Ballantyne Strong, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Ballantyne Strong Inc. Second Quarter 2022 Earnings Conference Call. All participants are in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please also note this event is being recorded. And now I'd like to turn the call over to John Nesbitt of IMS Investor Relations. Thank you. You may begin.

Good afternoon and welcome to Ballantyne Strong's earnings conference call for the second quarter ended June 30th, 2022. On the call today from Ballantyne Strong are Kyle Sermonera, Chairman of the Board, Mark Robertson, Chief Executive Officer, and Todd Major, Chief Financial Officer. There's also a slide presentation that management we'll be referencing that is available in the investor relations section of the Valentine Strong website. Before we begin, I'd like to remind everyone that some statements made on this call will be forward-looking in nature. These statements are based on management's current view and expectations as of today. The company is under no obligation and expressly disclaims any obligation to update forward-looking statements except as required by law. These statements are also subject to risks and uncertainties and may cause actual results to differ materially from those described in today's call. Risks and uncertainties are also described in the company's SEC filings. Today's presentation and discussion also contain references to non-GAAP financial measures. The definition of non-GAAP terms and reconciliations to GAAP measures are available in the earnings release posted on the Investor Relations section of the company's website. Our non-GAAP measures may not be comparable to those used by other companies and encourage you to review and understand all of our financial reporting before making any investment decisions. At this time, I'd like to turn the call over to Mark Robertson.

Go ahead, Mark. Thanks, John. Good afternoon, and thanks for joining today. Before we jump into the details for the quarter, we'll just step back and throw out all context starting on slides three and four of the PowerPoint. Now, Ballantyne is a holding company. We have operating businesses and real estate holdings primarily in our strong entertainment group. And our equity holding portfolio includes FG Financial, Green First Forest Products, and Firefly. Overall, we've seen a strong post-COVID rebound, and our business has really been performing well, with consolidated revenues increasing by 50% to $9.1 million for the quarter and 76% to just over $19 million on a year-to-date basis. This increase in our revenues has been directly correlated to the recovery in the entertainment industry, particularly in the cinema space, with increase in both the quality and content of studio content driving record-breaking box office results for our customers. On the slide deck, if you refer to slides 3 through 10, we'll walk through the entertainment business. Our strong entertainment operating business is the largest supplier of cinema screens in North America. We're a market leader in managed services, and we recently launched a new content division. With the macro climate becoming more favorable and the backlog of movies coming to the cinema increasing, we're seeing our cinema customers starting to do two very important things. Number one, they're relying more heavily on outsourced technical support and services rather than hire and build up staffing internally. And two, they're beginning to accelerate capital investments, particularly as it relates to the upgrade cycle from xenon projection to laser. Cinemark, for example, started a 10-year project to upgrade all of their cinemas to laser prior to COVID, and we're now seeing them restart those projects. AMC announced just this spring that they would be starting the first phase of their laser upgrade this summer. And without getting too deep into the technical aspects of laser versus xenon, what we're seeing is as the industry recovery continues, we're seeing exhibitors starting to deploy capital on upgrades like laser projection, as well as other investments to drive the customer experience. The increase in laser projection was a positive catalyst for both our screen business and for our service and distribution revenues, and we expect the laser upgrade cycle to be a positive industry catalyst for at least the next several years. As we see demand for projection and audio equipment increasing, We're also seeing increased service installation demand, and our recurring monthly revenue maintenance contracts are largely back to pre-COVID levels now, with project and installation revenues starting to pick up as well. Our Eclipse immersive screens were a significant contributor to the first half results, primarily from the military projects. Eclipse was a larger contributor in the first quarter for our screen business, And we started to see the product mix shift actually more heavily towards cinema in the second quarter, which we believe is a good sign for the second half of the year as exhibitors prepare for the large slate of releases, including the next installment of Avatar, and increase their investments in projector and screen upgrades. Strong Studios, which adds content and opens up new growth opportunities, is a new line of business for the entertainment group. We acquired a portfolio of projects and started production on one of those projects, Safe Haven, this summer. We're working on several other projects, both from the acquired portfolio as well as adding other new projects. Our overall business model and the goal with Strong Studios is to utilize co-production and distribution pre-sales as well as refundable tax credits for production funding, which minimizes our capital at risk as we build out the content library. creating both near-term revenue as well as longer-term value. We're partnering with other production companies and production services companies on these early projects, which minimizes our capital at risk and increases our ability to execute and be nimble with minimal fixed staffing. Over time, we expect this business to evolve into a meaningful revenue producer for the entertainment group. Turning to our equity holdings on slides 11 through 14, We increased our stake in FG Financial this quarter and hold 2.9 million shares, or approximately 31% of the common shares outstanding. FG Financial has continued to invest in expanding its reinsurance and its SPAC platforms. So far this year, FGF has completed two SPAC IPOs, FG Merger Corp and FG Acquisition Corp, and are currently evaluating acquisition targets. FGF's reinsurance business is patiently deploying capital and entered into two new contracts this year. FGF also holds equity stakes in Hagerty and OpFi as a result of completed SPAC transactions from 2021. We hold $13 million in preferred equity in Firefly, which is a private VC-backed company, and we acquired those shares through our sale of Strong Outdoor last year. Firefly has continued to grow and innovate post-COVID, They announced a new program with Hyundai just recently where Firefly will be able to enroll professional drivers and fleet operators at the point of purchase, and drivers can earn advertising revenues which helps to subsidize their purchase of the vehicle. In July, Firefly also announced their entry into the European market with the acquisition of Ubiquitous, which is the UK's leading taxi advertising company. Ubiquitous has been a leader in the outdoor advertising for over 40 years. And they've been focused on using technology and data analytics, which improves their advertising effectiveness and fits right into the Firefly visual advertising and digital transformation strategy. We hold 15.3 million shares in GreenFirst, which is traded on the Toronto Exchange. Following the transaction last summer, where GreenFirst acquired the lumber assets and saw mills from Rainier, it's now a leading lumber producer in Canada. and has the capacity to produce over 9 million board feet annually in central Canada. This quarter, another large player in the North American lumber market, Inter4, announced today it acquired a property 16% stake in Green First. We believe Green First is well positioned, both in the current cycle as well as for the longer term. Overall, the entertainment industry reopening is accelerating. The backlog of movies coming to the cinema is unprecedented, and our revenues have rebounded as a result. We're entering a major capital upgrade cycle that will drive spending over the next five to ten years, and we're well-positioned to gain share domestically and internationally looking ahead on both the screen as well as the services side of the business. And the upside on Eclipse and the additional strong studios further increases our growth opportunities. With regard to the planned spinoff of the entertainment group, a registration statement on Form S-1 is on file with SEC. In terms of timing of the IPO, for the group, we're evaluating market conditions as to the appropriate timing, and we'll continue to do so on an ongoing basis. And I'll turn it over to Todd.

