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Operator: Good day and welcome to Kingsway Full Year 2022 Earnings Call. At this time, all participants have been placed in a listen-only mode and the floor will be open for question and comments after the presentation. With me on the call are J.T. Fitzgerald, Chief Executive Officer and Kent Hansen, Chief Financial Officer. Before we begin, I want to remind everyone that today’s conference call 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 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 risk factors detailed in the company’s 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 note too, 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 most recent press release, as well as in our periodic filings with the SEC. Now I’d like to turn the call over to J.T. Fitzgerald, CEO of Kingsway. J.T. please proceed.

J.T. Fitzgerald : Thank you, Paul. Good day everyone and welcome to Kingsway full year 2022 conference call. 2022 is a year of significant accomplishments and progress towards our strategic priorities. We delivered solid financial results dramatically simplified our capital structure and reallocating capital through the sale of certain assets and the acquisition of new operating businesses, all while making meaningful progress towards delivering our balance sheet. Our balance sheet looks quite different than it did even one quarter ago. But certainly compared to last year-end. Kingsway today is a much more streamlined company with operating businesses that align with our financial and strategic objectives. And our Kingsway search accelerator serves as a powerful engine for identifying additional acquisition opportunities that can provide an attractive return on invested capital.

2022 was a transformative year of moving our company from complex towards simple. As we look out on the coming year, our focus will be on transitioning from simplifying to a full focus on building for growth. We have a clean balance sheet, a cash flow engine in our existing operating companies, and a great strategy to grow the acquisition with our Kingsway search accelerator platform. Central to our strategy at Kingsway is our commitment to the strategic allocation of our capital to create long-term value for our shareholders. We aim to do this by monetizing nonstrategic passive investments, and redeploying this capital towards growing our portfolio of great cash flow positive operating companies. Earlier this year, we sold PWSC for 51.2 million in cash with net proceeds to Kingsway of 37.2 million.

We sold this asset at an attractive price and freed up capital to pursue a repurchase of our trust preferred debt and acquire other great businesses just prior to yearend, we completed the sale of our rail yard in Texas for a total sales price of 215.2 million. Importantly 170.7 million of the sales price was non-recourse mortgage debt that was assumed by the buyer and is no longer carried on our balance sheet. This one transaction dramatically simplified our balance sheet. Furthermore, we plan to use a portion of the 21.4 million in net proceeds from this transaction along with the cash generated from the PWSC sale to exercise our options to repurchase our trust preferred subordinated debt, which will deliver the balance sheet even further.

Kevin will describe in more detail the effect of these transactions a little later in the call. During the fourth quarter, we acquired C suite financial partners for $8.5 million. C suite is a national financial executive services firm providing fit financial management leadership to companies in every industry throughout the United States. It was the second acquisition completed under our Kingsway search accelerator program, and is being managed alongside Ravix as part of the KSX reportable segment. While it is still early, we are encouraged by the progress being made with the transition and can report that the business is performing to plan and as expected was accretive to EBITDA in the first two months post-acquisition. Also during the fourth quarter, we acquired secure nursing service, a staffing agency employing nursing and healthcare professionals for both short-term and long-term assignments in a variety of hospitals in Southern California.

This was the third acquisition under our accelerator program, and like C suite is off to a positive start under the Kingsway’s umbrella. The transition is progressing, and as expected, it has been accretive to adjusted EBITDA since the transaction closed in November. Each of these operating businesses fit our acquisition criteria. That is they each operate in fragmented and growing industries with nice secular tailwinds. They have recurring revenue business models, strong margins, and require minimal capital investment. Looking ahead, we’re striving to build upon our momentum by executing two to three new acquisitions per year that fit our clearly defined acquisition criteria, and will generate annualized adjusted EBITDA in the range of $1.5 million to $3 million each.

