Q2 2024 Abacus Life Inc Earnings Call

August 12, 2024

Speaker Change: Greetings. Welcome to Abacus Life second quarter 24 earnings call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Operator: At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Garrett Edson of ICR. Thank you.

Operator: At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Garrett Edson of ICR. Thank you.

Speaker Change: Please note this conference is being recorded. I will now turn the conference over to Garrett Edson of ICR. Thank you.

Operator: Good day, ladies and gentlemen. Thank you for standing by.

Garrett Edson: Thank you for standing by. Abacus Life refers participants on this call to the investor web page, www.abacuslife.com/slash-investors. For the press release, the investor information, and filings with the FCC for a discussion of the risks that can affect the business. Abacus Life specifically refers participants to the presentation furnished today on Form 8K with the Securities and Exchange Commission and to remind listeners that some of the comments today may contain forward-looking statements, and as such, will be subject to risks and uncertainties, which, if they materialize, could materially affect results.

Speaker from Abacus Life: Abacus Life refers participants on this call to the investor web page www.abacuslife.com slash investors for the press release, the investor information, and filings with the FCC for a discussion of the risks that can affect the business. Abacus Life specifically refers participants to the presentation furnished today on Form 8K with the Securities and Exchange Commission and to remind listeners that some of the comments today may contain forward-looking statements and, as such, will be subject to risks and uncertainties which, if they materialize, could materially affect results.

Speaker Change: Good day ladies and gentlemen. Thank you for standing by. Abacus Life refers participants on this call to the investor web page www.abacuslife.com slash investors for the press release, the investor information, and filings with the FCC for a discussion of the risks that can affect the business.

Speaker Change: Abacus Life specifically refers participants to the presentation furnished today on Form 8K with the Securities and Exchange Commission, and to remind listeners that some of the comments today may contain forward-looking statements and, as such, will be subject to risks and uncertainties which, if they materialize, could materially affect results.

Speaker from Abacus Life: Reference is made to the section titled Forward-Looking Statements and the Company's Earnings Press Release for the second quarter of 2024, which is incorporated herein by reference. As we know, forward-looking statements, whether written or oral, include but are not limited to Abacus Life's expectational prediction of financial and business performance and conditions as well as its competitive and industry outlook. Forward-looking statements are subject to risks, uncertainties, and assumptions, including the risk factors set forth in Item 1A of our most recent 10-K, which, if they materialize, could materially affect results, and such forward-looking statements do not guarantee performance, and Abacus Life gives no such assurance.

Garrett Edson: Reference is made to the section titled Forward-Looking Statements in the Company's Earnings Press Release for the second quarter of 2024, which is incorporated herein by reference. As we know, forward-looking statements, whether written or oral, include but are not limited to Abacus Life's expectation or prediction of financial and business performance and conditions, as well as its competitive and industry outlook. Forward-looking statements are subject to risks, uncertainties, and assumptions, including the risk factors set forth in Item 1A of our most recent 10-K, which, if they materialize, could materially affect results, and such forward-looking statements do not guarantee performance, and Abacus Life gives no such assurance.

Speaker Change: Reference is made to the section titled forward-looking statements in the company's earnings press release for the second quarter of 2024 which is incorporated herein by reference.

Speaker Change: We know forward-looking statements whether written or oral include but are not limited to Abacus Life's expectation or prediction of financial and business performance and conditions as well as its competitive and industry outlook.

Speaker Change: Forward-looking statements are subject to risks, uncertainties, and assumptions, including the risk factors set forth in Item 1A of our most recent 10-K, which, if they materialize, could materially affect results, and such forward-looking statements do not guarantee performance and Abacus Life gives no such assurances.

Garrett Edson: Abacus Life is under no obligation to expressly disclaim any obligation to update, alter, or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. In addition, historical data pertaining to operating results and other performance indicators applicable to Abacus Life are not necessarily indicative of results to be achieved in succeeding periods.

Speaker from Abacus Life: Abacus Life is under no obligation to expressly disclaim any obligation to update, alter, or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. In addition, historical data pertaining to operating results and other performance indicators applicable to Abacus Life are not necessarily indicative of results to be achieved in succeeding periods. I will now turn the call over to Jay Jackson, Chief Executive Officer of Abacus Life.

Advocacy's life: Abacus Life is under no obligation to expressly disclaim any obligation to update, alter, or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. In addition, historical data pertaining to the operating results and other performance indicators applicable to Abacus Life are not necessarily indicative of results to be achieved in succeeding periods.

Jay Jackson: I will now turn the call over to Jay Jackson, Chief Executive Officer of Abacus Life. Thank you to everyone joining us today for your interest in Abacus. And welcome to our second quarter 2024 earnings call. With me today is our Chief Financial Officer, Bill McCauley. And after our prepared remarks, we'll open it up to your questions.

Jay Jackson: Thank you to everyone joining us today for your interest in Abacus, and welcome to our second quarter 2024 earnings call. With me today is our Chief Financial Officer, Bill McCauley, and after our prepared remarks, we'll open it up to your questions.

Jay Jackson: It was another quarter of excellent performance for Abacus Life as we continue to successfully execute on our key strategic initiatives and further solidifying our position as a leading market maker and global alternative asset manager, which will have nearly $3 billion in assets under management post-acquisition. For the second quarter of 2024, we more than doubled total revenue year-over-year to $29.1 million and recorded strong earnings, growing adjusted EBITDA by 83% year-over-year to $16.7 million and generating a 75% year-over-year increase in adjusted net income to $11.8 million, or $0.18 per diluted share.

Speaker Change: It was another quarter of excellent performance for Abacus Life as we continue to successfully execute on our key strategic initiatives.

Speaker Change: further solidifying our position as a leading market maker and global alternative asset manager which will have nearly three billion dollars in assets under management post acquisitions.

Speaker Change: For the second quarter of 2024, we more than doubled total revenue year-over-year to $29.1 million.

Speaker Change: and recorded strong earnings, growing adjusted EBITDA by 83% year-over-year to $16.7 million and generating a 75% year-over-year increase in adjusted net income to $11.8 million, or $0.18 per diluted share.

Jay Jackson: Our second-quarter performance underscores our thoughtful investments in marketing, which continue to yield excellent results by driving significant year-over-year increases in our direct-to-consumer originations. Meanwhile, the strength of our partnerships with carriers and reinsurers remains a key contributor to our strong performance in both revenue and adjusted EBITDA. Bill will be along shortly to discuss our second quarter financial performance in further detail.

Speaker Change: Our second quarter performance underscores our thoughtful investments in marketing, which continue to yield excellent results by driving significant year-over-year increases in our direct-to-consumer originations.

Speaker Change: Meanwhile, the strength of our partnerships with carriers and reinsurers remains a key contributor to our strong performance in both revenue and adjusted EBITDA.

Speaker Change: Bill will be along shortly to discuss our second quarter financial performance in further detail.

Jay Jackson: In addition to our exceptional quarterly financial results, we also made substantial progress with respect to our long-term strategy. As we outlined during our Investor Day in June, along with our core business of acquiring life insurance policies, we are focused on expanding our complementary lifespan-based financial products. Since our last earnings call, we achieved several key strategic milestones. In a pivotal moment for our ABL Wealth Division, subsequent to the quarter end, we announced a definitive agreement to acquire Carlisle Management Company, a premier Luxembourg-based investment manager in the life settlement space, for approximately $200 million.

Bill: in addition to our exceptional quarterly financial results.

Bill: We also made substantial progress with respect to our long-term strategy.

Speaker Change: As we outlined during our Investor Day in June , along with our core business of acquiring life insurance policies, we are focused on expanding our complementary lifespan-based financial products. Since our last earnings call, we achieved several key strategic milestones.

Jay Jackson: In a pivotal moment for our ABL Wealth Division, subsequent to the quarter end, we announced a definitive agreement to acquire Carlisle Management Company, a premier Luxembourg-based investment manager in the life settlement space, for approximately $200 million. This acquisition will add approximately $2 billion in assets under management and is fully aligned with our strategy to become a global alternative asset manager. In addition to being a great culture fit, Carlyle further enhances Abacus's offering to institutional investors seeking attractive, risk-adjusted returns with low correlation to other asset classes.

Speaker Change: In a pivotal moment for our ABL Wealth Division, subsequent to the quarter end, we announced a definitive agreement to acquire Carlisle Management Company, a premier Luxembourg-based investment manager in the life settlement space.

Jay Jackson: Carlisle has a most impressive and long-standing track record as a fund manager in the life settlement industry, and its geographically diverse client base stands to significantly complement our efforts to become a global financial leader. By incorporating Carlisle's expertise and robust portfolio into our offerings, we are strategically positioning ABOL at the heart of our mission to deliver sophisticated investment solutions for the life settlement market. This acquisition highlights our dedication to providing exceptional value and expanding our capabilities to serve a wider range of investors.

Speaker Change: for approximately $200 million.

Speaker Change: This acquisition will add approximately $2 billion in assets under management and is fully aligned with our strategy to become a global alternative asset manager.

Speaker Change: In addition to being a great culture fit, Carlyle further enhances Abacus' offering to institutional investors seeking attractive, risk-adjusted returns with low correlation to other asset classes.

Jay Jackson: Carlisle has a most impressive and long-standing track record as a fund manager in the life settlement industry, and its geographically diverse client base stands to significantly complement our efforts to become a global financial leader. By incorporating Carlisle's expertise and robust portfolio into our offerings, we are strategically positioning ABLL at the heart of our mission to deliver sophisticated investment solutions for the life settlement market. This acquisition highlights our dedication to providing exceptional value and expanding our capabilities to serve a wider range of investors.

Speaker Change: Carlisle has a most impressive and longstanding track record as a fund manager in the life settlement industry and is geographically diverse client base.

Speaker Change: stands to significantly complement our efforts to become a global financial leader.

Speaker Change: By incorporating Carlyle's expertise and robust portfolio into our offerings, we are strategically positioning ABOL at the heart of our mission to deliver sophisticated investment solutions for the life settlement market.

