Q2 2024 Ambac Financial Group Inc Earnings Call
Speaker Change: [inaudible]
Operator: Greetings and welcome to the Ambac Financial Group Inc. second quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A brief 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. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Charles Sebaski, Head of Investor Relations.
Speaker Change: Greetings and welcome to the Ambac Financial Group Inc. second quarter 2024 earning call.
Speaker Change: At this time, all participants are in a listen-only mode.
Speaker Change: A brief 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. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Charles Sebaski, Head of Investor Relations.
Charles Sebaski: Thank you. Good morning and welcome to Ambec's second quarter 2024 call to discuss financial results. Speaking today will be Claude LeBlanc, President and CEO, and David Trick, Chief Financial Officer. They will discuss the financial results of our business and the current market environment. And after prepared remarks, we'll take your questions. For those of you following along on the webcast, during prepared remarks, we'll be highlighting some slides from the investor presentation, which can be located on our website.
Speaker Change: Please go ahead, sir.
Charles Sebaski: Thank you. Good morning and welcome to Ambec's second quarter 2024 call to discuss financial results.
Speaker Change: Speaking today will be Claude LeBlanc, President and CEO , and David Trick, Chief Financial Officer.
Speaker Change: They will discuss the financial results of our business and the current market environment, and after prepared remarks, will take your questions.
Speaker Change: For those of you following along on the webcast, during prepared remarks, we'll be highlighting some slides from the investor presentation, which can be located on our website.
Speaker Change: Our call today includes forward-looking statements. The company cautions investors that any forward-looking statements involve risks and uncertainties and is not a guarantee of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors.
Speaker Change: Those factors are described under forward-looking statements in our earnings press release, our most recent 10-Q and 10-K filed with the SEC. We do not undertake any obligation to update forward-looking statements.
Speaker Change: Also, in our prepared remarks or responses to questions, we may mention some non-GAAP financial measures.
Speaker Change: Reconciliation to those non-GAAP measures are included in our recent earnings press release, operating supplement, and other materials available on the investor section of our website, ambac.com.
Speaker Change: Thank you Chuck and welcome to everyone joining today's call.
Speaker Change: Our reported results for the second quarter were favorable compared to the prior year. We generated a net loss of just under $1 million, adjusted net income of $8 million, and consolidated EBITDA of $27 million.
Speaker Change: David will discuss our financial results in detail shortly.
Speaker Change: Today I would like to provide an update on the two strategic announcements we made earlier in the quarter.
Claude LeBlanc: In June, we announced an agreement to sell our legacy financial guarantee business to Oak Creek Capital Management for $420 million.
Speaker Change: In June , we announced an agreement to sell our legacy financial guarantee business to Oak Creek Capital Management for $420 million.
David Trick: This was the culmination of several years of targeted efforts to optimize the portfolio, maximize recoveries, and progress the business towards a steady state runoff in preparation for a strategic review.
David Trick: The Oaktree bid was the best value to shareholders, measured on a notional, time, and risk-adjusted basis.
David Trick: The sale price achieved was consistent with or above a range of estimated values that we evaluated.
David Trick: The sale of AEC is expected to close during the fourth quarter of 2024, although the ultimate timing will be subject to approvals outside of our control.
David Trick: Upon the close of the sale, we will implement a share repurchase program of up to $50 million to be initiated in the first three months of closing, depending on market conditions.
David Trick: In making this decision, management and the board took into consideration our anticipated year-end liquidity and capital position, and our go-forward capital needs and obligations, amongst other considerations.
David Trick: Following the execution of the share repurchase program, we will evaluate authorizing additional capital return activities measured against other capital deployment opportunities and based on market conditions.
Speaker Change: Last week we also announced the closing of the Beat Capital acquisition. I would like to take this opportunity to officially welcome John Kavanaugh and his partners and the entire Beat team to the Ambac family.
Speaker Change: Indeed, we have found an organization with a similar culture and values.
