Kingsway Financial Services Inc. (NYSE: KFS) has reported a successful financial year in 2023, with consolidated revenue and adjusted EBITDA figures that met expectations. The company's revenue saw an 11% increase to $103.2 million, and adjusted EBITDA reached $9.1 million. Despite challenges in the extended warranty segment, Kingsway implemented effective strategies to counteract higher claims expenses and macroeconomic pressures.
The company's growth has been partly driven by strategic acquisitions, and it plans to continue this trajectory with two to three new deals expected to be completed in the next year. Kingsway's cash position and debt reduction efforts were also key points of discussion during its earnings call.
Key Takeaways
- Kingsway's consolidated revenue increased by 11% to $103.2 million in 2023.
- Adjusted EBITDA for the company stood at $9.1 million.
- The extended warranty segment contributed $68.2 million in revenue, while the KSX segment reported $35 million, bolstered by acquisitions and strong performance from Ravix.
- Kingsway aims to complete two to three acquisitions in the following year.
- Cash and cash equivalents were reported at $9.1 million, with a significant reduction in total outstanding debt from $102.1 million to $44.4 million.
- The company remains optimistic about the warranty business's outlook for 2024.
Company Outlook
- Kingsway is focused on growth through strategic acquisitions, with an optimistic outlook for the warranty business in 2024.
- The company is working on adding new distribution partners and channels to improve claim severity.
- There is a potential for organic growth in the software business, with early successes in new client onboarding.
- Kingsway is actively managing growth in the cardiac monitoring business, prioritizing a strong foundation and patient care.
Bearish Highlights
- The extended warranty segment faced challenges due to increased claims expenses and macroeconomic headwinds.
- Cash used in operating activities from continuing operations increased significantly to $26.8 million.
Bullish Highlights
- Revenue growth in the extended warranty segment was achieved through price increases and cost management strategies.
- The KSX segment's revenue was driven by recent acquisitions and strong performance, particularly from Ravix.
Misses
- Kingsway's cash and cash equivalents decreased from $64.2 million at the end of 2022 to $9.1 million at the end of 2023.
Q&A Highlights
- CEO JT Fitzgerald and CFO Kent Hansen discussed the company's acquisition strategy, emphasizing the ability to unlock growth potential in acquired businesses.
- The company acknowledged the shortage of nursing staff and is addressing it by hiring recruiters to meet demand.
- In response to questions, the executives explained the rationale behind Kingsway potentially trading at a higher multiple than acquisition multiples.
- The decentralized operation model was highlighted as beneficial for attracting and retaining talent.
Kingsway Financial Services Inc. remains committed to its growth strategy through acquisitions and organic expansion, with a focus on improving its financial position and capitalizing on market opportunities. The company's proactive approach to challenges and strategic initiatives positions it for potential success in the coming year.
InvestingPro Insights
Kingsway Financial Services Inc. (NYSE: KFS) has demonstrated a notable performance over the past year, with revenue growth and strategic acquisitions driving its success. Here are some insights based on real-time data from InvestingPro and InvestingPro Tips that may provide additional context for investors considering Kingsway's financial health and stock performance.
InvestingPro Data:
- The company's Market Cap stands at $261.84M, reflecting its current valuation in the market.
- Kingsway's P/E Ratio is at 13.62, which could be appealing to investors looking for reasonably valued stocks.
- The Revenue Growth for the last twelve months as of Q3 2023 is 19.93%, indicating a strong upward trend in the company's sales.
InvestingPro Tips:
- Kingsway's stock price has shown a strong return over the last three months, with a 19.69% price total return, which may interest investors looking for momentum in the market.
- The company's liquid assets exceed its short-term obligations, suggesting a solid liquidity position that could provide stability in times of financial uncertainty.
