Q3 2024 ECN Capital Corp Earnings Call
Speaker Change: Good afternoon and welcome to ECN Capital Corp's third quarter 2024 earnings conference call and webcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I would now like to turn the call to your host, Katherine Moradiellos. You may begin.
Speaker Change: The news release summarizing. These results was issued this afternoon and the financial statements and MD&A for the three months period ended September 32024 have been filed with SEDAR.
Speaker Change: These documents are available on our website at Www Dot E. C. N capital Corp, Dotcom presentation slides to be referenced during the call are accessible in the webcast as well as in PDF format under the presentations section of the company's website before we begin I want to remind our listeners that some of the information we are sharing with you today.
Speaker Change: It includes forward looking statements. These statements are based on assumptions that are subject to significant risks and uncertainties I will refer you to the cautionary statements section of the MD&A for a description of such risks uncertainties and assumptions, although management believes that the expectations reflected in these statements are reasonable we can obviously give no assurance.
Speaker Change: Set the expectations of any forward looking statements will prove to be correct.
Speaker Change: You should note that the company's earnings release financial statements MD&A and today's call include references to non Ifr S measures, which we believe help to present the company and its operations in ways that are useful to investors.
Speaker Change: A reconciliation of these non <unk> measures to Ifr S measures can be found in our MD&A.
Speaker Change: All figures are presented in U S dollars unless explicitly noted with that I will now turn the call over to Steve Hudson.
Steve Hudson: Thank you Kathy and good evening I'm very excited to announce our best quarter in two years with five cents of EPS compared to our guidance of four to six.
Steve Hudson: I'd like to highlight five items for you on the Q3 overview first hurricane Helene and Milton impacted originations in Q3, but we are recovering in Q4.
Steve Hudson: Notwithstanding a very active storm season, with five hurricanes impacting our operating areas our operating businesses have performed exceedingly well.
Steve Hudson: Second Jackie will speak in a moment to our extension of our senior line of credit well done Jackie third.
Steve Hudson: <unk> operating income for the quarter of $26 7 million is $18 8 million higher than Q3 of 'twenty three.
Steve Hudson: Fourth the operating income of our RV Marine business came in at $3 3 million, which is up 43% year over year.
And finally, the acquisition of Paramount capital, our internal servicing platform for RV Marine closed in the third quarter. This platform is consistent with <unk> proven playbook to develop strong non cyclic recurring revenue just like we did with triad 6 billion servicing business Lance over.
Speaker Change: To you.
Lance: Thank you Steve as Steve mentioned, our adjusted operating income for the quarter was up to $26 7 million.
Lance: Was driven in large part by a 74% year over year increase in origination revenue.
Lance: However, it's important to note the contribution from our floor plan rental and servicing businesses as well in 2017, when do you see an acquired triad. The company had no commercial or servicing business as triad was a strictly gain on sale operation.
Lance: But again consistent with the ECM playbook of adding and then growing relevant businesses try to establish first an industry leading servicing team and then later an effective floor plan and rental business.
Lance: We continue to expand those businesses and to develop them into a diversified recurring and non cyclical revenue stream that represented 35% of our revenue in Q3, and we expect this balance to continue into 2025.
Lance: Lastly, I'll just highlight the reference to our expanded flow arrangements in order for us to continue to be the lender of choice for a growing number of homebuyers, we must continue to develop new and grow our existing funding partnerships. We were excited to announce the extension of the Blackstone program in October and that extension along with the continued relationships with Carlisle Monroe in our menu.
Lance: <unk> long standing banking credit Union relationships brings our total funding arrangements to more than $1 9 billion year to date.
Lance: Moving over to slide nine Steve also mentioned in his opening comments that we did see some negative impact to originations in September due to Hurricanes, Helene and Milton and while that impact may be felt for a period of time in Q4, our business remains resilient and recovery is well underway youll notice in the Pie chart that our origination mix.