Speaker Change: Both Serata and BEAT employ a partnership model to align interest. The combination offers significant potential for revenue, capital, and expense synergies, which we believe will allow us to achieve superior returns and create long-term value for our shareholders.
Speaker Change: The Serata B combination establishes us as a leading insurance distribution platform with exceptional global growth opportunities through both organic and inorganic means.
Speaker Change: We believe the combined breadth and depth of our capacity relationships, distribution channels, and a highly desirable operational environment makes us a premier destination for top MGA talent.
Speaker Change: Our distribution businesses are primarily focused on specialty and E&S lines, where specialization and flexibility of rate and form have led this segment to outperform the growth of the broader P&C markets.
Speaker Change: On a combined basis, Ambac specialty P&C businesses are now expected to generate approximately $1.4 billion of premium on a pro forma basis for 2024.
Speaker Change: essentially doubling the size of our PNC platform. The combined Serata BEAT insurance distribution platform now comprises 16 MGAs, up from 5.
Speaker Change: As of the end of the second quarter.
Speaker Change: As we seek to accelerate our premium and margin growth, our combined platform is uniquely positioned to continue to attract what we believe to be best-in-class talent, as well as top MGAs.
Speaker Change: Together, we are better positioned to leverage our key differentiated offerings for the benefit of our MGA partners, which include, first...
Speaker Change: Aligned Risk Capital. Unlike the majority of our insurance distribution peers, we can accelerate the launch and support the continued development and growth of our distribution businesses.
Speaker Change: Our Lloyd's Syndicates and Capital Light Carriers enable us to align interests with our capacity providers and gives us the ability to incubate and launch distribution ventures more rapidly.
Speaker Change: This distinct market advantage positions us for strong future growth.
Speaker Change: Second, as a public company, we offer key risk and oversight controls that benefit our businesses as well as our key stakeholders. And lastly, business agility, supported by our extensive technology-focused shared service offering.
Speaker Change: Turning now to our second quarter results, excluding our BEAT business.
Speaker Change: Our consolidated specialty PNC insurance platform continued to generate strong production with over $165 million in premium, a 75% increase over last year.
Speaker Change: Our insurance distribution business placed over $53 million in premium, up 31% over the prior year. This was supported by the ongoing benefit of organic growth initiatives and the addition of Riverton to the platform last August .
Speaker Change: We also announced the launch of Tara Hill in the second quarter and MGA focused on management and professional alliance.
Speaker Change: Going forward, we believe Serata's business profile and mix will be meaningfully and positively impacted by the BEAT acquisition. We look forward to providing investors with more details on the combined business in the coming months.
Speaker Change: Everspan had strong growth in the quarter.
Speaker Change: Generating gross written premium of $111 million, which is up 109% over last year, and produced a combined ratio of 109.4%, improving from the 112.7% last year, as the portfolio continues to scale and diversify.
Speaker Change: This quarter, the underwriting results were impacted by increased loss frequency in commercial auto.
Speaker Change: As we indicated in prior quarters, we continue to take a cautious approach to reserving and expect some near-term volatility as Everspan's portfolio scales and diversifies across programs and lines of business.
Speaker Change: Consistent with our focus on disciplined underwriting, we discontinued the Subject Commercial Auto Program this quarter.
Speaker Change: We believe rates are keeping up or exceeding lost cost trends for all of our other programs.
Speaker Change: At the same time, Everspan maintains a strong pipeline of program opportunities, which we believe will further our goals to diversify the portfolio, support growth, reduce our combined ratios, and deliver strong future ROEs.
Speaker Change: I will now turn the call over to David to discuss our financial results for the quarter. David.
David Trick: Thank you, Claude, and good morning, everyone.
David Trick: For the second quarter of 2024, Ambac generated a net loss of just under $1 million, or $0.02 per diluted share, improving from a net loss of $13 million, or $0.29 per diluted share in the second quarter of 2023.