For investors seeking a deeper dive into Kingsway's financials and stock performance, there are additional InvestingPro Tips available on the platform. With a subscription, investors can access a wealth of data and insights to inform their investment decisions. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. Currently, there are 6 more InvestingPro Tips listed for Kingsway Financial Services Inc., which can be viewed at: https://www.investing.com/pro/KFS
These metrics and insights could be particularly relevant for investors who are evaluating Kingsway's recent financial results and considering the company's potential for sustained growth and profitability in the future.
Full transcript - Kingsway Financial Services Inc (KFS) Q4 2023:
Operator: Good day, and welcome to the Kingsway Full Year 2023 Earnings Call. [Operator Instructions] With me on the call are JT Fitzgerald, Chief Executive Officer; and Kent Hansen, Chief Financial Officer. Before we begin, I want to remind everyone that today's conference may contain forward-looking statements. Forward-looking statements include statements regarding the future, including expected revenue, operating margins, expenses and future business outlook. Actual results or trends could materially differ from those contemplated by those forward-looking statements. 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, please see the risk factors detailed in the company's annual report on Form 10-K and subsequent Form 10-Qs and Form 8-Ks filed with Securities and Exchange Commission. Please note also 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 measures is available in the most recent press release, as well as in our periodic filings with the SEC. Now, I'd like to turn the call over to JT Fitzgerald, CEO of Kingsway. JT, please proceed.
JT Fitzgerald: Thank you, John. Good afternoon, everybody, and welcome to the Kingsway earnings call for full year 2023. Thank you for joining us. I'd also like to quickly apologize. I know that the earnings release just dropped. We had some technical difficulties with our service provider and then a fairly large queue to get those things out. Apologize on the short timing here. So, let's get started. First let me start by saying that 2023 was a year of significant accomplishments. We delivered financial results that are largely in line with our expectations given the current market conditions. And we completed two great acquisitions, which is in line with our previously described internal target of two to three acquisitions per year. Also, during the year, we repurchased a substantial amount of our warrants in common stock, and we completed the repurchase of a substantial portion of our subordinated debt that resulted in a much more simplified and stronger balance sheet. All in all, 2023 was a great year here at Kingsway. Equally important, over the course of the year, we built a firm foundation to advance our strategy of growth through acquisitions and are really energized by the opportunities ahead of us. So we'll start with the financial results. Our first year or rather, our full year financial results include consolidated revenue of 103.2 million, up 11% from a year ago, and consolidated adjusted EBITDA of 9.1 million. Combined adjusted EBITDA for the extended warranty segment and the KSX segment was 14.1 million for the year. If we break this down, our extended warranty segment reported 68.2 million of revenue in 2023 compared to pro forma revenue of 74 million in 2022. Adjusted EBITDA for 2023 was 8.4 million compared to pro forma adjusted EBITDA of 10.7 the year prior. As a reminder, pro forma results exclude those of PWSC, which was sold in July of 2022. Throughout most of the year, as we discussed on the quarterly earnings calls, our Vehicle Service Agreement or VSA companies were impacted by an increase in average claims expense or severity and persistent macro level revenue headwinds that impact consumers primarily tighter credit conditions and high used car prices. In the fourth quarter, claims severity began to moderate as the rate of inflation related to parts and labor began to recede compared to earlier quarters, we've been able to reduce the impact of these headwinds through our tight focus on managing operating expenses. We've implemented price increases to reflect the higher claims environment and expect those to begin rolling through the book this year. IWS, Gemini and PWI have also been very active on the business development front. IWS added several new credit union partners during the year, and Gemini and PWI have executed a significant reboot of their sales teams and the corresponding goals and incentives, which are starting to yield results. At Trinity, maintenance support business revenues were negatively impacted by decreases in its equipment breakdown and maintenance support services due to both smaller, average job sizes and generally mild weather condition, which resulted in fewer service calls. Equipment warranty sales were negatively impacted by softer demand and long lead times on equipment availability and installations with some equipment lead times approaching as much as a year. As a reminder, our revenue from warranty equipment sales is not recognized until the underlying equipment is installed. Thankfully, these backlogs are starting to free up, and the Trinity team has also done a nice job adding new distribution partners over the past 12 months to offset these challenges, we expect positive momentum in 2024. In summary, for the extended warranty segment, while it's difficult to predict macroeconomic trends and the resulting impact to our business going forward, our companies remain focused on improving Salesforce (NYSE:CRM) production, strategically adjusting pricing and managing our costs. We have seen significant positive