Thanks, Mark, and good afternoon, everyone. We continue to see meaningful increases in revenue when comparing to the prior year. The year-over-year increase was more than 50%, with revenues from bulk to sale of products and services higher than the prior year. While gross margin dollars were relatively flat compared to the prior year, margin as a percentage of revenue was down. However, it is important to point out that prior year gross margin included a benefit of nearly $850,000 related to employee retention credits. As presented in the lower table, after adjusting for the employee retention credits, Recognized in the prior year, gross margin dollars were up nearly 50%, and gross margin as a percentage of revenue was flat year over year. Some shifts in product mix, including higher sales of projection and audio equipment, are pulling down in gross margin percentage a bit. And we're also seeing some inflationary pressure on raw materials, labor, packaging, and freight. Employee retention credits recognized in the prior year also had a $450,000 impact on the year-over-year comparison of SG&A. The increase can primarily be contributed to two other items. Number one, we continue to make investments in our sales and marketing teams and are seeing an increase in the corresponding trade show and marketing efforts as the activity across the industry continues to ramp upward. And number two, The second quarter of 2022 was our first full quarter operating Strong Studios and the costs associated with that part of the business rolling up to the SG&A line. Excluding the total $1.3 million in employee retention credits reported in the prior year, operating loss improved over 30% and Strong Entertainment generated its fifth consecutive quarter of positive operating income. Moving down the P&L a bit, as the broader markets decline during the first half of the year, we experience some contraction in the fair value of our green-first equity holding, which we mark to market every quarter. Shifting over to the balance sheet now, cash flow used in operations and decreases in working capital during the first half of the year, combined with the cash payment in connection with the Strong Studios acquisition of projects from Chicken Soup, as well as the down payment for the purchase of the digital ignition building, were partially offset by a $2.3 million prepayment on a note receivable. In addition, we deployed additional capital to our FGS equity holding by participating in the common stock offering late in the second quarter. We believe we continue to maintain adequate liquidity. That wraps up the financial review, and I'll now turn the call over to our chairman, Kyle Sermonara, for some closing remarks before we take questions.