David Trick: Adjusted net income increased to $8 million or $0.18 per diluted share for the quarter compared to adjusted net income of $3 million or $0.07 per diluted share in the second quarter of 2023. Our results for the second quarter of 2024 were impacted by several items.
David Trick: Including $5 million of net gains from minority strategic investments in insure-tech related businesses.
David Trick: 12 million of net gains from the termination of a retiree benefit plan and approximately 16 million of legal and advisory expenses related to the acquisition of BEAT and the sale of AAC.
David Trick: In addition, during the second quarter, we continued to experience significant growth in our specialty P&C businesses.
David Trick: Sorata Premium's place grew 31% to over $53 million from $41 million in the second quarter of 2023, driven by the acquisition of Riverton and 11% organic growth.
David Trick: Gross commissions were $13 million, up 32% compared to the second quarter of 2023.
David Trick: Revenue benefited both from the acquisition of Riverton and 12% organic growth.
David Trick: EBITDA was $2.4 million, $2 million after minority non-controlling interest, the second quarter of 2023.
David Trick: Up 47% and 54% from the $1.6 million, $1.3 million after the minority non-controlling interest, respectively, reduced in the second quarter of 2023.
David Trick: The resulting gross EBITDA margin was 18.1% this quarter compared to 16.3% in the second quarter of 2023.
David Trick: This margin expansion was largely driven by organic growth, including an A&H policy renewal, which shifted to the second quarter of 2024, which would have been the third quarter.
Speaker Change: We expect Serata's earnings and margin profile to be positively impacted in the third quarter by the inclusion of two months of BEITS results with the closing of the acquisition effective July 31st.
Speaker Change: Everspan's net premiums written in the quarter of $32 million were up 254% over the prior year period, based on a retention rate of approximately 29% of gross written premium $111 million.
Speaker Change: This compares to a 17% retention rate of gross premium written of $53 million last year.
Speaker Change: As was the case last quarter, both the growth in net premiums and higher retention levels stem mostly from workers' compensation in non-standard auto programs written in the back half of 2023 as assumed reinsurance.
Speaker Change: Earned premiums and program fees were $27,000,000 and $3,000,000, up 248% and 60% respectively in the second quarter of 2023.
Speaker Change: The loss ratio of 85.1% in the second quarter of 2024 was up from 73.7% in the second quarter of 2023.
Speaker Change: The second quarter loss ratio included 6.9 percentage points of prior accident year development.
Speaker Change: Mainly driven by increased frequency in commercial auto. This elevated commercial auto frequency also led to 4.2 percentage points.
Speaker Change: Catch-Up from the first quarter of this year.
Speaker Change: The 2024 accident year loss ratio, excluding both prior period development and inter-period catch-up, was 73.9% compared to 69.5% in the second quarter of 2023.
Speaker Change: One of the ways Everspan manages exposure is through sliding scale commissions, which is recorded against acquisition costs and linked to loss performance.
Speaker Change: For the second quarter of 2024, sliding scale commissions produced a benefit of 5.6% compared to a 4.2% benefit last year.
Speaker Change: The expense ratio was 24.3% in the second quarter of 2024, down from 39% in the prior year quarter, benefiting from the overall growth at Everspan.
Speaker Change: In addition, the expense ratio benefited this quarter from the increase in sliding scale commissions of 140 basis points noted earlier.
David Trick: The resulting combined ratio for the second quarter was 109.4%, an improvement of 330 basis points from the respective prior year period.
Speaker Change: The resulting combined ratio for the second quarter was 109.4%, an improvement of 330 basis points from the respective prior year period.
Speaker Change: The year-to-date combined ratio of 104% is down meaningfully from 117.1% last year to date.
Speaker Change: Our expense combined ratios overall are continuing to trend downward as the business grows in third verse of five.
Speaker Change: And as noted by Claude, we have taken decisive action to contain the losses in commercial auto.
Claude LeBlanc: Excluding commercial auto, Everspan produced a loss ratio for the quarter of 68.7%.