progress thus far in 2024 and expect a better year ahead. Switching now to our Search Xclerator or KSX segment, which reported revenue of $35 million in 2023 compared to revenue of $19.2 million in 2022. Adjusted EBITDA for 2023 was $5.7 million compared to $3.8 million in 2022. These increases were driven by the acquisitions of CSuite and SNS, which were completed in November 2022, as well as the acquisitions of SPI in September and DDI in October. Within the segment, Ravix performed better-than-expected from a profitability perspective, especially in Q4 as higher operating margins more than offset lower-than-expected revenues. Since our acquisition, Ravix has performed very well ahead of our original underwriting thesis. CSuite experienced fewer interim engagements and inconsistent search placements amidst the challenging private equity and M&A environment. The team has bolstered its pipeline and is advancing new business opportunities to reignite growth. While it is early in the year, we have begun to see the M&A environment thaw a bit and both Ravix and CSuite have added business development talent to accelerate revenue growth. For SNS, the per diem business is performing quite well, partially offsetting an industry-wide decline in the use of travel nurses, which are typically billable at a higher margin. To address the industry headwinds, the team recently added new recruiting talent and completed upgrades to its technology and operations to better support its clinician recruiting efforts. The team has done a nice job of building a tech-enabled platform to support its anticipated growth. Importantly, we believe long-term demand for nurse staffing will be strong with the projected persistent shortage of registered nurses over the next decade. Secular demand for per diem and travel nurses is expected to remain robust. Growth through acquisitions is central to our corporate strategy. We have developed and follow an underwriting framework that evaluates opportunities based on a pre-defined set of performance criteria that reinforce the thoughtful and disciplined allocation of capital and enable us to acquire high return cash flow generating operating companies at reasonable valuations. In short, we are targeting opportunities that deliver predictably high returns on tangible capital in large and growing end markets. In September, we acquired Systems Products International or SPI, a privately held vertical market software company. It was the fourth acquisition completed under our Search Xclerator and a great fit to our portfolio with contractual recurring revenue, low customer churn, strong margins and low capital demands. It operates in a growing industry and as we expected was immediately accretive upon consolidation into KSX. In October, we acquired Digital Diagnostics Imaging or DDI, a provider of fully-managed, outsourced, cardiac monitoring telemetry services. DDI is the industry standard bearer for outsourced cardiac monitoring in the long-term acute care and rehab hospital space and has established itself as a trusted partner to its customers through its focus on dependable, high-quality service. This business has a high level of recurring revenue with high customer retention and operates in a fast growing and underpenetrated market. DDI has demonstrated an opportunity to grow at a very fast clip with revenues growing in excess of 30% year over year in our first few months of ownership. The team at DDI is focused on building the internal infrastructure and processes to scale alongside this high level of demand, while ensuring continued excellent levels of service and care. We held separate conference calls to discuss each of the SPI and DDI acquisitions. If you miss the original calls, I encourage you to listen to the replays for a more in-depth discussion of those transactions. We are eager to expand our KSX business, but we are also committed to discipline decision making. The M&A environment is more favorable than it was 12 months ago, and we continue to believe this will translate into the completion of two to three deals over the next year. With the addition of Paul Vidal at the start of 2024, we currently have four fantastic operators and residents who are actively scouring the market and evaluating potential target opportunities. We remain encouraged by the quality of our pipeline and hold a high degree of confidence in our ORs. We continue to believe that the future is extremely bright for our search accelerator platform given the talent we have on our team, the quality of the opportunities they are pursuing, and the rigorous framework through which we evaluate acquisition candidates. Inclusive of our recent acquisitions, our trailing 12 month adjusted EBITDA run rate is 17 million to 18 million. This includes the extended warranty companies, the existing KSX companies, as well as pro forma results for SPI in DDI. As a reminder, this metric is intended to capture the 12 month earnings businesses of the company that we currently own and is not intended to be forward-looking guidance. Looking ahead, our priorities for 2024 and beyond remain the same. Operational excellence at our companies, while strategically deploying the excess cash flows, they generate to grow our portfolio of wonderful businesses. Our goal is to deliver sustainable long-term growth in cash flow from operations and provide an excellent return to our shareholders. We continue to target two to three new acquisitions per year that fit our clearly defined acquisition criteria and we'll generate annualized EBITDA in the range of $1 million to $3 million each. And as we build our acquisition engine and our cash flows, we believe we are building the flywheel to scale our acquisition pace even further. I'll now turn the call over to Kent for a review of our financials.
