Heritage Global Inc. Q1 2024 Earnings Call
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Operator: Ladies and gentlemen, greetings and welcome to the Heritage Global Inc. first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Nesbett with IMS Investor Relations.
Ladies and gentlemen, greetings and welcome to the Heritage Global Inc. First quarter 2024 earnings conference call at.
John Nesbett: At this time all participants are in a listen only mode.
John Nesbett: Later, we will conduct a question and answer session.
Operator: As a reminder, this conference is being recorded.
John Nesbett: It is now my pleasure to introduce your host John Nesbitt with IMS Investor Relations.
John Nesbett: Thank you and good afternoon, everyone. Before we begin, I'd like to remind everyone that this conference call contains forward-looking statements based on current expectations and projections about future events, which are subject to change based on various important factors. In light of these risks, uncertainties, and assumptions, you should not place undue reliance on these forward-looking statements, which speak only as of the date of this call. For more details on the factors that could affect these expectations, please see our filings with the Securities and Exchange Commission. Now, I would like to turn the call over to Heritage Global's Chief Executive Officer, Mr. Ross Dove. Thank you, John.
John Nesbett: Thank you and good afternoon, everyone before we begin I'd like to remind everyone that this conference call contains forward looking statements.
John Nesbett: On current expectations and projections about future events and are subject to change based on various important factors.
Ross M. Dove: In light of these risks uncertainties and assumptions you should not place undue reliance on these forward looking statements, which speak only as of the date of this call for more details on factors that could affect these expectations. Please see our filings with the Securities and Exchange Commission now I would like to turn the call over to <unk> Global Chief Executive Officer, Mr roster.
John Nesbett: Ross.
Ross M. Dove: Thank you, John. Good afternoon, and thank you everyone for joining us. Ending Q1 with a solid Q and $2.6 million in NOI feels very good after our very large Q4. It bodes well for not just this year but also next year and beyond. We're now in Q2 with lots of momentum and a strong sale in the books already, and on track and pace to close our first quarter well-positioned to continue our organic growth trajectory.
Ross M. Dove: Thank you John Good afternoon, and thank you everyone for joining.
Ross M. Dove: Ending Q1, with a solid Q and $2 6 million in NOI feels very good after a very large Q4.
Ross M. Dove: Well for just this year and also next year and beyond we're now in Q2 with lots of momentum and a strong sale in the books already and on track and pace to close of our first quarter well positioned to continue.
Ross M. Dove: Our organic growth trajectory, we are now healthy enough and confident and positive about.
Ross M. Dove: We are now healthy enough, confident enough, and positive enough to pivot to a strong drive towards M&A. With that, I turn the call over to Brian for the nuts and bolts of Q1 results, and I'll add some color afterwards on where I see the market, where I see the opportunities, and where I see us striving forward. So, Brian, we'll walk you through the quarter, and then I'll join back in. And once again, thank you for joining us.
Brian: To pivot to a strong drive towards M&A.
Ross M. Dove: With that I'll turn the call over to Brian, but the nuts and bolts of Q1 results.
Brian: And I'll add some color afterwards.
Brian: Where I see the market, where I see the opportunity.
Ross M. Dove: It's driving forward well, Brian will walk you through the quarter and then I'll join back in and once again, thank you for joining.
Brian: Thank you Ross.
Brian J. Cobb: Before we dive into the overall financial results, I want to first touch on our divisional highlights. Our financial assets division continued to build on its momentum in 2023, capitalizing on opportunities in the marketplace as increased macroeconomic pressure drove continued volumes of charged-off credit cards and non-performing loans. The division reported operating income of $2.9 million in the first quarter of 2024, compared to $2.5 million in the 2023 period, a 16% increase year-over-year.
Brian: Before we dive into the overall financial results I wanted to first touch on our divisional highlights.
Brian J. Cobb: Our financial asset Division continued to build on its momentum in 2023 capitalizing on opportunities in the marketplace as increased macroeconomic pressure drove continued volumes of charged off credit cards and nonperforming loans.