Speaker Change: This acquisition highlights our dedication to providing exceptional value and expanding our capabilities to serve a wider range of investors.

Jay Jackson: Along with Carlisle, last week, we entered into an agreement to acquire FCF Advisors, a New York-based asset manager and index provider specializing in free cash flow-focused investment strategies. FCF Advisors has a suite of core and thematic free cash flow equity strategies and offers over 50 customizable free cash flow index strategies covering eight global equity allocations.

Speaker Change: Along with Carlisle, last week we entered into an agreement to acquire SCF Advisors, a New York-based asset manager and index provider specializing in free cash flow focused investment strategies.

Speaker Change: FCF Advisors has a suite of core and thematic free cash flow equity strategies and offers over 50 customizable free cash flow index strategies covering eight global equities allocations.

Jay Jackson: The deal will add approximately $600 million in assets under management and further accelerate the expansion of ABL Wealth with a diverse, lifespan-based suite of products. In late June, we successfully closed an oversubscribed public offering of 11.5 million shares of common stock, including a full exercise of the underwriter's option, which further broadened our investor base and enhanced our liquidity position. Through this offering, we raised over $90 million in proceeds, which we have rapidly deployed into additional life settlement policies, as well as advancing our overall business strategy.

Speaker Change: The deal will add approximately $600 million in assets under management and further accelerates the expansion of ABL Wealth with a diverse, lifespan-based suite of products.

Speaker Change: In late June , we successfully closed an oversubscribed public offering of 11.5 million shares of common stock, including full exercise of the underwriters option, which further broadened our investor base and enhanced our liquidity position.

Speaker Change: Through this offering, we raised over $90 million in proceeds, which we have rapidly deployed into additional life settlement policies, as well as advancing our overall business strategy.

Jay Jackson: Finally, during the quarter, we established a national distribution relationship with AIMCOR, one of the largest national insurance marketing organizations in the United States. This partnership will leverage AIMCOR's extension network of over 40 broker general agencies to offer protection and retirement solutions to thousands of financial professionals, institutional clients, and other distribution partners nationwide. As a preferred partner for life settlement solutions, Abacus will provide its expertise to AIMCOR's affiliated member firms. This collaboration highlights our commitments to client-centric solutions and enhances our ability to educate policyholders about the value of their policies and empower them to make informed financial decisions.

Jay Jackson: Finally, during the quarter, we established a national distribution relationship with AIMCorp, one of the largest national insurance marketing organizations in the United States. This partnership will leverage AIMCorp's extension network of over 40 broker general agencies to offer protection and retirement solutions to thousands of financial professionals, institutional clients, and other distribution partners nationwide. As a preferred partner for life settlement solutions, Abacus will provide its expertise to AIMCorp's affiliated member firms.

Speaker Change: Finally, during the quarter, we established a national distribution relationship with AIMCorp, one of the largest national insurance marketing organizations in the United States.

Speaker Change: This partnership will leverage AIMCOR's extension network of over 40 broker general agencies to offer protection and retirement solutions to thousands of financial professionals, institutional clients, and other distribution partners nationwide.

Speaker Change: As a preferred partner for Life Settlement Solutions, Abacus will provide its expertise to AIMCorp's affiliated member firms.

Jay Jackson: This collaboration highlights our commitments to client-centric solutions and enhances our ability to educate policyholders about the value of their policies and empower them to make informed financial decisions. All of our achievements over the past few months clearly underscore our relentless commitment to constant innovation through our wealth of longevity data and actuarial technology, offering an incredible value proposition for our clients and firmly solidifying Abacus as a pioneering global alternative asset manager and market maker.

Speaker Change: This collaboration highlights our commitments to client-centric solutions and enhancing our ability to educate policyholders about the value of their policies and empowering them to make informed financial decisions.

Jay Jackson: All of our achievements over the past few months clearly underscore our relentless commitment to constant innovation through our wealth of longevity data and actuarial technology, offering an incredible value proposition for our clients, and firmly solidifying Abacus as a pioneering global alternative asset manager and market maker. Looking ahead, we're incredibly excited to build upon our success and capitalize on the vast growth opportunities before us. By continuing to leverage our successful business model, exceptional team of experts, and extensive proprietary data and technology, we are strategically positioned for sustainable and profitable growth, ensuring long-term value creation for our shareholders. With that, I'll now hand it over to our CFO, Bill McCauley, to discuss the specifics of our second quarter results and financials.

Speaker Change: All of our achievements over the past few months clearly underscore our relentless commitment to constant innovation through our wealth of longevity data and actuarial technology.

Speaker Change: offering an incredible value proposition for our clients and firmly solidifying Abacus as a pioneering global alternative asset manager and market maker.

Jay Jackson: Looking ahead, we're incredibly excited to build upon our success and capitalize on the vast growth opportunities before us. By continuing to leverage our successful business model, exceptional team of experts, and extensive proprietary data and technology, we are strategically positioned for sustainable and profitable growth, ensuring long-term value creation for our shareholders. With that, I'll now hand it over to our CFO, Bill McCauley, to discuss the specifics of our second quarter results. Thanks, Jay. And hello everyone.

Speaker Change: Looking ahead, we're incredibly excited to build upon our success and capitalize on the vast growth opportunities before us.

Speaker Change: By continuing to leverage our successful business model, exceptional team of experts, and extensive proprietary data and technology, we are strategically positioned for sustainable and profitable growth, ensuring long-term value creation for our shareholders.

Bill McCauley: With that, I'll now hand it over to our CFO , Bill McCauley, to discuss the specifics of our second quarter results and financials.

Bill McCauley: Thanks Jay, and hello everyone. As Jay mentioned, we delivered another strong quarter of top-line growth and profitability at Abacus. The key driver of our business performance continues to be our highly efficient origination platform while we continue to build our other verticals that will contribute to our future earnings. In the second quarter of 2024, origination capital deployed was $104.7 million compared to $59.8 million in the prior year period, while we grew policies purchased 95% to $275 compared to $141 in the prior year period.

Bill McCauley: As Jay mentioned, we delivered another strong quarter of top-line growth and profitability at Abacus. The key driver of our business performance continues to be our highly efficient origination platform while we continue to build our other verticals that will contribute to our future earnings. In the second quarter 2024, origination capital deployed was $104.7 million compared to $59.8 million in the prior year period, while we grew policies purchased 95% to $275 compared to $141 in the prior year period.

Bill McCauley: In the second quarter of 2024, origination capital deployed was $104.7 million, compared to $59.8 million in the prior year period.

Bill McCauley: while we grew policies purchased 95% to 275 compared to 141 in the prior year period.

Bill McCauley: Total revenue in the second quarter of 2024 more than doubled to $29.1 million compared to $11.4 million in the prior year period. The increase was primarily due to higher active management revenue. As of June 30th, 2024, Abacus held 458 policies, of which 452 are accounted for under the fair value method, and six are accounted for using the investment method, which is cost plus premiums paid.

Bill McCauley: Total revenue in the second quarter 2024 more than doubled to $29.1 million compared to $11.4 million in the prior year period. The increase was primarily due to higher active management revenue.

Bill McCauley: As a reminder, for all policies purchased after June 30th, 2023, the company has elected to account for these under the fair value method going forward. For policies purchased before June 30th, 2023, the company elected to use the fair value method or the investment method. Turning to expenses, total operating expenses, excluding unrealized and realized gains and losses and the change in fair value of debt, for the second quarter of 2024 were approximately $18.9 million compared to $1.3 million in the prior year period.

Bill McCauley: As a reminder, for all policies purchased after June 30th, 2023, the company has elected to account for these under the fair value method going forward. For policies purchased before June 30th, 2023, the company elected to use the fair value method or the investment method. Turning to expenses, total operating expenses excluding unrealized and realized gains and losses and the change in fair value of debt for the second quarter of 2024 were approximately $18.9 million compared to $1.3 million in the prior year period.

Bill McCauley: As a reminder, for all policies purchased after June 30, 2023, the company has elected to account for these under the fair value method going forward. For policies purchased before June 30, 2023, the company elected to use the fair value method or the investment method.

Bill McCauley: Turning to expenses, total operating expenses excluding unrealized and realized gains and losses and the change in fair value of debt for the second quarter 2024 were approximately $18.9 million compared to $1.3 million in the prior year period.

Bill McCauley: We would note that second quarter 2024 total operating expenses included $6.2 million of non-cash stock compensation expense and $0.8 million of public company related expenses, both of which did not occur in the prior year period. Beginning in the third quarter, we will anniversary these non-cash equity compensation and public company expenses. We also increased sales and marketing expenses by approximately $1.9 million compared to the prior year period, which assisted in accelerating our growth profile.

Bill McCauley: Beginning in the third quarter, we will anniversary these non-cash equity compensation and public company expenses.

Bill McCauley: We also increased sales and marketing expenses by approximately $1.9 million compared to the prior year period, which assisted in accelerating our growth profile. The company typically realizes the benefit of marketing spend within 90 to 120 days.

Bill McCauley: Adjusted EBITDA for the quarter grew 83% to $16.7 million compared to $9.1 million in the prior year period. Adjusted even a margin was 57.5% for the quarter compared to 80.4% in the prior year period. Gap net income attributable to stockholders for the quarter was $0.8 million, compared to $6.8 million in the prior year period. On an adjusted basis, excluding non-cash compensation, business acquisition costs, amortization, and change in fair value of warrant liability, net income for the second quarter of 2024 grew 75% to 11.8 million compared to 6.8 million in the prior year period.

Bill McCauley: Adjusted EBITDA for the quarter grew 83% to 16.7 million, compared to 9.1 million in the prior year period.

Bill McCauley: adjusted even a margin was 57.5% for the quarter compared to 80.4% in the prior year period. Gap net income attributable to stockholders for the quarter was 0.8 million compared to 6.8 million in the prior year period.

Bill McCauley: on an adjusted basis excluding non-cash stock compensation, business acquisition costs.