Kent Hansen: Thank you, JT. As a reminder, during the fourth quarter of 2022, we began executing a plan to sell one of our subsidiaries VA Lafayette, which owns a medical clinic whose sole tenant is the US Veterans Administration. As part of our strategic shift away from the lease real estate segment, VA Lafayette is included in discontinued operations and its assets and liabilities are reported as held for sale. The results of its operations are reported separately and not included in the results I'm about to discuss. Given that JT covered operating results, I would like to focus on holding company expenses, cash flows, and some balance sheet highlights. Our ongoing holding company expenses, which exclude our KSX search expenses consist mainly of employee costs of our 10 corporate employees and costs associated with being a publicly traded company. Total expense excluding interest from our last remaining TruPS with 7.7 million in 2023 compared to 7.3 million in 2022. However, 2023 includes the following items: $1 million of stock-based compensation expense, which is non-cash, $1.1 million of expense related to acquisitions and non-recurring items and about $600,000 in IBNR expense as our employee medical plan was self-insured in 2023. We have since moved to a fully insured plan in 2024 and at a lower total cost. We continually challenge our holding company expenses, which has resulted in significant savings over the past few years. We believe our holding company will be able to scale as our underlying businesses expand and grow. Our ongoing KSX search expenses consist of employee costs for our active searchers as well as the tools to support their searches. Total expense was $1.3 million in 2023 compared to about $600,000 in 2022. The increase was mainly due to the average number of OIRs in 2023 increasing over 2022. The addition of our VP of Business Development in 2023, and due to having a full year of the Strategic Advisory Board in 2023, as well as expanding it by one member this year. We would expect KSX search expenses to fluctuate as we hire new OIRs and existing OIRs close deals and move into the newly-acquired businesses. We view these expenses as a long-term investment that will fuel the growth of the entire Kingsway organization. Turning to our balance sheet and cash flows. At the end of 2023, we had cash and cash equivalents of $9.1 million compared to $64.2 million at the end of 2022. Cash used in operating activities from continuing operations was $26.8 million for the 12 months ended December 31, 2023, compared to $2.6 million a year ago. Our cash balance was impacted by the following significant items in 2023. First, the repurchase of a majority of our trust preferred debt for $56.5 million, which retired $96.7 million in principal and deferred interest that was done in the first quarter. $5 million payment of trust's deferred interest also in the first quarter. $2 million for the release of the Mendota escrow in Q1, $1.8 million of management fees paid in Q1 and Q2 related to the final sale of commercial real estate investments, $7.2 million paid for the repurchase of our warrants in common stock, principal debt payments of $9.1 million in 2023, excluding the stocks repurchase and then also we have $16.7 million of cash received from holders exercising warrens and $3.3 million from the sale of -- stock. We had total outstanding debt, which is comprised of bank loans and trust debt, of $44.4 million at the end of 2023, compared to $102.1 million at the end of 2022. Net debt decreased to $35.3 million as of December 31, 2023, compared to $37.9 million at the end of 2022. As we've mentioned before, in March 2023, the Board approved a one year securities repurchase program. Through February 29, 2024, we repurchased nearly $1.1 million of our warrants and repurchased just over 400,000 shares of our common stock under this plan. The repurchase of common stock is being held as treasury stock at cost and has been removed from our common shares outstanding. In summary, we continue to make progress reducing our net debt. We have shed most of the remaining non-core assets and we're able to repurchase a meaningful amount of our securities, all of which we believe will provide more flexibility in pursuing our strategic objectives. I'll now turn the call back over to John, the operator to open the line for questions. John?