Another of our stated priorities is attracting, developing and retaining world class talent. We currently have three highly talented, early career professionals that are actively searching for acquisition targets that fit our defined set of criteria. We are encouraged by the pipeline of opportunities we are identifying. But as always, market factors will undoubtedly influence how and when deals get done. Above all else, though, we are committed to a disciplined approach to evaluating opportunities and a defined set of criteria that guides our investment decisions. In the first half of 2022, we created a strategic advisory board for our Kingsway search accelerator segment and welcome Tom Joyce and Will Thorndike as members of that board. Both Tom and Will have been instrumental in guiding our decisions, while providing valuable insights and expertise to our operators and residents, and KSX company CEOs. We are very grateful for their perspectives and engagement.

We believe the advisory board will also serve as a powerful factor in our future ability to attract talented entrepreneurs to the search accelerator platform. Turning now to our extended warranty business. As a whole, our extended warranty segment performed well and to our expectations for 2022. On a pro forma basis, excluding PWSC, which was sold during the year, revenues increased by 3% over last year. Pro forma adjusted EBITDA increased by 9%. Kent will discuss in further detail, but higher used car prices and increased financing costs are having a modest impact on industry wide demand. In spite of these macro conditions, our warranty businesses continue to execute and find opportunities to grow. Looking ahead, we expect to used car prices to normalize, particularly at the older end of the spectrum, where our warranty products are most relevant, which should serve as an offset to the impact of higher borrowing costs.

Also of note, our warranty businesses have roughly $45 million of investment float that until recently yielded very little investment income. As we roll over expiring maturities in our bond portfolio, we should begin to see nice returns from these investments. Now to our search accelerator segment. Ravix are only KSX business which we own for the full year completed a great first year with Timmy . Revenues grew by 16% versus last year, and adjusted EBITDA of 3.2 million was 23% higher than last year. We have great confidence in Timmy as he assumed leadership of the C suite acquisition alongside Ravix. Previously mentioned we acquired secure nursing service in mid-November, Charles Mokuolu, our second OIR in the search accelerator program has transitioned nicely into the day-to-day responsibilities as CEO.

The nursing industry is undergoing dramatic changes as a result of a chronic mismatch between healthcare demand and the supply of caregivers. While it is early, we believe that Charles has the wind at his back. We accomplished a great deal in 2022, we simplified our balance sheet grew EBITDA from our operating businesses and acquired two great companies. The Kingsway is much simpler, and we have a clear path for growth going forward. We believe, we have the talent, the capital, and the framework to increase profitability and generate meaningful returns on the investments we are making to deliver long-term value to our shareholders. I’ll now turn the call over to Kent for a review of our financial results. Kent?

Kent Hansen: Thank you, J.T. At Kingsway, we focus on net income and non-GAAP adjusted EBITDA. In the past we also focused on non-GAAP adjusted net income. However, given the continued simplification of our balance sheet and capital structure, through actions such as selling our rail yard asset and other non-core real estate assets, as well as the expected repurchase of a substantial portion of our outstanding trust preferred that later this month. We believe that a total company adjusted EBITDA metrics, rather than our foreign former metric of non-GAAP adjusted net income will give a better view of the company’s performance today and going forward. I would also like to point out that as a result of the sale of our railyard assets in our VA Clinic, business being classified as held for sale, as of December 31, 2022.

We concluded that our former real estate reportable segment met the criteria for discontinued operations. As such, the company’s financial statements have been updated to reflect the former real estate reportable segment in discontinued operations in 2022 and 2021. The exit of our real estate segment and the disposition of the final property in our net lease investment portfolio caused a lot of noise in the fourth quarter. First, while we recorded a gain on the disposal of the railyard asset of about 200,000, and received net cash proceeds of 21.4 million. We recorded a loss from discontinued operations of just under 16 million in the fourth quarter, mainly due to a management fee associated with the sale. Furthermore, while we originally reported income from continuing operations of 40.6 million for the nine months ended September 30, 2022, taking into consideration that the results of the real estate segment are moved into discontinued operations.