Speaker Change: The quarter, Everspan experienced just over a $1 million tax loss compared to a roughly break-even result for the second quarter of 2023.
Speaker Change: For the second quarter, the legacy financial guarantee segment generated net income of $11 million versus a net loss of $9 million in the prior year period. The year-over-year improvement was primarily driven by higher discount rates and a one-time gain related to determination of a benefit plan.
Speaker Change: Consolidated investment income for the second quarter was $36 million, compared to $35 million in the second quarter of 2023.
Speaker Change: The improvements stem from higher average yields on fixed income securities, which increased 60 basis points over the same period.
Speaker Change: Consolidated loss and loss adjustment expenses were $18 million in the second quarter of 2024 compared to $7 million in the second quarter of 2023. Error span losses grew by $17 million compared to the prior year to $23 million.
Speaker Change: Legacy Financial Guarantee produced a net benefit of five million.
Speaker Change: favorably impacted by higher discount rates versus lower discount rates in the prior year and favorable credit development.
Speaker Change: Shareholders' equity of $1.37 billion, or $30.25 per share, at June 30, 2024.
Speaker Change: compared to $30.19 at March 31st, 2024. The net loss in the quarter was more than offset by a $4 million unrealized gain on available for sale investments.
Speaker Change: Adjusted book value of $1.32 billion, or $29.23 per share, at June 30, 2024 was up 1% from $29.03 per share at March 31, 2024.
Speaker Change: At June 30, 2024, AFG on a standalone basis, excluding investments and subsidiaries, had cash investments and debt receivables of approximately $202 million, or $4.47 per share.
Speaker Change: I will now turn the call back to Claude for some closing remarks.
Claude LeBlanc: Thank you, David.
Claude LeBlanc: This quarter represents an inflection point for Ambac as we made significant progress on all key strategic priorities.
Claude LeBlanc: First, completing the transformation of Ambac to a pure play specialty P&C company by entering into an agreement to sell our legacy financial guarantee business to Oak Tree Capital.
Claude LeBlanc: Second, establishing a leading insurance distribution business through the combination of BEAT and Serrata.
Claude LeBlanc: The execution of these strategic priorities is not an end point, but the beginning of our future. We have strong conviction that Ambac's go-forward business strategy provides tremendous opportunity to create additional value for our shareholders.
Claude LeBlanc: through continued growth of our insurance distribution business, which has been materially advanced by the recent acquisition of Beat Capital Partners and positions us as a leading peer play specialty PNC business. Our focus remains on maximizing long-term shareholder value, which we are committed to doing by growing our specialty PNC businesses, as well as through prudent capital allocation. I look forward to updating you on our progress in the coming quarters. Operator, please open the call for questions.
Claude LeBlanc: through continued growth of our insurance distribution business.
Claude LeBlanc: which has been materially advanced by the recent acquisition of Beat Capital Partners.
Claude LeBlanc: and positions us as a leading pure play specialty P&C business.
Claude LeBlanc: Our focus remains on maximizing long-term shareholder value, which we are committed to doing by growing our specialty PNC businesses, as well as through prudent capital allocation. I look forward to updating you on our progress in the coming quarters. Operator, please open the call for questions.
Unknown Attendee: That's very helpful. I appreciate the time, and I will jump back in in a few.
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: The confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.
Speaker Change: We ask analysts to limit themselves to one question and a follow-up so that others may have an opportunity to ask questions. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
Speaker Change: One moment, please, while we poll for questions.
Speaker Change: Our first question comes from Giuliano Bologna with Compass Point. Please proceed with your question.
Juliana Oluyemunha: Good morning. Maybe to kick off, you know, one of the notes in the presentation highlights that.