Hey, everyone. This is Kyle. I'm going to tee us up to the Q&A section. But before we get to this, my hope is that if you have a question about the company, you'll ask it and we'll do our best to answer your question. Before we open it up, I know many of you are either current or prospective shareholders. And while I'm the chairman of the company, I'm also its largest shareholder. And there's no doubt I want to see the stock price do well. In fact, just last quarter, I added to our position in the company. And if it remains at these depressed levels, I anticipate that we will continue to look for opportunities during open windows to increase our position in the company. A few things that are important to me. We're currently listed on the New York Stock Exchange American, and this costs some additional money. It also gives us the opportunity to consider doing transactions that we wouldn't otherwise be able to do if we were a private company. So every quarter, we weigh the costs and benefits of listing. We currently believe there's a benefit of being listed, and that can change in the future, but we're currently in favor of continuing down the path as a public company. We have a number of holdings that can grow and prosper with a focused strategy. Green First is the best example of this. It was only a few years ago, a little over two years ago, that people were struggling with our investment in tiny little Itasca Capital. I think our team demonstrated that we can take a little $5 million market cap company and turn it into something special. Green First is one example, but there are many more. If you go back several years ago, we started a company inside of Valentine Strong called Strong Outdoors. It was a workout of some screens that we inherited from a customer that defaulted to our legacy convergent digital signage business. With that, we turned lemons into lemonade and created a new company. And, you know, over a number of years, we created value for our shareholders that was some pain and suffering. But the net result was that we sold the business to Firefly in exchange for equity in their business. And if you had told me that Firefly would grow to be the company it is today, I would have probably put reasonably odds on it back then, but it's amazing to watch what it's become, and we're really excited to see what Firefly is going to turn into as it continues to grow and prosper down the road. So we're planting seeds like Green First and Firefly today inside of Valentine Strong. You've heard about the Strong Studios business, which is a new seed that we've planted, FG Financial, and Digital Ignition. We have other seeds that will continue to plant and hopefully harvest someday down the road. But the one thing I can promise you is that we're all working very hard to create value for shareholders, and that we want nothing more than to create long-term value. We take this into account in every decision we make, and hopefully that will, you know, not every decision is going to work out perfectly, but we hope that many of them will turn out to be like rain first and fire first. So with that, I will open it up to questions and fire away.

We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.

Our first question will come from Edward Riley with EF Hutton.

You may now go ahead.

Hey, guys. Thanks for taking my question. With regard to the upgrade cycle, I was wondering how frequently screens typically need to be replaced.

Hey, Ed. Yeah, thanks for calling. It's a good question. The answer, like most things, is it varies greatly depending on the exhibitor. As a general rule, we would kind of tell you that screens generally should be replaced after five to seven years. After that period of time, you are going to see some degradation in the optical quality of the screen coatings. And a lot of it can also be accelerated depending on temperature conditions and other environmental factors within each cinema. So it does vary. But a good rule of thumb is that five to seven year mark. Certainly there are exhibitors who, like folks, do lots of things, stretch them out longer than that. But that's the number that I would use as a kind of a standard rule of thumb.

Got it. I was wondering, given AMC's recent release, I was wondering about the cadence of the laser projection upgrade cycle. I was wondering if you expect more business to come from this later on in the year.

Yeah, we do, actually. We're starting to see that already. We already have some projects underway, both with AMC as well as with other exhibitors. We believe this is going to be an upgrade cycle that runs over multiple years. Cinemark has announced pre-COVID that they were actually contractually committed to upgrade all of their cinemas over a 10-year period. They started before COVID, they hit pause during COVID, and they started re-accelerating that program on their side. AMC made their announcement back, I believe it was in March, and they're already starting with their first kind of wave of upgrades. This summer, we're seeing some of those go in already and expect that to wrap up in the back half of the year and really continue probably over the next three, four, five years.

Gotcha. Do you expect the majority of revenue to come from this be service revenue and should we maybe expect lower margins going forward if that's the case?

I'm sorry, can you repeat the first part of that question?

Yeah, I was wondering basically about the revenue breakdown with the partnership with Semionic and if it's mostly services revenue, should we maybe expect lower margins going forward?

