Q1 2024 ECN Capital Corp Earnings Call

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Operator: Thank you for standing by. This is the conference operator. Welcome to the ECN Capital First Quarter 2024 Results Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity for analysts to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. I would now like to turn the meeting over to Catherine Moradios, VP of Finance and Investor Relations. Please go ahead, Catherine.

Thank you for standing by this is the conference operator welcome to the E. C. N Capital's first quarter 2024 results conference call.

Katherine Moradiellos: As a reminder, all participants are in listen only mode and the conference is being recorded.

Operator: After the presentation, there will be an opportunity for analysts to ask questions to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you May signal, an operator by pressing Star then zero.

Katherine Moradiellos: I would now like to turn the meeting over to Catherine <unk> VP of Finance and Investor Relations. Please go ahead Catherine.

Catherine Moradios: Thank you, Sachi. Good afternoon, everyone, and thank you all for joining this call. Firstly, as you may have already noticed, I've taken over for John Wimsatt as head of investor relations in addition to my financial planning and analysis role. I want to thank John for his assistance in this transition.

Katherine Moradiellos: Thank you Saatchi good afternoon, everyone and thank you all for joining this call. Firstly as you may have already noticed I've taken over for John wins that heading up Investor Relations. In addition to my financial planning and analysis role I want to thank John for his assistance in this transition he will continue as a strategic advisor for ECS.

Catherine Moradios: He will continue as a strategic advisor for ECN. Joining us on the call are Steve Hudson, CEO of ECN; Jackie Weber, Chief Financial Officer; Lance Hull, President of Triad Financial; Matt Heidelberg, Chief Operating Officer of Triad Financial; Mike Opdahl, President of SourceOne; and Hans Kraaz, Founder and CEO of IFG. A news release summarizing these results was issued this afternoon, and the financial statements and MD&A for the three-month period ended March 31, 2024, have been filed with CDAR. These documents are available on our website at www.ecncapitalcorp.com. Presentation slides to be referenced during the call are accessible during the webcast as well as in PDF format under the presentation section of the company's website.

Catherine Moradios: Joining us on the call are Steve Hudson, Chief Executive Officer, Jackie Weber, Chief Financial Officer, Lance Hall, President of Triad financial Matt Heidelberg, Chief operating officer of Triad financial Mike Abdul President of source, one and Hans Cross founder and CEO of ISG.

Catherine Moradios: A news release summarizing. These results was issued this afternoon and the financial statements and MD&A for the three month period ended March 31, 2024 had been filed with SEDAR. These documents are available on our website at Www Dot E. C N Capital Corp, Dotcom press.

Catherine Moradios: Presentation slides to be referenced during the call are accessible in the webcast as well as in PDF format under the presentations section of the company's website.

Catherine Moradios: Before we begin, I want to remind our listeners that some of the information we are sharing with you today includes forward-looking statements. These statements are based on assumptions that are subject to significant risk and uncertainties. I will refer you to the cautionary statement section of the MD&A for a description of such risk uncertainties and assumptions. Although management believes that the expectations reflected in these statements are reasonable, we can obviously give no assurance that the expectations of any forward-looking statements will prove to be correct.

Catherine Moradios: Before we begin I want to remind our listeners that some of the information. We are sharing with you. Today includes forward looking statements. These statements are based on assumptions that are subject to significant risks and uncertainties I will refer you to the cautionary statements section of the MD&A for a description of such risks uncertainties and assumptions.

Catherine Moradios: Although management believes that the expectations reflected in these statements are reasonable we can obviously give no assurance that the expectations of any forward looking statements will prove to be correct.

Catherine Moradios: You should note that the company's earnings release, financial statements, MD&A, and today's call include references to non-IFRS measures, which we believe help to present the company and its operations in ways that are useful to investors. A reconciliation of these non-IFRS measures to IFRS measures can be found in our MD&A. All figures are presented in U.S. dollars unless explicitly noted. With these remarks, I will now turn the call over to our CEO, Steve Hudson.

Catherine Moradios: You should note that the company's earnings release financial statements MD&A and today's call include references to non Ifr S measures, which we believe help to present the company and its operations in ways that are useful to investors. A reconciliation of these non <unk> measures to ifr's measures can.

Steven K. Hudson: Be found in our MD&A all figures are presented in U S dollars unless explicitly noted.

Catherine Moradios: With these remarks I will now turn the call over to our CEO Steve Hudson.

Steven K. Hudson: Thanks, Kathy, and good evening. I believe everyone has seen five or six in the past, but let me just make a comment on the bottom of slide six, if I can, which is ECN is the only source at scale of approximately $3 billion per annum of attractive consumer and credit assets with very strong risk-adjusted returns. They are of interest to numerous investors, and we'll speak to that in a moment. Turning to slide 7, I'm pleased to report flat earnings per share in the first quarter, which compares favorably to our previously provided quarterly guidance of a 1 to 2 cent loss.

Steven K. Hudson: Thanks, Kathy and good evening I believe everyone is seeing five or six in the past, but let me just make a comment on the bottom of slide six if I can which is E. C. N is the only source that scale of approximately 3 billion per annum and attractive consumer and credit assets with very.

Steven K. Hudson: Very strong risk adjusted returns they are of interest to numerous investors and we'll speak to that.

Steven K. Hudson: In a moment.

Steven K. Hudson: Turning to slide seven I'm pleased to report flat earnings per share in the first quarter, which compares favorably to.

Steven K. Hudson: So our previously provided quarterly guidance of a one to two cent loss.

Steven K. Hudson: I'd like to highlight three things, both with respect to manufactured housing and RV and marine, regarding manufactured housing. Q1, over $300 million, was Lance's largest quarterly gain in triad history. Great result. The second point I would draw you to is the improved origination revenue margin went from 3.9% in the fourth quarter to 5.2% in Q1, and we're tracking to a rate of approximately 6% through the latter part of the year. And there were no fair value adjustments in the quarter.

Steven K. Hudson: I'd like to highlight three things both with respect to manufactured housing.

Steven K. Hudson: Via marine with.

Steven K. Hudson: Regarding manufactured housing Q.

Steven K. Hudson: Q1 over 300 million was lapses largest Q1 in triad history, Great result.

Steven K. Hudson: Second point I would drive to is the improved origination revenue margin went from three 9% in the fourth quarter to five 2% in Q1.

Steven K. Hudson: We're tracking two of rates approximately 6% through the latter part of the year.

Steven K. Hudson: And there is no fair value adjustments in the quarter.

Steven K. Hudson: Third, we're overfunded in 24 banks, and credit unions are increasing commitments, and we have extended and expanded agreements with our existing institutional investors. Turning to RV Marine, at 166 million in originations, Source 1 was up 5% year-over-year. IFG was actually down a bit, but that was due to a couple of large transactions in March of 2023.

