Q3 2024 Kingsway Financial Services Inc Earnings Call
Prince Please press star zero on your telephone keypad I will now turn the conference over to your host James Carbonara with Hayden IR you may begin.
James Carbonara: Thank you operator and welcome once again to change the way its conference call to discuss the acquisition of image solutions LLC.
James Carbonara: With me on the call are J P Fitzgerald, Chief Executive Officer, Ken Hanson, Chief Financial Officer, and Davita as Donkey the incoming CEO of image solutions LLC.
James Carbonara: Before we begin I want to remind everyone that todays conference call may contain forward looking statements.
Looking statements include statements regarding the future, including expected revenue operating margins expenses and future business outlook.
James Carbonara: Actual results or trends could differ materially from those contemplated by those forward looking statements.
James Carbonara: For a discussion of such risks and uncertainties, which could cause actual results to differ from those expressed or implied in the forward looking statements.
James Carbonara: Please see risk factors detailed in the Companys annual report on Form 10-K, as well as other reports that the company files from time to time with the Securities and Exchange Commission. Please.
James Carbonara: Please note that today's call may include the use of non-GAAP metrics that management utilizes to analyze the company's performance a reconciliation of such non-GAAP metrics to the most comparable GAAP metrics is available in our periodic filings with the SEC.
Speaker Change: Now I'd like to turn the call over to JT Fitzgerald CEO of Kingsway J T. Please proceed.
JT Fitzgerald: Thanks, James and welcome everyone to the call.
JT Fitzgerald: As we disclosed in our press release, roughly two weeks ago, we purchased image solutions LLC for $19 $5 million plus transaction expenses.
JT Fitzgerald: And a small working capital adjustment and an all cash.
JT Fitzgerald: Transaction funded with cash and a $7 $7 million.
JT Fitzgerald: That facility, we will talk more about the transaction during this call and provide investors with an opportunity to ask questions about the transaction.
JT Fitzgerald: We're in the process of closing our third quarter, and we will defer any questions about the financial results for the quarter to a subsequent conference call.
JT Fitzgerald: So moving to the acquisition, we're excited to announce image solutions as our sixth acquisition in the growing Kingsway search accelerator portfolio.
Speaker Change: Music
JT Fitzgerald: As you know the <unk> segment is focused on acquiring service businesses with between one and $3 million of EBITDA that satisfy our investment screening criteria, specifically acquisitions must be within an industry with long term secular growth trends with strong recurring customer relationships.
Speaker Change: The National Security Council.
High margins and an asset light business model.
JT Fitzgerald: Image solutions demonstrate each of these characteristics.
JT Fitzgerald: Since its founding in 2003, the business has grown through exceptional service to serve over 800 small and mid sized businesses in the southeast region.
JT Fitzgerald: We are fortunate to partner in this acquisition with Davita Zackie, who joined Kingsway last year as an operator and residents and has now transitioned to the role of CEO with image solutions.
Speaker Change: I'll now turn the call over to Ken for a review of the financial details and then we'll ask David to share more about the business and the opportunities he sees.
JT Fitzgerald: Kent.
Kent: Thanks J T.
Kent: For the 12 months ended June 32020 for image solutions reported $9 $8 million in unaudited revenue and approximately $3 1 million an unaudited adjusted EBITDA.
Kent: Based on our purchase price of $19 5 million devaluation represents approximately two three times revenue and approximately $6 three times adjusted EBITDA.
Kent: The business has delivered EBITDA margins in excess of 30% in each of the last two years and demonstrates strong cash generation with limited capital expenditure or working capital needs.
Kent: We acquired <unk> image solutions in an all cash transaction comprised of $11 4 million in cash and $7 $75 million in debt financing for a total of $19 5 million.
Kent: The $11 4 million came primarily from the issuance of class B preferred stock proceeds from drawing on the exist kwh loan.
Kent: And cash on hand.
Kent: On September 24, Kingsway issued and sold to accredited investors 330000 shares of newly created class B preferred stock with the liquidation preference of 20 $25 per share for total proceeds of $8 5 million.
Kent: The shares of class B preferred stock were offered and sold without registration under the Securities Act of $19 33.
Kent: The issue has strong participation from members of our board management and the <unk> Advisory Board.
Kent: Key terms of the issuance include a fixed cumulative preferred cash dividend of 8%.
Kent: Conversion price of $9 50 per share.
Kent: And in renewable by Kingsway on September 24, 2031 for the price of $25 per share.