You know, I would expect, you know, our service business, you know, carries reasonable margins. You know, we have higher margins in our screen business where we manufacture the product. So product mix does play a part in our margins. You know, I would actually expect to see our margins, you know, increase, you know, as cinema screen deployments increase, that becomes a larger portion of our product mix going forward. You know, that would have a positive effect. impact on margins, you know, service revenue, and it depends on the flavor of service. You know, our, our, our partnership with Cineonic, um, you know, basically we're the preferred provider or preferred supplier of services for them, for their customers. Um, that's not a low margin business. So that really doesn't have a negative impact on our margins at all.

Okay, great. Thanks for clearing that up. And then, um, Any update on the Belgium and China operations?

Yeah, in Belgium, that's a new initiative that we just announced back in April and May. I believe it was in March, actually, that we made the announcement. We're cranking that up right now. We're in process and expect to be shipping out of that facility in the third quarter. We may have already actually shipped some out already. I wouldn't want to say that, but certainly by the end of the third quarter, we'll have activity out of that facility. It'll be a little bit of a slower start. We're getting our first batch of inventory there where we can quick ship to customers in the market. And just to back up kind of the purpose of that, what we're doing and why we're doing it is probably important. Europe represents a very large cinema market. There's approximately 40,000 to 44,000 screens in the North American market. There's approximately the same amount of screens in the European market. It's a little more fragmented market, but very similar to the U.S. and North American markets in terms of size. We have a very large market share in the U.S. and Canada and North America. We have an extremely small market share in Europe. And part of the reason that we have such a small market share in Europe is we've never really had a local presence in the continent. And when you're shipping screens from our plant in Canada into the U.S. and Canada, that's pretty easy. When you're shipping screens across the water over to Europe and also to China, it becomes a little more of a cost issue. But even more importantly, it becomes a service issue in terms of being able to quickly supply customers with screens. So that's really held us back in those markets. And so the objective of both the China and the Belgium finishing plant are to provide, to be able to provide quick turnaround, quick ship products to customers there so that we can start to increase our share. So as I said, in Europe, we expect that's up and running. We expect to start seeing shipments out of there in the second half in Q3. China is also up and running. It's a little slower there, primarily because of the continued restrictions in China on entry into the country as well as other things. So both of those are operational and would expect to see increased volume out of those going forward, particularly as we get into 2023.

Gotcha. And then final one for me, because you brought up a good point, is the exclusive relationship with AMC and Cinemark. Is that for North America only or is that worldwide?

That's primarily North America. Cinemark is really primarily North America. AMC is a North American exclusive.

Okay. Got it. Thanks, guys. Appreciate it. All right. Thanks, Ed.

Again, if you have a question, please press star then one. Our next question will come from Brett Reese with Janie Montgomery Scott. You may now go ahead.

Hi, gentlemen. Hey, how you doing?

Good. How are you?

Good, good, good. I guess the service revenues were kind of flat sequentially, you know, quarter to quarter. Is there seasonality that happened? that impacts that or, you know, is that going to pick up in subsequent quarters, you know, with all the good things going on in the industry now?

Yeah, you know, there's not too much, you know, real seasonality in that number. There's a little more seasonality in probably our product sales than there is in the service revenue. But it does, you know, vary up and down, you know, depending on what customers are doing. and how much they're calling us for installation work, project management, et cetera. I would expect to see that start to tick up as the laser upgrades increase over time. We're certainly going to get busier, and we're seeing things get busier now as those upgrades are starting to come through. Okay.

Now, the ubiquitous acquisition by Firefly. Yes. How big an acquisition was that? And, you know, is it public knowledge what the revenues of ubiquitous were?

Yeah, I don't believe that those parameters are public. Kyle may know more about that than I do in terms of any of those numbers have been made public, so you can chime in if I'm incorrect. But from what I've seen or what I know, I don't believe that the – The actual revenues, they're a private company. I don't believe their revenues are public, so I can't share that or the deal parameters. What I can tell you is they're a significant player in the U.K. market and really a four-year history and one of the major players in the U.K., so that's a very significant increase and enhancement of Firefly's scope and reach and a meaningful acquisition for them.

Do you think that... after this acquisition is made and integrated, that that's the piece of the puzzle that Firefly needs to see to move forward with their own IPO?

Yeah, I mean, I think it's, you know, certainly one of several probably pieces of the puzzle. I don't necessarily know or could speak to whether that's the piece of the puzzle but it's certainly a positive step for their growth and positioning of their company.