Bill McCauley: On an adjusted basis, excluding non-cash stock compensation, business acquisition costs, amortization, and change in fair value of warrant liability, net income for the second quarter of 2024 grew 75% to $11.8 million, compared to $6.8 million in the prior year period. Now turning to our balance sheet metrics, on an annualized basis, adjusted return on equity and adjusted return on invested capital for the three-month period ended June 30, 2024. We're both 18%, reflecting our highly profitable business model. As of June 30, 2024, the company had cash and cash equivalents of $91.3 million, balance sheet policy assets of $208.7 million, and outstanding long-term debt of $151.3 million.

Bill McCauley: amortization and change in fair value of warrant liability, net income for the second quarter of 2024 grew 75 percent to 11.8 million, compared to 6.8 million in the prior year period.

Bill McCauley: Now turning to our balance sheet metrics, on an annualized basis, adjusted return on equity and adjusted return on invested capital for the three-month period ended June 30, 2024, we're both 18%, reflecting our highly profitable business model. As of June 30, 2024, the company had cash and cash equivalents of $91.3 million, balance sheet policy assets of $208.7 million, and outstanding long-term debt of $151.3 million. In summary, we are pleased with our strong results, delivering triple-digit growth on our top line, as well as solid profitability on an adjusted basis. We remain very excited about the growth opportunities ahead and are well positioned to execute on our long-term plans. I will now turn it back to our CEO, Jay Jackson, for his closing comments.

Jay Jackson: In summary, we are pleased with our strong results, delivering triple-digit growth on our top line, as well as solid profitability on an adjusted basis. We remain very excited about the growth opportunities ahead and are well positioned to execute on our long-term plans. I will now turn it back to our CEO, Jay Jackson, for his closing comments. Thanks, Bill.

Bill McCauley: In summary, we are pleased with our strong results, delivering triple-digit growth on our top line, as well as solid profitability on an adjusted basis. We remain very excited about the growth opportunities ahead and are well positioned to execute on our long-term plans.

Jay Jackson: Thanks, Bill. To sum up, we remain well positioned to continue utilizing our deep expertise within the life planning space to further capitalize on a massive market opportunity. We are making steady progress on the path to becoming a global alternative asset manager, while our incredible wealth of longevity data is opening up many new doors into several new verticals, which should further charge our growth capabilities. And we will continue to do this while ensuring that we sustain and grow our profitability, just as we have done over the last 20 years. I'd like to thank you all for joining us today, and we appreciate your interest in Abacus Life. We will now field any questions.

Jay Jackson: To sum up, we remain well positioned to continue utilizing our deep expertise within the life planning space to further capitalize on a massive market opportunity. We are making steady progress on the path to becoming a global alternative asset manager, while our incredible wealth of longevity data is opening up many new doors into several new verticals, which should further charge our growth capability. And we will continue to do this while ensuring that we sustain and grow our profitability, just as we have done over the last 20 years.

Speaker Change: We are making steady progress on the path to becoming a global alternative asset manager, while our incredible wealth of longevity data is opening up many new doors into several new verticals, which should further charge our growth capabilities.

Speaker Change: And we will continue to do this while ensuring that we sustain and grow our profitability just as we've done over the last 20 years. I'd like to thank you all for joining us today and we appreciate your interest in Abacus Life. We will now field any questions.

Jay Jackson: I'd like to thank you all for joining us today, and we appreciate your interest in Abacus Life. We will now field any questions. Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Crispin Love with Piper Sandler. Please proceed.

Speaker Change: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question is from Crispin Love with Piper Sandler. Please proceed. Thanks. Good morning, Jay. Good morning, Bill. Hope you're well.

Speaker Change: Our first question is from Crispin Love with Piper Sandler. Please proceed.

Crispin Love: Thanks. Good morning, Jay. Good morning, Bill. Hope you're well.

Crispin Love: First, can you talk a little bit about deployment and capacity? You raised 90 million plus in June, and you clearly put some of that to work pretty quickly based on the results. So can you discuss when you expect to deploy that full amount and then capacity for deployment and opportunities going forward as you look to the back half of the year and into 2025? Sure. Thanks, Chris.

Crispin Love: First, can you just talk a little bit about deployment and capacity? You raised $90 million plus in June and clearly put some of that to work pretty quickly based on the results. So, can you discuss when you expect to deploy that full amount and then capacity for deployment and opportunities going forward as you look to the back half of the year and into 2025? Sure. Thanks, Chrisman.

Jay Jackson: When we thought about this, when we were even managing the follow-on investment, you know, when we talked about the deployment of that capital being to make things both sustainable and profitable over time, and we're in a very, I think, exciting period for our industry in a sense that, you know, the broadening of the message has really certainly increased policy flow for us, and thus, the deployment of capital, we absolutely were able to, we had some So even in that short amount of time, we were able to get that capital deployed.

Jay Jackson: Sure. Thanks, Chris.

Jay Jackson: When we thought about this, when we were even managing the follow-on investment, you know, when we talked about the deployment of that capital being to make things both sustainable and profitable over time, and we're in a very, I think, exciting period for our industry, in a sense that, you know, the broadening of the message is really certainly increasing policy flow for us, and thus, the deployment of capital, we absolutely were able to, we had So even in that short amount of time, we were able to get that capital deployed.

Crispin Love: policy flow for us.

Speaker Change: And thus, you know, the deployment of capital, we absolutely were able to, we had some pent up inventory and were able to put some of that capital to work right away even before Q2, even though we closed.

Jay Jackson: I think we, you know, we spoke prior to, and specifically, you know, we expect to have a majority of that capital deployed before year end, probably sooner than that, it could be as early as Q3, which is exciting, right? That's what we wanted to do, get that capital deployed, and get that ROE to work for all of our shareholders and investors. And the opportunity only continues to grow through this year and really through next year as well.

Speaker Change: on the follow on June 20. So even in that short amount of time, we were able to get that capital deployed. I think we had spoken prior.

Speaker Change: specifically,

Speaker Change: You know, we expect to have a majority of that capital deployed.

Jay Jackson: We think it's also, even when you think about rates and you think about the markets themselves, this is really a market that's designed for us, whether that's volatile or different types of volatility or whether it's different types of interest rates. We think that this is a great market for us. Thanks, Jay. All super helpful.

Jay Jackson: We think it's also, when you think about rates and you think about the markets themselves, this is really a market that's designed for us, whether that's volatile or different types of volatility or whether it's different types of interest rates. We think that this is a great market for us.

Jay Jackson: Thanks, Jay. It's all super helpful.

Speaker Change: or different types of volatility, or whether it's different types of interest rates, we think that this is a great market for us.

Crispin Love: And then just another one on adjusted EBITDA. You generated about $28 million in the first half of the year. Can you just talk a little bit about expectations for the full year as I kind of look at my model? Just simplistically, doubling that gets you to $56 million, but you did add the capital and take advantage of some opportunities late in the second quarter, which might not recur. So just curious about how we should look at the cadence of EBITDA for the second half of the year.

Jay Jackson: And then just another one on adjusted EBITDA. You've generated about $28 million in the first half of the year. Can you just talk a little bit about expectations for the full year as I kind of look at my model? Just simplistically, doubling that gets you to $56 million, but you did add capital and also took advantage of some opportunities late in the second quarter, which might not recur.

Speaker Change: Thanks, Jay. All super helpful. And then just another one on adjusted EBITDA. You've generated about $28 million in the first half of the year. Can you just talk a little bit about

Jay Jackson: So just curious about how we should look at the cadence of EBITDA for the second half of the year. Yeah, I think the cadence of EBITDA... additional capital. So when we look at Q3, Q4, you know, the way that we're looking at this is that yes, we had a phenomenal Q2. We want to manage expectations in Q3, Q4. I think, you know, the numbers that you put forth and other analysts, we think that we're tying up to those, and everything looks very positive. Obviously, you can't predict everything that's going to happen in the future.

Jay Jackson: Yeah, I think the cadence of the EBITDA... additional capital. So when we look at Q3, Q4, you know, the way that we're looking at this is that, yes, we had a phenomenal Q2. We want to manage expectations in Q3, Q4. I think, you know, the numbers that you had put forth and other analysts, we think that we're tying out to those. And everything looks very positive. Obviously, you can't predict everything that's going to happen in the future. But based upon the capital raise and, like I said, the sustainability and profitability of the current business, we feel very good about the numbers throughout the end of the year.

Jay Jackson: Yeah, I think the cadence of the EBITDA...

Speaker Change: additional capital. So when we look at Q3, Q4, you know, the way that the way that we're looking at this is is that, yes, we had a phenomenal Q2. We want to manage expectations in Q3, Q4. I think, you know, the numbers that you have put forth and other analysts, we think that we're tying out to those and everything looks very positive. Obviously, you can't predict everything that's going to happen in the future.

Speaker Change: but based upon the capital raise and based upon, like I said, the sustainability and profitability of the current business, you know, we feel very good about the numbers throughout the end of the year.

Jay Jackson: But based upon the capital raise and, like I said, the sustainability and profitability of the current business, you know, we feel very good about the numbers throughout the end of the year. Great. And then just one very quick one for housekeeping.

Crispin Love: Great, and then just one very quick one for housekeeping my model. Can you share what the originated face value was in the quarter? Yeah, total originated.

Bill McCauley: Can you share what the originated face value was in the quarter? Yeah, total originated face value in the quarter. I know Bill has that number, that exact number, which he will get to you.

Speaker Change: Great, and then just one very quick one for housekeeping my model. Can you share what originated face value was in the quarter?

Bill McCauley: Yeah, total originated face value in the quarter. I know Bill has that number, that exact number, which will get to you.

Jay Jackson: One of the things that we did, Chrisman, that I just want to highlight is that when we think about origination, it can come from one of two areas. It can come direct from the policyholder, but there can also be opportunities where we see other asset managers that are winding down their funds, and they want to potentially opportunistically sell the remaining other assets so that they can return their capital back to their shareholders.

Speaker Change: When we think about origination, it can come in one of two areas. It can come direct from the policyholder, but there can also be opportunities where we see other asset managers that are winding down their funds and they want to potentially opportunistically sell their remaining other assets so that they can return their capital back to their shareholders.