Brian J. Cobb: The Division reported operating income of $2 9 million in the first quarter of 2024 compared to $2 5 million in the 2023 period.
Brian J. Cobb: 16% increase year over year.
Brian J. Cobb: The growth in our financial assets division was primarily driven by our specialty lending segment, which recorded operating income in the first quarter of approximately $900,000, an 81% increase compared to the prior year period. As of March 31, 2024, our total gross balance related to investments in loans to buyers of charged-off and non-performing receivable portfolios was $37.3 million, classified on our balance sheet as both notes receivable and as equity method investments.
Brian J. Cobb: The growth in our financial assets Division was primarily driven by our specialty lending segment.
Brian J. Cobb: Core net operating income in the first quarter of approximately 900000.
Brian J. Cobb: And 81% increase compared to the prior year period.
Brian J. Cobb: As of March 31, 2024, our total gross balance related to investments in loans the buyers of charged off and nonperforming receivable portfolios was $37 3 million.
Brian J. Cobb: Pacified on our balance sheet as both notes receivable and as equity method investments.
Brian J. Cobb: Our brokerage segment continues to be the main driver of income for our financial assets division and recorded $2.1 million in operating income compared to $2 million in the prior year quarter. We continue to strengthen our existing relationships in the segment with high quality, top, and mid-tier buyers and are seeing a strong pipeline of opportunities in the upcoming year. In the Industrial Assets Division, total operating income was $800,000 during the quarter compared to $2.6 million during the first quarter of 2023.
Brian J. Cobb: Our brokerage segment continues to be the main driver of income for our financial assets Division and recorded a $2 1 million and operating income compared to $2 million in the prior year quarter.
Brian J. Cobb: We continue to strengthen our existing relationships in this segment with high quality top and mid tier buyers and are seeing a strong pipeline of opportunities in the upcoming year.
Brian J. Cobb: In the industrial assets Division total operating income was 800000 during the quarter compared to $2 6 million during the first quarter of 2023.
Brian J. Cobb: While the Division didn't see certain large auctions as executed in the first quarter of 2023 or the volume of auctions seen in the fourth quarter of 2023, we have significantly added to the current pipeline during the first quarter, and we expect to see strong auction activity as we move through the second quarter. One big development related to our auction segment. In conjunction with our joint venture partners, we acquired a pharmaceutical plant in Missouri late in December 2023. Only four months later, we closed the sale of machinery and equipment within the building, along with a 10-year building lease.
Brian J. Cobb: While the division didn't see certain large auctions as executed in the first quarter of 2023 or the volume of auctions seen in the fourth quarter of 2023, we.
Brian J. Cobb: We have significantly added to the current pipeline during the first quarter and we expect to see strong auction activity as we move through the second quarter.
Brian J. Cobb: One big development related to our auction segment.
Brian J. Cobb: In conjunction with our joint venture partners, we acquired a pharmaceutical plant in Missouri late in December 2023.
Brian J. Cobb: Only four months later, we closed the sale of machinery and equipment within the building along with a 10 year building lease.
Brian J. Cobb: This is another quick turn from acquisition to close for real estate and a big win for our auction segment, which exemplifies the strength of our sales team and relationships with our joint venture partners. And lastly, before turning to the financials, I want to touch on a brief accounting item. In accordance with new segment reporting guidance, we're working on expanding our segment-specific disclosures by reporting additional income statement details by the end of 2024.
Brian J. Cobb: This is another quick turn from acquisition that closed for real estate and a big win for our auction segment, which exemplifies the strength of our sales team and relationships with our joint venture partners.
Brian J. Cobb: And lastly, before turning to the financials I want to touch on a brief accounting item.
Brian J. Cobb: In accordance with new segment reporting guidance, we're working on expanding our segment specific disclosures by reporting additional income statement details by the end of 2024.
Brian J. Cobb: We look forward to sharing more information on our segment operations and providing further transparency for shareholders. Now, turning to the financial results. Consolidated operating income was $2.6 million in the first quarter of 2024 compared to $3.9 million in the first quarter of 2023. For the quarter, we reported adjusted EBITDA of $2.9 million compared to $4.2 million in the prior year period. Net income was $1.8 million, or $0.05 per diluted share, compared to net income of $2.8 million, or $0.08 per diluted share, in the first quarter of 2023.