Juliana Oluyemunha: So there's some, you know, potential obligations to fund minority interests at the MGAs, you know, typically range from $250 million to $370 million. I'm curious, you know,
Speaker Change: About the potential timing of that and you know and if you could you know Maybe accelerate some of those or internalize some of the minority interests before those obligations or you know along the way
Speaker Change: Hi, Giuliano. Thanks for the question. Yeah, so those obligations relate primarily to the puts and the calls that we have with the
Speaker Change: MGA's that are currently part of the Serrata family as well as
Speaker Change: Now with the acquisition of Deet.
Speaker Change: So, you know, typically we, when we partner up with these MGAs, we, you know, acquire about 80% on average, 60 to 80% on average of MGAs, and then in the remaining minority interests of 20 to 40%, we enter into put-call arrangements.
Speaker Change: So we're coming to a point where on some of our earlier acquisitions.
Speaker Change: We're in the put call period for our first acquisition, and others will be coming at a regular cadence at this point, including with Beat, which our first put call would be in 2026.
Speaker Change: So we can't really accelerate them, but we are in a point in time.
Speaker Change: In the case of the call, exercisable, and the put, which would be more the obligation, could be put to us. So we do anticipate over the next couple years.
Speaker Change: That we'll be exercising some of those calls and or responding with some of those puts Which ultimately would be funded by you know cash on the balance sheet as well as potentially some external financing
Speaker Change: That's very helpful. Then, you know, slightly different topic, you know, there's a discussion about the $50 million security purchase authorization.
Speaker Change: I'm curious about two different aspects around that. The first one is, if there's any ability to accelerate any of that before potential sale of AAC closes.
Speaker Change: And then the second one is, you know, $50 million is not necessarily immaterial to your, you know, market cap, and you still have the 5% ownership limitation in place. I'm curious if there's any...
Speaker Change: any way to, you know, lift the 5% cap or if there's any interest in lifting the 5% cap or, you know, how you could work around that. Yes, you know, a $50 million shorty purchase program, you know, executed.
Speaker Change: Giuliano, the $50 million is a plan that we have indicated we will initiate immediately post-close of the AAC transaction. We do have some...
Speaker Change: Additional capital available between now and close, but you know, we remarked that for other, you know, business purposes.
Speaker Change: and you know just prudent capital management you know we're going to wait until we close the AC transaction to officially launch into that.
Speaker Change: You're right, it is a, you know, on a larger side, if you will, in terms of...
Speaker Change: are shared trading values are below our view of the value of the company and we believe that that, you know, that gap we hope will...
Speaker Change: will reduce between now and the closing of the transaction, potentially in connection with the closing of the transaction.
Speaker Change: But we do have a strong conviction to deploy the full $50 million.
Speaker Change: if market conditions are appropriate.
Speaker Change: depending on where stock price is. And as it relates to the 5% limitation, while that is something that we'll keep a close eye on as we progress, we have developed a plan to.
Speaker Change: to mitigate the risk of that. But we you know, we won't be using that as a
Speaker Change: as a hard line in the event that there was potentially some shift, that's something that we will be prepared to deal with, although we're not looking to create shift that would in any way jeopardize the NOLs.
Speaker Change: That's helpful. Thank you. And then, you know, just thinking about, you know, obviously there are a few moving parts between now and closing of.
Speaker Change: The Energy Transaction in terms of whole liquidity moving around. But I'm curious when you think about, you know, further out, I'm curious how you think about whole, cool leverage.
Speaker Change: how much leverage you might be willing to use at the holding company level to fund additional growth opportunities and or just different investments for us, the platform.
Speaker Change: Sure, Giuliano. So, you know, we are not...
Speaker Change: Afraid of leverage, certainly, you know, we could use leverage if it makes, you know, economic sense, we want to, we're going to leverage the company, whether it's because of, you know, puts and calls or other acquisition opportunities, it's going to be measured against, you know, what the profile of those investments and acquisitions.