The gestation period for, you know, the Safe Haven, you know, production by Strong Studios, how long is that? And when the Safe Haven is birthed, If it's a successful production, can you give me some sense of what kind of revenues would flow back to us? If it's very successful, what would we make if it's moderately successful? Any color you could give to me so I can put my arms around that? Sure.

Yeah, I mean, on Safe Haven, and this certainly would apply probably broader than just this one project, but as we're producing a project like Safe Haven, we're going to have economics in a couple of ways. Number one, we receive production fees along the way as these productions are being made for our services to the production. Those kind of come off the top. Um, you know, and that's, that's decent, but, you know, certainly, uh, you know, not life changing in terms of, you know, huge upside where the upside comes in. Is it really on the backend? You know, where, you know, we have the IP, you know, if the production's usually successful, you know, we share in, you know, the backend profitability of, of the C of the, uh, of the project. So, you know, you know, if, if it's moderately successful,

It's good.

We cover our costs. We make some production fees. If it's hugely successful, then we make upside on the back end.

Is $10 million, $1 million, $500,000, can you throw a number out there?

This is a new line of business for us. I'm not going to necessarily throw out a number right now in terms of setting an expectation that, you know, may prove to be wrong and, you know, be brought back later on and a number that didn't turn out to be right. So, I'd say stay tuned. Okay.

Hey, Mark, let me add to that. So, hey, Brett, how you doing? This is Kyle.

Yes. Yes, sir.

So, you asked a few questions and I was just taking some notes, so I wanted to before you go too far down asking additional questions, just sort of address them. On the ubiquitous acquisition by Firefly, they haven't stated publicly what the revenues are, but just like the acquisitions they made in New York, they've had a great strategy of taking non-digital assets and converting them to digital, which has a a significant multiple that adds to both, you know, the revenue on digital assets is dramatically higher than the revenue on, you know, non-digital assets. So they're buying a business that has significant revenue and ubiquitous, just like they did with, with Kurt in New York and with our business, with our business in New York, Strong's business in New York. And outside of that though, they're able to convert these non-visual assets to digital and get sometimes three, four, five, six times the revenue per vehicle or even more than that in some cases from it. So while I think the ubiquitous acquisition is a very attractive one in terms of adding to the revenue and profitability of Firefly, it's going to be even more attractive beneficial as they convert these assets from non-digital to digital. In terms of when Firefly might come public, either by IPO or SPAC or when they may sell, we would have a realization event in terms of the approximately $13 million that we hold in our balance sheet at cost. I've been involved in Firefly for a long time since they only had a few million dollars of revenue to now having you know, many, many, many multiples of that. And it's been really fun to watch them grow and both organically and through some acquisitions that we've talked about. And, you know, I would have thought that it would be prudent for them to be thinking about going public when we had, you know, some excitement in the IPO market or in the SPAC market over the last 12 or 24 months. But Firefly has an extraordinary board consisting of a representative from Google Ventures or GV, a representative from NFX, and a few others that have just been great additions to the board. I'm on the board as well. And I think that over time, what I've observed is that Firefly continues to mature not in terms of growth. Its growth has actually been doing extremely well, but it continues to mature as a company, and I think that by the time it goes public, it's going to look like a completely different company than it did two or three years ago, and even than it does today. So the value keeps going up, and I'm really excited to watch it grow over the next few years. Yeah, I know Mark didn't want to commit to dollar amounts for some of these movies, but I think you could probably see us making in the several millions of dollars per movie to making very little in any movie. But the one thing that we've been trying to focus on is not losing a lot of money on a movie. So that's sort of been the core thesis is let's go into this business where we are confident that when we underwrite a project, that we're not going to have like a massive loss on the project and that if things go right, then it's, it's significant upside to sort of limit the downside. And when, when it's a blockbuster, which as Mark was trying to suggest, it's hard to, hard to predict which ones will be blockbusters. But when we do get a blockbuster, we certainly will make, you know, millions and millions of dollars on those. It's just a matter of, you know, hard to predict which ones will be there. And I think that's why Mark was being, conservative around putting a dollar amount around it.

Great. I thank you for the added color on my questions there. Kyle, if I may, could you tell the listeners you invested, I guess, an additional $2 million in FGF Financial. Why is that a good use of corporate cash?

