Abacus Life, Inc.

Greetings and welcome to Abacus Life 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Garrett Edson of ICR. Thank you. You may begin.

Good day, ladies and gentlemen. Thank you for standing by. Abacus Life refers participants on this call to the investor webpage, www.abacuslife.com slash investors, for the press release, the investor information, and filings with the SEC for a discussion of the risks that then affect the business. Abacus Life specifically refers participants to the presentation furnished today on Form 8K with the Securities and Exchange Commission and to remind listeners that some of the comments today may contain forward-looking statements and, as such, will be subject to risks and uncertainties, which, if they materialize, can materially affect results. Reference is made to the section titled Forward-Looking Statements in the Company's Earnings Press Release for the Fourth Quarter of 2023, which is incorporated herein by reference. We note forward-looking statements, whether written or oral, include but are not limited to abacus life's expectation or prediction of financial and business performance and conditions, as well as its competitive and industry outlook. Forward-looking statements are subject to risks, uncertainties, and assumptions, including the risk factors set forth in Item 1A of our most recent 10-K, which if they materialize, could materially affect results, and such forward-looking statements do not guarantee performance, and Abacus Life gives no such assurances. Abacus Life is under no obligation and expressly disclaims any obligation to update, alter, or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. In addition, historical data pertaining to the operating results and other performance indicators applicable to Abacus Life are not necessarily indicative of results to be achieved in succeeding periods. I will now turn the call over to Jay Jackson, Chief Executive Officer of Abacus Life.