Steven K. Hudson: Third were overfunded in 'twenty four.

Steven K. Hudson: And credit unions are increasing commitments and we have extended and expanded agreements with our existing institutional investors.

Steven K. Hudson: Turning to RV and marine.

Steven K. Hudson: At $166 million of originations.

Steven K. Hudson: First one was up 5% year over year.

Steven K. Hudson: <unk> was actually down a bit but that was due to a couple of large transactions in March of 'twenty. Three if you look to the run rate there up January and February at 4% growth.

Steven K. Hudson: If you look at the run rate, they were up January and February at 4% growth. And as both presidents, all three presidents, will speak to in a second, their Q2 results are indicating an even stronger acceleration in growth. Second, we're executing on, Mike and Hans are executing on two strategies, two take-share strategies, specifically expanding the geographic footprint and further dealer representation. And like TRIAD, they are overfunded for 24.

Steven K. Hudson: And as both presidents all three presence will speak to in a second the.

Steven K. Hudson: Q2 results are indicating even stronger acceleration in growth.

Steven K. Hudson: Second we're executing on.

Steven K. Hudson: Mike and tons of executing on two strategies to take share strategies, specifically, expanding the geographic footprint and further dealer presentation and like triad. They are overfunded for 'twenty four.

Steven K. Hudson: Turning to slide eight.

Steven K. Hudson: I am pleased to announce Cathy's promotion to include senior responsibility for IR. Cathy is a seasoned financial service executive and a member of ECN's senior management team for the past seven years. I'd like to highlight two other announcements which add additional senior bench strength to ECM on page 9. Announcement: Mike McCauley has joined Triad as General Counsel. Mike has over 18 years of senior experience in the U.S. mortgage industry as well as served as the financial ombudsman for the state of New Jersey.

Steven K. Hudson: Pleased to announce kathy's promotion to include senior responsibility for I R. Cathy is a seasoned financial service executive.

Steven K. Hudson: And a member of <unk> senior management team for the past seven years.

Steven K. Hudson: Like to highlight two other announcements, which add additional senior bench strength ECM on page nine.

Steven K. Hudson: Mike Mcauley has joined Triad as General Counsel, Mike has over 18 years of senior experienced in the U S mortgage industry as well as certain served at the financial Oxman for the state of New Jersey, We're happy to have Mike on Board.

Steven K. Hudson: We're happy to have Mike on board. As well, Joe O'Brien is joining as Chief Operating Officer at Source One. Joe has over 22 years of senior experience in the U.S. and consumer markets, and Specialty Finance. These three additions add significant strength and underpin the growth of our businesses. With that, I'm going to pass to Lance.

Steven K. Hudson: As well Joe Joe Brian is joining as Chief operating officer source one.

Steven K. Hudson: Joe has over 22 years senior experience in U S and consumer and.

Steven K. Hudson: In specialty finance lease three additions at significant strength and underpin the growth of our businesses with that I'm going to pass to <unk> to Lance.

Lance Hull: Well, thank you, Steve, and as Steve said, we're excited about the first quarter that we had. It was the largest Q1 in Triad history, and while we're celebrating with the team right now, we're not resting because we do have an accelerating growth path for the remainder of the year, and our commitment is to achieve this accelerating growth path for the remainder of 2024. I want to point you to just four points on this slide, number 12.

Steven K. Hudson: Thank you Steve and.

Lance Hull: As Steve said.

Lance Hull: We're excited about the first quarter that we had it was the largest Q1 in triad history and while we're celebrating with the team right now we're not resting because we do have an accelerating growth path for the remainder of the year and our commitment is to achieve these these this committed path for the remainder of 2024.

Lance Hull: I want to point you to just four points on this slide number 12.

Lance Hull: First of all while we were at 6% year over year in Q1 originations I want to really focus on the revenue originations growth and channel.

Lance Hull: First of all, while we were at 6% year-over-year in Q1 originations, I want to really focus on the origination growth in chattel at 17% year-over-year. Our business is segmented into three primary areas, chattel, land, home, and communities, and while the rebounding of land, home, and communities is a little slower than the chattel business, the fact that our chattel originations growth is ahead of plan has enabled us to achieve the results we did this quarter.

Lance Hull: At 17% year over year, our business is segmented into three primary areas chattel landfill with communities and while the rebounding of land home and community is a little.

Lance Hull: Slower than the channel business. The fact that our channel originations growth is ahead of plan.

Lance Hull: Enabled us to achieve the results we did this quarter.

Lance Hull: Secondly, Steve mentioned it, but I think it's worth repeating that we had no fair value adjustment in Q1, as we believe the portfolio is now conservatively marked. The third thing I'd like to highlight is, again, the $350 million reduction in the held for trading asset portfolio. We had a tremendous opportunity and moved that $350 million through the sales process in Q1, dramatically lowering the balance sheet. And then lastly, it's very important to note that our funding capacity is actually; we've got an overfunded status.

Lance Hull: Secondly, Steve mentioned, it but I think it's worth repeating that we had no fair value adjustment in Q1 as we believe the portfolio is now conservatively marked.

Lance Hull: The third thing I'd like to highlight is again to $350 million reduction in the held for trading an asset portfolio and we had a very tremendous.

Lance Hull: <unk> and move that $350 million through the sales process in Q1 dramatically lowers the balance sheet.

Lance Hull: And then lastly.

Lance Hull: Important to note that our funding capacity is actually we've got an.

Lance Hull: Overfunded status, we have $2 $3 billion worth of capacity in our banks and credit unions have rebounded sharply from last year. There are more than double where we were last year and we signed a new Blackstone agreement in Q1 expanded that agreement and we have a rental funding program that we actually will announce a little bit later this month.

Lance Hull: We have $2.3 billion worth of capacity now. Our banks and credit unions have rebounded sharply from last year. They're more than double where we were last year. And we signed a new Blackstone agreement in Q1, expanded that agreement, and we have a rental funding program that we actually will announce a little bit later this month. And with that, I'll turn it over to COO Matt Heidelberg.

Lance Hull: And with that I'll turn it over to our CFO, Matt Heidelberg.

Matthew Heidelberg: Thank you, Lance. I'm going to start on page 13.

Matthew Heidelberg: Thank you Lance.

Matthew Heidelberg: I'll start on page 13.

Matthew Heidelberg: We'll walk through a few of the trends that we're seeing in the business over the next few slides. Originations, like Lance said, were up 6% overall. But you all know that's just part of the story.

Matthew Heidelberg: Walk through a few of the trends that we're seeing in the business for the next few slides.

Matthew Heidelberg: Originations like Lance said, we're up 6% overall, but you all know that's just part of the story is product mix matters.