Lance: <unk> has shifted toward channel for the quarter now representing more than 77% of our total originations and as channel is our highest margin business that helped drive a higher origination revenue margin for the quarter as well and then lastly on this slide our community and rental originations were also up for the quarter, reflecting the completion.
Lance: The flow agreement with Monroe.
Lance: On to slide 10, a quick look at our approvals Q3 approvals remains strong and our pipeline growing throughout the quarter.
Lance: Chattel approvals increased 17% year over year in Q3 and remain up 21% year to date and encouragingly. This trend is continuing into Q4 with October chattel approvals up 39% year over year in.
Lance: In addition to the growth in channel, we continue to see activity, increasing and our land home group for the quarter land home approvals were up 30% year over here in these approval trends in both land home and channel and our pipeline growth bodes well for future originations.
Lance: Moving over to slide 11. This is a slide we shared in the past and it shows the shipment growth trends continuing to rise through Q3 in fact, the industry now up 15% year over year, and it's good to see growth and activity for the industry, but the real takeaway from this slide is the impact from the overwhelmingly strong demand for affordable housing.
Across the country.
Lance: Developing solutions for affordable housing our key initiatives for both political parties and the demand has never been stronger and for this reason regardless of changes in interest rates or consumer sentiment, we see strong growth opportunities ahead for Tri Ed and we're well positioned to capitalize on this opportunity.
Speaker Change: And now I'll ask Matt to share some portfolio updates.
Matt: Thanks, Lance starting on Slide 12, we're happy to report that both delinquencies and net charge offs remained low.
Matt: And our manage assets continued to grow ending the quarter at $5 $5 billion, which will drive continued recurring revenues for Tri Ed in future quarters.
Matt: Moving you to slide 13.
Matt: Commercial balances ended the quarter at $425 million, which includes both rental and floor plan yields and performance remains strong and as a reminder, these yields do float with market rates.
Matt: Moving on to slide 14.
Matt: Give you a quick update on champion financing.
Matt: Rampion finance continues to perform very well.
Matt: Active balances you see on the bottom left of this chart are up 33% quarter over quarter, while still maintaining a growing pipeline you see in the approved orders and unused credit lines.
Matt: <unk> balances not only will drive diversified revenue, but also generate two five times retail volume for us.
As these balances continue to grow.
Matt: Yes.
Matt: Lastly, moving to slide 15, you've seen this slide in the past. It gives you a quick update on our historical quarterly originations.
Speaker Change: And with that I'll hand, it over to Hans.
Speaker Change: Thanks, and great job to our team at triad awesome awesome quarter move.
Hans: Moving to slide 17.
Hans: We are firing on all cylinders and I'm excited to share some very positive updates for marine and RV.
Hans: Originations for the third quarter opt.
Hans: Operating income before tax was up 43% year over year <unk>.
Hans: <unk> of almost $275 million was up 30% year over year.
Hans: July and August increased by a whopping 40%.
Hans: September was only 3%, but that was due to the multiple hurricanes that we experienced.
Hans: Turning to slide 18.
Hans: Im going to touch briefly on this slide but it shows the accelerated growth we are experiencing.
Hans: Moving to slide 19.
Hans: <unk> business update I am excited to share some very positive updates from ISG.
All of which makes me incredibly proud.
Hans: Diving into our third quarter results.
We achieved an 18% year over year increase in originations driven largely by a very strong July and August September as I said before was soft due to the impact of Hurricane Helane.
Hans: Even more encouraging is our October performance. Despite another hurricane Milton our team came back with exceptional performance in effort. We ended October up 41% year over year Testament to the team's resilience and dedication.
Hans: Not only are we seeing robust consumer demand, but our bank partners continued to show strong interest in our loan products. This demand coupled with the growth in our dealer network is creating substantial momentum.
Hans: As I mentioned in our last quarter. This year, we have signed up more dealers than any other time in our company's history and this trend is continuing.
Hans: This past quarter, we welcome seven new sales staff, who together bring over 150 years and marine lending experience. We expect this team to produce an additional 75 million in originations over the next year.
Hans: With this solid foundation in place I'm confident.