The updated income from continuing operations is 37.4 million for the nine months ended September 30, 2022. This was reported in the 8-K that we filed on January 5, 2023, and will be reflected in our future filings. Second, even though we closed on the sale the final net lease property in February 2023, which generated $8.3 million in net cash proceeds to us. We recorded an unrealized loss in the fourth quarter of 2.1 million in order to record the book value to the expected selling price. Having said all that, let’s get into the results from our continuing operations. Income from continuing operations was 30.1 million for 2022, compared to a loss from continuing operations of 2.7 million in 2021. Adjusted EBITDA was 10.2 million for 2022 a 3.1 million or 44% increase compared to adjusted EBITDA of 7.1 million in 2021.

Combined operating income for extended warranty and KSX was 13.4 million for 2022, compared to 13.1 million in the prior year. While combined pro forma adjusted EBITDA, which excludes the results of PWSC that we sold in July 2022 was 13.5 million in 2022 and 9.4 million for 2021 Now let’s break this down by reportable segment. In extended warranty, 2022 pro forma adjusted EBITDA was 9.7 million, or 14% of pro forma extended warranty revenue, compared to 8.9 million or 13.3% of pro forma segment revenue in 2021. IWS continues to perform well as its credit union distribution channel has muted the impacts caused by issues in the automotive supply chain. However, Geminus and PWI distributed through independent dealers that were more directly impacted by the disruptions in the automotive supply chain, especially earlier in 2022.

In the summer of 2022, we appointed Brian Cosgrove, who has been the President of Penn since early 2020 to oversee both Penn and PWI Brian has wasted no time bringing in positive changes at PWI especially in the go-to-market strategy. There’s also been refocusing Penn sales strategy. This combined with a sharp focus on cost discipline at both companies began to produce positive results late in 2022, which is carried forward into 2023 so far. In KSX adjusted EBITDA was 3.8 million, or 19.7% of segment revenue in 2022, compared to 600,000, or 16% of segment revenue in 2021. As a reminder, 2022 benefited from a full year results from Ravix, which was only three months in 2021, as it was acquired in October 2021. And partial quarter results from C suite and SNS in 2022, which were acquired in November.

Ravix delivered solid first year performance with revenue growth in the mid-teens, and a more than 20% increase in adjusted EBITDA. Although, we did see a slight decline in the fourth quarter revenue associated with the slowdown in capital markets-based projects. But we anticipate this to be short lived as Ravix pivots increasing its revenue from traditional staff augmentation and the expected benefit of referrals from C suite. At C suite and SNS partial period results are both reassuring and encouraging. The integrations are progressing nicely, and the entities are performing in line with our expectations at this early stage. Turning now to our balance sheet. At the end of 2022, we had cash and cash equivalents of 64.2 million, an increase of 54 million compared to the prior year-end.

This increase was largely driven by the proceeds from the sale PWSC, the CMC railyard assets and other non-strategic real estate holdings. Our total outstanding debt is comprised of bank loans, notes payable, and subordinated debt. Presentation of our total outstanding debt. Specifically, the notes payable is impacted by how we report discontinued operations. Any debt associated with our former real estate segment has been removed from the notes payable line on our balance sheet and is now reported in liabilities held for sale and liabilities of discontinued operations, along with other associated liabilities. Because of this, we reported total outstanding debt of 102.1 million at the end of 2022, compared with 94.1 million at the end of 2021.

Let me walk you through the details. Reported notes payable outstanding was zero at the end of 2022, compared to 6.4 million at the end of 2021. However, as of December 31, 2022, there was 16.1 million of non-recourse debt recorded in liabilities held for sale associated with our VA Clinic. At the end of 2021, there was 70 million non recourse debt recorded in liabilities held for sale and 181.6 million recorded in liabilities of discontinued operations. When we sold the railyard assets, we eliminated the 181.6 million of debt that was reported at the end of 2021. And when we completed the sale of the Flower’s portfolio in 2022, we eliminated another 6.4 million of debt that was reported at the end of 2021. When we sell the VA Clinic, which is being actively marketed, the 16.1 million of non-recourse debt would be eliminated.