Matthew Heidelberg: Product mix matters. Lance also highlighted the core chattel products up 17% year-over-year, which is ahead of pace for us to start out. Lance is going to speak more about Land Home later, but the material improvements that we've made in this division are going to lead to significantly more growth in the second half. You'll also see rental growth, $25 million year over year, and silver and bronze, which are going to be benefiting from that expanded agreement with that signed agreement, as well as a few more that we have coming. This is giving us an opportunity to further accelerate these products, which is going to be part of the growth story for us for the remainder of the year. Moving to slide 14.

Matthew Heidelberg: <unk> also highlighted the core shuttle product is up 17% year over year, which is ahead of pace for us to start out.

Matthew Heidelberg: We're just going to speak more to land home later, but the material improvements that we've made in this division is going to lead to significantly more growth in the second half you.

Matthew Heidelberg: You'll also see rental growing $25 million year over year, and silver and bronze, which youre going to be benefiting from that expanded agreement with that signed agreement as well as a few more that we have coming.

Matthew Heidelberg: This is giving us an opportunity to further accelerate these products, which is going to be part of the growth story for us for the remainder of the year.

Matthew Heidelberg: Moving to slide 14.

Matthew Heidelberg: Approvals are up 2% in units overall and 6% in dollars for the first quarter. Within this number, we see core also up 2%, but silver and bronze increasing over 50% each. One additional thing I wanted to remind people, the approval numbers are really just focused on our consumer loans. The growth ahead for our commercial loans, in particular rental, is not represented in these numbers.

Matthew Heidelberg: Approvals are up 2% in units overall and 6% in dollars for the first quarter within this number we see core also up 2%, but silver and bronze increasing over 50% each.

Matthew Heidelberg: One additional thing I wanted to remind people. The approval numbers are really just focused on our consumer loans, but the growth ahead for our commercial loans in particular rental is not represented in these numbers.

Matthew Heidelberg: How the industry is doing on page 15 the.

Matthew Heidelberg: How the industry is doing on page 15. The industry began the year as we expected, with shipments up 15% year-over-year. We continue to remain very positive about the industry and see it benefiting from long-term tailwinds as it is an ideal solution to satisfy affordable housing demand. To move back to our loans on page 16, tribals' average loan rates are back near highs relative to market rates, as seen in the graphs on this page.

Matthew Heidelberg: The industry began the year as we expected with shipments up 15% year over year. We continue to remain very positive on the industry and see it benefiting from long term tailwind as it is an ideal solution to satisfy the affordable housing demand.

Matthew Heidelberg: Yes.

Matthew Heidelberg: To move back to our loans on page 16 tried.

Matthew Heidelberg: <unk> average loan rates are back near highs relative to market rates as seen in the graphs on this page.

Matthew Heidelberg: This premium is benefiting our partners' returns and driving more demand for triad loans. The other factor impacting returns for our partners, moving to slide 17, would be our loan performance. You can see in the graphs to the right that performance continues to stay well within expectations. Our partners are quite happy with the returns they're earning. To give you a quick update on our commercial business, on page 18, I want to shift you to start focusing on our total balance, which is $426 million.

Matthew Heidelberg: This premium is benefiting our partners' returns and driving more demand for Tri Ed loans.

Matthew Heidelberg: The other factor impacting returns for our partners moving to slide 17 would be our loan performance.

Matthew Heidelberg: You can see in the graphs to the right. The performance continues to stay well within expectations. Our partners are quite happy with the returns they're earning.

Matthew Heidelberg: To give you a quick update on our commercial business on page 18.

Matthew Heidelberg: I want to shift you to start focusing on our total balance that's $426 million, that's up quarter over quarter and year over year we.

Matthew Heidelberg: That's up quarter over quarter and year over year. We see this number as more relevant now as we continue to sell service commercial loans. Our floor plan flow portfolio is performing exceptionally well for our partners, and we see rental growth accelerating meaningfully as we convert this to a flow program in the second quarter.

Matthew Heidelberg: We see this number is more relevant now as we continue to sell service commercial loans.

Matthew Heidelberg: Our floor plan flow portfolio is performing exceptionally well for our partners.

Matthew Heidelberg: And we see rental growth accelerating meaningfully as we convert this to a flow program in the second quarter.

Matthew Heidelberg: With that.

Matthew Heidelberg: I'm going to hand it back to Lance. Thanks, Matt. Turning to slide 19, just a quick update on our land home progress. In my first 10 months at Triad, much of my time in operations was spent in the areas surrounding land homes. During that time, I had two primary focuses.

Matthew Heidelberg: Hand, it back to Lance Thanks, Pat.

Matthew Heidelberg: Turning to slide 19, just a quick update on our land home progress in my first 10 months at triad much of my time on operations is it's been spent in the areas surrounding land home.

Matthew Heidelberg: During that time I had two primary focuses one was the reduction of risk in the portfolio and two was a very solid plan for growth.

Lance Hull: One was the reduction of risk in the portfolio, and two was a very solid plan for growth. In order for us to address the risk, we had to get to a point of having higher loan rates, and we had to improve our funding cycle times. And while we got some help from the industry as backlogs have normalized, we have also strengthened our systems, our people, and our processes, which have enabled us to cut our funding times dramatically.

Lance Hull: In order for us to address the risk we had to get to a point of having higher loan rates and we had to improve our funding cycle times and while we got some help from the industry as backlogs have normalized we also have strengthened our systems and our people and our processes that have enabled us to cut our funding times dramatically.

Lance Hull: As you can see in the graphs down towards the bottom of the page our land home rates have increased steadily over 2023, now up more than 300 basis points since the low mark in 'twenty three.

Lance Hull: As you can see in the graphs down towards the bottom of the page, our land-home rates have increased steadily over 2023, now up more than 300 basis points since the low mark in 2023, and our construction portfolio is down by more than 100 million, which has put us in a much more efficient position of capital. And lastly, it's very nice to note that we also have an additional partner to fund our land home loans. It's now committed an additional $100 million in funding capacity for land homes.

Lance Hull: And our.

Lance Hull: Our construction portfolio is down by more than 100 million, which has put us in a much more efficient position of capital.

Lance Hull: And lastly, it's very nice to note that we also have an additional partner to fund our land home loans. It's now committed an additional $100 million and funding capacity for land home. So we're in a very strong position for growth going forward and we do believe that the land home rebound is well underway.

Lance Hull: So we're in a very strong position for growth going forward, and we do believe that the land home rebound is well underway. Switching to slide 20, just a quick update on the Champion Financing update. We had a very successful launch of the program that we talked about last quarter at the Louisville Show in Kentucky earlier this year. That resulted in what you see in the graph at the bottom, a strong interest in our floor plan programs where we have nearly $170 million worth of credit lines now in process.