Jay Jackson: And so, we have, you know, been able to take advantage of that as well. And so when we look at discount rates on a go forward. Please do, Mr. Jackson. We are having a little trouble with your line. It keeps cutting out a little bit.

Operator: Excuse me, Mr. Jackson, we are having a little trouble with your line. It keeps cutting out a little bit.

Speaker Change: We have, you know, been able to take advantage of that as well. And so when we look at discount rates on a go-forward basis,

Bill McCauley: I don't know if that's true or not, Bill, but if you wouldn't mind jumping on and just giving him the actual number, and then we can kind of tie out the rest of that. Yeah, sure. So total originated face value for the quarter was $447. What Jay was mentioning before he cut out was that we had opportunities to buy policies outside of just our origination platform, and that's what also contributed to the high volume. Great. Thank you both.

Jay Jackson: I don't know if that's true or not, Bill, but if you wouldn't mind jumping on and just giving him the actual number, and then we can kind of tie out the rest of that.

Speaker Change: I don't know if that, Bill, if you wouldn't mind jumping on and just giving him the actual number and then we can kind of tie out the rest of that.

Bill McCauley: Yeah, sure. So total originated face value for the quarter was 447 million. And what Jay was mentioning is that, before he left, we had opportunities to buy policies outside of just our origination platform. And that's what also contributed to the high volume. Abacus Life

Bill McCauley: Yeah, sure. So, total originated face value for the quarter was $447 million.

Bill McCauley: And what Jay was mentioning is that, before he cut out, is that we had opportunities to buy policies outside of just our origination platform and that's what also contributed to the high volume in the quarter.

Crispin Love: Great. Thank you both. I appreciate you taking the time to answer my questions.

Speaker Change: Great. Thank you both. I appreciate you taking my questions.

Operator: As a reminder to press 1 on your telephone keypad if you would like to ask a question, our next question is from Andrew Klingerman with TD Securities. Please proceed. Hey, good morning.

Operator: Appreciate you taking my question. As a reminder to press 1 on your telephone keypad if you would like to ask a question, our next question is from Andrew Klingerman with TD Securities. Hey, good morning.

Speaker Change: As a reminder to star one on your telephone keypad, if you would like to ask a question, our next question is from Andrew Klingerman with TD Securities. Please proceed.

Andrew Klingerman: Hey, good morning. Good to kick the week off with Abacus Earnings. My first question is about management and the revenue that came in. I mean, more than doubled. It's a big number, at 27 million, a little more than we had anticipated. Could you could help frame, you know, just sort of is this sort of a base number now? How do you see that trending over the next year or two?

Andrew Klingerman: Good to kick the week off with Abacus Learning. My first question is about management and the revenue that came in. I mean more than doubled.

Andrew Klingerman: Hey, good morning. Good to kick the week off with Abacus Earnings.

Andrew Klingerman: My first question is around

Speaker Change: active management, and the

Jay Jackson: It's a big number, at 27 million, a little more than we had anticipated. Could you could you help frame just sort of what this sort of base number now? How do you see that trending over the next year or two? Yeah, hey, I don't know if my sound was repaired or not.

Speaker Change: The revenue that came in I mean more than doubled

Speaker Change: It's a big number at 27 million, a little more than we had anticipated. Could you help frame, you know, just sort of, is this sort of a base number now? How do you see that trending over the next year or two?

Jay Jackson: Yeah, hey, I don't know if my sound was repaired or not. Is that any better?

Operator: That sounds good, Jay.

Jay Jackson: Great. Sure, Andrew, and thank you for the question.

Jay Jackson: Is that any better? That sounds good, Jack. Great. Sure, Andrew, and thank you for the question. I think that, you know, when we look at Q2, this is about being able to put some of the capital to work that we were able to expand from our follow-on investments. The way that I look at this is that, you know, this is sustainable and profitable. And we are in on one key indicator there: when you look at the return on equity, we didn't see a fall off in ROE.

Jay Jackson: I think that when we look at Q2, this is about being able to put some of the capital to work that we were able to expand from our follow-on investments. The way that I look at this is that this is sustainable and profitable. We are in One key indicator there is when you look at the return on equity; we didn't see a fall off in ROE. However, we also still have a significantly higher cash balance sheet that we're putting money to work here in Q3 as well.

Speaker Change: Expand from our follow on investments the way that I look at this is that you know this is sustainable and profitable and we are in one key indicator. There is when you look at the return on equity we didn't see a falloff on Roe.

Jay Jackson: However, we also still have a significantly higher cash balance sheet that we're putting money to work here in Q3 as well. So, you know, this is the type of business that when we look at discount rates and the opportunities that we have to buy, let's say, policies, it's incredibly creative for us right now.

Speaker Change: However, we also still have a significant higher cash balance sheet that we're putting money to work here in Q3 as well. So you know this is the type of business that when we look at discount rates and the opportunities that we have to.

Jay Jackson: This is the type of business that, when we look at discount rates and the opportunities that we have to buy, let's say policies, it's incredibly creative for us right now. Without trying to pull out the crystal ball and go too far out in advance, I think the way that I would look at it is that, from a modeling perspective, and the way that we see this through the end of the year, I would expect us to maintain a lot of the things that a lot of the modeling numbers that you had laid out.

Speaker Change: To buy let's say policies.

Speaker Change: It is incredibly accretive for us right now and so.

Jay Jackson: Without trying to pull out the crystal ball and go too far out in advance, I think the way that I would look at it is that from a modeling perspective, and the way that we see this through the end of the year, I would expect us to maintain a lot of the things that a lot of the modeling numbers that you had laid out. Okay, and then with respect to M&A, yeah, two really nice acquisitions, and Carlisle being more of a pure play life settlement. And then there is FCF, which is a little more diverse.

Speaker Change: Without trying to pull out the crystal ball and go too far out in advance I think the way that I would look at it is is that.

Speaker Change: From a modeling perspective in the way that we see this through the end of the year I would expect that to maintain our a lot of the things that a lot of the modeling numbers that you had laid out.

Speaker Change: Got it Okay, and then with respect to M&A.

Jay Jackson: Okay, and then with respect to M&A, yeah, two really nice acquisitions, Carlisle being more of a pure play life settlement, and then FCF, which is a little more diverse. So, as we kind of look forward, Jay, what are your thoughts about M&As, and will they be more along the lines of FCF, or are there more Carlyle-type deals out there? I think that Carlisle was a special opportunity.

Speaker Change: Yeah, two two really nice acquisitions in Carlisle being more of a pure play life settlements.

Speaker Change: And then F C F, which is a little more diverse so as we kind of look forward.

Jay Jackson: So, as we kind of look forward, Jay, what are your thoughts about M&As, and will they be more along the lines of FCF, or are there more Carlisle-type deals out there? I think that Carlyle was a special opportunity for us. We had known them for so long, and they had a 15-plus year track record.

Speaker Change: What what are you thinking about M&A.

Speaker Change: <unk> will be deemed more along the lines of FCS or are there more carlyle type deals out there.

Jay Jackson: I think that Carlyle was a special opportunity for us. We had known them for so long, and they had a 15 plus year track record. I don't think there are a lot of companies like Carlyle out there. I think our focus should be on that business that has $2 billion in assets under management primarily from offshore investors and continue to grow and expand that brand. And FCF is the same in the sense that FCF has got a great track record.

Speaker Change: I think the Carlisle was a special opportunity for US we had known them for so long 15, plus year track record.

Jay Jackson: I don't think there are a lot of companies like Carlyle out there. I think our focus is, let's look at that business that has $2 billion in assets under management primarily from offshore investors and continue to grow and expand that brand. And FCF is the same in the sense that FCF has got a great track record. We want to expand the idea of providing ETF models specifically related to someone's lifespan.

Speaker Change: I don't think Theres a lot of companies like Carlyle out there I think from our focus is let's look at that business that has 2 billion in assets under management, primarily from offshore investors and continued to grow and expand that brand.

Speaker Change: And <unk> is the same in the sense that SDF. He's got a great track record we want to expand.

Jay Jackson: We want to expand the idea of providing ETF models specifically related to someone's lifespan. So from our perspective, the way that we look at M&A is, let's make sure that we're integrating successfully the companies that we've been able to acquire and drive profitability there. Because I think that we have the best in class in both of those businesses right now, and if we're

Speaker Change: The idea of providing ETF models, specifically related to someone's lifespan. So you know from our perspective the way that we look at M&A is let's make sure that you know we're integrating successfully the companies that we've been able to acquire and and drive profitability there.

Jay Jackson: So from our perspective, the way that we look at M&A is, let's make sure that we're integrating successfully the companies that we've been able to acquire and drive profitability there. Because I think that we've got the best in class in both of those businesses right now and if we don't, Okay, you have cut out again. Bill, could you maybe take up while I fix Bill's line?

Speaker Change: Because I think that we've got best in class in both of those businesses right now and if we.

Speaker Change: Okay, you'll have cut out again.

Speaker Change: So could you maybe take up full ethics.

Speaker Change: Absolutely. So I think you know Andy.

Bill McCauley: Absolutely. So I think, you know, Andrew, we'll continue to be opportunistic with regard to M&A. As Jay mentioned, Carlisle was a pure life settlement play in our industry, and it made sense from an asset management side. FCF is a great fit for our ABL wealth model, and as we look to build out ABL wealth, providing financial advice based on longevity. We think that's a great fit and will continue to be strategic on the M&A side.

Bill McCauley: Okay, you have cut out again. Bill, could you maybe take up the reins while I fix Bill's statement? Absolutely. So, I think, you know, Andrew, we'll continue to be opportunistic with regard to M&A. You know, as Jay mentioned, Carlisle was a pure life settlement play in our industry, and it made sense from an asset management side. FCF is a great fit for our ABL wealth model, and as we look to build out ABL wealth, providing financial advice based on longevity, we think that's a great fit, and we'll continue to be strategic on the M&A side going forward. Amen.

Speaker Change: Andrew will continue to be opportunistic with regards to M&A.

As Jay mentioned Carla.

Speaker Change: Carlyle was a pure life settlement play in our industry made sense from an asset management side F. C. F is a is a great fit for them for a b L well model and as we look to build out.