Kent: We refer to the 8-K, we filed on September 27th with the Security and Exchange Commission for further details of the issuance.
Kent: Kingsway also chose to draw a $4 million on its existing kwh loan that's the loan secured by our extended warranty companies in mid September which consisted of 500000 on the revolver and $3 5 million on the delayed draw term loan.
Kent: The revolver is now fully drawn and there is $500000 unused on the delayed draw term loan.
Kent: The $775 million of debt financing was provided by avid bank in the form of a term loan priced at prime plus 50 basis points with a floor of 725%.
Kent: The term of the loan is six years with a graduated amortization schedule and is nonrecourse that kingsway.
Speaker Change: I'll now turn the call over to <unk> for more details about the company and the industry.
Speaker Change: Thank you Ken.
Speaker Change: I'm pleased to have the opportunity to speak with you today.
Speaker Change: In share additional context on that we saw and evaluated it made solutions.
Speaker Change: I'm happy to talk about the last three weeks since closing the transaction in the way how they can indeed.
Also die.
Speaker Change: Enterprise opportunity Ics.
Speaker Change: Okay, Great Jason.
Speaker Change: The company headquartered in all kind of lineup.
Speaker Change: <unk>.
Speaker Change: Managed services.
Speaker Change: It was founded in 2000 feet.
Speaker Change: My background in the equipment industry.
Speaker Change: And initially.
Speaker Change: Thank you Stephen.
Speaker Change: Tau.
Speaker Change: Equipment to hospitals and small businesses in Western North Carolina.
Speaker Change: Tony Sterne image solutions has expanded its offerings and now operate.
Speaker Change: Three business units.
Speaker Change: How quickly can sotheby's and help desk.
Speaker Change: He made solutions is considered one of the largest IP.
Speaker Change: Service providers in Western North Carolina.
Speaker Change: <unk> comprehensive.
Speaker Change: So every piece of both hardware and software.
Hey, Tom.
Speaker Change: Accounts hematologist.
Speaker Change: Alright, let me, let me talk a little bit about the sales team.
Speaker Change: In early 2024.
Speaker Change: I need to see screened focused on managed service providers.
Speaker Change: It is highly fragmented and growing industry.
Speaker Change: Aligned one making a target investment grade.
Speaker Change: It was supported by similar successful transactions in the search space to bolster my confidence in this thesis.
Speaker Change: During this time miles engaged with many business owners and.
Speaker Change: Operators.
Speaker Change: To evaluate your MSP industry.
Speaker Change: <unk>.
Speaker Change: Give me a solution was subsequently sourced.
Speaker Change: Outside broken process.
Speaker Change: Okay.
Speaker Change: <unk> multiple would be just.
Speaker Change: We believe that several factors contributed to our success.
Speaker Change: First we recognize the strong fundamentals.
Speaker Change: Process, specifically focusing on the rapidly growing MSP segment.
Speaker Change: Q2, the company legacy hardware resell.
Speaker Change: Second key say unique feature is the public company embracing and operate or treatment approach enabled me to be in the relationship directly with the founder and position ourselves and then we'll talk to you soon.
Speaker Change: Sure Jonathan.
Jonathan: So we focus on the new C E mail solution opening in the rapidly expanding managed service provider and hardware as southeast Texas.
Jonathan: <unk> expected to see double digit CAGR over the next decade.
MST services currently contributes about 70% of solutions revenue.
Jonathan: But an impressive average growth rate of 25% year over year put a box. Please.
Jonathan: As companies increasingly outsource managed.
Jonathan: <unk> management to focus on core operation.
Jonathan: Fees are becoming essential for improving operational efficiency and remaining competitive.
Jonathan: You May solutions is well positioned to capitalize on this trend.
Jonathan: Operating natale MSP servicing, but also comprehensive hardware as a service solutions.
Jonathan: Which.
Jonathan: <unk> customer, we both the equipment and your ongoing support.
Jonathan: In the hardware as a service model he made solution integrates equipment tears and support into non cancer, both three to five year contracts.
Jonathan: I think steady growth.
Jonathan: 100, <unk>, increasing by about 10% year over year for the past three years.
Jonathan: In combination of long term service agreements and embedded equipment contracts.
Jonathan: Create a reliable recurring revenue model delivering both stability and predictability.
Jonathan: In fact, <unk> solution is only 2% of revenue Shaun.
Jonathan: And has.