Thank you to everyone listening today for your interest in Abacus, and welcome to our 2023 fourth quarter earnings call. With me today is our Chief Financial Officer, Bill McCauley, and after our remarks, we'll open it up to your questions. We finished off 2023 with another strong quarter of positive results and profitable growth, capping off a record year for Abacus, exceeding our previous record year in 2022. As we look to 2024, our differentiated business model has positioned us well to further capitalize on our momentum. And with the recent launches of ABL Wealth and ABL Tech, which I'll discuss in a moment, we are progressing toward leveraging our technology advantages, expanding our total addressable market, and becoming a full-fledged alternative asset manager. For the fourth quarter of 2023, we grew total revenues 25% year-over-year to $23.6 million and delivered strong earnings with adjusted EBITDA of $11 million and adjusted net income of $5.9 million. For the full year of 2023, we generated total revenues of $79.6 million or 14% growth from the prior year. while growing adjusted EBITDA 13% year over year to $39.3 million and delivered adjusted net income of $29.4 million. In 2023, we increased our new policy originations by 30% to 633 in 2023 and paid over $200 million to policyholders. Much of this growth was driven by our carrier partnerships and expanding reinsurer relationships. Also, during the fourth quarter, our Board of Directors authorized a $15 million stock repurchase program. As of March 19, 2024, $8.1 million of stock had been repurchased at a weighted average price of $11.20 per share. There is currently $6.9 million of availability remaining under this program. Warrant holders have started to exercise their warrants at the strike price of $11.50, and we have received $3.5 million in proceeds to date. Bill will be along shortly to discuss more of the fourth quarter and full year 2023 financial performance in further detail. Our proven business model, expert team, wealth of data, and innovative technology positions us well to execute on our various strategic initiatives. take advantage of the many exciting opportunities that lie ahead, and ultimately create long-term value for our shareholders. Over the past few months, we've made considerable strides in launching and expanding our newest initiatives, ABL Wealth and ABL Tech. And I wanted to spend a couple of minutes telling you about how we expect both of them to enhance our business model in the years ahead. First, as you may recall, in November, we launched ABL Wealth to offer clients custom, lifespan-based financial solutions in partnership with one of the country's leading wealth management platforms for independent wealth management firms. The thesis for ABL Wealth rests in our belief that using lifespan and longevity as a core tool in designing customized personal wealth solutions will fundamentally change the retail financial services industry. At Abacus Wealth, We occupy the intersection of life insurance, lifespan and longevity and wealth management. In 2024, we've started to capitalize on our abacus marketing leads, including the thousands of in-house inquiries. And we are beginning to design custom asset management solutions for our clients. We will continue to partner with RIAs and broker dealers to expand our product offerings and align our interest as we further progress. In addition, Last month, we launched ABL Tech to the pension fund and financial services industries. Over our 20-year history, we have accumulated a trove of longevity data and developed proprietary technology and analytics that drive our investment decision process to acquire policies. Now, ABL Tech seeks to leverage that wealth of data and technology along with AI and advanced algorithms to create a suite of tech-driven solutions for the pension fund and financial services industries. Among the solutions we are providing, mortality verification and participant verification. We are utilizing AI and advanced algorithms to more efficiently verify mortality and participant locations, which will aid pension funds in protecting assets and preventing fraud. We are also leveraging AI in real-time lifespan data to provide strategic wealth distribution analysis and lifespan valuation, which is crucial for insurers and wealth managers to better forecast the asset value of investor wealth over their lifespan. In addition, we've created the Abacus Marketplace, which is a multi-platform digital portal enhancing life settlement sector communication and transparency, and which simplifies end-to-end access and processes for clients, advisors, and investors. We expect to see top-line contributions from both ABL Wealth and ABL TAC in 2024. Along with our new initiatives, our core origination and asset management vertical, also known as ABL Longevity Funds, continues to hum along well as we just completed our 20th consecutive year of GAAP profitability while continuing to generate strong margins. Additionally, our new mutual fund, ABL Longevity Growth and Income Fund, remains on pace to launch later this year, and we are very excited for its potential. As we move ahead, we remain confident in our business. The opportunities within our total addressable core market and in the incredible stability of our asset class. As a reminder, our industry currently only has about 2% market penetration, of a $233 billion-plus opportunity with a significant financial incentive to the individuals selling their policies. With new investor interest from both institutions and life insurance companies, that's a significant gap that we believe we can close over time. We will continue to educate policyholders about the value of their policies through our network of over 30,000 financial professionals and through television and digital campaigns for our growing direct-to-consumer channel. And with our expanded verticals and deep data and technology advantages, we are well on our way toward creating a true vertically integrated alternative asset manager with multiple revenue and profit streams. We remain excited about our historical, current, and future trends, as well as our potential for expected origination growth and sustainable long-term profitability. With that, I will now hand it over to our CFO, Bill McCauley. to discuss the specifics on our Q4 results in financials.