Our other two categories of debt, bank loans and subordinated debt were not impacted by how we report discontinued operations. Bank loans outstanding at the end of the year were 34.3 million, compared with 26.7 million as of December 31, 2021. The increase is due to loans associated with our acquisitions of C suite, and SNS of 6 million and 6.5 million respectively. In addition to our normal debt service payments, we made a principal payment of 1.7 million in March of 2022 from the excess cash flows generated from the extended warranty companies anticipate making an additional principal payment in March 2023 of 1.1 million. Due to our leverage ratio at the end of 2022. We are entitled to retain a higher percent of the excess cash flow than in prior year.

Our subordinated debt was 67.8 million as of December 31, 2022, compared with 61 million as of the end of 2021. This is our TruPs debt that is recorded at fair value, and for which we have options to repurchase 83% of the principal and deferred interest. On March 2, 2023, we announced our intent to repurchase 100% of the Trumps that we have under option no later than March 15, 2023 and we’ve begun the process with the holders of the debt. This would require a cash payment of 56.5 million, which is net of the 2.3 million we paid to enter into these options. And we would retire at 75.5 million of principal and 21.2 million of deferred interest, both valued as of December 31, 2022. That works out to paying $0.608, so $0.608 on the dollar, which will go down once the deferred interest from 2023 is accounted for and is greater than a 20% IRR in today’s interest rate environment.

Given our intent to repurchase the TruPs debt, we would be required to pay the outstanding deferred interest in the final TruPs that is not under agreement to repurchase. This would require us to pay an estimated 4.7 million also no later than March 15, 2023. Once the TruPs debt has repurchased, our pro forma subordinated debt as of December 31 2022 would be 11.4 million. And our pro forma deferred interest payable would be zero compared to actual deferred interest of 25.5 million. I know that’s a lot to file. So let me recap it for you on a pro forma basis assuming that TruPs repurchase. Total pro forma outstanding debt as of December 31, 2022 would be 45.7 million, which is bank loans of 34.3 million and subordinated debt of 11.4 million.

Included in liabilities held for sale or the nonrecourse VA clinic notes payable of 16.1 million. This will all be reflected in our March 31, 2023 financial statements. Finally, because we will be coming current on the TruPs debt, we are required to offer to redeem the outstanding Class A preferred shares. As such on March 1, 2023, we gave formal notice to the holders of the Class A shares of our intent to redeem no later than March 15, 2023. The shares remain convertible at the option of the holder and we have received formal responses from most holders of their intent to convert. As a reminder, a conversion requires no cash outlay from the company. In summary, 2022 was a year of solid operating performance, significant cleanup and delevering that was punctuated by two nice acquisitions in the fourth quarter.

We enter 2023 with the financial flexibility to continue making value accretive investments and to create long-term value for our shareholders. With that, I will turn the call back to the operator to open the call for questions. Paul?

Operator: We did have a question come from Adam Patinkin from David Capital.

Adam Patinkin : Well, first, I just want to say congratulations, what a remarkable job. You guys have done cleaning up this balance sheet as well as cleaning up the capital structure and simplifying the business. I think that I and many other shareholders are super appreciative of all that you guys have done to make what was a very complex story, as you guys say, much simpler. So first, I just wanted to say thank you, and congratulations on all the progress.

J.T. Fitzgerald: Thank you.

Adam Patinkin : I have three questions. The first one is just a last question on the simplification. So my understanding is that you have the VA Clinic to sell, the Minnesota real estate to sell and the insurance subsidiary to exit. And I’m wondering if you can give an update on expected timelines or outcomes of each of those pieces, as you kind of continue the work to simplify the balance sheet.

Kent Hansen: We’ll take those in reverse order. So I think the insurance subsidy you’re referring to is a Miko which we had put in runoff several years ago, we had applied to surrender our licenses with the Florida regulator late last year. And actually, earlier this week, we received final approval. So we’re no longer in the regulated insurance industry. The Minnesota property was part of our net lease portfolio. And as I think I said in my opening comments that we did sell that in February 2023, which resulted in proceeds to Kingsway of about 8.3 million. So it was wonderful to have that close as well. And then I think the last one was the VA Clinic, we started actually marketing that at the end of December, it’s sort of with a broker right now, we continue to get interested in it. And it’s really sort of been probably just really on the MLS or the commercial equivalent of that for three or four weeks now and we’re getting some good indications of interest.