Brian J. Cobb: We look forward to sharing more information on our statement of operations and providing further transparency for shareholders.
Brian J. Cobb: Now turning to the financial results.
Brian J. Cobb: Consolidated operating income was $2 6 million in the first quarter of 2024 compared to $3 9 million in the first quarter of 2023.
Brian J. Cobb: For the quarter, we reported adjusted EBITDA of $2 9 million compared to $4 2 million in the prior year period.
Brian J. Cobb: Net income was $1 8 million or <unk> <unk> per diluted share compared to net income of $2 8 million or <unk> <unk> per diluted share in the first quarter of 2023.
Brian J. Cobb: Our balance sheet continues to strengthen with stockholders' equity of $63 million as of March 31, 2024, up from $61.1 million at December 31, 2023, and net working capital of $15 million. Looking forward, while we continue to drive organic growth and profitability, we are increasing our focus on strategic M&A to drive the long-term growth of the business. It's incredibly exciting to see how this company has evolved over just a few years, and I'm enthusiastic about the increased number of opportunities we see in the M&A space.
Brian J. Cobb: Our balance sheet continues to strengthen with stockholders equity of $63 million as of March 31, 2024 up from $61 1 million at December 31 2023.
Brian J. Cobb: And net working capital of $15 million.
Brian J. Cobb: Looking forward, while we continue to drive organic growth and profitability.
Brian J. Cobb: We are increasing our focus on strategic M&A to drive the long term growth of the business.
Brian J. Cobb: It's incredibly exciting to see how this company has evolved over just a few years and I'm enthusiastic about the increased number of opportunities we see in the M&A space.
Brian J. Cobb: With continued performance in our core segments and a strong balance sheet, I'm confident that we'll be able to achieve our goals to broaden our business through acquisition. And with that, I'll turn the call back over to Ross. Thank you, Brian.
Brian J. Cobb: With continued.
Brian J. Cobb: <unk> performance in our core segments, and a strong balance sheet I am confident that we'll be able to achieve our goals to broaden our business through acquisition.
Brian J. Cobb: And with that I'll turn the call back over to Ross.
Ross: Thank you Brian.
Ross M. Dove: It was good to hear. So, let me try to kind of open up the drapes and give you kind of a window into where we see our growth. Because we have a lot of competitors in the marketplace, I'm not going to completely and entirely unveil what we think is our secret sauce. But let me just give you some obvious drivers.
Ross: Good to hear so let me try to.
Ross M. Dove: Kind of open up the drapes and give you a kind of a window into where we see our growth.
Ross M. Dove: Because we have a lot of competitors in the marketplace, So I'm not going to completely and entirely unveil what we think associate resource. So let me just give you. Some obvious drivers were already in the process of initiating so let me talk about first lending.
Ross M. Dove: We're already in the process of initiating, so let me talk about first lending. 95% of our lending business is financial assets. But, as you know, half our revenue is from industrial assets. There's going to be a significant push to balance out our lending and leverage our databases that literally have almost a billion dollars of assets captured on the industrial side and become a far more aggressive lender. So that's kind of one of the multiple things we're doing. Let me talk to you about the second one.
Ross M. Dove: 95% of our lending business as financial assets, but as you know half of our revenue is industrial assets, there's going to be a significant push into balancing out our lending and leveraging our databases data literally have almost $1 billion of assets capture.
Ross M. Dove: On the industrial side, and becoming a far more aggressive lender. So thats kind of one of the multiple things. We're doing let me talk to you about the second one we have all of this data we've recorded in both financial and industrial and we're not really.
Ross M. Dove: We have all of this data we've recorded in both financial and industrial, and we're not really gaining what we should in revenue on finding a way to monetize data-driven revenue. That is an initiative that we have begun this year. We see lots of opportunities to take that data and monetize it. The third one is that we want to look hard at the sectors we're in. Yes, we're winning in pharma, we're winning in biopharma, and we're doing great in food and beverage, but there are 20 manufacturing sectors.