Thanks, Jay. And hello, everyone. As Jay mentioned, we delivered another strong quarter of top-line growth and profitability across our business. The key driver of our business performance continues to be our highly efficient origination platform. In the fourth quarter of 2023, origination capital deployed increased by approximately 92% to $68.3 million, compared to 35.5 million in the prior year period, driven by larger face value policy acquisitions while maintaining 79% growth in policy originations to 208 compared to 116 in the prior year period. Total revenue in the fourth quarter 2023 grew by approximately 25% to 23.6 million compared to 18.8 million in the prior year period. The increase was primarily due to strong performance across all segments. For the full year 2023, revenue increased 14% to $79.6 million compared to $69.7 in the prior year. The increase was primarily attributable to higher policy acquisitions and realized trade revenue. As of December 31st, 2023, Abacus held 296 policies of which 287 are accounted for under the fair value method, and nine are accounted for using the investment method, which is cost plus premiums paid. As a reminder, for all policies purchased after June 30, 2023, the company has elected to account for these under the fair value method going forward. For policies purchased before June 30, 2023, the company elected to use either the fair value method or the investment method. Revenue from our portfolio servicing segment in the fourth quarter of 2023 was 0.2 million compared to 0.1 million in the prior year period. Turning to expenses, total operating expenses, excluding unrealized gains and losses on investments and change in fair value of debt for the fourth quarter of 2023 were approximately 18.9 million compared to 4.4 million in the prior year period. We would note that the fourth quarter 2023 total operating expenses included $6.2 million of non-cash stock compensation expense and $2.5 million of public company related expenses, both of which did not occur in the prior year period. We also increased sales and marketing expenses by approximately $2 million compared to the prior year period, which assisted in accelerating our growth profile in 2023. the company typically realizes the benefit of marketing spend within 90 to 120 days. Consistent with the fourth quarter of 2023, total operating expenses in the first half of 2024 will be elevated from the prior year period by non-cash equity compensation expenses as well as ongoing public company expenses that did not occur in the first half of 2023. We will begin to anniversary non-cash equity compensation and public company expenses in the third quarter of 2024. Adjusted EBITDA for the quarter was $11 million, relatively comparable to $11.1 million in the prior year period. Adjusted EBITDA margin was 47% for the quarter compared to 52% in the prior year period. For the full year 2023, adjusted EBITDA increased 13% to $39.3 million compared to $34.8 million for the prior year. Adjusted EBITDA margin for 2023 was 49% compared to 50% for the prior year. Gap net loss attributable to stockholders for the quarter was 6.2 million compared to gap net income attributable to stockholders of 10 million in the prior year period. On an adjusted basis, excluding non-cash stock compensation, amortization, and change in fair value of warrant liability, Net income for the fourth quarter of 2023 was $5.9 million compared to $9.5 million in the prior year period. For the full year 2023, adjusted net income was $29.4 million compared to $32.3 million in the prior year. Now turning to our balance sheet metrics, on an annualized basis, return on equity and return on invested capital for the three-month period ended December 31st, 2023, were 18% and 17% respectively, reflecting our highly profitable business model. As of December 31st, 2023, the company had cash and cash equivalents of $25.6 million, balance sheet policy assets of $124 million, and outstanding long-term debt at fair value of $89.1 million. During the fourth quarter, We were pleased to successfully complete our public bond offering using the proceeds to refinance prior debt and reducing the interest rate we pay from our prior debt by approximately 275 basis points. In summary, we are pleased with our strong results this quarter and continue to deliver double digit growth on our top line as well as solid profitability on an adjusted basis. We remain very excited about the growth opportunities ahead and are well positioned to execute on our long term plans. I will now turn it back to our CEO, Jay Jackson, for our closing comments.

Thanks, Bill. To sum up, we believe Abacus Life is well positioned to capitalize on a large market opportunity within a dynamic sector today. Very few other business models offer 20 years of consistent net income, a $200 billion plus in growing target market, and new growth opportunities such as ABL Wealth and ABL Tech. We are proud to be a growth company that has generated consistent, long-term profitability. I'd like to thank all of you for joining us today, and we appreciate your interest in Abacus Life.

We will now field any questions.

Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer session. If you'd like to ask a question, you may press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Andrew Klingerman with TD Callen. Please proceed with your question.

Hey, good afternoon, Jay and Bill. Question around revenue and origination capital. It looks like the revenue... was up 14% year over year. You said higher policy acquisition and realized trade revenue. And on origination capital, up 46% on larger face and larger face value policy originations and count. The numbers look great. Is this the kind of trend that we should be expecting on both sides? both items into 24. How are you thinking about 24 in revenue and origination capital respectively?