Jonathan: <unk> has achieved high client retention, meaning solid foundation.
Jonathan: Sustained growth and future expansion.
Jonathan: In an increasingly competitive service provider industry.
Jonathan: <unk> solutions ability to drive growth can maintain client loyalty.
Jonathan: <unk> is the leader in the market well equipped to capture future opportunities.
Jonathan: So we talked a bit about the industry, let's focus on due diligence.
Jonathan: The first thing that I did.
Jonathan: Establishing credibility with the Standalone.
We're supported by my own industry research and keeps a support.
Any vessel.
Jonathan: Allowing us to transition.
Jonathan: To diligence and.
Jonathan: Allows us to appreciate unique certainly sneaks in.
Jonathan: And position.
Jonathan: <unk>.
Jonathan: E Mail solution and IBM platform put a key effects portfolio.
Jonathan: He may solution is the provider and the pad.
Jonathan: Managed services and an impressive track record enthusiastic client endorsement.
Jonathan: Growing pipeline of new business opportunities.
Jonathan: Approximately 80% of solutions revenue is contractually recurring.
Jonathan: I talked before about the low churn.
Jonathan: And strong market will.
Jonathan: With impressive sorry, Coca Cola, where kind of diabetes.
Jonathan: In Australia.
Jonathan: The business operate in a steady flourishing sector and geography.
Jonathan: And we focus on growth and profitability.
Jonathan: We focus on.
Jonathan: The most recent CES from 2021.
Jonathan: The business has demonstrated a three year revenue CAGR of 12% in.
Jonathan: And 20% annual growth rate in the past year.
Jonathan: The company has consistently deliver.
30%.
Jonathan: EBITDA margins.
Jonathan: So I'm looking for customer interviews and meeting with key suppliers, we were able to understand our <unk> solutions.
Jonathan: The platform is a critical component in their customer base.
Jonathan: <unk> consistently gaining wallet share.
Jonathan: We knew service expansion.
Jonathan: Third reinforces and profitability.
Jonathan: The company historically focused on distributing IQ equipment.
Jonathan: However, as the needs of small business customers have evolved.
Speaker Change: Yes Matthew.
Matthew: The service model.
Matthew: As I mentioned supported by three to five years noncancelable and automatically renewable contracts.
Matthew: Around 800 customers, but also date.
After midnight.
Matthew: Our debt service.
Matthew: Today, the fastest growing service line.
25% year over year growth rate in the past fees.
Matthew: Mkay solution has drawn their customers.
Matthew: Demonstrating.
Matthew: An exception.
Matthew: Generally low churn rate so.
Matthew: We were able to retain 98% of your revenue.
Matthew: Over the past few years.
Matthew: Indeed, it gives us tremendous confidence in the ability to leverage the platform.
Matthew: Future calls.
Matthew: And now.
Matthew: The closing.
Correspondingly.
Speaker Change: Peter <unk> of Citi.
Speaker Change: Denver and the 'twenty stab enough September.
Speaker Change: On Friday.
Speaker Change: Not kind of line of Western North Carolina.
Speaker Change: Was affected by the loss natural disaster.
Speaker Change: In our lifestyle. So I went out on our Q walks on the impact that <unk> has.
Speaker Change: On the business.
Speaker Change: So let me start saying that Fortunately all certified.
Speaker Change: Our team members are safe.
Speaker Change: And no losses.
Speaker Change: In part due to the damage pumps.
Speaker Change: The business is located on high ground adjacent to the <unk> Airport.
Speaker Change: He was able to 19 power proud to storm and serve as the refuge for dosing dangerous.
Speaker Change: Just after a few days after the hurricane hit he may solutions was fully operational and ready to serve our customers.
Speaker Change: Looking ahead, we do not expect a significant impact on revenue.
Speaker Change: And we in TTP to full recovery by year end, thanks to the contractual nature of our service and maintenance agreements.
Speaker Change: Beyond the expected effects.
Speaker Change: <unk> excuse.
Speaker Change: He is a temporary dip.
Of installations.
Speaker Change: We have also seen somewhat wins.
Speaker Change: Because we were lucky.
Speaker Change: To be on damaged by the storm.
Speaker Change: We were able to outperform competitors responding quickly and providing superior service.
Speaker Change: Being key to securing new customers.
Speaker Change: Before I turn it back to Jay I want to spend a few words.
Speaker Change: No.
Speaker Change: A few weeks.
Speaker Change: I've had some unexpected surprises.