Ross M. Dove: Gaining what we should do in revenue on finding a way to monetize the data driven revenue that is an initiative begun this year, we see lots of opportunities to take that data and monetize it.
Ross M. Dove: Third one is.
Ross M. Dove: We want to look hard at the sectors. We're in yes, we are winning in pharma, we are winning in Biopharma, we're doing great in food and beverage 20 manufacturing sectors and also there is a global geography, where we're primarily focused in North America.
Ross M. Dove: And also, there's a global geography where we're primarily focused on North America. So we're looking at expanding all of that and trying to speed up our growth and make our shareholders proud. Some of this will require an increase in M&A, and some of this will require just simply adding expertise to our existing company. We're always going to look hard at the build or buy component, and we're not necessarily saying it takes all M&A to grow because we think we're solid growing organically too, but we're going to put all of our engines together on both, and we're going to push forward with confidence. I thank you all for hearing us. We're now open to questions, and we appreciate you guys always joining us. Thank you.
Ross M. Dove: We're looking at expanding all of that and trying to speed up our growth and make our shareholders proud.
Ross M. Dove: This will require.
Ross M. Dove: An increase in M&A and some of this will require just simply adding expertise to our existing company. We're always going to look hard at the build or buy component and we're not necessarily saying it takes all M&A to grow because we think were solid growing organic.
Ross M. Dove: <unk>, two but we're going to put all of our engines together on both and we're going to push forward with confidence.
Ross M. Dove: Thank you all for hearing US we're now open for questions and we appreciate you guys are always joining thank you.
Operator: If you would like to ask a question, please press star 1 on your phone now, and you'll be placed in the queue in the order received, if, once again, or please be prepared to ask your question when prompted. Once again, if you have a question, please press star 1 on your phone now.
Ross M. Dove: If you would like to ask a question. Please press star one on your phone now and Youll be placed into the queue in the order received.
Operator: Okay.
Operator: Once again.
Operator: Please be prepared to ask your question when prompted.
Operator: Once again, if you have a question. Please press star one on your phone now.
Operator: And our first question comes from Mark Argento from Lake Street capital.
Operator: Your line is open.
Mark Nicholas Argento: Hey guys, good afternoon. I just wanted to touch on a little bit, I know you talked a little bit more about M&A than you have historically. Any specific criteria from a financial perspective, does it need to be immediately accretive? What are you kind of, when you're looking at opportunities, what are the key criteria that you're looking to fulfill?
Speaker Change: Hey, guys good afternoon.
Mark Nicholas Argento: Just wanted to touch a little bit I know you talked a little bit more about M&A than you have historically.
Mark Nicholas Argento: Any specific criteria from a financial perspective does it need to be immediately accretive.
Mark Nicholas Argento: What did you cut out when youre looking at opportunities what what are what are the key criteria is that you're looking to fulfill.
Ross M. Dove: So I'll take it first, Brian. Obviously, NLEX originally was an acquisition that worked out phenomenally well. ALT is working out well, too.
Speaker Change: So I'll take it first Brian so.
Ross M. Dove: Obviously analytics originally wasn't acquisition worked out phenomenally well ALC is working out well, what we really look at us.
Ross M. Dove: What we really look at is, having one and one equal three, so to speak, if we can buy somebody, we don't mind it not being just a pure straight, look at all the numbers today. What we're looking at, more importantly, is looking at the fit, looking at the culture, and looking at something that expands our offering but has a lot of synergy. So there are opportunities on both sides of the table.
Ross M. Dove: One and one equals three so to speak if we can buy somebody we don't mind not being just the pure straight look at all the numbers today. We're looking at more importantly is looking at the foot looking at the culture and looking at something that expands our offering but has a lot of synergy. So there are.
Ross M. Dove: Opportunities on both sides of the table there are financial asset companies that.
Ross M. Dove: There are financial asset companies that basically are not all consumer loans that are also real estate loans and other types of loans that we think will really fit into our platform. On the industrial side, there are niche players in very specific industries that we think can also fit into our platform, and there's also us growing our international business as well, Mark.