Lance Hull: Switching to slide 20, just a quick update on the champion financing update.

Lance Hull: We had a very successful launch of the program that we talked about last quarter at the Louisville show in Kentucky that earlier this year.

Lance Hull: That resulted in what you see at the graph at the bottom is a strong interest in our floor plan programs, where we have nearly $170 million worth of credit lines now in process.

Lance Hull: As a reminder, that floor plan income is not the only benefit to this partnership with Skyline Champion, but we also know that for every dollar of floor plan business that we get, it will translate into $3 of retail funding. And so much of that funding will also be flowing into the partnership with Champion Financing. Perhaps the most important thing on this slide, however, is the note down at the bottom referencing the National Retail Loan Program.

Lance Hull: As a reminder, that Floorplan income is not the only benefit to this partnership with Skyline champion, but we also know that for every dollar of floor plan business that we get it will translate into $3 of retail funding.

Lance Hull: And so much of that funding will also be flowing into the partnership with champion financing.

Lance Hull: Perhaps the most important thing on this slide however, though is that the note down at the bottom referencing the national retail loan program. We were very excited that skyline champion and triad of partnered to announce a retail loan program through all of their stores that provides customers. Some of the very best rates. It try it has with discounted rates that are going to drive more.

Lance Hull: We were very excited that Skyline Champion and Triad have partnered to announce a retail loan program through all of their stores that provides customers with some of the very best rates that Triad has with discounted rates that are going to drive more traffic and help us, again, to grow the activity level in this partnership.

Lance Hull: Traffic and help us again to grow the activity level in this partnership.

Lance Hull: On slide 21 is just a little bit of information about our originations history and as we have done in the past I'll leave that with you and with that I'll turn it back to Steve.

Lance Hull: On slide 21, it's just a little bit of information about our origination history, and as we have done in the past, I'll leave that with you. And with that, I'll turn it back to Steve. Thanks, Lance.

Steve: Turning to slide 23.

Steven K. Hudson: Thanks, Lance. Turning to slide 23, I'd like to introduce Mike Opdahl and Hans Kraaz in a second, but let me highlight a few things on these two slides. First and foremost, we've produced half a million dollars of income from the businesses, which is in line with management's forecast. As I mentioned earlier, originations are up 5%, Source 1, and adjusting for two large transactions in March last year, up 4% in January and February for IFG.

Steven K. Hudson: I'd like to introduce Mike Opto enhance cross in a second but let me highlight a few things on these two slides first and foremost.

Steven K. Hudson: We've produced $5 million of income from the businesses, which is in line with management's forecast as I mentioned it earlier originations are up 5% sourced one in <unk>.

Steven K. Hudson: Adjusting for two large transactions in March last year up 4%.

Steven K. Hudson: In February for ISG.

Steven K. Hudson: We're not finished with the second quarter, but the growth rates in the mid-part of the second quarter have accelerated significantly over those levels for both these businesses. And finally, on slide 23, as you know, Chris Johnson has joined our management team as Senior Vice President, Capital Markets, in addition to the hedging responsibilities and disciplines. Chris is also launching expanded initiatives that will look very similar to the funding arrangements we have in place for TRIAD and Source One.

Steven K. Hudson: <unk> finished the second quarter, but the growth rates in the in the mid part of the second quarter have accelerated significantly over those levels for both these businesses.

Steven K. Hudson: And finally at the bottom of <unk>.

Steven K. Hudson: Slide 23, as you know Chris Johnson has joined our management team as senior Vice President of capital markets. In addition to the hedging responsibilities and disciplines. Chris is also launching expanded initiatives that will look very similar to the funding arrangements we have in place for Tri Ed.

Steven K. Hudson: For <unk> one.

Steven K. Hudson: Turning to slide 24, if you look at the Q1 originations, I think it's fair to say we've returned to pre-pandemic normalcy, and we have take-share strategies which are gaining significant national share as well as dealer presentations, which might, dealer penetrations, which I will now have Mike talk about.

Steven K. Hudson: Turning to slide 24.

Mike: If you look at the Q1 originations I think it's fair to say, we've returned to pre pandemic normalcy.

Mike: We have take share strategies, which are gaining significant national share as well as dealer.

Mike: Dealer presentations.

Steven K. Hudson: Which Mike dealer penetrations, which I will now have Mike talk about.

Steven K. Hudson: Thank you, Steve. Good afternoon, everyone.

Mike: Thank you Steve Good afternoon, everyone, let's turn to slide 25.

Michael Opdahl: Let's turn to slide 25. For over 25 years, Source One has originated contracts that focus on prime to super-prime consumers with high-value assets. As the graphs show, both Source One and our lending partners, Arby and Marine Portfolios, continue to outperform automotive loans with a rate premium consistently over 2% and losses of one-third to one-sixth that of prime auto. Moving on to the next page.

Steven K. Hudson: For over 25 years sourced one has originated contracts that focus on prime to Super Prime consumers with high value assets as the graph show both source, one and our lending partners RV and marine portfolios continue to outperform automotive loans with a rate premium consistently over 2%.

Michael Opdahl: And losses of one third to one sixth that of Prime auto.

Michael Opdahl: Moving on to the next page.

Michael Opdahl: What I'd like you to take away from this slide is that the future is very promising for the RV industry. Over 90 new campgrounds and more than 18,000 campsites are opening in the next three years. With an estimated 11 million potential new buyers in the next six years and over 4 million consumers annually aging into RV's key demographic, this ensures both demand and growth for years to come. Turning to slide 17.

Michael Opdahl: But I'd like you to take away from this slide is that the future is very promising for the RV industry.

Michael Opdahl: Over 90, new campgrounds and more than 18000 campus sites are opening in the next three years with an estimated 11 million potential new buyers in the next six years and over 4 million consumers annually aging into RV as key demographic. This ensures both demand and grow.

Michael Opdahl: For years to come.

Michael Opdahl: Turning to slide 17.

Michael Opdahl: Sure.

Michael Opdahl: I'd like to focus on how Source One continues to execute the proven ECN playbook to successfully scale our business. We believe that the RV and marine origination model is 25 years behind automotive finance in terms of technology and efficiencies, and we are investing heavily to close that gap. We are now licensed in 48 states compared to the 13 states that Source One was operating in prior to ECN's acquisition. We continue to build out our sales team. In the first quarter, we entered the Pacific Northwest and Mid-Atlantic regions.

Michael Opdahl: I'd like to focus on how source one continues to execute the proven ECM playbook to successfully scale our business.

Michael Opdahl: We believe that the RV and marine origination model is 25 years behind automotive finance in terms of technology and efficiencies and we are investing heavily to close that gap.