ABL: ABL, well, providing financial advice based on longevity.

Speaker Change: I mean, we think that's a great fit and will continue to be strategic on the M&A side going forward.

Andrew Klingerman: And one last one on the Abacus Tech front. You know, I know you've outlined in the past that potential clients would be governments, insurance companies, pensions. It seems like... pensions would be the big area and, Maybe you could touch on progress to date, if you've had any wins. I think I'm kind of where you sh-

Bill McCauley: And one last one on the Abacus Tech front. You know, I know you've outlined in the past that potential clients would be governments, insurance companies, and pensions. It seems like... pensions would be the big area and maybe you could touch on progress to date, if you've had any wins, kind of where you see that. Okay, we are still having trouble with Jay's line. I'm trying to get him to connect.

Speaker Change: Got it and then one last one on the Abacus Tech front.

Speaker Change: You know I know you've outlined in the past that potential clients would be governments insurance companies pension as it seems like engines would be the big area and.

Operator: at this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press store zero on your telephone keypad. Please note this conference is being recorded.

Speaker Change: Maybe you could touch on progress to date.

Speaker Change: Got any win Sydney.

Speaker Change: You know kind of where you see that going.

Operator: Okay, we are still having trouble with the chase line. I'm trying to figure out how I can take that one.

Speaker Change: Okay, we are having trouble with kids line I'm trying to get.

Gary Edson: I will now turn the conference over to Gary Edson of ICR. Thank you. You may begin. Good day, ladies and gentlemen. Thank you for standing by. Abacus Life refers participants on this call to the investor web page, www.abacuslife.com slash investors for the press release, the investor information and filings with the FCC for a discussion of the risks that can affect the business. Abacus Life specifically refers participants to the presentation furnished today on form A.K, with the Security and Exchange Commission and to remind listeners that some of the comments today may contain overlooking statements and as such will be subject to risks and uncertainties which, if they materialize, could materially affect results.

And.

Speaker Change: I can take that one.

Bill McCauley: So, ABL Tech continues to grow. I mean, we're adding new clients here now that we've deployed the..., deployed the service. And so, you know, we continue to see that as a growth opportunity for fee-recurring earnings.

Bill McCauley: I can take that one. So, ABL Tech continues to grow. I mean, we're adding new clients here now that we've, Floyd D, deployed the service, and so, you know, we continue to see that as a growth opportunity for fee-recurring. So that is going as planned. Thanks a lot.

Speaker Change: So a ABL tech continues to grow I mean, where we're adding on new clients here now that we've deployed the <unk>.

Speaker Change: Deployed the service and so you know we continue to see that as a.

Speaker Change: As a growth opportunity for fee recurring earnings.

Andrew Klingerman: So that is going as planned to date. Great. Thanks a lot. Thanks, Andrew.

Speaker Change: So that that is going as planned to date.

Andrew Klingerman: Great. Thanks a lot.

Speaker Change: Great.

What.

Andrew Klingerman: Thanks, Andrew.

Gary Edson: Reference is made to the section title for looking statements in the company's earnings press release of the second quarter of 2024, which is incorporated here in by reference. We know for looking statements whether written or oral include they are not limited to Abacus Life's expectation or prediction of financial and business performance and conditions as well as its competitive and industry outlook for looking statements are subject to risks and uncertainties and assumptions, including the risk factors set forth in item 1A of our most recent 10K, which if they materialize could materially affect results.

Operator: Abacus Life: Okay, Jay is back in with us, and we will move on to the next question, which is Matt Howlett with the Riley Center. Oh, hi, Bill. Hi, Jay. Good morning.

Okay.

Operator: Okay, Jay is back with us, and we will move on to the next question, which is Matt Howlett with Riley Securities. Please proceed.

Andrew Klingerman: Okay, Jay is back in with Us.

Speaker Change: And we will move on to the next question is Matt Howlett with B Riley Securities. Please proceed hi.

Matt Howlett: Oh, hi Bill. Hi Jay. Good morning.

Matt Howlett: Hey, terrific results. I mean, I want to talk about the margins here. I mean, it's just, it's just, it beat us and impressed us again. What do you see?

Matt Howlett: Hi, Bill Hi, Jay Good morning, Hey at terrific results I mean, I wanted to ask about the margins here I mean, it's just it's just beat us and impressed again well what do you see you know what are you seeing out there.

Gary Edson: Abacus Life does not guarantee performance and Abacus Life gives no such assurances. Abacus Life is under no obligation, expressly disclaims any obligation to update, alter or otherwise revise any forward looking statements whether as a result of new information, future events or otherwise accepts as required by law.

Gary Edson: In addition, historical data pertaining to the operating results and other performance indicators applicable to Abacus Life are not necessarily indicative of results to be achieved in succeeding periods.

Matt Howlett: On the acquisition front and was there anything particular list particular this quarter did you buy bigger policies was there a certain channel that was better than the others. Just just give me a what you're seeing out there in terms of margins and pricing.

Matt Howlett: Hey, terrific results. I mean, I want to talk about the margins here. I mean, it just beat us and impressed us again.

Jay Jackson: You know, what are you seeing out there in terms of acquisitions? And was there anything particular this quarter? Did you buy bigger policies? Was there a certain channel that was better than the others?

Matt Howlett: Yeah, Hey, Matt hopefully you all can hear me better now.

Jay Jackson: Just give me what you're seeing out there in terms of margins and prices. Yeah, hey, Matt. Hopefully, y'all can hear me better now. They, yes, the even margin went up, and we are seeing really interesting opportunities. And I kind of highlighted the two areas where we're being able to acquire directly from policy holders as well as institutionally. And I think, you know, on an institutional basis where we're able to acquire some very strategic opportunities related to other portfolios; we definitely saw some of that in Q2.

Jay Jackson: I will now turn the call over to Jay Jackson, Chief Executive Officer of Abacus Life. Thank you to everyone joining us today for your interest in Abacus and welcome to our second quarter 2024 earnings call with me today as our Chief Financial Officer Bill McCauley and after our prepare remarks will open it up to your questions. It was another quarter of excellent performance for Abacus Life as we continue to successfully execute on our key strategic initiatives and further solidifying our position as a leading market maker and global alternative asset manager, which will have nearly $3 billion in assets under management, post acquisitions.

Matt Howlett: They are.

Speaker Change: Yes, the the EBIT margin went up and we are seeing really interesting opportunities and I kind of highlighted the two areas.

Matt Howlett: What are you seeing out there on the acquisition front? And was there anything particular this quarter? Did you buy bigger policies? Was there a certain channel that was better than the others? Just give me what you're seeing out there in terms of margins and prices.

Speaker Change: Where we're being able to acquire directly from policyholders as well as institutionally and I think you know on an institutional basis, where we're able to acquire some very strategic opportunities related to other portfolios. We definitely saw some of that in Q2.

Jay Jackson: Yeah, hey Matt, hopefully y'all can hear me better now. Yes, the even margin went up, and we are seeing really interesting opportunities. And I kind of highlighted the two areas where we're being able to acquire directly from policyholders as well as institutionally. And I think on an institutional basis, where we're able to acquire some very strategic opportunities related to other portfolios, we definitely saw some of that in Q2. Historically, we haven't seen as much opportunity there as we are seeing today, as some funds are starting to wind down some of their strategies, and they can't sell into the next one.

Jay Jackson: You know, historically, we haven't seen as much opportunity there as we are seeing today, as some funds are starting to wind down some of their strategies, and they can't sell into the next one. So, you know, on a go forward basis, we think that that's going to continue to be a strategy that we want to expand, in addition to our. I would also just add, too, when you add more origination, which is what we've done, we have focused specifically on educating consumers, educating financial advisors, and broadening our origination from large financial firms.

Speaker Change: You know historically, we havent seen as much opportunity. There is we're as we're seeing today is as some funds are starting to wind down some of their strategies and they can't sell into the next one. So you know on a go forward basis, we think that that's going to continue to be.

Jay Jackson: So, on a go-forward basis, we think that that's going to continue to be a strategy that we want to expand in addition to our. I would also just add, too, when you add more origination, which is what we've done, we have focused specifically on educating consumers, educating financial advisors, and broadening our origination from large financial firms. When you do that, you're able to get a broader set of policies to purchase at much better rates.

Speaker Change: Strategy that we that that we want to expand in addition to our.

Jay Jackson: For the second quarter of 2024, we more than double total revenue year over year to 2029.1 million and recorded strong earnings growing adjusted EBITDA by 83% year over year to 16.7 million and generating a 75% year over year increase in adjusted net income to 11.8 million or 18 cents per diluted share. Our second quarter performance underscores our thoughtful investments in marketing, which continue to yield excellent results by driving significant year over year increases in our direct consumer originations.

Speaker Change: Regular origination which is directly to the policyholder and I would also just add to when you add more origination which is what we've done we are focused specifically on educating consumers educating financial advisors broadening our origination from large financial firms. When you do that you're able to get a broader set of policies to purchase.

Jay Jackson: When you do that, you're able to get a broader set of policies to purchase at a much better rate. In terms of just the general market, with your direct program, I realize you can go to these institutions and get low-hanging fruit when it's available, but the market size, the share size, is it still as big as you thought it was going to be? It is, and I would argue it's even bigger, right?

Speaker Change: At much better rates.

Matt Howlett: In terms of just the general market, with your direct program, I realize you can go to these institutions and get low-hanging fruit when it's available, but the market size, the share size, is it still as big as you thought it was going to be?

Speaker Change: And then in terms of just the.

Speaker Change: The general market.

Speaker Change: I mean would that what's your direct program I realize you can go to these institutions and get low hanging fruit when it's available but the market size the sheer size, yet, but I'll say it is still as big as as you as you thought it was going to be.

Jay Jackson: Meanwhile, the strength of our partnerships with carriers and reinsurers remains a key contributor to our strong performance in both revenue and adjusted EBITDA. Bill will be along shortly to discuss our second quarter financial performance in further detail.