Thank you, Andrew. Great to hear your voice as well. And yes, the answer is yes. We are excited about the prospects of 2024. This is a trend that actually started back even a few years ago. And we have seen an increase in the size of the policies that we're acquiring. And you've seen almost year over year now a larger deployment of capital, but you've also seen a significant increase in the number of policies that we're acquiring. And I think this goes back to one driven by our ability to market. We've been in the market a long time. We've got really well established relationships with financial professionals across the country. We have seen a very positive impact as well on our advertising to increase our direct to consumer channel and division. where our new policy number of originations, I think is indicative as well, where we were up over 30% over the prior year period. So, it's really twofold, right? So we're purchasing more contracts that also we have larger face value, which is driving up the amount of capital deployed. And then as you look at it as a kind of a key driver, that capital deployed figure, that would then contribute to your year over year growth in top line and bottom line on your adjusted EBITDA. And in fact, I would even highlight if you look at the prior year period or year over year in Q4, not just 2023, but if you look at Q4, saw the adjusted EBITDA number, albeit it looked like it was flat year to year, but taking into consideration that we increased our marketing by $2 million in the fourth quarter, we had public company expenses, another $800,000 in addition to the prior year period. We're talking about $2.8 million of additional EBITDA that would have been there effectively at 25%. So that would have matched the top line, right? You would have had a fourth quarter, 25% top line and 25%. But we took that revenue and invested it back into the business to really tee up 2024. Got it.

So it sounds like the trend continues into 24.

It does. And, you know, I think that it's important to us and it's important to everyone to understand that we're going to continue to reinvest back in our business to drive growth. And I think that's one of the more compelling pieces to our story.

And maybe on that total operating expenses, if I take out the non-cash, I think it was like about $14 million in the quarter, right? Is that kind of a run rate that we should look at, or should we kind of build that up a little bit to your point that you're reinvesting a lot?

Well, I always like to under promise and over deliver. So I don't want to stretch it too thin, but yes, we're building into that higher, higher net and EBITDA number. You know, and like anything is you invest into that number. You have higher expenses as you do that, but the net result of that over time is very, very positive. And that's what you're seeing.

Got it. And maybe if I could sneak in one, one last one, ABL tech. I mean, I, I, I'm just kind of thinking about what's the revenue potential of that investment? How does that play out? Maybe this year and then three or four years from now.

Sure. I think one way to think about ABL Tech and what we're doing there is that it's more than just one line of business. We do valuation and servicing work there. We do a lot of lifespan and longevity work that feeds into other lines of our business. So when you consider that, you'll see an uplift in the other areas like ABL Wealth and using that technology and that lifespan technology to do financial planning, utilizing lifespan, I think is very exciting and would also help drive future investment products that we build and design for that. But the other piece that I think is really tangible is we've been doing mortality verification for our own accounts and our own funds that we've managed for over a decade. And being able to roll that out to other customers, we think is really, really exciting. We're already signing up customers, significant institutions and insurance companies that utilize that for mortality verification. And when you think about things like the pension fund industry, when you think about the size, scale, and scope of that market, the states, we're having conversations with states about how to better manage some of those pension liabilities where they might be overpaying or potentially even dealing with potential fraud. So that market, what's fascinating is that it's massive. So what I don't want to do is say, oh, hey, next year we're expecting X, but we do anticipate that line of our business overall to be a significant piece to our total revenue on a go-forward basis. Growing three and five years out, this would be a significant piece to our revenue and contributor to our revenue. and the margins on that business are excellent. I think in the next year, as we continue to build that, it'll be incremental. It'll be slower in the first year, and then you'll see two, three, four, five in years this piece of the business really takes on.

Got it. Makes a lot of sense. Thanks a lot.

Thank you, Andrew.

Our next question comes from the line of Wilma Burtis with Raymond James. Please proceed with your question.

Hey, good afternoon. Everyone, could you provide any updates on the mutual fund launch and just maybe talk about the revenue opportunity there?