Michael Opdahl: We are now licensed in 48 states compared to the 13 states that source one was operating in prior to <unk> acquisition.

Michael Opdahl: We continue to build out our sales team in the first quarter, we entered the Pacific Northwest and mid Atlantic regions, and we look to enter the northeast later this year. Additionally, we'll be doubling our presence in California, and Texas in the coming months.

Michael Opdahl: And we look to enter the Northeast later this year. Additionally, we'll be doubling our presence in California and Texas in the coming months. While we currently capture approximately 2% of financed RV and marine originations, geographically, we are just getting started. We believe there's an opportunity to boost volume upwards of 50% this year alone through a combination of the expansion and incremental gains in our current dealership. Moving on to slide 28.

Michael Opdahl: While we currently capture approximately 2% of finance RV and marine originations geographically, we are just getting started.

Michael Opdahl: We believe there is an opportunity to boost volume upwards of 50%. This year alone through a combination of the expansion and incremental gains in our current dealerships.

Michael Opdahl: Moving on to slide 28.

Michael Opdahl: Let's take a look at our accomplishments this past quarter. As Steve mentioned, quarter one originations were up 5% year over year, and early indications are that Q2 is going to be substantially higher. Our proprietary e-contracting capabilities have improved our capture rate. We are now entering peak season, and our inbound pipeline continues to grow. Keep in mind that while we have best-in-class technology, at our core, we are still a relationship lender, and the relationships with both our lending partners and our dealerships are incredibly hard to replicate.

Michael Opdahl: Let's take a look at our accomplishments this past quarter.

Michael Opdahl: As Steve mentioned quarter, one originations were up 5% year over year.

Michael Opdahl: And early indications are that Q2 is going to be substantially higher or.

Michael Opdahl: Our proprietary E contracting capabilities have improved our capture rates we.

Michael Opdahl: We are now entering peak season, and our inbound pipeline continues to grow.

Michael Opdahl: Keep in mind that while we have best in class technology at our core we are still a relationship lender and the relationships with both our lending partners and our dealerships are incredibly hard to replicate.

Michael Opdahl: An example of the strength of these relationships was exhibited last month at the world's largest consumer RV show, where we had underwriters on site. This personal touch allowed us to capture 62% of our approved applications and double our monthly originations from this dealer group. Our investments have not been limited to technology, as we are fortunate to have Joseph O'Brien join SourceOne as COO. We are confident that with Joe's leadership and experience, the company's growth will be assured. I'll now turn it over to Hans to bring everyone up to speed on IFG's accomplishments and our cross-company initiative.

Michael Opdahl: An example of the strength of these relationships was exhibited last month at the world's largest consumer RV show, where we had underwriters onsite.

Michael Opdahl: This personal touch allowed us to capture 62% of our approved applications and double our monthly originations from this dealer group.

Hans: Our investments have not been limited to technology as we are fortunate to have Joseph O'brien joined source. One is cielo, we are confident that with Joe's leadership and experience the company's growth will be assured.

Michael Opdahl: I'll now turn it over to Hans to bring everyone up to speed on Isg's accomplishments and our cross company initiatives.

Michael Opdahl: Thanks, Mike Please turn to slide 29.

Hans Kraaz: Thanks, Mike. Please turn to slide 29.

Hans Kraaz: Consistent win with Ecm's playbook.

Hans Kraaz: Consistent with the ECN's playbook, Michael and I have been working to identify and execute a cross-platform synergy. Some of those include IFG and Source One, which can access each other's funding, materially expanding the financing option for its customers. Two, Source One dealers are able to access IFG's best-in-class title department. For example, we did a test pilot at a subsidiary, Epic, that successfully secured 100 mortgages. Finally, combining credit report accounts, which will result in a 30% cost savings. Turn to slide 30, please.

Hans Kraaz: Michael and I have been working to identify and execute on cross platform synergies.

Hans Kraaz: Some of those include ISP and source one can access each other's funding.

Hans Kraaz: Materially expanding the financing option for our customers.

Hans Kraaz: To source, one dealers are able to access <unk> best in class title Department.

Hans Kraaz: For example, we did a test pilot at a subsidiary epic to successfully secured 100 mortgages entitles.

Hans Kraaz: Finally, combining credit report accounts, which will result in a 30% cost savings.

Hans Kraaz: Turning to slide 30 please.

Hans Kraaz: ISG business update.

Hans Kraaz: IFT Business Update, As you can see in the origination volume chart on the right, 2004 year-to-date activity is trending positively based on total origination. We're seeing this trend continue into April with units financed up year over year. As you're aware, IFG originates loans through a diverse network. All channels are firing on all cylinders as we continue to add capabilities through our sales origination process. That's it.

Hans Kraaz: As you can see in the origination volume chart on the right.

Hans Kraaz: 2000 and for year to date activity is trending positively based on on total originations.

Hans Kraaz: We're seeing this trend continue into April with units financed up year over year.

Hans Kraaz: As you are aware ISG originates loans through a diverse network.

Hans Kraaz: All channels are firing on all cylinders as we continue to add capabilities through our sales origination process.

Hans Kraaz: That said, we win our business through our people.

Hans Kraaz: We win our business through our people. Infrastructure and Industry Leading Funding Partner Relationships. Our funding relationships have been built over 30-plus years. We offer a spectrum of solutions to our customers and are continually working to enhance and improve them. The source of funding provides us with virtually unlimited funding capacity.

Hans Kraaz: Infrastructure and industry, leading funding partner relationships.

Hans Kraaz: Our funding relationships have been built over 30 plus years.

Hans Kraaz: We offer a spectrum of solutions to our customers and are continually working to enhance and improve them.

Hans Kraaz: The source of funding provides us with virtually unlimited funding capacity.

Hans Kraaz: We're also investing in technology, which is displayed by a small acquisition of First Approval Source. Two key points on this deal: one, this will sharply reduce the time between origination and sale, maximizing profit per transaction. And number two, the acquisition brought 34 new dealer relationships that have been successfully integrated. Now, I'll turn it over to Jackie.

Hans Kraaz: We're also investing in technology.

Jackie: Which is displayed by a small acquisition of first approval sellers.

Hans Kraaz: Two key points on this deal one this will sharply reduce the time between origination and sale.

Jackie: Maximizing profit per transaction.

Hans Kraaz: Number two the acquisition brought 34 new dealer relationships.

Jackie: It has been successfully integrated.

Jackie: And now I'll turn it over to Jacky.

Jackie: Thank you Hong.