Ross M. Dove: We are not all consumer loans that are also real estate loans and other types of loans, we think will really fit into.
Ross M. Dove: Our platform on the industrial side, there are niche players and very specific industries that we think can also fit into our platform and there is also.
Ross M. Dove: That's growing our international business as well Mark So we're kind of looking at a lot of different fronts at once and were seeing a bunch of potential opportunities.
Brian J. Cobb: Yeah, in terms of just looking at the business, in particular, looking at the financial assets business, it sounds like the lending business is performing well. I think the charged-off or brokered loan business seems to be kind of flattish. Any, you know, you see in any activity, any pickup there, any kind of seasonality or other kind.
Ross M. Dove: Sure.
Ross M. Dove: Terms of the.
Brian J. Cobb: Just looking at the business.
Brian J. Cobb: Particular, looking at the financial assets business. It sounds like the lending business is performing well.
Speaker Change: I'll take the charged off.
Brian J. Cobb: Coker bone business seem to be kind of flattish any you are seeing any activity any pick up there any kind of seasonality or other.
Speaker Change: Yes at higher levels.
Brian J. Cobb: The fact that.
Brian J. Cobb: It is actually growing. We didn't have any episodic transactions in Q1, so Q1 was almost entirely the existing forward flow. The good news is that we added new forward flow clients, so you're going to see it pick up as the year goes by. So we think it's actually going to have some sequential quarter-over-quarter growth going forward, and we're going to have, like we do every year, some episodic transactions that will get a spike in one or two of the quarters.
Brian J. Cobb: So it is actually growing we didn't have any episodic transactions in Q1. So Q1 was almost entirely the existing forward flow. The good news. There is we added new forward flow clients, when you're going to see it pick up as the year goes by.
Brian J. Cobb: So we think it's actually going to come.
Brian J. Cobb: Sequential quarter over quarter growth going forward and we're going to have like we do every year. Some episodic transactions that will get a spike in one or two of the quarters. So.
Brian J. Cobb: So it's going to grow organically on its own, and it's also going to grow because we've added some more clients. And you don't see revenue from those clients in the quarter that we onboard them. You see the revenue coming in Q2 and Q3 as they start giving us products to sell.
Brian J. Cobb: It's going to grow organically on its own and it's also going to grow because we've added some more clients.
Brian J. Cobb: Don't see the revenue from those clients in the quarter that we onboard them you see the revenue coming in Q2, and Q3, as we start giving us product to sell.
Operator: Great. I appreciate it. I'll hop back into the queue. Thanks.
Speaker Change: Okay I appreciate it I'll hop back in the queue. Thanks.
George Frederick Sutton: Thank you. And our next question comes from George Sutton of Craig Hallam. Your line is open.
Speaker Change: Thank you.
Operator: Our next question comes from George Sutton of Craig Hallum.
George Frederick Sutton: Line is open.
George Frederick Sutton: Hi, George.
Ross M. Dove: Hello, Ross. How are you? I'm good.
George Frederick Sutton: Hello, Ross how are you.
George Frederick Sutton: Im good.
Ross M. Dove: So first, I wondered if you could walk through the pharma plant economics, just so we're kind of clear what that opportunity looked like, what you achieved there? I'm going to give that to, I'm going to give that to Brian, because it's a little complicated on how the revenue recognition is going to take place. When you sell the equipment, and then you do a 10 year lease versus just selling it all at once, so Brian is probably more qualified to work with the auditors. So Brian, you get, you ask this question.
George Frederick Sutton: So first I wondered if you could walk through the pharma plant economics, just so we're kind of clear what that opportunity looks like and what you achieved I didn't give that I'm going to give that to Brian.
Brian: Because it's a little complicated on how the revenue recognition is going to take place.
Brian: When you sell the equipment and then you do a 10 year lease versus just sell it all at once.
Ross M. Dove: Brian and probably there's more qualified and working with the auditors. So Brian you get you get this question.