So, it's a great question, and I'm glad you asked it. Thank you. So, we had planned on actually investing in FG Financial at higher prices. The fact that the stock declined right before the pricing of the offering. I'm not sure why it did that. I think we're all as good at guessing that as anyone. But in terms of when the opportunity presented itself, it seemed like the right thing to do in terms of adding to our position. We have a pretty good idea of what we think the intrinsic value of each of the assets inside of FG Financial is. We know that we're adding to those assets every day. And over time, what you're going to see is that FG Financial, as we sort of stated a couple of years ago, as we've been building out the platform, is going to evolve much more into an asset management business and a merchant banking business than just sort of a singular focus on one or two products. So, you know, the reinsurance, the reinsurer took us a while to get up and up and running. But now we have a we've built a great team. We've got I think this is one of the best reinsurance markets I've seen in my career. And I think it's I think it's very fortuitous that not only do we have, you know, a Cayman licensed reinsurer with that's capitalized, but we have a great reinsurance team, underwriting team and management team. And we're we're well positioned to to sort of pick and choose what we think are some of the best reinsurance contracts out there that have very, very high returns on them based on our projections. Outside of that, the SPAC market was very hot two years ago. It's cooled since then. We've been able to close two SPACs, one that has done reasonably well, Hagerty, and the other one that hasn't done as well, Opify, but we still very much like that company and think it will do well over time. We've also IPO'd to fresh new SPACs, one in Canada, which I think we're one of only one or two publicly traded SPACs in Canada. So it's made us actually pretty unique in Canada in terms of deal flow, and one in the US, which is a smaller SPAC. So when you compare that to some of the larger SPACs that have struggled to get deals done, some of the more famous deals, like I think Purging Square announced that they were not moving forward with their spec, the monstrous spec that they did, and some of the other more headliner specs that have not necessarily closed transactions. We've been able to have pretty amazing deal flow for all of our specs, and I'm very happy with that. I think we'll continue to do that. But SPAC is just one of the platform strategies that we'll be doing inside of FG Financial. It's really a bit of a merchant banking and asset management platform that will be growing over time. And you're going to start to see some of those new initiatives over the next 6, 12, 18 months that I think will be pretty exciting. So I'm really excited about FG Financial, I think. We own a very large percentage of it. We not only bought it inside of Ballantyne Strong, I used my own capital to buy it as well. And I obviously am a large shareholder of Ballantyne Strong, so I thought it was good for Ballantyne and good for our own money as well. So I'm happy to answer any other questions you have on that, but that's sort of our thinking around that.

Great. Now, Ballantyne Strong cash levels, is down to around 4 million. With the ambitious things on your agenda, is that enough cash to get done what you want to get done?

Well, you know, Green First is a very large position for us, as I'm sure you have seen. And we're very optimistic about Green First in the... in both the short run and the long run. But you've probably seen that there's been a great deal of M&A activity in the lumber industry and particularly in Canada. So you saw that Resolute was recently sold, I think, for something like a 60% premium to a buyer that, you know, people may not have been expecting to – to be in the industry looking for acquisitions. So I thought that was very interesting. You also had some speculation recently about Wes Frazier. Interfor recently took a 16% position in Green First, which was not anticipated by any of us, which I think is, but it's certainly welcomed by Valentine Strong and FG. So we're certainly happy about their position. And I think that there's going to be, you know, quite a bit more M&A activity over the next 12 to 18 months in the industry. So, you know, at some point we will, you know, find the right time to, you know, monetize that most likely through, you know, a M&A transaction would be my guess. I'm not sure when that will occur. But when that does occur, it will certainly provide for substantial capital for us to execute on certain things that we want to do. In the meantime, we have other sources of liquidity that we can seek if we need. But at these prices, you've seen that we're buyers of the stock, and I can't imagine a scenario where we would issue common stock at these prices with Valentine Strong.

Great. Kyle, thank you, and Mark and Todd, thank you as well for answering my questions. I'm going to drop back in still.

Thanks, Brett.

This concludes our question and answer session. I would like to turn the conference back over to Mark Robertson for any closing remarks.

Great. Thanks, Anthony. Thank you, everybody, for dialing in and joining the call. Hopefully this was productive. I think this was a A really good call. If you have additional questions or think of other things that you would like to ask us or talk about, both Todd, Kyle, and myself are always available. Our contact information at IR is on the earnings release and on our website. So feel free to reach out at any time. Look forward to speaking with you.

Thanks again. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.