Jackie Weber: Turning to page 33 for our consolidated operating highlights, I think what the highlights demonstrate here is that we've turned a corner in Q1 with adjusted EBITDA of $21.8 million and adjusted operating income of $1.4 million, reflecting significant improvements from Q4. Adjusted operating income improved from a loss of $14.3 million in Q4 to positive adjusted operating income of $1.4 million in the current quarter. I would also add that there were no fair value provisions in the current quarter, and our held for trading portfolio is conservatively marked. The adjusted net loss was $0.3 million or $0.00 per share. Turning to page 34.

Jackie: Turning to page 33 for our consolidated operating highlights.

Jackie Weber: I think with the highlights demonstrate here is that.

Jackie Weber: In Q1.

Jackie Weber: <unk> EBITDA of $21 8 million and adjusted operating income of $1 4 million, reflecting significant improvements from Q4.

Jackie Weber: Adjusted operating income improved from a loss of $14 3 million in Q4 to positive adjusted operating income of $1 4 million in the current quarter.

Jackie Weber: I would also add that there were no fair value provisions in the current quarter and our held for trading portfolio is conservatively marked.

Jackie Weber: Adjusted net loss was <unk> 3 million or zero cents per share.

Jackie Weber: Turning to page 34.

Jackie Weber: I think our balance sheet highlights are also reflecting our commitments from Q4. Our total assets and debt decreased substantially in the first quarter as a result of the sale of Red Oak and pooled sales at Triad. We ended the first quarter with $400 million of capacity available on our senior line, and our businesses are fully funded for 2024. Turning to page 35.

Jackie Weber: I think our balance sheet highlights are also reflecting our commitments from Q4.

Jackie Weber: Our total assets and debt decreased substantially in the first quarter as a result of the sale of Red Oak and pulled sales at triad.

Jackie Weber: We ended the first quarter with $400 million of capacity available on our senior line.

Jackie Weber: And our businesses are fully funded for 2024.

Jackie Weber: Turning to page 35.

Jackie Weber: I think what this slide shows is that we're on track to deliver our 2024 business plan.

Jackie Weber: I think what this slide shows is that we're on track to deliver our 2024 business plan. Loan origination revenues of $19.8 million reflect a significant improvement in margin from Q4. The turnaround in adjusted operating income reflects both the improvements in revenue and in operating expenses. On page 36, year-over-year growth and business segment operating expenses reflect operational enhancements. Corporate operating expenses decreased to $2.8 million.

Jackie Weber: Loan origination revenues of $19 8 million.

Jackie Weber: Reflect a significant improvement in margin from Q4.

Jackie Weber: The turnaround in adjusted operating income reflects the improvements in revenue and in operating expenses.

Jackie Weber: Yes.

Jackie Weber: On page 36.

Jackie Weber: Year over year growth in business segment operating expenses reflect operational enhancement.

Jackie Weber: Corporate operating expenses decreased to $2 8 million.

Jackie Weber: And lastly on page 37.

Jackie Weber: And lastly, on page 37, our health for the trading portfolio decreased from $382 million at the end of 2023 to $227 million at the end of Q1, in line with our forecast provided in Q4. As I mentioned earlier, the on-balance sheet portfolio is conservatively marked, and our exposure is hedged moving forward. I'll turn it back to Steve for his closing remarks.

Jackie Weber: <unk> held for trading portfolio decreased from $382 million at the end of 2000 $23 million to $227 million at the end of Q1 in line with our forecast provided in Q4.

Jackie Weber: As I mentioned earlier the on balance sheet portfolio is conservatively marked and our exposures hedged moving forward.

Jackie Weber: I'll turn it back to Steve for his closing remarks. Thank.

Steve: Thank you Jackie.

Steve: We highlight five items on slide 39.

Steven K. Hudson: Based upon our return to historical origination revenue margins, we recorded 5.2% and Q1 up significantly over the past year. 3.9% in the fourth quarter and a target of 6% for Q2, 3, and 4 on average, as well as the increased servicing revenue, we're reconfirming our 24 guidance of $0.10 to $0.16. However, I would focus you on the higher end of that range given the results of this quarter. Second, there are no fair value adjustments in Q1, nor are they expected for the remaining part of 2024.

Jackie Weber: Based upon our return to historical.

Steven K. Hudson: Origination revenue margins, we recorded five 2% in Q1 up significantly over the.

Steven K. Hudson: Three 9% in the fourth quarter and a target of 6% for the for Q2, three and four on average as well as the increased servicing revenue. We're reconfirming, our 24 guidance of 10 to 16.

Steven K. Hudson: However, I would focus you on the higher end of that range given the results of this quarter.

Steven K. Hudson: Second there are no fair value adjustments in Q1, nor expected for the remaining part of 2024, we have conservatively marked our book and have effective hedging in place going forward.

Steven K. Hudson: We have conservatively marked our book and have effective hedging in place going forward. Three land home processes, systems, and personnel under Lance Hull's leadership have been materially improved, and in H2, we will return to growth in the LH business line. Funding capacity has significantly improved; in fact, we are overfunded. And finally, MH Triad's Q1 originations of over $300 million represent a strong start to the year, as well as the $165 million at RRB Marine Business. The business is in good shape. With that, Operator, we'll open the call to questions.

Steven K. Hudson: Three land home processes systems and personnel under Lance holds leadership haven't materially improved and.

Steven K. Hudson: And the H two we will return to growth in the LH business line.

Steven K. Hudson: Funding capacity has significantly improved in fact, we are overfunded and finally.

Steven K. Hudson: Rich <unk> Q1 originations over to over $300 million represent a strong start to the year as well as the $165 million at RMB remember marine business. The business is in good shape.

Steven K. Hudson: With that operator, we'll open the call to questions.

Operator: Thank you. We will now take analyst questions from the telephone lines. If you have a question, please press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please lift your handset before pressing any keys. To withdraw your question, please press star then 2. There will be a brief pause while the participants register for questions. Thank you for your patience. The first question is from Jaeme Gloyn from National Bank Financial. Please go ahead.

Speaker Change: Thank you we will now take analyst questions from the telephone lines.

Jaeme Gloyn: Do you have a question. Please press Star then one on your telephone keypad, you will hear a tone acknowledging your request. If you are using a speaker phone. Please lift your handset before pressing any keys to withdraw your question. Please press Star then two.

Jaeme Gloyn: There will be a brief pause while the participants register for questions. Thank you for your patience.

Jaeme Gloyn: The first question is from Jamie <unk> from National Bank Financial. Please go ahead.

Operator: Yeah.

Jaeme Gloyn: Yes, thanks, good afternoon.

Jaeme Gloyn: Yeah, thanks. Good afternoon. First question: just around the triad.

Jaeme Gloyn: First question just around the.

Jaeme Gloyn: The Tri Ed business, the origination yield five 2%.

Jaeme Gloyn: Proved.

Jaeme Gloyn: I guess still below the sort of run rate range of five 5% to 6%.

