment and for Tegra.
Based on the transaction multiple of trailing 12 months adjusted net income implicit in warburg's investment chip trees retained ownership of for Tegra on an as converted basis represents approximately 744 million or $19.
85 cents per diluted Tiptree sure.
As you can see including our remaining assets. We believe tiptree is some of the parts value to be $26.12 per diluted share.
Now I will turn the call back to Michael to conclude our prepared remarks.
Thanks Sandra.
We were pleased with the performance of our subsidiaries operations through the first half of the year.
For Tegra continues to post record premiums adjusted net income and return on equity.
Market conditions remain favorable and the pipeline for new business is as strong as it has ever been.
As we look forward, we see significant opportunities to create value with our investment in <unk>.
Within the shipping sector.
Charter rates remain at above average levels, which through the sale of our dry bulk vessels and continued ownership of our tankers provides us the opportunity to drive near term returns.
And we remain focused on deploying capital with the objective of long term shareholder value appreciation with that we will open the line for questions.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys and to withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.
And the first question will come.
From Walter Schenker with M. A Z partners. Please go ahead.
Actually two questions but.
The sale of the three.
<unk> ships.
Will result in approximately how much net cash to tiptree.
Assuming they close.
I realize youre under contract and Hasnt closed yet.
Right.
Walter Thank you for the question did you want to ask the second question also.
The second question is with the sale of the ships with the shrinkage somewhat just nature of the calling in the mortgage business with the fact that <unk> going back to the underwriting has its own school in place management team.
He is not.
Maybe this is a double negative doesn't.
Hip tree.
Overweighted in management and management expense.
Given that could Tigris has its own management team.
We spend a lot of money on.
Corporate.
Right.
Got it I understand the question. So let me start with the dry bulk question. So gain on sale relative to our depreciated carrying book value was approximately 20 is anticipated to be once we have the settlement of the dry bulk about $21 million over our gap.
Carrying book value total proceeds on a gross basis is expected to be about $69 million from the ultimate sale of all three on a net basis after fees and expenses as well as some of that has been invested by a partner, we would expect that to be less and Sandra <unk>. Scott I don't know if you have an estimate of what our net.
Basis, what you expect that to be.
Yes.
Roughly $60 million.
Okay. Okay. So that was it.
Yeah.
Thank you, so and since you're basically debt free.
Because of the Warburg Pincus thing.
I'll be $60 million of cash on the balance sheet at least.
Once the Rainbow being equal that's correct, yeah. That's right. Okay. Thanks, Mark settle that that's what we would expect with respect to the question of for Tegra mortgage business et cetera, and the management.
We have for the last 15 plus years, we've invested in operating businesses one of the things, we prioritized as having great management on those businesses in which we invest we like taking control interest in businesses.
So with regard to both reliance as well as for Tegra. We we did exactly that with respect to reliance we purchased that from a private equity firm and with respect to fatigue, where we did a take private actually.
In terms of when we when we purchased for <unk> had been a public company.
The management of both I'd say is as good as it gets.
It is rare to find management of the quality.
Of the extraordinary high quality in both of those businesses that I could not I could not say enough for the performance of both.
It is true that through on a look through basis. When you. When you look at the what I referred to its home office of Tiptree and the core group of management that allocates capital and deals with public company.
<unk> on both legal accounting tax et cetera, which we expect which we expect the number of individuals to stay relatively stable as we go forward that that number we think will ultimately achieve economies of scale as we grow as we invest in divested businesses based upon where we see.
<unk>.
The management.
Expenses embedded in the returns we are experiencing from those investments as we report as we report them. So we are always looking to cut costs. We are always looking to run efficient businesses, but what we prioritize above all else is having competent management for the capital that we allocate I don't know if that answers. Your question, but we are always going to look.
To try to run a tight ship getting paying down our debt is going to reduce if I recall correctly approximately $7 million of interest expense that will further reduce holding company ongoing.
Expense.
And we're always going to look to to try to to try to cut back where we can.
And I'll just mention that the incentive program, we're extremely aligned with investors in terms of how we get paid relative to price performance on our incentive program. So I'll stop there Walter any other question I'll just make a statement.
Over the last two years.
We've had share creep of a couple of million shares I just got two in the afternoon shows which is tied to management being incentivized with shareholders and part of the compensation all of which is generally good, albeit we're issuing shares at 40% of what you believe.
It is what it is good.
I would strongly suggest.
Since the stock is 40% roughly.
Give or take.
Where the.
<unk> per share is.
As you lay it out and I think that's a pretty reasonable mess.