Adam Patinkin : And so do you have any expectation of timing to exit that? Or is it just whenever the practice plays out? You’ll be out of the real estate industry.

J.T. Fitzgerald: Hard to predict when we’ll get an offer that we would be willing to accept, but we’re actively marketing it. And our goal would be to get that done this year for sure.

Adam Patinkin : So then, with that kind of out of the way, I wanted to pivot to just two questions on growth. So I know it was part of your opening script J.T. to talk about how maybe 2022 was about going from complex to simple and now it’s 2023 and beyond is about building for growth, I think was the phrase that you use. Can you maybe put a little bit more meat on that comment. Can you maybe talk through, what are your strategies to build and to grow the existing companies that you own? So the warranty business, SNS, Ravix and C suite, what are your strategies in each of these operating businesses that give you kind of confidence that EBITDA those businesses can grow at an attractive rate over time? I just love to hear some color on your strategies with each one.

J.T. Fitzgerald: Yeah, look, first and foremost, yes, sure, happy to do it. Obviously, predicting organic growth and an uncertain macroeconomic environment is always tough, right. But what I will come back to is that we have great managers in place at these businesses who have demonstrated an ability to do that, historically, continue to grow. And so we would expect those trends to continue, and are properly motivated through their incentive compensation structure to grow EBITDA. And so I don’t come up with their strategies for them, they present their strategies to me. And so if you sort of break this down company by company IWS distributes exclusively through the credit union channel, the credit union channel, in and by itself is growing visa vie to traditional commercial banks.

And the strategy there and what they’ve been doing for a long time from a business development perspective is to continue to grow the number of credit union relationships that they have, where their product is distributed on an exclusive basis. And so they are actively adding new credit union distribution partners to the company. Credit unions are also sort of uniquely position visa vie other traditional financing sources in the current environment, they’re a lower cost lender than other alternatives. And so we think that there are some things about the credit union channel in general that insulate them from a higher interest rate environment for instance. PWI and Geminus and I’ll just put those two together. We brought Brian in February of 2020, right before the pandemic.

And so, he had an interesting first 12 months running that business. But if you recall, some of you may recall that, Brian, before we hired him, had been the president at PWI. And had grown that business pretty significantly, while he ran it. And so bringing back Brian to run both Penn and PWI is sort of like bringing back the old all-star to reinvigorate that company and get it growing. Again, he’s done it once we have faith that he’ll do it again. And he’s got his own very specific strategy for activating their existing dealer network to get them to sell more warranty contracts. So like PWI, for instance, has 1000s of dealers that they’re actively under sort of relationship with that don’t sell a lot of our product. And so he is actively out reengaging with those dealers that are in our database and in our system to get them moving forward.

So, if you look at what he was able to do at Penn last year, I think that you can sort of expect that he would have similar results, getting PWI moving forward. And then and then at Trinity, Peter to Kaos, sort of two different lines of business within Trinity. We’ve got the T&A business, which is essentially dispatching of mechanical service providers to retailer customers. And then we have the more attractive what we call ESA side of the business extended service agreement, which is the extent of warranties. And the ESA side of the business is really a grower, it has been growing at mid to high-teens, internal growth rates every year. And as Peter builds scale, gets more brand identity out in the market, he’s able to penetrate wholesaler, distributor, contractor, installer channels, and he’s got a very defined strategy to do all of those sites.