Jaeme Gloyn: Maybe just talk through some of the factors that were at play to keep it below and then I think the comment was that it was going to trend towards 6% to move. This year. So is that kind of the high end that we would expect as we progress through 2020 for that.

Jaeme Gloyn: The comment was that it was going to trend towards 6% through this year. So is that kind of the high end that we would expect as we progress through 2024? will be more in the sort of 5% to 6% range as opposed to 5.5% and 6.5%.

Jaeme Gloyn: We will be more in the sort of 5% to 6% range as opposed to 556 and a half.

Steven K. Hudson: I'm going to let Matt answer that, but on our last call, I guided everyone to an average for the year of 5.5 to 6. We are on track to that average. If anything, based upon Q1, I think we would be on the high end of that average for 24, Matt.

Speaker Change: Yes, I know.

Speaker Change: Let met answer it but I think in our last call I guided everyone to an average for the year of five five to six.

Matt: We are on track to that average.

Steven K. Hudson: If anything based upon Q1, I think we would be the high end of that average four for 'twenty for that.

Matthew Heidelberg: Yeah, no, that's right. Hi Jaeme.

Matt: Yes, that's right.

Matt: Hi, Jim.

Matt: It's clearly a significant improvement than we had from the last quarter.

Matthew Heidelberg: It's clearly a significant improvement over what we had from the last quarter. But in any quarter, it's going to come down to a bit of mix, too. Last quarter, we really tried to highlight for you the different yields across the different products. But at the end of the day, we're still very confident with the numbers that we put out for the complete year, which would include this quarter. So we're expecting to see that number continue to move up and hit that average for the year.

Matthew Heidelberg: In any quarter, it's going to come down to a bit of mix to last quarter, we really try to highlight for you the different yields across the different products at the end of the day, we're still very confident with the number that we put out for the complete year.

Matthew Heidelberg: That would include this quarter. So we're expecting to see that number continue to move up and hit that average for the year and finally I think I don't think the fact that we are overfunded brings pricing discipline to the table with its taken us several years to establish this institutional asset with investors across the spectrum.

Steven K. Hudson: And finally, I think that the fact that we are overfunded brings pricing discipline to the table. It's taken us several years to establish this institutional asset with investors across the spectrum, and that overfunded position will provide pricing discipline as we go into the round of product 24 and 25.

Steven K. Hudson: And that overfunded position will provide pricing discipline as we go into the latter part of 'twenty four 'twenty five.

Speaker Change: Okay. Second question is still on triad originations just.

Jaeme Gloyn: Okay, second question still on triad originations. Just looking at two data points here. First is, you know, originations for the quarter are tracking below industry shipments. You know, do you have a comment on that relationship? And then just looking at the trend, like March originations were lighter than a year ago, whereas January and February were higher, so was there anything going on in March this year? You know, does that suggest that we have a little bit of a weaker handoff on originations into the Q2 period?

Jaeme Gloyn: Yeah.

Jaeme Gloyn: Looking at two data points here first is.

Jaeme Gloyn: Originations on a quarter are tracking below the industry shipments.

Jaeme Gloyn: I'll give a comment on that on on that relationship and then just looking at the trend like March originations were lighter than than a year ago, whereas January February were plus so was there anything going on in March this year.

Jaeme Gloyn: Does that suggest that we are a little bit of a weaker handoff on originations.

Jaeme Gloyn: Into the Q2 period.

Jaeme Gloyn: Hey, Jim It's Matt again no.

Matthew Heidelberg: Hey Jaeme, it's Matt again. No, you know, the first quarter is seasonally, it's always our slowest quarter for the year. We feel really good where we are. I mean, if I kind of take you back to the guidance we gave.

Matt: The first quarter's seasonally is always our slowest quarter for the year, we feel really good where we are.

Matt: And kind of take you back to the guidance we gave.

Matthew Heidelberg: I believe we boiled it down into like three buckets. It was a bit over a billion dollars in chattel, around $500 million in community, and a couple hundred million in land. Chattel, you've heard from us, we feel really good about it. You saw the growth rates that we had there in the first quarter, with that demand and approval growth coming in really fast behind in that silver and bronze category.

Matt: Believe we boil it down into like three buckets. It was.

Matthew Heidelberg: Like a bit over $1 billion in chattel around $500 million in community and a couple of hundred million dollars land home.

Matthew Heidelberg: Chadel you've heard from US we feel really good about you saw the growth rates that we had there in the first quarter with that demands an approval growth coming in really fast behind in that silver and bronze category with those expanded.

Matthew Heidelberg: With those expanded agreements that we signed with our partners, that's giving us additional capacity there, which is really giving us the opportunity to grow those channels even faster. In community, in a similar way, the rental program that we're going to be launching and turning into flow, we've been just waiting for that partner to come around so we can really get that going. So we feel very strong about that growth as well. Community, I believe, was up about 170% in that first quarter.

Matthew Heidelberg: Agreements that we signed with our partners, that's giving us additional capacity is out there that's really giving us the opportunity to grow those channels, even faster and community in a similar way we the rental program that we're going to be launching a turning into flow. We've been just sort of waiting for that partner to come around so we can really get that going.

Matthew Heidelberg: So we feel very strong about that growth as well community believe was up about 170% in that first quarter.

Matthew Heidelberg: And then Land Home, as Lance touched on before, with the improvements put in place there, that was going to be a second half kind of story for us, but also the smallest bucket of the three.

Matthew Heidelberg: And then land home was.

Matthew Heidelberg: Lance touched on that before with the improvements put in place there that was going to be a second half kind of story for us, but also the smallest bucket of the three.

Speaker Change: Okay understood last one on triad for me just.

Jaeme Gloyn: Okay, understood. Last one on the triad for me, just... As you think about the funding risks that came through last year and the hedging noise, we'll call it, within a scenario where the Fed hikes, what should we expect from the triad performance from finance?

Jaeme Gloyn: As you think about like the funding risks that they came through last year and had changed.

Jaeme Gloyn: Noise, we'll call it.

Jaeme Gloyn: Yes.

Jaeme Gloyn: Yes.

Jaeme Gloyn: Scenario, where the fed hikes rates, what should we expect from the triad performance from financials.

Jaeme Gloyn: Try it is hedged on its forward flow arrangements now Jamie I think by the way I think you are being kind of noise.

Steven K. Hudson: Triad is hedged on its forward flow arrangements now, Jaeme. I think, by the way, I think you're being kind to noise, but the reason that Chris Johnson is here and his leadership and his substantial financial service experience in capital markets is that we now have a board-approved hedging policy, and each hedge position is approved by the board. So we feel good about either a rising or a decreasing rate environment. Thank you.