Operator: [Operator Instructions] The first question comes from Adam Patinkin with David Capital.
Adam Patinkin: So let's see. I've got a few questions that I wanted to go into and granted I didn't have a ton of time to read through the results, but first I wanted to ask, just about the VA Lafayette process. I know that that asset has been for sale for a little bit and has been held as a under discontinued operations. Can you maybe provide an update on where things stand there?
Kent Hansen: We currently have the VA under an LOI, and so we're progressing through the process at this point.
Adam Patinkin: The second question I had is just I'm trying to understand the run rate EBITDA metric. So I guess my question on that is, when you do the calculation for run rate EBITDA for the operating businesses, are you taking the 12 months trailing operating profit? In other words, does the 17 18 million, is that essentially including the depressed warranty results from 2023? Or are you normalizing that to say, Hey, in a normal year, once we put through some of the different things that you mentioned on the call already to improve the profitability of that business, are you taking those into account that the improvements you're making? Or is it literally just, hey, here's the 12 months trailing, so you're including kind of a depressed warranty EBITDA number?
JT Fitzgerald: So run rate EBITDA, the way we define, it's probably a little bit of a misnomer, right? It is truly the last 12 months of earnings power of the businesses we currently own. So it is the trailing 12 month of all of the warranty businesses, plus the trailing 12 months of CSuite, Ravix and SNS. And then the last 12 months of operating performance of DDI and SPI as if we had owned them for the whole 12 months. The only normalizing adjustment Adam we make is to make an estimate of the increase in investment income we would receive on the warranty float. If we reinvest all of that at current market yields, that normalizing adjustment has compressed over time as we have rolled over a lot of those securities.
Adam Patinkin: If, I'm trying to think about it, and I think the way that most investors think about the companies that they invest in is thinking about what are the perspective cash flows of the business? In other words, what's the earnings power today and going forward? So if I'm going to think about what kind of a normalized earnings power is here. It actually should be a good bit higher than that number that you've provided just because I think the hope or expectation would be that the warranty business is going to recover from, kind of this depressed year for all the reasons you outlined. And then obviously each of your businesses, you're continuing to grow them and improve them. You just got SPI and DDI under your umbrella, et cetera. Is that a fair comment to make?
JT Fitzgerald: I think that's a very fair comment. I think that you heard in my prepared remarks that, we feel pretty good about where we stand today, certainly vis-a-vis with several months ago and there are nice things happening. We believe we have momentum and therefore I think that's a fair comment.
Adam Patinkin: Okay, great. I appreciate that and the clarity around that. Just one last question, which is in your press release, in your commentary, you noted that the transition has gone smoothly for SPI and DDI and you said some positive things about those businesses. Would you mind just providing a little extra color on SPI and DDI, how those transitions have gone with the OIRs taking over and how those deals have been performing so far, just a little bit more granularity so we can get a feel for those two kind of new businesses under the KSX umbrella?