Sure. Thank you, Wilma. We had filed and have filed an N2 prospectus. I think our last filing is available online public, and that was our fourth turn of SEC comments. We have whittled those down, I think, pretty significantly, and we're very excited about that opportunity. We're waiting on feedback now on what those next line of comments will be. But we are hopeful that we've been able to accommodate the SEC responses along the way here. And our hope is to have that, you know, targeting for us at that towards the end of April. I know that's moved a few months here from when we initially hoped closer to February. But with all things considered, you know, this is the first product of its kind with the SEC. And they've expressed that, and they're spending additional due diligence time just to make sure that we have the proper disclosures. But overall, we think that that's going to be a product, at least in our business, that has a significant impact, particularly within our ABL wealth. That'll be an interval fund that has its own ticker and effectively available to the public and will be distributed out through RIAs and other distribution platforms through RIAs and broker-dealers, etc., So we have a significant amount of interest already in that product where funds and others have said, gosh, you know, we've seen the filing. We would be very interested. Now, we can't have those conversations with them. until we have a clean prospectus, which again, we're hopeful to have that sometime in the next 30 days. But we believe that the overall interest and the contribution to our revenue will also be significant. And that will be significant in 2024. And obviously thereafter. And so, you know, it'll impact a number of areas of our business. And we're right now Just waiting patiently to receive some additional feedback from the SEC, but we expect that to be very, very soon.

Okay, thank you.

And then maybe if you could talk a little bit about the deployment pipeline, where your capital position stands, the capital you expect to generate, and what you can deploy. Sure.

As I think Bill highlighted, we had a record capital deployment in the fourth quarter. I think it was $68 million. Yep. And year over year, that was up almost 100%. And we had a record year in capital deployment in 2023, $218 million. So what we're able to see is with the investment we're making back into Abacus and our business in relationship to marketing and distribution, that capital deployment, we expect to continue that trend. And with that, from our perspective, it takes us to... the premise of additional capital ultimately on the balance sheet and whether that's through an interval fund mutual fund product or that's through other means whether it's a bond, which we did in January, which, by the way, we were very proud of. It was oversubscribed because the interest is significant, or other type of equity finance instruments, specifically around potentially, do we consider issuing more primary shares through a secondary offering? All of those things are at the forefront of our mind, and we're working closely with that because Right now, when you think about capital deployment, it's not the opportunities that we have and the revenue that we're earning on those. It's super important. We want to continue to do that, but it's the ones that we're not. And when you think about that, there's opportunities, there's contracts that we're not purchasing. And if we had additional capital on our balance sheet, we would be able to take advantage of those opportunities and it would be a creative day one. It's the type of thing that you would see a positive impact to our balance sheet by having more capital to it. So we're We have a number of ideas and options in process right now so that we can continue to address that and increase the capital on our balance sheet.

Okay, thank you. And then I guess just one last one, if you could talk a little bit about the pipeline for additional carrier relationships without any names, but just talk about the entity there.

Sure. And that's continuing to grow. I think that there is a significant carrier that we work with now. There are more that we're in deep conversations with, and we will continue to see that interest as we attend conferences and speak to them directly. What we're finding is that there is a real need for this, and they'll continue to be one. The challenges from the carrier's perspective is that they've kind of looked at our industry over time. Maybe they haven't had the best experience or the highest level of opinion of our industry historically. And we're set ourselves out to change that. And by being a public company, we're the only publicly traded company in our industry, I think gives us a significant advantage in those conversations because as we're working through governance committees at carriers, that's one of the key things they look for, transparency, regulatory, you know, are we able to manage and manage this transaction in as transparent as possible way and also, you know, being subject to the same type of regulatory that many of these carriers are at a public level, not just at a state regulatory level. Those conversations are going very, very well. We're advancing those conversations very quickly. I think in the last six months, it's moved exponentially. And we think over the next year, it will move even quicker as there's been more opportunities. And by the way, what's important about those carriers is that this is a mutually beneficial transaction, all the way back to the policyholder in the sense that As we know, policyholders typically have very high lapse rates, and this allows them to treat their policy like equity, and then potentially that policy gets lapsed and they can use that capital for other means. From the carrier's perspective, this is a really positive impact on their legacy liabilities, their balance sheet. And so when you start to measure all of these positives, the carriers are starting to look at this and say this needs to be one of the many things that they do in managing their legacy liabilities, but it went from this is something we'll think about to now it's a top two or three item.

Great. Thank you very much. Thank you, Wilma.