Speaker Change: Really excited and looking forward to the future of <unk> solutions.
Speaker Change: As we look forward, we intend to leverage the <unk> business system playbook by focusing on establishing processes.
Speaker Change: In dedicated business development capital changes.
Speaker Change: Before doing that however, I will spend time to learn about the business.
Speaker Change: And to build the team.
Speaker Change: So that we have the right people in the right place.
Speaker Change: <unk> focus on medium and long term goals.
Speaker Change: Is would serve as a foundation for customer retention, new customer acquisition and improving penetration of existing services.
Unknown Executive: And these give us tremendous confidence in the ability to leverage this platform for future growth.
Speaker Change: Listing customers and we will focus specifically on recurring five MSP services.
Unknown Executive: And now that the closing, corresponding, was free the 26th of September, and the 27th of September, on Friday, not Carolina West and North Carolina, was affected by the worst natural disaster in our lifetime. So I want to send a few words on the impact that the hurricane in had under business. So let me start saying that fortunately all 35 team members are safe, and this no losses were incurred due to the damage from the store. The business is located on high ground agiation to the Ashley Airport, because they were to maintain power throughout the storm and serve as a refuge for those endangered.
Speaker Change: In the medium term, we see value creation opportunities through expansion of service lines within our customer base, such as cyber security and cloud storage.
By focusing on scalable services, we can also expand.
Speaker Change: Geographic service area beyond our current geography.
Speaker Change: In the long term, we appreciate the highly fragmented nature of the service space and.
Speaker Change: And intend to evaluate additional opportunities.
Speaker Change: Inorganic growth.
Speaker Change: I look forward to collaborating with the team.
Speaker Change: To further advance to.
Speaker Change: The growth strategy.
Speaker Change: <unk> E mail solution to the next level.
Speaker Change: Now I'll turn it back to Jay for closing comments.
Speaker Change: Yeah.
Jay: Thank you David a great recap there.
Unknown Executive: Just after a few days after the hurricane, Image Solutions was fully operational and ready to serve our customers. Looking ahead, we do not expect significant impact on revenue. And we anticipate the full recovery by year end, thanks to the contraction nature of our IT service and maintenance agreement. The only expected effect on revenue is a temporary result of these solutions. We have also seen some more new wins, because we were lucky to be undamaged by the store. We were able to work with all competitors in responding quickly and providing superior service, which has been key to securing new customers.
Jay: And search fund acquisitions, we always expect.
Jay: One or two crises in the first year or so.
Jay: You have.
Jay: Stepped into a crisis on day one.
Jay: <unk> operated.
Jay: Demonstrably well so thank you for all of your tireless efforts around the clock for the last three weeks.
Jay: Yeah.
Speaker Change: Just some closing comments here the acquisition of image solutions is yet another milestone in the evolution of our accelerator program are really excited about this <unk> acquisition.
Speaker Change: Image solutions is a very attractive business and a high demand industry and we're excited about the possibilities for the company under David <unk> leadership, and importantly, the value. We believe it will return for our shareholders.
Unknown Executive: Before I turn back to JK, I want to spend a few words on Gross. One of few weeks, I have had some unexpected surprises. We're in an excited one, looking forward to the future of image solutions.
Speaker Change: With Davita, a transitioning out of his role as an operator and residents and into his new role as the CEO of image solutions. We now have three <unk> that continue to seek and evaluate additional M&A opportunities.
Unknown Executive: As we look forward, we intend to leverage the key safety assistance playbook by focusing on establishing processes, KPIs, and dedicated business development coverage. Before doing that, however, I will spend time to learn about the business and to be able to keep. So that we have to write people in the right place to then focus on medium and long-term goals.
Speaker Change: We do plan to add additional <unk> to the team to backfill Derby day and to support our acquisition and growth goals.
Speaker Change: And are currently in active conversations with many more talented entrepreneurs, who have an interest in joining the Ks X program more to come on that.
Speaker Change: As always while there is no certainty around closing another deal or the timing we remain encouraged by our IR outreach efforts and the activity that we're seeing in the market.
Speaker Change: And with that we'll move into Q&A now.
Speaker Change: And if there are any questions. Afterwards, please feel reach at feel free to reach out directly to Kent or me or to James at Hayden Investor Relations to schedule a call.
With that operator can you. Please open the phone lines for Q&A.
Speaker Change: Absolutely. Thank you at this time, we will be conducting a question and answer session. 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'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset.