Steven K. Hudson: The reason that Chris Johnson here, and his leadership and a substantial financial.

Steven K. Hudson: Their service experience a couple of markets is that we now have a board approved hedging policy.

Steven K. Hudson: And each hedge position as approved by the board.

Steven K. Hudson: So we feel good about it either.

Steven K. Hudson: <unk> or a decreasing.

Steven K. Hudson: The rate environment.

Steven K. Hudson: You are talking about rates coming down with quickbooks, either environment is fine for us.

Steven K. Hudson: Okay.

Jaeme Gloyn: Okay, I'll turn it on.

Speaker Change: Turn it over thanks.

Jaeme Gloyn: The next question is from Tom Mackinnon from BMO. Please go ahead.

Tom MacKinnon: The next question is from Tom MacKinnon from BMO. Please go ahead.

Tom MacKinnon: Yes, thanks, very much and good afternoon.

Tom MacKinnon: Yeah, thanks very much. And good afternoon. Just a question with respect to the corporate segment. Looking at that on page 13, or page 16 of the MD&A, there's about a million dollars in revenue here. And it seems to be from some legacy stuff. How should we be thinking of that? Is that kind of more of a one-off, or what's the trend for revenue in corporate?

Tom MacKinnon: Just a question with respect to the corporate segment.

Tom MacKinnon: And looking at that on page what is it on page 13, our page 16 of the MD&A.

Tom MacKinnon: There's about a million dollars in <unk>.

Tom MacKinnon: Revenue here.

Tom MacKinnon: And it seems to be from some legacy stuff is.

Tom MacKinnon: How should we be thinking of that as that kind of more of a one off or what's the trend for revenue any corporate.

Jackie Weber: I don't believe there was anything in the guide for that, but maybe you can help me. Thanks.

Jackie Weber: Don't believe there was anything in the guide for that but maybe you can help me. Thanks.

Jackie Weber: Hi Tom, it's Jackie.

Speaker Change: Hi, Todd.

Tom MacKinnon: Jackie corporate revenue, there's two components really built in there one is we have some corporate investments.

Jackie Weber: Corporate revenue, there are two components really built in there. One is that we have some corporate investments. Those can trend up or down just a little bit because they're marked at fair value. So this quarter, there was a little bit of a pickup there. There's also a little bit of FX that rolls into corporate revenue. So for example, during the CAD weekend in Q1, you saw a little bit of FX revenue there as well. I wouldn't expect those amounts to grow or change materially throughout the year. They tend to just move up and down slightly.

Jackie Weber: Those can trend up or down just a little bit because they're marked at fair value. So this quarter, there's a little bit of pick up there.

Jackie Weber: There's also a little bit of FX that rolled into corporate revenue. So as the CAD weekend in Q1, you saw a little bit of FX driving revenue there as well.

Jackie Weber: I wouldn't expect those amounts to grow or changed materially throughout the year. They tend to just move up and down slightly.

Speaker Change: So these would be legacy corporate investments is that correct.

Tom MacKinnon: So these would be legacy corporate investments, is that correct? Like, just help us think about what we should have for revenues in this segment going forward.

Speaker Change: Just help us think about what we should have for revenues in this.

Tom MacKinnon: In this segment going forward.

Speaker Change: No I think.

Jackie Weber: Don't think of the old businesses as far as aircraft or rail legacy is concerned; these are more of a fun type investment that we hold for purposes of gains.

Tom MacKinnon: Don't think of the old businesses as far as aircraft are rail legacy these are.

Jackie Weber: More of fund type investments.

Jackie Weber: <unk>.

Jackie Weber: That we hold for purposes of gain.

Jackie Weber: Okay.

Jackie Weber: And is there any how should we be thinking about this that line going forward because it had it was up significantly.

Tom MacKinnon: And is there any – how should we be thinking about this, that line going forward? Because it was up significantly?

Speaker Change: Yes, I think the guidance, Tom as a b plus or minus 500000 from $1 billion.

Jackie Weber: I think the guidance, Tom, is it should be plus or minus $500,000 from the million. Okay. I don't know what chunk is FX, but...

Jackie Weber: Okay, I don't know I don't know what chunk is FX, but.

Speaker Change: Okay, That's fine and then pardon me.

Tom MacKinnon: Okay, that's fine. And then, do you pardon me?

Jackie Weber: They tend to move a couple hundred thousand dollars in each direction. It just happened to be up slightly this quarter. Okay.

Tom MacKinnon: They tend to move a couple of hundred thousand dollars each direction. It just happened to be up slightly this quarter.

Tom MacKinnon: Okay, so if it's plus or minus, is zero the best way to think of it going forward? That's fair, Tom. Okay, thanks. And then, with respect to the...

Jackie Weber: Okay.

Tom MacKinnon: It's plus or minus zero, the best way to think of it going forward.

Tom MacKinnon: That's fair Tom.

Speaker Change: Okay. Thanks, and then with respect to the.

Tom MacKinnon: There seems to be some elevated transaction.

Tom MacKinnon: There seems to be some elevated transactions. Corporate development and strategic review costs that are below the line, still over $2 million, granted running half the level they were in December and the quarter ended then, but is there still an ongoing strategic review here? What would these $2 million costs be related to?

Tom MacKinnon:

Tom MacKinnon: Corporate development and strategic review costs that are below the line still over 2 million granted running half the level they were in December.

Tom MacKinnon: The quarter ended then but.

Tom MacKinnon: Is there still ongoing.

Tom MacKinnon: The strategic review here, what would these 2 million cost be related to.

Tom MacKinnon: So Tom the $2 million of transaction costs in Q1.

Jackie Weber: So Tom, the $2 million in transaction costs in Q1 have a couple of different components. I'd say the first was we did complete the acquisition of FAS in Q1, and then we do obviously look continuously at improvements for our businesses, and then the wrap-up of the strategic review as well.

Jackie Weber: A couple of different components, there I would say well first one is we did complete the acquisition of <unk> in Q1.

Jackie Weber: And then we do obviously look continuously at improvements.

Jackie Weber: And then the rapper wrap up the strategic review as well.

Tom MacKinnon: Okay, and so going forward, we probably would anticipate that number to be lower as well.

Jackie Weber: Okay, and so going forward, we probably would anticipate that number to be lower as well.

Jackie Weber: Correct, it was down this quarter, and we expect it to be down going forward. OK.

Tom MacKinnon: Correct. It was down this quarter and we expect it to be down going forward.

Tom MacKinnon: Okay, those are my questions. Thanks. As there are no...

Jackie Weber: Okay.

Speaker Change: Those are my questions. Thanks.

Speaker Change: As there are no further questions registered at this concludes today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.

Operator: As there are no further questions registered, this concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Operator: Yes.

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Operator: Right.

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