Hans: We are poised for a very very strong.
Hans: Year end.
Speaker Change: With that I'll hand, it off to Mike Thank you John and.
Mike: Congratulations on a great quarter and good afternoon, everyone. Please turn to slide 12.
Speaker Change: Very pleased to report that source loans make sure picture strategy is yielding strong results our third quarter originations increased by 63% in the fourth quarter has started just as prominently with October originations up nearly 70% despite expected seasonal slowdowns, we're well positioned with third quarter approval.
Speaker Change: Up 42% in October is up 46%, giving us a pipeline of nearly $40 million as we move into winter.
Speaker Change: Looking ahead to 2025 is shaping up well as our growth initiatives gain momentum.
Speaker Change: We've added four new sales reps expanding our reach to 46 states.
Speaker Change: We're actively executing our take share strategy with our look to book ratio up almost 19% and per dealer penetration increasing by 20%.
Regarding Tcs acquisition of Paramount capital.
Speaker Change: No longer dependent on an external servicer, allowing us to scale more confidently theyre best in class platform and technology facilitated a quick and successful migration of our RV and marine portfolios the quality reporting and transparency. We now have offers a level of visibility into portfolio performance that was.
Speaker Change: Previously unavailable.
Speaker Change: With the ongoing integration of specific back office functions with RFG combined with better data to drive strategic growth, we are improving operational efficiency and cross structures across RV marine.
Speaker Change: Now on to slide 21.
Speaker Change: Key takeaway.
Speaker Change: And first one are successfully executing the growth strategies significantly outpacing the industry.
Speaker Change: To put our third quarter gains in context, the anticipated recovery in RV and marine sales have been slow to materialize, but the combination of high interest rates and election year uncertainty resulted in the slight decrease in unit registrations. However, wholesale shipments have increased for four consecutive quarters. Following the pattern we saw in.
Speaker Change: <unk> housing and we are confident of the predicted recovery next year.
Speaker Change: With that in mind sourced one originations are up 45% year to date in October originations matched our 2022 volume, making it our best October ever with a 40% increase in approvals last month <unk>, one have robust pipelines as we close out the year our investments in systems team.
Speaker Change: And combined synergies position us strongly.
Speaker Change: Similar to the recovery of triad, we're confident that when the market rebounds in 2025 will be well placed to lead <unk>.
Speaker Change: Over to you.
Speaker Change: Thank you Mike.
Speaker Change: Turning to page 24 for our consolidated operating highlights.
Speaker Change: Overall, our Q3 operating results remain on plan with adjusted operating income of $19 5 million compared to $2 3 million in the prior year quarter, which was driven by increased revenues across each of our businesses.
Speaker Change: Adjusted net income to common shareholders was $13 1 million or <unk> <unk> per share consistent with our guidance range of $4 <unk> per share.
Speaker Change: Turning to page 25, looking at the balance sheet.
Speaker Change: Our total balance sheet is down approximately $85 million from Q2 and over $200 million from the prior year.
Speaker Change: I'd like to highlight that during the quarter, we completed a three year extension of our senior credit facility.
Speaker Change: Which provides for $770 million in funding through October 2027, which was within our target range of $750 million to $800 million.
Speaker Change: Turning to page 26.
Speaker Change: Loan origination revenues were $37 8 million in the quarter up from $23 million in the prior year, which reflects loan mix and margin improvement at triad and growth in origination volumes that RV and marine.
Speaker Change: Servicing revenues were up to $17 5 million driven by growth in managed assets of triad as well as the launch of servicing an RV and marine.
Speaker Change: Interest expense and interest income each decreased as a result of lower on balance sheet finance assets in 2024.
Speaker Change: On page 27 manufactured housing operating expenses increased from the prior year, reflecting elevated expenses related to new funding agreements.
Speaker Change: RV and marine operating expenses were up as a result of continued investments that we're seeing drive the business forward as well as the impact of the acquisition of Paramount.
Speaker Change: Yes.