As a reminder, it is Star 1 to ask a question. Our next question comes from the line of David Bestin with Kingdom Capital Advisors. Please proceed with your question.

Hey, Jay. Hey, Bill. Thanks for taking the question.

Quick one for you guys on policy originations. I think you guys had said previously that the vast majority of what you guys are doing right now is kind of the trading policies where you buy them and flip them within a pretty short time frame. Should we continue to expect kind of that cadence in 2024? Or do you think there will be any move towards holding more on your balance sheet longer term?

Hey, David, thank you. Great to hear your voice. And very good question. We are always remaining flexible, the best opportunity to maximize return in any contract. And As it looks today, we tend to trade more contracts in our active management portfolio than hold on our balance sheet over time. I think that as the balance sheet gets larger and larger, I think it's natural to think and progress that we'll hold some of these contracts for a longer period of time in our balance sheet. And we started to see a little bit of that in the fourth quarter. And you can track that through realized and unrealized gains on those contracts. But there will always be an active management element to what we do because there is such high demand for these contracts. And being able to realize that revenue and that profit today versus letting those contracts mature out over several years, we think is a very smart business model. But I'll also add to that is that as we're increasing our institutional relationships, whether that be with insurance carriers, whether that be with other private institutional asset managers, the demand is quite high for the asset. And I think it's important that we always consider and maximize our capital and our capital flows in the most intelligent way. So I think as we get into 2024 and we start to put more capital on our balance sheet, that might alter some of the positioning on how much we hold versus how much we decide to trade and realize at that time. But just keep in mind, You know, we're holding terrific assets on our balance sheet that are, you know, historically great returns with, you know, essentially uncorrelated underlying asset that's, you know, trades and deals much more like a mortality driven zero. So to answer your question specifically, I think that we will remain flexible at this time and be opportunistic in what is the best way to manage and drive revenue for the company's balance sheet.

Got it. Thanks. That's a, certainly a nice way to manage the cashflow problem that has beset some of your predecessors. Um, second question. Um, it sounds like you're, you know, on the ABL wealth and ABL tech side, you know, there's, there's been a pretty significant amount of costs, you know, in getting all those set up. Do you have a rough idea? Like if we're looking at the fourth quarter, kind of how much of the cost is going towards, you know, these, these new revenue lines that we're going to start seeing in the next couple of quarters?

Sure. Um, What's interesting about that is that the costs were not as significant as you might suspect in launching those lines. Because keep in mind, let's start with ABL Tech. We had been doing this for years, right? So the infrastructure was essentially already in place. We just added to it. So the overall costs weren't startup related because it already existed. It was just a matter of adding additional labor costs. and some technology behind that. So I think that when we look at our relative costs, the cost increase related to the fourth quarter, we're less about the build out of ABL Wealth and ABL Tech and driven more by origination costs related to acquiring more contracts in the fourth quarter. Specifically, one of the largest cost increase we had in the fourth quarter was marketing and advertising. And that was not related to ABL wealth or, or ABL tech. So, you know, from our perspective, we're rolling out these additional lines based upon the foundation that we already had. And then your incremental costs are more labor driven versus infrastructure.

Got it. Well, that's certainly good for incremental margins as we look into 24.

Right. Right.

Got it. Thanks guys.

Appreciate you taking my time. Always. Thanks, David.

Our next question comes from the line of Matthew Howlett with B. Reilly Securities. Please proceed with your question.

Oh, hey, Jay and Bill. Thanks for taking my question.

Sure. Hey, Matt.

Hey, just to follow on, you know, the investment, the sales and marketing, can we get the update on the direct-to-consumer channel? I mean, that's your highest-margin channel. Jay, I love seeing the ads, the commercials. Todd, give me the update. That sounds like that could really contribute to the bottom line here as you invest in and build out that channel.