Jay Jackson: It is, and I would argue it's even bigger, right? Like, we have pent-up demand. And there are specific segments of the market that we're absolutely thrilled about opportunistically, where I think that, you know, as more and more people are starting to really utilize this asset as something for their estate plan, I think that that's creating a significant amount of opportunity. So, you know, for us, Matt, we see this continuing. I mean, you know, this is the type of opportunity that, from a profit margin and a discount rate perspective, we haven't seen in years. And we should be putting more and more capital to work where the opportunities lie. It's incredible!

Speaker Change: It is an end and I would argue it's even bigger right like we we have pent up demand.

Jay Jackson: Like we have pent-up demand, and there's specific segments of the market that we're absolutely thrilled about opportunistically, where I think that, you know, as more and more people are starting to really utilize this asset as something for their estate plan, I think that that's creating a significant amount of opportunity. So, you know, for us, Matt, we see this continuing. I mean, you know, this is the type of opportunity that, from a profit margin and a discount rate perspective, we haven't seen in years.

Jay Jackson: In addition to our exceptional quarterly financial results, we also made substantial progress with respect to our long-term strategy. As we outlined during our investor day in June, along with our core business of acquiring life insurance policies, we are focused on expanding our complementary lifespan-based financial products. Since our last earnings call, we achieved several key strategic milestones. In a pivotal moment for our ABL wealth division, subsequent to the quarter end, we announced a definitive agreement to acquire Carlyle Management Company, a premier Luxembourg-based investment manager in the life settlement space, for approximately $200 million.

Speaker Change: There are specific segments of the market that that were absolutely thrilled about opportunistically, where I think that as more and more people are starting to.

Speaker Change: Really utilize this asset as something for their estate plan I think that that is creating a significant amount of opportunity. So you know.

Speaker Change: For us Matt we see this continuing I mean this is the type of I think opportunity that that from a profit margin and a discount rate perspective, we haven't seen in years.

Jay Jackson: This acquisition will add approximately $2 billion in assets under management and is fully aligned with our strategy to become a global alternative asset manager. In addition to being a great culture fit, Carlyle further enhances Abacus's offering to institutional investors seeking attractive, risk-adjusted returns with low correlation to other asset classes. Carlyle has a most impressive and long-standing track record as a fund manager in the life settlement industry and is geographically diverse client-based, stands to significantly complement our efforts to become a global financial leader by incorporating Carlyle's expertise and robust portfolio into our offerings.

Jay Jackson: And we should be putting more and more capital to work where the opportunities lie. It's incredible, and you're putting more marketing dollars to work, and we'll see the impact of that. You know, like you said, it's sort of some lead time before you see more of that coming through that channel. Look, that's terrific.

Matt Howlett: And we should be putting more and more capital to work where the opportunities lie.

Matt Howlett: It's incredible, and you're putting us in more marketing dollars to work, and we'll see the impact of that, you know. Like you said, it's a sort of some lead time before you see more of that coming through that channel. Well, I've looked at that script for them. It's amazing how quickly you put that capital work from the race on the buyback insurance buyback. I didn't see if there was Did I did I see it right, or was it just one be every quarter, quarter to quarter?

Matt Howlett: It's incredible and you're putting up some more marketing dollars to work and we'll see.

Matt Howlett: The impact of that you know like you said are we sort.

Speaker Change: Sort of some lead time before you see more and more of that coming through that channel well that looked at that script has I mean, it's amazing how quickly you can put that capital to work from the race on the on the buyback share buyback. It does seem like there's any contribution this quarter did I see it right or is that just won't be every quarter quarter to quarter.

Jay Jackson: I mean, it's amazing how quickly you put that capital to work from the raise. On the buyback, the insurance buyback, I didn't see if there was any contribution this quarter. Did I understand you right, or is that just one B every quarter, quarter to quarter? Yeah, when you look at the buyback perspective, sometimes it's lumpy in the sense that it just depends on when transactions close, right? Like, you know, they're not always in the last few days of the month or the week.

Jay Jackson: Yeah, when you look at the buyback perspective, sometimes it's lumpy in the sense that it just depends on when transactions close, right? Like they're not always the last few days of the month or the week. Sometimes you're building up inventory to better structure those.

Speaker Change: Yeah. When you look at the buyback perspective, sometimes its lumpy in a sense that it just depends on when transactions close right like you know theyre not theyre not always at the last few days of the month or the week, sometimes you're building up inventory to better structure those and.

Jay Jackson: You know, sometimes you're building up inventory to better structure those deals. And I like to point out that even with or without that buyback in place, we still had a really strong quarter. And I think that, you know, that's the consistency that you're looking for is that, absolutely, working with the life insurance companies and potentially reinsurers is a great opportunity, but we still have a phenomenal underlying business that generates great returns. And as that business continues to grow, that will just grow on top of this. Yeah, that's where I was going.

Jay Jackson: And I like to point out that even with or without that buyback in place, we still have just a really strong quarter. And I think that, you know, that's the consistency that you're looking for is that, absolutely, working with the life insurance companies and potentially reinsurers is a great opportunity. But we still have a phenomenal underlying business that generates great returns. And as that business continues to grow, that will just grow on top of this.

Speaker Change: I like to point out is that even with or without that buyback in place and still have just a really strong quarter and I think that you know that.

Jay Jackson: We are strategically positioning ABL wealth at the heart of our mission to deliver sophisticated investment solutions for the life settlement market. This acquisition highlights our dedication to providing exceptional value and expanding our capabilities to serve a wider range of investor. Along with Carlyle, last week, we entered into an agreement to acquire SCF advisors, a New York-based asset manager and index provider specializing in free cash flow focused investment strategies. SCF advisors had a suite of core, and thematic free cash flow equity strategies and offers over 50 customizable free cash flow index strategies covering 8 global equity's allocations. The deal will add approximately $600 million in assets under management and further accelerate the expansion of ABL wealth with a diverse lifespan-based suite of products.

Speaker Change: The consistency that you're looking for is is that yes, absolutely working with the life insurance companies and potentially reinsurers as a great opportunity, but we still have a phenomenal underlying business that generates great returns and as that business continues to grow.

Speaker Change: That will just grow on top of this.

Matt Howlett: Yeah, that's where I was going. The margin would have been even stronger if that had been involved this quarter. Okay, so – and then the last thing is you've raised the equity. You did the Carlisle deal, which was more equity than debt. I mean, when you look at – you've delevered a bit, and you've got your 28-no trading above par, and you've got possibly interest rates

Jay Jackson: The margin would have been even stronger if that was the only thing that was involved this quarter. OK, so and then the last thing is, you've raised equity. You did the Carlisle deal, which was more equity than debt. I mean, when you look at you, you've de-levered a bit, and you've got your 28 note trading above par, and you've got possibly interest rates coming down. Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.

Speaker Change: Yeah, that's what I saw on the margin would have been had been stronger if that was.

Speaker Change: That was involved this quarter. Okay. So and then the last thing is if you raise you raise the equity you did the carlile deal with what was more equity than that I mean, when you look at you you've you've de levered a bit when he and you've got your 28 nano trading above part.

Speaker Change: Possibly interest rates coming down J.

Jay Jackson: He is a licensed financial professional both in the U.S. and Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA, SIFMA. Accounts carried by National Financial Services, LLC, Member NYSE & SIPC, a Fidelity Investments company. His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered at www.profile-fin

Douglas Goldstein: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. He is a licensed financial professional in both the U.S. and Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA, SIFMA. Accounts held by National Financial Services, LLC. Member NYSE & SIPC, a Fidelity Investments company. His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered at www.profile-financial.com.

Speaker Change: Jay what what's the capacity to add more debt capital. When it's available are you looking at things like structured finance I mean, just walk me through the balance sheet here. It just seems like it's it's certainly improved as the deal.

Jay Jackson: In late June, we successfully closed an oversubscribed public offering of 11.5 million shares of common stock, including full exercise of the underwriters option, which further broadened our investor base and enhanced our liquidity position. Through this offering, we raised over $90 million in proceeds, which we have rapidly deployed into additional life settlement policies, as well as advancing our overall business strategy. Finally, during the quarter, we established a national distribution relationship with AIMCOR, one of the largest national insurance marketing organizations in the United States.

Jay Jackson: It has, and the balance sheet is really strong, and we're taking advantage, I think, of every opportunity that would present itself, specifically around capital. Assuming that here we've got this great inventory of contracts with this level of ROE that we should be purchasing, and even if you apply this to the M&A, the M&A deals didn't really require much capital. Almost all of that was either through bond or equity rollover. So we're deploying this capital into those assets, which now, how do we best utilize that?

Jay Jackson: And the balance sheet is really strong. And we're taking advantage, I think, of every opportunity that would present itself specifically around capital. Assuming that here we've got this great inventory of contracts with this level of ROE that we should be purchasing. And even if you apply this to the M&A, the M&A deals didn't really require much capital.

Speaker Change: It adds in the balance sheet is really strong and and we're taking advantage I think of every opportunity that would present itself specifically around capital.

Jay Jackson: All information on this website is purely information and should not be used as the sole basis for making financial decisions. The opinions rendered herein are those of the guests and not necessarily those of Douglas Goldstein, Profile Investment Services, Ltd., or Israel National News.

Douglas Goldstein: All information on this website is purely information and should not be used as the sole basis for making financial decisions. The opinions rendered herein are those of the guests and not necessarily those of Douglas Goldstein, Profile Investment Services, Ltd., or Israel National News.

Speaker Change: Assuming that you hear we've got this great inventory of contracts with this level of ROE that we should be purchasing and even if you apply this to the M&A. The M&A deals didn't really require much capital a lot of almost all of that was either through bond or through equity rollover.

Jay Jackson: A lot of, almost all of that was either through bond or through equity rollover. So we're deploying this capital into those assets, which now, how do we best utilize that? Is it through the potential of adding some more debt to the balance sheet?

Speaker Change: We're deploying this capital into those assets, which now how do we best utilize that is it through potential adding some more debt to the balance sheet certainly taken a close look at that particularly as we're watching closely what what rates do and if rates come down substantially that it'll be at the forefront of our mind.