Speaker Change: And lastly on page 28, we ended the quarter with under $300 million in our on balance in our portfolio, which includes just under $230 million at triad and $70 million in RV and marine.
Steve Hudson: And I'll turn it over to Steve.
Steve Hudson: Thanks, Jackie before commenting on slide 30, our 2025 guidance, let me start by thanking the 700 members of our employees.
Steve Hudson: In the field many of the of our employees and their families had significant challenges. During this very active season. So we thank you for your hard work.
Steve Hudson: <unk> got hit by 19 Hurricanes and its just was shut down just for a day it's amazing.
Steve Hudson: By way of background to our 2025 guidance I'd like to focus on the corporate simplification plan.
Steve Hudson: 95 business plan provides for the completion of the corporate simplification plan as many of you will note that was the first approved by <unk> Board in the second quarter of 'twenty three.
Steve Hudson: Simplification plan will conclude in early part of 'twenty, three by combining ECM and Tri Ed eliminating.
Steve Hudson: Eliminating duplication of overhead cost at the two companies.
Steve Hudson: Try its Jacksonville, Florida office will become <unk> corporate headquarters corporate functions will be integrated with Tri Ed <unk>.
Steve Hudson: Resulting in five 5% to $6 5 million of cost savings.
Steve Hudson: As many of you remember in 2021, when we sold service finance, we were successful eliminating $12 million of annual corporate cost.
Steve Hudson: RV Marine will continue to operate as a strong and vibrant subsidiary.
Steve Hudson: All of this is possible by last holes.
Steve Hudson: It's all possible because land Lance Hall has built a deep and talented senior management team of Tri Ed and Thats the catalyst for us in terms of executing this.
Steve Hudson: This expense reduction plan now.
Steve Hudson: Our guidance for 2025 is between 19% and 25.
Steve Hudson: And I would reference you on a midpoint of 22.
Speaker Change: James Thank you Steve turning to slide 31 tried is guiding to $1 seven to $1 9 billion of originations in 2025 inclusive of the champion finance JV activity. This represents year over year growth of 23% at the midpoint.
Speaker Change: In terms of mix, our highest margin channel product is expected to grow 17% and represented 70% of total 2025 originations our community rental and land home offerings are expected to grow at a higher rate of approximately 40% and will comprise 25% and 5% of total loan production respectively.
Speaker Change: Turning to slide 32, the table converts are expected production mix into forecasted origination revenue, we expected blended origination revenue yield of six 5% with higher margin channel offset by lower margin community rental and land home volume.
Speaker Change: Slide 33 summarizes our 2025 origination and managed balanced kpis, along with our forecasted P&L origination.
Speaker Change: Revenue generated from our target 2025 loan production is expected to comprise 55% of total revenue with the balance of revenue driven by growth in managed balances from our commercial and servicing businesses to $6 $75 billion at the midpoint.
Speaker Change: Operating expenses includes additional overhead and interest expense from the corporate simplification plan of integrating ECM corporate functions into Tri Ed in 2025.
Steve Hudson: And with that I'll turn it back to Steve to review the <unk> 2025.
Steve Hudson: Turning to slide 34, let me highlight three three items on this slide the originations of one two to $1 4 billion I would anchor you more in the $1 4 billion. If you look to <unk> to 'twenty four we have an average of about $290 million a quarter. So I think the 1200.
Steve Hudson: $1 2 billion is a low watermark before one four is a better mark <unk>.
Managed assets reflect Mike's earlier comment about Paramount financing, we like that because of the recurring stable.
Steve Hudson: Income and that ties into my last comment on the adjusted operating income of 16% to 26 I would ask you more to the higher end, 40% of that income is driven by our servicing business.
Steve Hudson: Turning to page 35 in terms of the cadence of our 19% to 25.
Steve Hudson: Quarter by quarter has been laid out for you I wouldn't comment specifically on the fourth quarter of 25, which historically has been a seasonal quarter, but with larger servicing revenue and commercial finance revenue floor plan of rental we've now been able to smooth out the seasonality of our business.