Methodology.
A significant portion of that.
$60 million could be redeployed.
Creating value by buying back shares I know you bought back a few in the quarter, but you know surely in a position to be more aggressive. That's my comments, it's not a question I comment is right.
Appreciate the comment and as we've said in the past, we will always look to buyback our shares and we think it presents opportunity there are constraints in how we buy back shares and how we wanted to do so in a safe Harbor.
Situations. So there are constraints on volume constraints et cetera, so it's harder than it sometimes looks to buy back shares but as you noted we bought back notes if I remember correctly 89000 shares plus which frankly was towards the end of the quarter. After we saw.
<unk> line of sight to a clear settlement of the Warburg transaction. So we didn't want to be too aggressive too. We knew that was closing, but yeah. We're always going to look for that and I agree with you that's going to be a great use of capital. If we can buyback our shares at a significant discount to intrinsic that is correct.
Okay. Thank you very much.
Thank you.
Yeah.
The next question will come from Chris Colvin with breach Inlet capital. Please go ahead.
Thanks for taking my question.
I guess echoing Walters comments.
To start with is just given the big discount between fair value and you're trading price. We're also very supportive and we'd like to see more aggressive buybacks and.
It suggests considering a large Dutch tender to buy back a bunch of shares but.
And I think that'll be helpful. But the reality is the liquidity of your stock is low I suspect some shareholders on the call don't want to see a large buyback because of that liquidity and although that should help close the gap I don't think that's really the answer.
So <unk>.
Since you wisely pulled the protect our IPO last April you look Youre for Tiger earnings are up I think like 150%.
Warburg has invested in a value that as you state conservatively implies of Tiptree shares are worth over 25 a share.
Yet your share price is remains if like Walter said, 40% of that fair value in your trading price isn't up much from when you pull the IPO.
So we would strongly encourage the board to look at spinning off for Tegra into a standalone public company.
That seems like one of the best path to crystallize and highlight the value of the asset it would be far more cost and tax efficient.
Then in IPO and something that I think Warburg pincus seems like they could get onboard with so I guess I propose that and wanted to hear Michael your perspective on that idea.
Sure. Thank you, Chris and and I appreciate your comments.
I'll start with the Dutch tender in share buyback and I would just say that look when we there are a couple of criteria I look at before we want to buy back shares and one of them is that we held cash flush that we have no covenants that may be breached, which having paid off our holding company debt.
Eliminates many of the questions that would be raised with respect to covenants et cetera, and you're shrinking so we need to value the.
The distribution of that capital and share buyback versus the objectives of growing and achieving economies of scale and expenses as well as other investment opportunities, particularly what opportunities may exist, continuing continuing to support our existing businesses protect growth being the largest.
So we try to evaluate all of this coupled with the knowledge constraints that I mentioned and that you just made reference to a low low active trading little float as well as.
Constraints on any safe Harbor program that one might put in place.
Other than block sales, which frankly are relatively infrequent.
So we are always going to look at that opportunity. We have a dynamic conversation I'd say if not every day certainly every week and certainly every quarter at our board meetings as to what the what the right objectives are and we carry forth. These ideas to our board and discuss them actively and Jonathan and I with the with <unk>.
Randy and Sandra and Scott and others, we debate this all the time.
So we're always going to consider that as an objective if we meet the criteria that we've set for ourselves to manage the company properly and in light of other opportunities.
With respect to the spinoff of for Tegra look we just closed on Warburg.
For <unk> now got capital to grow its hitting its numbers and exceeding its numbers that had been targeted we see a great path of growth for Tegra, we have a private equity partner. So we acknowledged by taking on a private equity partner theres going to be an objective from them to see a monetization at some point that can come in a couple different form.
It can come in an IPO potentially could come in a sale of a business but.
But its spinoff frankly may be complicated it's a it's a there's a lot of considerations that go into that and frankly.
All opportunities all Oh, all scenarios will be considered but we just settled the dust is Jeff settling.
We have capital for Tegra to continue the growth trajectory and so where is it.
Yes.
We're very happy with our investment in for Tegra, We wanted to see continued value to.
To Tiptree shareholders, we have a long term view and we're going to manage that how we see desk right.
Right now, we're going down that path, but I agree with you at some point it will make sense to potentially if achieving its objectives and the market conditions are right.
The monetization event.
Certain certainly as I said, we have a partner that's going to want to do that and we acknowledge that.
Thanks, Thank you.
Thank you Bruce.
The next question will come from Joseph <unk> Investor. Please go ahead.
Hey, guys.