Brian J. Cobb: Yeah, okay. We haven't provided any details in the earnings release on the extent of the transaction. However, you know, we're working through the accounting for that partnership or a joint venture with three other partners. So we're working through the accounting; all of the expenses have to flow through the joint venture. And also, as Ross mentioned, a 10-year lease has a couple of different ways that it could be accounted for.
Ross M. Dove: Yes.
Brian: Okay. So we haven't provided any details on the in the earnings release on the extent of the transaction.
Brian J. Cobb: However, we're working through the accounting that as a partnership or joint venture.
Brian J. Cobb: With three other partners. So we're working through the accounting all of the expenses that flow through the joint venture.
Brian J. Cobb: And also as Ross mentioned tenure.
Brian J. Cobb: 10 year lease has a couple of different ways.
Brian J. Cobb: That it can be accounted for.
Brian J. Cobb: I anticipate the lease to be a sales-type lease, although we have to agree as a management team and with our auditors that that's the position. And until that point, I think it's... We'll leave it there for now, and we'll provide more details at the end of Q2. The only other thing I'll mention is that back in 2022, we had purchased in the same joint venture two buildings, with Machinery and Equipment. So it could be a good transaction to look at.
Brian J. Cobb: My.
Brian J. Cobb: I anticipate the lease to be a sales type lease, although we have tail agree as a management team and whether auditors that that's the position and until that point I think it's.
Brian J. Cobb: We will leave it there for now and we will provide more details at the end of Q2 and the only thing I'll mention is that back in 2022, we had purchased in the same joint venture two buildings and machinery and equipment.
Brian J. Cobb: So it could be a good transaction to look to.
George Frederick Sutton: So to lift some language from the press release, I'll lift the two words highly accretive.
Brian J. Cobb: So I understand on the AG.
Brian J. Cobb: So that's the language from the press release I'll, let the two words highly accretive.
Ross M. Dove: I understand. Okay. Ross, you talked about perhaps starting an industrial lending offering, and I just want to be clear, would you be providing capital to the buyers of assets at your auctions, or would you be looking to provide capital to buyers of assets? Assets coming from your auctions?
Speaker Change: I understand okay. So.
Ross M. Dove: Ross you talked about perhaps.
Ross M. Dove: Starting in industrial lending.
Ross M. Dove: Offering and I just wanted to be clear would you be.
Ross M. Dove: Providing.
Ross M. Dove: Sure.
Ross M. Dove: Capital to the buyers of assets at your auctions or would you be looking to provide capital to buyers of Oh.
Ross M. Dove: Of.
Ross M. Dove: Assets coming from your auctions.
Ross M. Dove: So, not to provide financing, but at ALT Capital, we actually do already provide financing to the buyers that buy at our retail offices. So that exists.
Ross: So not that provide financing we at ALC capital, we actually do already provide financing to the buyers that buy at our retail.
Ross M. Dove: Offerings, so that exist.
Ross M. Dove: We did a deal last year, an asset-based deal, where we lent money, basically, as a hard-money asset-based lender to an aircraft company or an aircraft transportation company. We're actually seeing lots of offers now. The marketplace has kind of moved to where it's getting very, very difficult in a lot of industries to get venture lease money. It's getting more difficult to get your Series C, D, and E, and F money from the venture community.
Ross M. Dove: We did a deal last year, an asset deal, where we lend money basically.
Ross M. Dove: As a hard money asset based lender to an aircraft.
Ross M. Dove: Company Aercap Transportation company.
Speaker Change: Hi, Julien.
Ross M. Dove: Lots of brokers now the marketplace has kind of moved where it's getting very very difficult and a lot of industries. Good venture lease money, it's getting more difficult to get your series C. D E and F money from the venture community. So theres more people.
Ross M. Dove: So, there are more people that have capital assets out there now that are looking to borrow directly against their assets. And as banks are getting a little bit more cautious on lending, we see a lot of growth in industrial asset-based lending. It's a marketplace we understand. We're very skilled at underwriting, so we're just going to move more aggressively into looking at those deals. We didn't earlier when we didn't have as much free capital, but now when you're looking at our credit line of $10 million at zero, you're looking at us having substantial multi-million dollar profits every quarter. We think it's a good, strong, safe, smart way to broaden our lending business and to basically take our lending book and be both an industrial and a financial lender, which
Ross M. Dove: Capital assets out there now and they're looking to borrow directly against their assets and that's the banks are getting a little bit more cautious on lending, we see a lot of growth in industrial asset base lending.