Kent Hansen: Yes, great. I'll start with SPI. That is led by Drew Richard, really talented young guy. If you recall, this was a sort of a family-owned small software business. We really like the fundamentals of it. The business as is often the case in these small founder-led businesses probably had a lot of unlocked opportunity and particularly around organic growth. And so, obviously, first 100 days, Drew has to transition in, establish sort of the new regime and get to know all of the folks there and build rapport and then talk to customers and based on that sort of start to begin articulating a vision for the business and the strategy to achieve that vision. Drew's thesis is that, there is ample opportunity to grow this company organically through new customer acquisition in its existing market segment. We've got a wonderful new Head of Sales there that had only been on Board at the company for a couple of months prior to our closing and they've been building out their sales process sort of top of the funnel all the way down through and have had some early success on adding new customers onto the software platform. That will probably take some time, as they kind of starting from scratch to build this sales team and processes. But so far things are going really well and we're very pleased with the company we bought. Turning to DDI, again, Founder-led business. The Founder has largely transitioned out. Peter Dousman is our President there. This is sort of a unique situation where DDI has been growing pretty rapidly. As I mentioned in the prepared remarks, in our first couple of months of ownership in 2023, year-over-year revenues were up over 30%. And that's through inbound existing customers trying to expand their business in new rehab and LTAC hospitals and more recently some inbound interest from other hospital systems. Peter is very busy creating the internal processes, structure and team to be able to support really wonderful opportunity to grow, but do it in a very thoughtful way so that we most importantly ensure a very high-quality level of service and quality of care for the patients that we're monitoring. And so that's the dynamic he's balancing, but I think that he's got a really nice growth runway ahead of him.
JT Fitzgerald: But operator, before you take the next question, I just wanted to point out to people on the call that we do get a lot of questions about run rate, and we published an investor deck in January of this year. And in the appendix, we did add a slide giving a little bit more color on that. So, I encourage people to take a look at that and hopefully it will help digest what we're trying to communicate with that.
Operator: [Operator Instructions] It looks like we have no further questions in queue from the lines. I'd like to turn it back to James Carbonara for any questions he may have via email.
James Carbonara: Thank you, Operator. Hi, JT and Kent. We had a few come in on email. Many were already answered. I'll start with this one that, I know you touched on in the prepared remarks but we'll go ahead and ask anyway. It says, now that we are in March, are you still hoping to close two to three new acquisitions by the end of 2023?
JT Fitzgerald: Yeah, that's certainly the goal, right? -- out pounding the pavement every day. And we have a set of sort of what I would call leading measures that we think are both predictive, and influenceable by our guys, and predictive of the lag metric, which is getting these acquisitions done. And so, the activity is great we're been engaged in a lot of conversations with business owners, and so standing here today that's still certainly our hope. Again, these things, there is some serendipity to them, and so it's hard to make a hard target, but based on the level of activity we're seeing, that's definitely our hope.
James Carbonara: You did touch on this before with Adam, but it talks about the warranty business and how do you see it performing in 2024? If you just wanted to reiterate your, your outlook.
JT Fitzgerald: Look, 2023 was a tough year in the warranty businesses from a revenue standpoint and on the claim severity claim severity seems to have receded a bit. Certainly in terms of the inflation kind of year over year inflation, we're starting to see that moderate. And all of those businesses have done a really nice job in spite of some of the revenue headwinds, adding new distribution partners, new distribution channels increasing the activity with existing customers getting higher conversion and attachment rates. And so we feel pretty sanguine about how they're going to do this year without giving guidance obviously, but fairly optimistic.
James Carbonara: Another question was, if you buy businesses for five to seven times EBITDA, why should Kingsway trade at a higher multiple than those acquisition multiples?