All right.
Hey, so.
Let me ask one question and then I'll ask another one if we can if you guys could take them in order to have that would be great.
So chi P value.
One thing Thats obvious just.
Yes.
Well the answer to.
Value of dollars, just going up on a per share basis.
Got it.
It hasn't as much right. So just to illustrate that September 30, 21 pro forma <unk> was $887 million.
Just ended at $979 million so.
The increase of $92 million awesome, great job.
But from a shareholder perspective per share.
It's flat to $26 from September 30 to June 30.
An element of that is share creep right.
More shares outstanding.
Uh huh.
Is there also some.
Else going on in the sense that.
DSO cheap P value used to assume $140 million of proceeds from the Warburg Pincus transaction.
Now does it deal closed according to your cash flow statements $200 million came in.
Did that.
Correct I would add is the $60 million go somewhere.
No I think I think you I think you are confused on that the investment was always a $200 million investment a certain portion was used to pay down tip trees holding company debt as well as for us to take some additional cash out in the form of a dividend and then capital was left with with Forte growth is growth.
Capital and so in the aggregate, though it adds up to 200 million of investment that was always the target investment from Warburg Pincus I'm just to be clear.
Okay.
Go ahead.
No I apologize.
The dilution again, so GP value being up nearly 100 million over nine months.
The per share at the GP.
It's flat.
Pretty much solely just theres more shares outstanding is the denominator.
I believe that case I know that in the last quarter, a warrant that had been issued 10 years ago.
Two two.
Two when we did an internalization of management structure came due and that warrant.
Holders of that warrant primarily myself.
Other partners of mind at the time exercise that warranty have writing a check and in cash. So it certainly speaks to our confidence of the value of the of the shares but there's certainly that an increase in shares of the exercise that warrant.
And a few shares I think of as incentive compensation, which is normal Sandra and Scot anything you'd add to that.
No Michael.
Warrants were a big driver of the change in.
Dilutive shares period over period.
Okay.
Alright, and then.
Question, Thank you for allowing that.
Yeah.
Do you guys know that.
If there is a vote of shareholders.
We get we just as illustrated every conference call.
We shareholders want.
Action now we want.
The value inherent apparently inherent in the company to be.
Better shown in our stock price.
And our vote.
All the vast majority of folks want action now whether it be a spin out selling the company.
Whatever.
This isn't that atypical against you guys or the management team.
Or do.
Yes, hey be patient, we will get we will get to where we want to get too.
Just hold on tight.
I respect that.
One of my.
Biggest pet peeves here is while we wait while shareholders way public shareholders weight.
Okay.
A lot of loss leakage of value in the sense that $125 million of annualized corporate expense that excludes interest expense.
As a pure corporate expense.
It's a lot of you know that's a lot of money that's on.
On an after tax basis, you're talking.
Something like 50 cents a share.
And basically in earnings not only that you guys are issuing stock.
Two employees at a 40, 50% discounted what you clean or replace I think believe is the value of the company.
So again.
Not to beat a dead horse, but Michael you're a smart guy he's been doing this a long time you get to markets.
Yeah.
Where is your conviction in.
Were all wrong.
And it pays.
Year after year two.
Nick.
This value from public shareholders.
Two.
Basically corporate insiders. Thank you very much for addressing that question.
I appreciate it.
And.
I I do appreciate your comment and let's talk about the shared leak as you referred to it it's interesting because one of them and value.
I think right in our corporate expense was $25 million a year realized sure that some of that is public cost for a CAGR, which was generating 90% of profits or more of the company. So it's basically for integra.
Okay. Okay go ahead, sorry, yeah, no. That's fine I was going to just say that lets us address corporate expenses first I think to your point there is a certain amount of corporate expenses that are fixed and then particularly as a public company those will not change the way that I would like to see.
That diminish as a percentage of the business is to grow the business and that again is a counter balance to our other objectives of potentially buying back shares or any consideration of other dividends et cetera. So there's always that tension is my desire to grow the business versus using that capital in other ways that would potentially shrink or keep the business.
At its current size.
One consideration incentive.
She is another component of the corporate expenses and that's based upon performance to that end, we did make a significant adjustment last year that was voted on in our proxy.
Earlier, this year, where we changed the senior management incentive from our shoes, which were issued to your point at a discount to fair value and we felt that that program as it related to the senior executives was really not applicable was not the right program.
What was the rate program was to achieve higher and higher share price.
Out of the money from where we're currently trading out of the money from where we currently are either a book value, where we've treated historically where increased amounts are awarded for increased price appreciation. So so to that end. There were there were shares that were issued when we hit the price of 15, the first target.