So it’s not my strategy, it’s their strategy, but I’m very comfortable with what they’ve laid out. And they have great plans and our incentive to do that. If we turn to Ravix, Timmy did a great job stepping in and transitioning in that business grew greater than 15%, 16% year-over-year in his first year running it. I think he’s got a really nice tail in there. Within accounting profession broadly, there’s a shift underway. One increasing complexity of accounting regulations and standards mean more work. And then on the other side, on the sort of supply side, there’s a kind of like nursing, there’s a structural shortage of accountants. And then if you combine that with the proliferation of cloud-based accounting systems, the ability to do fractional accounting work for companies is more and more attractive.

They can use it in a fractional way, scale to their needs. And it’s a cost-effective solution. So we feel like the tail end. So there’s a nice sort of secular tailwind in that industry. And Timmy is out, working on sort of business development, including hiring people to go out and actively grow. A lot business was maybe a little bit more of a lifestyle business. And now we’re leaning into the growth. And then and that it would be bolstered by the C suite acquisition, and the sort of cross selling opportunities that those two companies provide to each other. SNS is probably too early to say. I don’t want to make any huge growth projections there, except to say that we believe very strongly in the long-term tailwinds in the nursing industry.

There’s, obviously the demographics are driving strong demand for as far as we can see. And it’s no secret that there’s a sort of chronic shortage of nurses. Some of that’s burnout, some of its demographics. And the remaining nurses are younger and prefer flexibility. And I’ve gravitated towards the travel and per diem nurse staffing model, so we feel pretty good about it.

Adam Patinkin : So maybe to just move to my last question, which is I think you’ve talked about your strategies for growing your existing businesses. Can you talk about on the acquisition side, I think that you mentioned in your introduction, that you’re hoping to make maybe two to three acquisitions a year. And each of those acquisitions to be between 1.5 million to 3 million of EBITDA on average. Can you maybe talk about, I know so much of it is just market dependent, whether you can find the right businesses to buy as businesses to buy in the right partners and at the right prices, but can you maybe talk about, do you feel comfortable that having three operators in residence is enough? Is that a number that you could grow? How do you feel about the acquisition targets that are out there, I just love to understand a little bit more about how you view the growth lens from the M&A side through your searchers?

J.T. Fitzgerald: Yeah, so we have right now three searchers on the platform out in the market every day looking for opportunities, right both on the sort of direct source model where they’re reaching out directly to business owners. And then through intermediary network brokers and investment bankers, we have a database of 4000 or 5000 investment bankers that they’re connecting with, periodically to make sure that we’re seeing all the deal flow. But like you said, our ability to do transactions, the way that we want to do them will always be a little bit serendipitous. Right. And so we think that with three and I think I’ll get to the, how many searchers at any given time, but three or four searchers that two to three acquisitions per year is certainly a reasonable expectation.

It’s not a goal. It’s not a quota, but it is a sort of an expectation, informed by our history in search, right. And so if you look at search from inception, sort of typical kind of mean time to close for a searcher from the time they start searching until they close an acquisition is around 16 months. And so if you have, if you just kind of do the math, you would expect it, if you had four searchers actively searching, they might be able to do two acquisitions, two and a half acquisitions a year kind of thing. I think we can bend the curve in our favor in that regard, because of our platform, and speed up that sort of up the curve process. But that would be where that sort of two to three acquisitions a year expectation comes from. I say expectation, but it’s sort of what we would think we could be able to do with the number of oars we have on the platform, but always add them I will come back to you know our discipline in investing, right.

We’ve gotten close on lots of deals, but they just you know, and the difference between yes and no can be very small, but we have to be disciplined and hold to our hold to our criteria and our hurdle rates.

Operator: And there were no other dialing questions at this time. I would now like to hand the call to James Carbonara for some emails, questions.

James Carbonara : Thank you. Yes, 18 counts a few payments on email. I’ll go through them. Now hopefully, they’re not duplicative of what we just heard. But if they are certainly feel free to note that. The first one that came in as you close on the nursing business and C suite and late 2022, are they meeting your expectations? Would you be willing to buy them at the same price you paid? And why?