JT Fitzgerald: That's one we get from time to time. First, I would say, I'm not going to say why something should or shouldn't. Probably not. My role to say what someone should or shouldn't do, but I can give you my perspective. And so I think first kind of unpack it from like why are these businesses available to these high-quality businesses available to acquire for 5x to 7x EBITDA. I would say, first, every one of these small companies probably has some amount of what I would call hair on them. Cash basis financials filed in QuickBooks, etcetera. In essentially every case you've got a founder, operator, leader who's looking to retire. And for that reason and these processes take a very long time and we are sourcing them more often than not proprietarily. And that's just really hard to do. And so as a result, there's a relatively small universe of buyers out there relative to the number of companies in that size range that because of the demographics we've discussed in the past are coming available for sale. And on the flip side, why should why I think that they should trade at higher multiple? If you think about what happens to those businesses when they come into Kingsway and onto the KSX platform. First, they get cleaned up, right? We put them through what we call the Kingsway Car Wash, right? So consistent, accrual-based, audited financials, internal control environments, risk mitigation, et cetera. And then we install really great leadership to unlock that latent growth that often is there, certainly what we're targeting. We shield those cash flows from taxes because of our NOL, our tax attributes. Each one of these small companies also has some risk, often there's customer concentration or something like that. I would say that, a portfolio of those businesses is probably less risky than buying one individually and it would be hard to reconstruct that portfolio. And then I think my final thought would be that, the highest multiples for companies get afforded to those that can reinvest their free cash flow at very high rates of return for a long time. I think that we are building that with the KSX platform. This demographic silver tsunami of opportunities to buy great businesses, combined with our pipeline of talent and the cash flow to redeploy, I think creates a really nice flywheel that will give us a very long and wide runway.
James Carbonara: Great. And then the last one, just on the software business. It's a two parter. It says, do you think you will be able to organically grow the software business? And do you have any concrete examples you are able to offer regarding growth?
Kent Hansen: Yes. I touched on this briefly with Adam. I do think more importantly, Drew thinks. He's the President of the company. We run a very de-centralized operation here. I fundamentally believe in the power of de-centralization both in the ability to attract and more importantly, retain really great people, and Drew, absolutely believes that he has the ability to grow that organically. This is mission critical software for its customers, and so the sales cycle is a little longer. But I think in terms of concrete examples, I think that some early successes with some new client ads that they're on-boarding now. And I'm very sanguine about his opportunity to grow that organically.
James Carbonara: I see no further questions coming in on the email, operator, I'll turn it back to you to close that the what -- I apologize JT and Kent, if you guys are still there, there is one question on the email. It does say, due to the shortage of nursing staff available -- how does the demand for nurses how does the demand for nurses that benefits SNS compare with the challenge SNS faces in hiring travel nurses?
JT Fitzgerald: I would say, the demand challenge in 2023 was sort of a post pandemic hangover -- during the pandemic hospital systems had to be very reliant on contingent labor, which is obviously a lot more expensive, and they pushed back very hard to eliminate contingent labor in those hospitals maybe overly so. And that impacted the, in the near term, the demand for travel nurses for SNS, they have contracts with several 70 or so hospitals in the state of California, and there is demand that is unmet. And so hiring recruiters to bring more nurses onto our platform to satisfy the, the requirements and criteria for those open positions is Charles's strategy to rebuild the travel business. In the meantime, the per diem business, which is harder to fill, is something that the company has done very effectively for a very long time. And he's done a nice job of continuing to grow that per diem business. So I don't know if that fully answers the question, but -
James Carbonara: Appreciate that and I'll Ron sent that in, so I'll reply to him and see if it, it does. There was one that kind of was hanging over from the email question that you may have answered with Adam, but it asks about the cardiac monitoring business. It says, how are you working towards managing the potential strong growth of the business?
JT Fitzgerald: I think it's just sort of crawl, walk, run there, right? New manager, new company, get in, understand your team, your people, your customers, their needs and desires. And we talk a lot about glass balls and rubber balls, and just make sure you don't drop any glass balls. And he is building and professionalize his background in as a nuclear engineer. And he is building all kinds of processes and protocols around safety. And so as he builds that foundation, I think that he will be able to lean into that growth that the demand is there. And it's about sort of being very deliberate about how quickly you want to onboard new hospital locations while still delivering a very high standard of care, given that patients' lives are being monitored. Peter's background -- he is going to do a great job.
James Carbonara: Perfect. Thank you so much, JT. And that does conclude the email questions. Operator, I'll turn it back to you to close out the call.
Operator: Thank you. Absolutely. This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.
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