Steve Hudson: And finally on page on Slide 36, which is the consolidated 2025 forecasts for both Tri, Ed and RV Marine and servicing.
Steve Hudson: Strong strong earnings of 61% to $78 million for the year coupled with as.
Steve Hudson: As I mentioned earlier, the strong recurring non cyclic servicing revenue and the cost reductions we've announced earlier this evening.
Steve Hudson: And finally on page 38, my closing comments.
Steve Hudson: Had an exceptional third quarter, our strongest in two years with five of earnings Triads earnings remain ahead of ahead of plan.
Steve Hudson: Origination momentum in RV Marine is strong as many of you know the.
Steve Hudson: The MH industry turned around 24, our view is that the RV Marine business, we'll see that same similar turnaround in 2025 in fact, we're seeing it in the fourth quarter.
Steve Hudson: And the revenue guidance includes includes the corporate simplification cost Takeouts, we believe our 24 earnings will approximate current consensus.
Steve Hudson: Withstanding the hurricane season.
Steve Hudson: Issuing guidance of 19% to 25 cents and our dividend is maintained with that operator I would open the call for questions.
Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad now and he will be placed into the queue in the order received.
Speaker Change: You are going to ask a question on you are connected to the webcast video. Please mute the webcast, which youre a good audio connection.
Speaker Change: These be prepared to ask your question when prompted once again, if you would like to ask a question. Please press star one on your phone now.
And our first question comes from Nik Priebe from CIBC. Please go ahead Nick.
Nik Priebe: Yes. Thanks.
Speaker Change: You alluded to some changes that you made to the senior credit facility.
Speaker Change: I'm aware that you've got a series of bonds that go current at the end of the year is that part of the plan to address the refinancing there is extinguishing the bonds using the capacity on the senior credit facility an option for you.
Speaker Change: Yes.
Speaker Change: It's.
Speaker Change: We believe that those bonds are due on December 31 of this year, we believe will refinance those bonds and the senior line is dedicated to financing on balance sheet assets that said, we have strong cash flow, which could be another source, but we feel very confident in our ability to refinance those December 31 debentures.
Speaker Change: Yeah.
Speaker Change: Got it and just sticking on the same topic I've always kind of struggled with the concept of leverage for your business model, specifically because the credit facility that you have is a bit of a hybrid facility.
Speaker Change: I look through the debt that is drawn specifically for the purpose of funding finance receivables, how levered as ECM today or how do you think about leverage in that context.
Speaker Change: And so our senior credit facility and then drawn balance is fully supported by our on balance sheet asset.
Speaker Change: Yes.
Speaker Change: Okay. So there wouldn't be like a 70% advance rate or something of that nature I can think of it as being 100 essentially 100%.
Speaker Change: Well there is an advance rate, but if you look at our accounts receivable and our finance assets across both businesses.
Speaker Change: The senior line balance.
Speaker Change: Okay. Okay.
Speaker Change: And then just last question I am just trying to understand exposure to some of these disruptive weather events like the Atlantic Hurricane season can you give us a rough sense for what proportion of originations will be based.
Speaker Change: In the state of Florida, or the southeast U S in general.
Speaker Change: Yes, Tri Ed, Florida is our third largest state for originations. So it's a significant portion of our origination business.
Speaker Change: And I don't see this as being a permanent.
Speaker Change: Disruption by any means it's a temporary slowdown in businesses as our retailers and for that matter. The the conditions fore sight placement of homes improves and as they dry up and has hit these cleared up I think we'll be right back on track.
Speaker Change: If I could just add one other thing Nick as you know these are all HUD approved.
Speaker Change: Both our design and construction and deliver.
Speaker Change: Delivery. These homes have a 40 to 50 year life, we're only aware of one claim.
Speaker Change: For for a home that was materially damaged.
Speaker Change: It's really been the conditions are such that you can't what they call set of home if the grounds, whether you can get and you can set the home, but we've seen Hans commented earlier that we've seen a nice nice.
Speaker Change: This recovery in the marine business in October and we're starting to see that in the manufactured housing sector.