Speaker Change: Before pressing the star keys, one moment, please while we poll for questions. Once again. Please press star one if you have a question or comment.
Speaker Change: Once again Thats star one.
Speaker Change: If you have a question or a comment.
Speaker Change: There are currently no questions in queue I'd like to turn the floor back to James Carbonara for any questions you may have via email.
James Carbonara: Thank you operator, yes, some questions did come in on E Mail.
James Carbonara: J T kind of Davita I'll try to avoid the ones that are already answered in the prepared remarks at some came in before the call and some during.
James Carbonara: Let's see.
James Carbonara: One of the questions is image solutions operates in the managed services market. What is the overall growth rate of this market and has the image solutions been gaining or losing market share.
Speaker Change: David do you want to take kind of the industry dynamic question.
James Carbonara: Question here, yes.
David: Yes happy to.
David: <unk> solution.
David: I'm pleased that intersection between the managed service provider and their hardware as a service industries.
David: Both of those industries are expected to grow between 11.
David: Average a 12% CAGR.
David: Year over year in the next.
10 years.
Speaker Change: Excellent. Thank you.
Speaker Change: And then there was one on.
Speaker Change: Looks like it's on margins the unaudited financials show a strong EBITDA margin.
Speaker Change: What are the key drivers behind image solutions profitability and are the margins.
Speaker Change: Painful as the business scales are there.
Speaker Change: Other operating leverage opportunities.
Speaker Change: Yes, I'll take this one so sort of two.
Speaker Change: Two parts key drivers between their profitability and margin.
I would say that they have a very strong gross margin.
Speaker Change: Profile.
Speaker Change: And they have very sticky customers and so because of the mission critical nature of their services and the high <unk>.
Speaker Change: Service levels, they provide and the customer satisfaction faction scores they have in that.
Speaker Change: That generates some probably some pricing power.
Speaker Change: Which has allowed them to operate at a relatively high margins. It's also fairly entrepreneurial organization.
Operator: One moment, please, while we pull for questions. Once again, please press star one if you have a question or a comment. Once again, that's star one if you have a question or a comment.
Speaker Change: So not a lot of excess or fat there its been a well run business.
Speaker Change: Sure.
Speaker Change: And then.
Speaker Change: Operating leverage opportunities.
Speaker Change: I think that there may be some like I said, it's pretty lean.
Speaker Change: Organization well run as.
Speaker Change: As you grow there are obviously some costs that are quasi fixed that you can.
Speaker Change: Get some operating leverage from but I think that our goal would probably and is to.
Operator: There are currently new questions in queue.
James Carbonara: I'd like to turn the floor back to James Carbonara for any questions he may have via email.
Speaker Change: Maintain the currently high margins as we invest in.
James Carbonara: Thank you, operator. Yes, some questions did come in on email.
Speaker Change: And growing the business.
James Carbonara: JT, Ken, and David Altry to avoid the ones that already answered in the prepared remarks, as some came in before the call and some during.
Speaker Change: Great.
Speaker Change: I appreciate that the next one is.
Speaker Change: How much of the image solutions growth has been driven by expanding wallet share with existing customers versus acquiring new customers. What is the typical net revenue retention rate.
Unknown Executive: One of the questions is Image Solutions operates in the IT managed services market.
Unknown Executive: What is the overall growth rate of this market, and has image solutions been gaining or losing market share?
Speaker Change: Yes, great questions, David I'll, let you take that.
David: David, do you want to take kind of the industry dynamic question? Yeah, it's happy to. So image solution is a place that we intersection between the managed service provider and the hardware and the service industries. Both of those industries are expected to grow between 11 to 12% so here's the next 10 years.
Speaker Change: Yes, I would say that roughly.
Speaker Change: Half of the growth has been driven by <unk>.
Speaker Change: Combination of.
Speaker Change: Cross selling services.
I'm thinking about.
Speaker Change: MSB and hardware as a service.
Speaker Change: So equipment really hardwood.
Speaker Change: Software all helped us support.
Speaker Change: And pricing optimization.
Speaker Change: The other half.
Speaker Change: As coming from new customer acquisition.
Speaker Change: The numbers now.
Unknown Executive: Next on, thank you.
Speaker Change: Now in terms of.
Unknown Executive: And then there was one on success on margins the unordinated financial source strong Ebrom margin. What are the key drivers behind image solutions profitability and are the margins sustainable as the business scales are there.