Speaker Change: are to make sure that we have, you know, the right leverage for the balance sheet that, you know, protects the balance sheet. That's our primary goal is
Speaker Change: to grow the business in a responsible way and protect the balance sheet and optimize the financial flexibility. But as a normal course company and growing company now, leverage makes a lot of sense and it's
Speaker Change: That's one of the ways in which we can optimize, you know, our cost of capital and the efficiency of our balance sheet.
Speaker Change: So, you know, I think over longer term, you know, the normalized level of leverage could be in the range of, you know, three,
Speaker Change: 2-4 times EBITDA, that may peak up at a certain point in time depending on short term transactions, but as a normal cost that seems to be the level of leverage that would make sense for us over the long term.
Speaker Change: That's very helpful. I appreciate the time and I will jump back in.
Speaker Change: Our next question comes from Deepak Sarpango with Repertoire Partners. Please proceed with your question.
Deepak Sarpango: Thank you. Good morning, Claude, David, and Chuck.
Deepak Sarpango: One quick follow-up first, just given the first question from Giuliano on the quick call potential obligations or opportunity.
Deepak Sarpango: So on slide 15 you had listed that this 250 to 370 million over the next five years. How much of that relates to BEAT and how much versus how much of it relates to the previous acquisitions?
Speaker Change: Certainly, the relative value, if you will, will shift depending on the performance of each of the businesses. These are typically...
Speaker Change: structure in a way that's a result of a multiple of you know future EBITDA so you know giving that range gives a effect to a few things so
Speaker Change: Ultimately, the larger portion of that is related to EAT, that's the smaller portion of it at current expectations of performance is related to the existing MGAs.
Speaker Change: And maybe this touches on the comment David just made about the company being in a stronger position and ultimately, you know, the most efficient balance sheet, including a certain amount of leverage, but
Speaker Change: In the range that you gave for $250,000 to $370,000, you know, you previously said that
Speaker Change: You know, those multiples should be similar to what you paid for BEAT, so let's call it roughly 16 times EBITDA.
Speaker Change: So, if I take, you know, 250 and 370 and divide it by 16, you know, we're talking about probably
Speaker Change: an incremental $15 to $23 million of EBITDA that you can acquire. But tell me if my math is incorrect.
Unknown Attendee: What that looks like to me is that, effectively, because I know some of these are contingent on performance,
Speaker Change: And what that looks like to me is that effectively, because I know some of these are contingent on performance, that
Speaker Change: In those scenarios, you're talking about...
Speaker Change: Roughly doubling your EBITDA, at least as it relates to something like BEAT, correct?
Speaker Change: So there's, you know, two components of that. First of all, you know, the existing MGAs, we have set schedules in terms of
Speaker Change: What the multiples are, and there's certainly a range there of multiples we could pay for the minority interest.
Speaker Change: but I don't believe any of those touch 16.
Speaker Change: like the range on those.
Speaker Change: but you are from, you know, 10 to 14, let's say. And then, of course, as it relates to BEAT, we have acquired 60%, so the opportunity to acquire an additional 40%, you know, nearly.
Speaker Change: comes close to doubling, of course, the available EBITDA there. But also, in the BEAT structure, you may recall BEAT owns a number of MGAs in which they own a majority stake.
Speaker Change: 60 to 70 percent and we also have negotiated for the ability to acquire those minority interest or a portion of those minority interest in the actual MGA's at a discount to that multiple that you mentioned.
Speaker Change: Yeah, so I mean, I think.
Speaker Change: The point being that...
Speaker Change: Given that effectively there's likely some EBITDA growth involved in that and with David's comment that
David Trick: You do have both access to and a willingness to borrow prudently, when it makes sense that some portion of that incremental EBITDA would effectively increase your...
Speaker Change: available from debt financing. So some of that would kind of further reduce the amount of reserve that you might need. And I think there's a lot of interesting information on this slide 15. I guess...
Speaker Change: One clarification I wanted to make is that,
Speaker Change: In your in your current plan, you know, which I understand is conservative and prudent, you know, you've got the, you know, the initial $50 million
Claude LeBlanc: Share repurchase plan as Claude referenced, you know, you'll be able to consider and evaluate additional capital returns beyond that.