Jay Jackson: Is it through the potential of adding some more debt to the balance sheet? Certainly, we're taking a close look at that, particularly as we're watching closely what rates do. And if rates come down substantially, that'll be at the forefront of our minds. And what does equity look like going forward, too? Although we had a very successful follow-on equity raise in June, what we're hearing from shareholders and investors is that there's significantly more appetite for additional equity to purchase. And so, you know, we're also taking that into consideration as well.

Jay Jackson: This partnership will leverage AIMCOR's extension network of over 40 broker general agencies to offer protection and retirement solutions to thousands of financial professionals, institutional clients, and other distribution partners nationwide. As a preferred partner for life settlement solutions, AIMCOR will provide its expertise to AIMCOR's affiliated member firms. This collaboration highlights our commitments to client-centric solutions and enhancing our ability to educate policy holders about the value of their policies and empowering them to make informed financial decisions.

Jay Jackson: Certainly, we're taking a close look at that, particularly as we're watching closely what rates do. And if rates come down substantially, that'll be at the forefront of our minds. And what does equity look like going forward, too, right? Although we had a very successful follow-on equity raise in June. What we're hearing from shareholders and investors is that there's significantly more appetite for additional equity to purchase. And so, you know, we're also taking that into consideration as well.

Speaker Change: And you know what is what is equity you look like going forward too right.

Although we had a very we had a very successful follow on equity raise.

Speaker Change: And in June.

Speaker Change: What we're hearing from shareholders and investors is that there's significantly more appetite.

Speaker Change: For additional equity to purchase and so we're also taking that into consideration as well.

Jay Jackson: All of our achievements over the past few months clearly underscore our relentless commitment to constant innovation through our wealth of longevity data and actuarial technology, offering an incredible value proposition for our clients, and firmly solidifying Abacus as a pioneering global alternative asset manager and market maker. Looking ahead, we're incredibly excited to build upon our success and capitalize on the leverage our successful business model, exceptional team of experts, and extensive proprietary data and technology. We are strategically positioned for sustainable and profitable growth, ensuring long-term value creation for our shareholders.

Matt Howlett: No, listen, but with the acquisitions you did, I mean, just, you guys, I mean, it seems like, you know, markets are willing to give you capital just given the growth in the business. Really, congratulations, and look forward to the next quarter.

Jay Jackson: No, listen, with the acquisitions you did, I mean, just, I mean, you guys, it seems like, you know, markets are willing to give you capital just given the growth in the business. Really, congratulations, and I look forward to the next quarter. Thank you. We have reached the end of our question and answer session. I would like to turn the call back over to Jay for closing.

Speaker Change: Nonetheless, it but then with the acquisitions you did I mean, it's just a I mean.

Speaker Change: You guys are I mean, it seems like a market's willing to give you capital just given how the growth in the business really congratulations and look forward to the next quarter.

Speaker Change: Awesome. Thank you.

Operator: We have reached the end of our question and answer session. I would like to turn the call back over to Jay for closing remarks.

Speaker Change: We have reached the end of our question and answer session I would like to turn the call back over to Jay for closing remarks.

Jay Jackson: Great. Thank you again, everyone. And we are absolutely thrilled to highlight another strong, consistent, and profitable quarter for Abacus. We are just as excited about our future and the opportunities that we have as a business and as a company. And we look forward to continuing that journey with each and every one of you. I hope everyone has a great day today. If you have any follow-up or further questions that you would like to have answered, please feel free to reach out to Bill and myself. We're happy to schedule some additional time with you. Have a great day, everybody!

Jay Jackson: Great. Thank you again, everyone. And we are absolutely thrilled to highlight another strong, consistent, and profitable quarter for Abacus. We are just as excited about our future and the opportunities that we have as a business and our company, and we look forward to continuing that journey with each and every one of you. I hope everyone has a great day today. If you have any follow-up or further questions that you would like to have answered, please feel free to reach out to Bill and myself, and we're happy to schedule some additional time with you. Have a great day everybody!

Speaker Change: Great. Thank you again everyone.

Speaker Change: And you know.

Speaker Change: We are absolutely thrilled to highlight another strong and.

Speaker Change: And consistent and profitable quarter for abacus.

Speaker Change: We are just as excited about our future and the opportunities that we have that as our business and our company and we look forward to continuing that journey with each and every one of them I hope everyone has a great day today. If you have any follow up or further questions that you would like to have answered please feel free to reach out to bill and myself in.

Bill McCauley: With that, I'll now hand it over to our CFO, Bill McCauley, to discuss the specifics of our second quarter results in financials. Thanks, Jay. And hello, everyone. As Jay mentioned, we delivered another strong quarter of top-line growth and profitability at Abacus. The key driver of our business performance continues to be our highly efficient origination platform while we continue to build our other verticals that will contribute to our future earnings. In the second quarter of 2024, origination capital deployed was $104.7 million compared to $59.8 million in the prior year period.

Speaker Change: And we're happy to schedule. Some additional time with you have a great day everybody.

Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation. Thank you for watching.

Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation. Abacus Life

Speaker Change: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Unnamed: [music]

Speaker Change: [music].

Bill McCauley: While we grew policies purchased 95% to $275 compared to $141 in the prior year period. Total revenue in the second quarter 2024 more than doubled to $29.1 million compared to $11.4 million in the prior year period. The increase was primarily due to higher active management revenue. As of June 30th, 2024, Abacus held 458 policies of which 452 are accounted for under the fair value method and six are accounted for using the investment method, which is cost plus premiums paid.

Speaker Change: Yes.

Speaker Change: [music].

Bill McCauley: As a reminder, for all policies purchased after June 30th, 2023, the company has elected to account for these under the fair value method going forward. For policies purchased before June 30th, 2023, the company elected to use the fair value method or the investment method. Turning to expenses, total operating expenses, excluding unrealized and realized gains and losses in the change in fair value of debt for the second quarter 2024 were approximately $18.9 million compared to $1.3 million in the prior year period.

Speaker Change: Okay.

Bill McCauley: We would note that second quarter 2024 total operating expenses included $6.2 million of non-cash stock compensation expense and $8 million of public company related expenses both of which did not occur in the prior year period. Beginning in the third quarter, we will anniversary these non-cash equity compensation and public company expenses. We also increased sales and marketing expenses by approximately $1.9 million compared to the prior year period, which assisted in accelerating our growth profile.

Bill McCauley: The company typically realizes the benefit of marketing spend within 90 to 120 days. Adjusted EBITDA for the quarter grew 83% to $16.7 million compared to $9.1 million in the prior year period. Adjusted EBITDA margin was 57.5% for the quarter compared to $80.4% in the prior year period. GAT net income attributable to stockholders for the quarter was $0.8 million compared to $6.8 million in the prior year period. On an adjusted basis, excluding noncash.compensation, business acquisition costs, amortization and change and fair value of warrant liability, net income for the second quarter of 2024 grew 75% to 11.8 million compared to 6.8 million in the prior year period.

Bill McCauley: Now turning to our balance sheet metrics on an annualized basis, adjusted return on equity, and adjusted return on invested capital for the three month period and did June 30, 2024 were both 18% reflecting our highly profitable business model. As of June 30, 2024, the company had cash and cash equivalence of 91.3 million balance sheet policy assets of 208.7 million and outstanding long-term debt of 151.3 million.

Bill McCauley: In summary, we are pleased with our strong results delivering triple digit growth on our top line as well as solid profitability on an adjusted basis. We remain very excited about the growth opportunities ahead and are well positioned to execute on our long-term plans.

Jay Jackson: I will now turn it back to our CEO, Jay Jackson, for our closing comments. Thanks, Bill. To sum up, we remain well positioned to continue utilizing our deep expertise within the life planning space to further capitalize on a massive market opportunity. We are making study progress on the path to becoming a global alternative asset manager while our incredible wealth of longevity data is opening up many new doors into several new verticals which should further charge our growth capabilities.

Jay Jackson: And we will continue to do this while ensuring that we sustain and grow our profitability just as we've done over the last 20 years. I'd like to thank you all for joining us today and we appreciate your interest in Advocates life.

Operator: We will now field any questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. And for a participant using speaker equipment, it may be necessary to pick up your handset before pressing the start keys.

Chris Binov: Our first question is from Chris Binov. Would Piper Sandler please proceed? Thanks.

Jay Jackson: Good morning, Jay. Good morning, Bill. Hope you're well. First, can you talk a little bit about deployment and capacity? You raised 90 million plus in June. Clearly, put some of that to work pretty quickly based on the results. So can you just guess when you expect to deploy that full amount and then capacity for deployment and opportunities going forward as you look to the back half of the year and into 2025?

Jay Jackson: Sure. Thanks, Chris Binov. When we thought about this, when we were even managing the follow-on investment, you know, when we talked about the deployment of that capital was to make things both sustainable and profitable over time. And we're in a very, I think, exciting period for our industry in a sense that, you know, the broadening of the message has really certainly increased policy flow for us. And thus, you know, the deployment of capital, we absolutely were able to, we had some pent-up inventory, and we were able to put some of that capital to work right away even before Q2, even though we closed on the follow-on June 20.

Jay Jackson: So even in that short amount of time, we were able to get that capital deployed. I think we, you know, we had spoken, you know, prior. We expect to have a majority of that capital deployed before year end probably sooner than that. It could be as early as Q3, which is exciting, right? That's what we wanted to do, get that capital deployed, get that ROE to work for all of our shareholders and investors and the opportunity only continues to grow through this year and really through next year as well.

Chris Binov: Thanks, Jay. I'm all super helpful.

Jay Jackson: And then just another one on Adjusted EBITDA, you've generated about 28 million in the first half of the year. Can you just talk a little bit about expectations for the full year as I kind of look at my mouth just simplistically, doubling that gets you to 56 million, but you did add the capital. Also took advantage of some opportunities late in the second quarter, which might not recur. So just curious on how we should look at the cadence of EBITDA for the second half of the year.