Speaker Change: Net revenue retention, we did net revenue retention analogy and the average of the past the USD 106%.
Speaker Change: Hum grass gross churn would have been approximately 2%.
Unknown Executive: Are there other operating leverage opportunities?
Speaker Change: Great. Thank you and then.
David: Yeah, I'll take this one.
Speaker Change: Last one I see here is.
David: So sort of two parts key drivers between their profitability and margin. I would say that they have a very strong gross margin profile. They have very sticky customers. And so, because of the mission critical nature of their services and the high. The levels they provide and the customer satisfaction scores they have. And that generates some probably some pricing power. Which has allowed them to operate at a relatively high margins.
Speaker Change: Are there opportunities to expand image solutions addressable market by moving into adjacent service offerings or expanding the customer base beyond their core market in Western North Carolina.
Speaker Change: David I'll take I'll take this one I think diabetes spoke to that a little bit I mean, the the FERC the focus for <unk> in the company.
Speaker Change: Over the next certainly six months.
Speaker Change: Is to predominantly to get into the business really learn the business from the bottom up.
David: It's also fairly entrepreneurial organization. And so not a lot of excess or fat there to been a well-run business. And then operating leverage opportunities. You know, I think that there may be some, like I said, it's pretty lean organization well-run. As you grow, there are obviously some costs that are quasi fixed that you can get some operating leverage from. But, you know, I think that our goal would probably and is to maintain the currently high margins as we invest in growing the business.
Speaker Change: Create systems.
Speaker Change: And processes and <unk>.
Speaker Change: Continue to build a great team to support that growth and that team will help them develop the strategy. We obviously have some near term opportunities.
Speaker Change: <unk>.
Speaker Change: But I think that yes.
Speaker Change: Expanding the service offerings or the geographic market that the company serves are both kind of medium term.
Speaker Change: Growth opportunities, we think about things in the context of <unk> and soft matrix.
Speaker Change: We'll be focused in sort of that sort of customer penetration.
Speaker Change: <unk> first and then expand into.
Unknown Executive: Great. I appreciate that.
Speaker Change: Product expansion or market expansion thereafter.
Unknown Executive: The next one is how much of the image solutions growth has been driven by expanding wallet share with existing customers versus acquiring new customers. What is the typical net revenue retention rate?
Speaker Change: <unk>.
Speaker Change: Some some possible product expansions that David mentioned like the cyber and cloud cloud services, and then expanding the geographic footprint, either organically or integrate or inorganically would be kind of a medium term.
David: Great questions, David.
David: I'll let you take that. I would say that roughly half of the growth has been driven by combination of cross styling services. And I'm thinking about MSB and Hardware as a Service. So equipment, really hardware and software or health care support, and pricing of optimization. The other half is coming from new customer positions for new, new levels.
Speaker Change: Growth opportunity.
James Carbonara: Excellent. Thank you J T.
Speaker Change: And David day, and everybody, who tuned in and listened today live or on the webcast operator, I'll turn it back to you to close out the call.
Speaker Change: Thank you.
Speaker Change: This concludes today's conference and you may disconnect your lines at this time thank.
Speaker Change: Thank you for your participation.
David: Now, in terms of net revenue retention, we did a net revenue retention analysis. And the average of the past 10 years is 106%. With a gross growth that has been approximately 2%.
Unknown Executive: Great. Thank you.
David: And then, the last one I see here is, are there opportunities to expand image solutions at the rest of the market by moving into adjacent service offerings or expanding the customer base beyond their core market in Western North Carolina?
David: David, I'll take this one. I think David spoke to that a little bit. The focus for David and the company over the next certainly six months is for David to get into the business, really learn the business from the bottom up, create systems and processes, and continue to build a great team to support that growth. And that team will help them develop the strategy. We obviously have some near-term opportunities. But I think that, yes, you know, expanding the service offerings or the geographic market that the company serves are both kind of medium-term growth opportunities.
David: We think about things in the context of an Ansoff matrix. And we focused in sort of that sort of customer penetration zone first and then expand into product expansion or market expansion thereafter. You know, some possible product expansions that David mentioned, like cyber and cloud services, and then, you know, expanding the geographic footprint, either organically or inorganically, would be kind of a medium-term growth opportunity.
Unknown Executive: Excellent. Thank you, GT, Kent, and Davide, and everybody who tuned in and listened today live or on the webcast.
Operator: Operator, I'll turn it back to you to close up the call. Thank you.
Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.