J.T. Fitzgerald: Yeah, I think we said in the call, you know, they’re certainly meeting our early expectations, right there off to a good start and obviously transition is always challenging, right, but you bring them into the family. And Charles has done a great job. Stepping into the CEO role moved out to LA and is getting up to speed in a new industry for him right and transitioning out the former owner operator. Would we want to buy them again? Absolutely. Right. I think that they’re very attractive businesses. And as I described, in my answer to Adam, in industries that have what we believe, like really nice secular long-term, growth trends based on imbalanced between supply and demand. And so I definitely think, use whatever reference you want or wind at our back, swimming downstream, whatever it is, I think that we’re well positioned.

We buy great businesses with opportunities to grow and professionalize. And great operators there that have really aligned incentives. And so yes, we would absolutely do those acquisitions again.

James Carbonara: And then the next one relates to the last question is, how many searchers would you like to have available as we move forward? And are potential searchers still interested in working at Kingsway?

J.T. Fitzgerald: Like I said, I think it really is a function of how many we that we think that we can do a great job of supporting and helping be successful in their entrepreneurial endeavor. I think given our lean holding company staff and our desire to stay lean, we can certainly support four or five searchers at any given time, maybe more. But the goal would be, rather than having more and more searchers, would be to accelerate the cycle time from coming on board to getting an acquisition done. And I think there are things that we can do to speed up that process. And so that’s what we’re working on. And are they still attracted? I mean, I think so we talked to a lot of candidates, and we’ve got several that we’re currently talking to.

And I think that as this gets momentum, it has a really nice feedback loop. And so not only do they see the success, for instance, the sale of PWSC with Tyler, that was a great demonstration of what can happen in the model. They see the success of Timmy and now Charles, buying businesses and stepping into the CEO role. And then so the great feedback loop there, and then also with the expanding networks of our OIRs and CEOs, and the people in their spheres, who learn about it through them and come to us, as opposed to us reaching out to them. And then I would just sort of add to that the advisory board and the quality and talent of the two people that have chosen to in agreed to help us out with this. I think is just a really incredible asset.

And people are really attracted to the idea that they will get sort of operational coaching from Tom Joyce, and capital allocation coaching from Will Thorndike. So, yes, I think absolutely not only is it still attractive, I think it’s getting more attractive every day.

James Carbonara: There’s two more remaining from the email. The first one is, is the rise in interest rates having any impact on the pricing of deals you are now reviewing about the availability of credit?

J.T. Fitzgerald: The lower end of the lower middle market, the deal multiples and where we play probably not impacted as much by sort of availability of credit. Obviously, cost of capital will change valuations a bit. And maybe there’s a little bit of a sorting out as sellers have to readjust their expectations at the business, their business may not be worth the same multiple of cash flow as they thought it was. But I think anything that I could say to that would be just sort of based on my own limited data set. But I would say not really but you have to expect that it might a little. And then in terms of the availability of capital. I haven’t seen that. Obviously, the cost of capital sort of debt capital is higher. But it hasn’t impacted the availability of capital, especially not the types of lending structures that we’re using, which is traditional kind of straight amortizing bank that at low leverage ratios.

James Carbonara : Great. And then finally, can you talk about the costs and advantages of obtaining the $10 million loan from CIBC?

John Fitzgerald: Yeah, so the cost, there’s a small commitment fee to have that there. I think —

James Carbonara : We paid $25,000 at close, and then any future draw would be 75 basis points of that draw? Yeah, so it’s a small cost, I think to have some nice drop dry powder.

John Fitzgerald: Yeah. And so the benefit of that is, you know, we’re going to use up a lot of our cash that we have at the holding company here pretty shortly to repurchase our trust preferred current on the first interest on the sixth tranche, and potentially redeem some of the non-converting preferred. We thought it would be prudent to have a standby facility to provide us additional dry powder if we had an acquisition to do in the not-too-distant future.

James Carbonara : Great. So that was the last email question. I’ll pass it back to you JT for any closing comments.

J.T. Fitzgerald: Okay. Well, thank you everyone for your participation. This concludes our 2022 earnings call. Thank you.

Operator: Thank you. This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.