Speaker Change: Got it okay, that's great I'll pass the line. Thank you.
Speaker Change: Okay.
Speaker Change: And our next question comes from Jamie Klein from National Bank Financial. Please go ahead Jamie.
Speaker Change: Yes.
Speaker Change: Thanks.
Speaker Change: Question on the.
Speaker Change: 2025 guidance I suppose just broadly.
Speaker Change: Broadly speaking.
Speaker Change: What what gives you the confidence to.
Speaker Change: To be able to achieve.
Speaker Change: This guidance that you've set out today.
Speaker Change: Especially in light of what.
Speaker Change: What we've seen recently.
Speaker Change: I appreciate the guidance provided so I just wanted to get a sense as to like what what what what is the foundation to be able to provide any guidance at this stage.
Speaker Change: I'm not sure about the covenant of <unk>.
Speaker Change: <unk> guidance, we're not I'm not going to revisit 'twenty three but we've been on the Mark Jamie for the last several quarters last three quarters, our guidance in terms of what gives us the confidence as a team.
Speaker Change: If the forward order book.
Speaker Change: In partnership with champion.
Speaker Change: Increasing deliveries you've seen the deliveries from champion into the field and further penetration into into that joint venture, but also gives us.
Speaker Change: Guidance that we've been able to streamline the business under under Lance.
Speaker Change: Leadership with with Matt Heidelberg, and with James Berry, taking out significant costs.
Speaker Change: And finally, we have had increased demand for our institutional investors for our loan product, we've been able to materially increase the economics on.
Speaker Change: While on the gain on sale and the loan servicing rights values.
Speaker Change: As I mentioned earlier in my opening remark it's Jamie.
The RV marine business, particularly looking at this quarter is recovering and we believe it is going to go through the same cyclical recovery that Pemex did.
Speaker Change: <unk> 24, as we are starting to see now in 2012.
Speaker Change: Yes understood.
Speaker Change: On the on the guidance or in triad.
Speaker Change: Where would we see the JV with champion show up in this guidance or how much is it contributing to the 2025 guidance that you're providing today.
Speaker Change: Yes, Jim this is Matt.
Speaker Change: <unk>.
Speaker Change: Unfortunately, our partner there are champions another publicly traded company. So so we're sensitive to that now the we.
Speaker Change: We give you an update on the floor plan and kind of how that's tracking but we want to be sensitive to other partner without giving too much information.
Speaker Change: On their behalf.
Speaker Change: We did we did cut and paste the quote from Dr. <unk> on the champion coal, which speaks to the success of the joint venture in there.
Speaker Change: Their view on.
Speaker Change: They're very happy with the joint venture.
Speaker Change: Okay.
Speaker Change: Alright, Thank you very much.
Speaker Change: And our next question comes from Tom Mackinnon from BMO. Please go ahead Tom.
Tom Mackinnon: Yeah. Thanks, good afternoon.
Tom Mackinnon: With respect to slide 33, and the triad guidance.
Tom Mackinnon: Okay.
Tom Mackinnon: You've talked about additional expenses there as a result of kind of folding in the head office into triad can you quantify what those additional expenses that you've added in there or.
Tom Mackinnon: To reflect that.
Tom Mackinnon: Interesting.
Tom Mackinnon: On the expense side, Tom So there's there's some corporate overhead it's primarily interest though so the interest that you used to see in the corporate segment is primarily now it will be pushed down the businesses.
Speaker Change: Okay. So.
Speaker Change: Right now corporates kind of running at I don't know $2 5 million a quarter 10 to 10 a year youre.
Speaker Change: Youre going to save five to six.
Speaker Change: Hey.
Speaker Change: No.
Speaker Change: Is the rest just what happens to the rest of them like you essentially you are losing.
Speaker Change: Corp, all of the corporate expenses, which are running at a run rate of 10.
Speaker Change: Youre not it does look like you're adding any of those.
Speaker Change: Overhead expenses into triad.