Jay Jackson: Yeah, I think the cadence of the EBITDA, additional capital. So when we look at Q3, Q4, the way that we're looking at this is that yes, we had a phenomenal Q2. We want to manage expectations in Q3, Q4. I think the numbers that you have put forth and in other analysts, we think that we're tying out to those and everything looks very positive. Obviously, you can't predict everything that's going to happen in the future, but based upon the capital raise and based upon, like I said, the sustainability and profitability of the current business, we feel very good about the numbers throughout the end of the year.

Chris Binov: Great.

Chris Binov: And then just one very quick one for housekeeping.

Jay Jackson: My model, can you share what originated face value was in the quarter? Yeah, total originated face value in the quarter. I know Bill has that number, that exact number, which will get to you. One of the things that we did do, Chris, that I just want to highlight is that when we think about origination, it can come in one of two areas. It can come direct from the policy holder, but there can also be opportunities where we see other asset managers that are winding down their funds and they want to potentially opportunistically sell their remaining other assets so that they can return their capital back to their shareholders. And so we have been able to take advantage of that as well. And so when we look at discount rates on a go-flow, thank you, Mr. Jackson.

Bill McCauley: Can we have a little trouble with your line and keep cutting out a little bit? I don't know if that Bill, if you would mind jumping on and just giving him the actual number Yeah, sure. So total originated face value for the quarter was $447 million. And what Jay was mentioning is that before he cut out is that we had opportunities to buy policies outside of just our origination platform and that's what also contributed to the high volume in the quarter.

Chris Binov: Great. Thank you both. I appreciate you taking my questions.

Andrew Klingerman: As a reminder to star one on your telephone keypad, if you would like to ask a question, our next question is from Andrew Klingerman with TD Securities. Please proceed. Hey, good morning.

Jay Jackson: Good to kick the week off with Abacus earnings. My first question is around management and the revenue that came in. I mean, more than doubled, it's a big number, 27 million, a little more than we had anticipated. Could you help frame just sort of, is this sort of a base number now? How do you see that trending over the next year or two? Yeah, hey, I don't know if my sound was repaired or not.

Jay Jackson: Is that any better? That sounds good, Jay. Great. Sure, Andrew. And thank you for the questions. I think that, you know, when we look at Q2, this is about being able to put some of the capital to work that we were able to expand from our follow on investments. The way that I look at this is that, you know, this is sustainable and profitable. And we are in one key indicator there is when you look at the return on equity, we didn't see a fall off on ROE.

Jay Jackson: However, we also still have a significant higher cash balance sheet that we're putting money to work here in Q3 as well. So, you know, this is the type of business that when we look at discount rates and the opportunities that we have to buy with, say, policies, it's incredibly creative for us right now. And so without trying to pull out crystal ball and go too far out in advance, I think the way that I would look at it is that from a modeling perspective and the way that we see this through the end of the year, I would expect us to maintain a lot of the things that a lot of the modeling numbers that you would laid out. Got it. Okay.

Jay Jackson: And then with respect to M&A, yeah, two really nice acquisitions in Carlyle being more of a pure play life settlement. And then FCF, which is a little more diverse. So as we kind of look forward, Jay, what are you thinking about M&A's and will they be more along the lines of FCF or are there more Carlyle type deals out there? I think that Carlyle was a special opportunity for us. We had known them for so long 15 plus year track record.

Jay Jackson: I don't think there's a lot of companies like Carlyle out there. I think from our focus is let's look at that business that has two billion and assets under management primarily from offshore investors and continue to grow and expand that brand. And FCF is the same in the sense that FCF has got a great track record. We want to expand the idea of providing ETF models specifically related to someone's lifespan. So from our perspective, the way that we look at M&A is let's make sure that we're integrating successfully the companies that we've been able to acquire and drive profitability there. Because I think that we've got best in class in both of those businesses right now. And if we're Yeah, you have cut out again.

Bill McCauley: So could you maybe take up the life. Yeah, absolutely. So I think, you know, Andrew will continue to be opportunistic with regards to M&A. You know, as Jay mentioned, Carlyle was a pure life settlement play in our industry made sense from an asset management side. FCS is a great fit for for ABL wealth model. And as we look to build out ABL wealth providing financial advice based on longevity. We think that's a great fit and we'll continue to be strategic on the M&A side going forward.

Andrew Klingerman: And one last one on the Abacus Tech Front. You know, I know you've outlined in the past that potential clients would be governments, insurance companies, pensions. It seems like pensions would be the big area.

Bill McCauley: And maybe you could touch on progress to date if you've had any wins and kind of where you see that going. Okay, we are still having trouble with baseline. I'm trying to get connected in. I can take that one. So ABL tech continues to grow. I mean, we're adding on new clients here now that we've deployed the service. And so, you know, we continue to see that as a growth opportunity for fee recurring earnings. So that is going as planned to date.

Andrew Klingerman: Great. Thanks a lot. Thanks Andrew.

Matt Howlett: Okay, Jay is back in with us. And we will move on to the next question which is Matt Howlett with the Riley Securities. Please, please proceed. Oh, hi Bill and hi Jay. Good morning. Hey, terrific results. I mean, I want to talk about the margins here. I mean, it just it's just it beat us and impressed again. What are you seeing out there on the acquisition front? Was there anything particular this quarter to buy bigger policies?

Matt Howlett: It was a certain channel that was better than the others. Just give me what you're seeing out there in terms of margins and pricing. Okay. Hey, Matt, hopefully I can hear me better now. They, yes, the even margin went up and we are seeing really interesting opportunities and I kind of highlighted the two areas where we're being able to acquire directly from policy holders as well as institutionally. And I think, you know, on an institutional basis where we're able to acquire some very strategic opportunities related to other portfolios.

Matt Howlett: We definitely saw some of that in Q2. You know, historically we haven't seen as much opportunity there is where as we're seeing today as some funds are starting to wind down some of their strategies and they can't sell into the next one. So, you know, on a go forward basis, we think that that's going to continue to be a strategy that we that that we want to expand in addition to our regular origination, which is directly to the policy holder.

Matt Howlett: And I would also just add to when you add more origination, which is what we've done. We have focused specifically on educating consumers, educating financial advisors, broadening our origination from large financial firms. When you do that, you're able to get a broader set of policies to purchase at much better rates, and in terms of just the general market, I mean, I mean, with that, with your direct program, I realize you can go to these institutions and get low hanging free when it's available.

Matt Howlett: But the market size to share size, you have obviously, is it still as big as you thought it was going to be? It is, and I would argue it's even bigger. Like, we have pent-up demand and there's specific segments of the market that we're absolutely thrilled about opportunistically, where I think that, you know, as more and more people are starting to really, you know, utilize this asset as something for their estate plan, I think that that's creating a significant amount of opportunities.

Matt Howlett: So, you know, for us, Matt, we see this continuing. I mean, you know, this is the type of, I think, opportunity that from a profit margin and a discount rate perspective, we haven't seen in years. And we should be putting more and more capital to work where the opportunities lie. It's incredible. And you're putting us in more marketing dollars to work and we'll see the impact of that. You know, like you said, every, you know, it's a sort of some lead time before you see more, more that coming through that channel.

Matt Howlett: Well, that's, look, that's, that's everything. It's amazing how quickly you put that capital work from the race. On the, on the buyback insurance buyback, I didn't see if there was any contribution this quarter. Did I see it right? Or that just won't be every quarter quarter to quarter? Yeah, when you look at the buyback perspective, sometimes it's lumpy in a sense that it just depends on when transactions close, right? Like, you know, they're not as, they're not always at the last few days of the month or the week, you know, sometimes you're building up inventory to, to better structure those.

Matt Howlett: And, and I like to point out is that even with or without that buyback in place, we still had just a really strong quarter. And I think that, you know, that's the consistency that you're looking for is is that yes, absolutely, you know, working with the life insurance companies and potentially re-insures is a great opportunity. But we still have a phenomenal underlying business that generates great returns. And as that business continues to grow, that will just grow on top of this.

Matt Howlett: Yeah, that's where I was going. The margin would have been stronger if that was, that was involved this quarter. Okay. So, and then the last thing is, you've raised, you raised the equity, you did the car liability, which was more equity than debt. I mean, when you look at your, you've delivered a bit, you've got your 28 note trading above part, and you got possibly interest rates coming down. Jay, what's the capacity that had more debt capital when it's available?

Matt Howlett: Are you looking at things like structured finance? We just walk me through the balance sheet here. It just seems like it's, it's really improved in the deal. It has, and the balance sheet is really strong and we're taking advantage, I think, of every opportunity that would present itself specifically around capital. You know, assuming that here we've got this great inventory of contracts with this level of ROE that we should be purchasing, and even if you apply this to the M&A, you know, the M&A deals didn't really require much capital.

Matt Howlett: A lot of almost all of that was either through bond or through equity rollover. So, you know, we're deploying this capital into those assets, which now, how do we best utilize that? Is it through potential, you know, adding some more debt to the balance sheet, certainly taking a close look at that, particularly as we're watching closely what rates do, and if rates come down substantially, that'll be at the forefront of our mind.

Matt Howlett: And you know, what does equity look like going forward to? Right? You know, although we had a very successful follow-on equity raise in June. What we're hearing from shareholders and investors is that they're significantly more appetite for additional equity to purchase. And so, you know, we're also taking that into consideration as well. No, look at what the acquisitions you did. I mean, just I mean, you guys, I mean, it seems like, you know, Mark is willing to give you capital just given how to grow from the business. Really congratulations and look forward to the next quarter. Awesome.

Matt Howlett: Thank you.

Operator: We have reached the end of our question and answer session.

Jay Jackson: I would like to turn the call back over to Jay for closing remarks. Great. Thank you again, everyone. And we are absolutely thrilled to highlight another strong and consistent and profitable quarter for Abacus. We are just as excited about our future and the opportunities that we have as our business and our company. And we look forward to continuing that journey with each and every one of you.

Jay Jackson: I hope everyone has a great day today. If you have any follow-up or further questions that you would like to have answered, please feel free to reach out to Bill and myself and we're happy to schedule some additional time with you. Have a great day, everybody. Thank you.

Operator: This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.

Q2 2024 Abacus Life Inc Earnings Call

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