The next target is 20 and U b.
You know you you should you should feel confident that senior management is extremely focused on that $20 price, we would love to see us.
Get that and I think shareholders, we would be rewarded and shareholders would be rewarded. So that's the current primary incentive program that exists. So its not leaking out shares at a discount it's incentivizing management to achieve higher a higher share price. There are there are there is still an argue program for other executives.
Relatively small as in the restructured incentive program and so to that end there is still four other other participants.
Participants in the in the home office as I call. It that will participate in our issues, but it's relatively small.
So as it relates to.
Expenses and incentives that that that is how I would respond.
<unk> to the objectives of the business as you said we've got.
Chip just passed its 15th anniversary in June we have always looked at allocating capital with the objective of achieving best in class returns for every industry every business every allocation and to be competitive with other investments available in the market you go back and look at our proxy.
C. A few pages and Youll see our one year three year five year 10 year relative to the S&P relative to the Earth to the Russell and quite frankly, I would I would argue strongly that we've achieved our objective over that period.
Certainly our shares have traded off.
As inflation has hit has oh.
It's taken a hit to our <unk>.
And it certainly impacts of their businesses, but quite frankly, I feel extremely bullish about our businesses with regard to for Tegra <unk>.
Particularly look we've invested in multiple insurance businesses over the years one of the first primary investments you made in Tiptree was an insurance company and so we've done other add on acquisitions of insurance businesses over the years for take rate has been a great investment for Tegra.
It started as a approximately 100 million allocation has grown dramatically from our initial allocation. It's great to have a winning investment my certainly growing up my objective is to keep your winners cellular losers were winding down or if you find the opportunity to sell something at a price at which you value at less than.
Others may value, it or you see greater downside than other see sell it so we stick to that discipline and we take a very long term view.
Clearly our objective is to create a platform.
Or monetization potentially for investment in particular, when we've achieved our objectives.
We went down that path as recently as 18 months ago and decided it wasn't really decided we weren't getting the right price that the market or bankers were not valuing what we solved properly and we decided to pull it and I think it was the right decision we brought in excess outside capital partner of Warburg Pincus, a great partner.
And as I said as a private equity partner, we have the objective that we share with them of seeking a monetization event when the markets are there and when we feel that the valuation is appropriate.
And so like all of our investments we are going to nurture that until we see the right point of exit.
But it just isn't ready yet and having just closed on that capital and it took a long time I can always longer than I'd hoped we are flushed with capital ready to grow and I see a great runway for Tegra to continue its growth trajectory. So we're we're extremely pleased with our investments right now all of our businesses as I noted at the beginning of the call where prop.
Well in the last quarter, and frankly, I give kudos to all of our management teams have done a great job.
Okay.
But we're going to talk in circles I'll just back at.
I'll make it brief.
And the key in Q2 employee comp and employee incentive comp combined $6 million in Q2, So I don't see how that is.
Five down with it.
With the new plan.
Maybe I'm missing something but that's what the Q says.
It's just it's a lot of money again $25 million in corporate expense, where we're CAGR is generating 90, maybe it's 100% of the problem actually 90% plus profit.
There is.
Yeah.
We ask shareholders weight.
We public shareholders are paying a very large price.
So way, it's money, that's going out the door and not coming back.
And.
Folks.
Good folks are getting at you guys.
It just seems like.
Got it.
Not a fair deal.
So.
Anyway. Thank you very much not every management team.
I would be open to having this critique.
In public forms so I do appreciate that but.
But just hearing us.
And nodding and saying we're doing our best as oney.
It's just only so gratifying it doesn't solve.
What would I came to be.
And unfair formulary here.
Formula It is not.
And.
Particularly.
The public shareholders' interest.
Foremost in mind.
Michael I do sincerely appreciate you letting me.
Destocking questions in.
Voicing.
These thoughts thank you.
Got it thank you Joe and I appreciate the comments, we hear from a lot of our investors and everyone has some great ideas, we try to certainly.
Hear them.
<unk> tried to do better, but with regard to our investments.
Well, we'll sell them when we feel that the right way.
When the markets are there and when it's at the right price, but I appreciate your comment Joe. Thank you.
This concludes our question and answer session I would like to turn the conference back over to MS. Sandra Bell for any closing remarks. Please go ahead.
Thank you Chuck and thank you everyone for joining us for our second quarter 2022 conference call as always we are available to take your calls and questions and please feel free to reach out to me or Scott at any time. Thank you again.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
Yeah.
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