And yet the guidance doesn't have any corporate expenses at all.
Speaker Change: As I see it then so are you really actually getting kind of like $10 million in corporate expenses in this plan.
Tom Mackinnon: Yes, youre, eliminating GCN, Tom to take you back to 'twenty three.
Tom Mackinnon: When champion made their investment with US we committed to a corporate simplification plan.
Tom Mackinnon: Lance has created a very strong robust team in Jacksonville, and we don't think we don't you don't need two legal departments, you don't need to risk departments, you don't mean, the others. So it will be complete elimination of ECM.
Speaker Change: Okay. So from what we're seeing that's producing two $5 million or $2 5 million in expenses this quarter will be.
Speaker Change: <unk> eliminated.
Tom Mackinnon: Yeah. It starts Tom if you have one quarter delay youre doing all the work now we're deep into it.
Let's say it's.
Tom Mackinnon: Finally, all of its completed by March 31, and they can try to reconcile that turned back to the five 5% to $6 five so it's three quarters of that.
Tom Mackinnon: Alright.
Tom Mackinnon: Okay.
Tom Mackinnon: And then I guess the second is what would be driving some of this increase in service revenue that youre seeing at triad right now is that just.
Tom Mackinnon: Managed assets floor plan is there anything else that is helping drive that increase in servicing revenue that we're seeing here.
Tom Mackinnon: Yes, Hi, Tom This is James from Tri Ed So servicing yield during the quarter benefited from two factors. It's the mix of the various servicing loan portfolio in total loan sale volume during the quarter. So the servicing fees for our silver and bronze product of roughly $40, 150% higher than our core product respectively. So as we originate more of these products to meet the demand.
Tom Mackinnon: Our Investor Partners drive servicing yield will increase and separately, we sold $165 million more loans to investor partners quarter over quarter, increasing our managed assets and servicing revenue as previously noted in the guidance, we expect to realize a servicing deal of $80 to 90 basis points in 2025.
Tom Mackinnon: Okay.
Speaker Change: Alright, that's great. Thanks, so much.
Speaker Change: And our next question comes from Stephen Boland from Raymond James. Please go ahead Steven.
Speaker Change: Sorry, I jumped on late maybe just address but following up on Toms.
Speaker Change: Questions, obviously, the service revenues benefiting sorry.
Sorry, there was a little blip there in terms of your Sup was 80, sorry was it 80 to 90 or timber.
Speaker Change: That number yes, I was referring to the 2025 guidance, it's 80 to 90 basis points in 2025.
Speaker Change: Okay.
Speaker Change: And again I haven't had time to dig into these numbers, but even the loan origination revenue seems quite robust quarter over quarter.
Speaker Change: Sure.
Speaker Change: Is there anything like that.
Speaker Change: Thats kind of one time, there or change in mix change in funding partners things like that.
Speaker Change: Yes, so it's a similar story, where it's Q3 benefited from higher gain on sale margin from the mix of sold production in the total loan sale volume. So we sold 150 million increase quarter over quarter on our highest margin core chattel product and then we also had increased landfill land home sales activity, which was up 14 million.
Speaker Change: Quarter over quarter. So this higher loan sale activity coupled too.
Speaker Change: Being weighted to a higher margin product drove an increase in gain on sale margin during the quarter and as we previously mentioned, we expect to gain on sale margins approximate six 5% in 2025.
Steve Hudson: I think Steve it's important to note that when you reported on the from the first loan flow program with Blackstone, We were in the 810 X, 80% core 10% silver 10% brands today. These mixes with various partners are 60% core.
Speaker Change: <unk>, 30% silver, 10% bronze silver and bronze R.
Speaker Change: Of our more profitable again, those mixes are driven by the institutional investor demand on us.
Speaker Change: But it does help it does help our margins.
Speaker Change: Okay I appreciate that thanks for clarifying that Thats, all I had thanks.
Speaker Change: Okay.
And that was our last question at this time to thank everybody for joining today's conference call and webcast.
Speaker Change: You may now disconnect and have a great night.