Speaker Change: Got it. And right. And so and even in the event that you were able to utilize some debt financing, you know, once you repay the bridge, that could be well over 200 million and still leaving you with a $50 million cash reserve. So really liking the position that
Claude LeBlanc: that we should be in as we approach the close of this deal. And then I thought it might be helpful to get a better sense of verification because it was a really interesting comment that Claude made about
Unknown Attendee: You know, I thought it might be helpful to get a better sense of verification because it was a really interesting comment that Claude made about this wide disconnect in your share price from fair value.
Claude LeBlanc: You have the ability to do a significant amount more than that $50 million, correct?
Speaker Change: That is correct.
Speaker Change: The overwhelmingly attractive use of capital would be to take advantage of that and to create accretion and benefit from.
Claude LeBlanc: This wide disconnect in your share price from fair value.
Speaker Change: Yes, certainly, you know, at these levels, and I think, you know, we're closer to the numbers that we were pre-announcement than where we are today, there's tremendous return value. So, you know, we have strong, strong conviction.
Speaker Change: into that range. And, you know, we will always continue to balance it against other opportunities that we're looking at. But, you know, I think we're now looking at this from a much longer term.
Claude LeBlanc: We have very strong conviction around our growth.
Claude LeBlanc: And we are also going to be very active in working with the investor community to ensure that our message is getting out there on our growth opportunities going forward. So we will keep those considerations in balance.
Claude LeBlanc: Given where the stock price is today, there's no question that we have strong conviction in purchasing our stock at these levels, and we'll do that for so long as there's opportunities to do that.
Claude LeBlanc: That's great. We think that the growth opportunities are really exciting. And again, we think that
Claude LeBlanc: You know, the market hasn't really come around to fully appreciating that, and so hopefully, you know, we can take advantage of both of those situations, the inorganic growth opportunity, the organic growth investments, and
Claude LeBlanc: and buying ourselves at a very large discount and effectively buying down the price of our already attractive acquisitions. One quick clarification as well, technicality, which is,
Unknown Attendee: On the transaction costs, I think there was a footnote on slide 22, if I'm not mistaken, that the Q2 non-compensation expense included the cost related to the transactions totaling 15.6 million. Can you tell me how much of the transaction expenses have already been expensed?
Speaker Change: On the transaction costs, I think there was a footnote on slide 22, if I'm not mistaken, that the Q2 non-compensation expense included the costs related to the transactions totaling $15.6 million.
Speaker Change: Can you?
Speaker Change: How much of the...
Speaker Change: How much of the transaction expenses have already been expensed?
Speaker Change: versus remain to be expense and then how much of the transaction expenses have already been paid versus still need to be paid?
Speaker Change: I'm sorry, I didn't hear the latter part of that, but... Oh, I was curious how much of it was already expensed, because I know in the merger proxy there was like...
Speaker Change: I think it was like $22 million total, including the past two years, and then, you know, but there was like $6 million contingent on the close of the AAC sale.
Speaker Change: And some of it may have already been expensed in the P&L. So kind of like, what's both the amount that's been approved or expensed? And then what's the amount that has actually been dispersed, if you will? Yeah. Yeah.
David Trick: So the the amounts in the first quarter were primarily accrued expenses. What's to come is really
Speaker Change: So the amounts in the first quarter were primarily accrued expenses. What's to come is really...
Speaker Change: Banking Fees
Speaker Change: related to, you know, investment bankers on each of the transactions.
Speaker Change: Okay.
Speaker Change: That sounds great. Well, I'll get back in the queue if I had any other questions, but congratulations on closing the beef deal.
Speaker Change: And look forward to closing the AAC transaction as well and continuing to advance our various strategic priorities. Thanks so much.
Unknown Attendee: Thanks, Deepak.
Speaker Change: Thanks for watching!
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