Ross M. Dove: Marketplace, we understand we're very skilled at the underwriting. So we're just going to move more aggressively into looking at those deals. We couldnt earlier, when we didn't have as much free capital, but now when youre looking at our credit line.
Ross M. Dove: A $10 million at zero, you are looking to us having substantial multibillion dollar profits every quarter. We think it's a good strong so smart way to broaden our lending business and to physically click our lending book and be both in industrial and financial lender, which was always.
Ross M. Dove: The long term goal George.
Ross M. Dove: Lastly, for me, you may have seen that we put out a note recently that kind of summarized most of the charge-off numbers and expectations from all of the key players in the industry, and it was very impressive in terms of the charge-off volume and the potential that they see. Most of them argue, though, that the latter part of this year will see some normalization, and frankly, I kind of remember them saying the same thing last year, but can you just give your perspective on how much opportunity you see in terms of the volumes there?
Speaker Change: I understand okay. That's that's helpful.
Ross M. Dove: Lastly for me you may have seen we put out a note recently that kind of summarized most of the.
Ross M. Dove: Charge off numbers and expectations from from all of the key players in the industry and it was.
Ross M. Dove: Very impressive in terms of the charge off volume and the potential that they see most of them argue though that the latter part of this year would see some normalization and frankly I kind of remember them, saying the same thing last year, but can you just give your perspective on.
Ross M. Dove: How much opportunity you see in terms of the volumes there.
Ross M. Dove: Right, so not looking at the future, but looking at the past and then looking at our future from the past, there's already out there a tremendous amount of product that has not yet become available. When you see a default, it takes time for that default to kind of mature into a charge-off. And then once it becomes a charge-off, it comes to us. So there's already a lot of product that's going to be available all of this year and, obviously, a lot of it rolling into next year. So if it does level off on the amount of charge-offs, there's a lot of sell-throughs still in front of us. Okay.
Speaker Change: Right, so not look with the goods here, but looking at the path and then looking at our future from the past there is already out there.
George Frederick Sutton: Okay, that makes sense. Thanks very much. Thank you. As a reminder, if you do have a question, please press start.
George Frederick Sutton: A tremendous amount of product that has not yet become available when you see a default.
George Frederick Sutton: Time for that default to kind of mature into a charge off and then once it becomes a charge off it comes to us. So there's already a lot of product thats going to be coming available all of this year and obviously a lot of it rolling into next year. So.
George Frederick Sutton: If it does level off on the amount of charge offs, there's a lot of sell through still in front of us George.
Speaker Change: Okay that makes sense, thanks very much.
Speaker Change: Thank you.
Operator: As a reminder, if you do have a question, please press star 1 on your touchstone keypad now. And if there are no further questions, I'll turn the call back over to our host.
Speaker Change: As a reminder, if you do have a question. Please press star one on your Touchtone keypad now.
Operator: And seeing no further questions I'll turn the call back.
Speaker Change: Over to our hubs.
Ross M. Dove: This is Ross. I want to thank you all for joining. We're very easy to get a hold of and are always available, and we really enjoy talking to our investors and talking to anybody who's curious or thoughtful or interested in being a future investor. So we're always available, and we thank you all for participating. Everyone have a great day.
Operator: This is Ross I want to thank you all for joining.
Ross M. Dove: Very easy to get a hold of and always available and we really enjoyed talking to our investors and talking to anybody who's curious we're thoughtful are interested in being a future investors. So we're always available and we thank you all for participating everyone have a great day.
Operator: This concludes today's conference call. Thank you for attending.
Speaker Change: This concludes today's conference call. Thank.
Operator: Thank you for attending.
Operator: The host has ended this call. Goodbye.
Speaker Change: The host has ended this call goodbye.