Sure. The quick update there was that, yes, that channel was a significant contributor, not just in the fourth quarter, but all of 2023. We launched that advertising campaign in January of 2023, and it's been, it's exceeded our expectations, which is what led to the significant investment in the fourth quarter of 2023 later in the year. We saw, you know, nearly a 2X in number of originations from the direct-to-consumer channel. So, you know, from our perspective, you know, as we look now into 2024, as Bill highlighted on the call earlier, typically there's a 90 to 120-day, you know, kind of delay from when you spend your marketing advertising dollars to when you see the impact of that marketing. And so, you know, what we think about and how we look at this is that 2024 is, you know, really well lined up based upon that marketing spend that we did in the fourth quarter of 2023. So, you know, even though we took a little bit higher expense against our EBITDA, we think it was worth it as we look into 2024.

And remind me again, the policyholder is getting just as good of a deal going directly through you as you would be going to a broker. You're just essentially cutting out the middleman. That sort of had a look at that change.

It is. For us, you don't need an auction to know the value of a life insurance contract. You need a calculator. It's a simple solve for net present value. And with the consolidation in our industry, You know, there's most of the capital is deployed through just, you know, a few companies. And because of that, it's far more efficient than what it was. And that means that, you know, there's a lot greater opportunity for the policyholder just to have a much better understanding of what their policy is actually worth without having to pay significant intermediary costs to do so. And because of that, we're able to acquire more policies in a much more efficient way. Well, at the same time, the policy holder themselves can benefit by potentially having a larger capital piece to them. So for us, it makes a lot of sense. And frankly, we're able to get to a much larger audience because of it.

Absolutely. And on that note, I mean, I see policy acquisitions up 30%. People get very excited when you look at the potential growth of Abacus. I mean, just walk us through what this ham is, what this market opportunity is. I mean, you're obviously leaving a lot on the table here as your cost of capital goes down and you scale. I mean, growth just seems like it could be huge going forward.

Yeah, that's exactly right. And that is exactly how we look at the business, right? I mean, you look at the addressable market. They're still north of $200. Two hundred million dollars a year that lapses over the age of 65. And our industry barely scratches that. Right. And so now we're starting to look at this and say, excuse me, 230 billion, not million. And we barely scratched the surface on that. as we now have what I think is really interesting, you have maybe life insurance carriers that are considering buybacks. That adds and actually validates. They're not a competitor to me. To me, they validate what we're doing. And that provides additional education to these policyholders where they're like, gosh, I should treat my policy like equity, not like debt. Why would you ever let this thing go, let this policy last, not making premium payments if it has a true equity value? And I think When you think about that education, if you think about our advertising, it's all about education. We have a calculator. Nobody puts out a calculator. We put out a calculator so that people get educated. They understand that their policy has value, and it's a real value. And because of that, now you start to look at how we start to capture or chase down that $230-plus billion that will lapse over the age of 65. It's driven by education, transparency, and legitimacy and validation. And when they see that, hey, we're a public company, this is a real transaction, it provides a lot of comfort to those policyholders when they're considering selling this transaction.

Absolutely. It makes total sense. It's such a unique model. Last question, Jay and Bill. I mean, look, I got to commend you on the buyback. I mean, you're one of the few companies that have gone public through a SPAC that's been And now you're saying some of the warrants now are starting to get exercised, so there's money coming in the door to you accretively. Just walk us through on the remaining warrants outstanding. Just talk about – that's got to be just in a – again, we haven't seen a lot of companies go public via SPAC being in such a unique, envious position as you are.

Well, thank you. And honestly, I don't I'm not aware of many public companies via whether it was a SPAC just going public first year that also did a buyback. And, you know, we looked at it because we looked at our stock as a position and felt that it was an undervalued asset. And why wouldn't we buy back at those prices based upon the earnings and the fundamentals that we had at the time? And that response and narrative has been really well received publicly. And, you know, As a result of that, as the stock price exceeded $1,150, which was the warrant exercise price, warrant holders are looking at our opportunity to own the common stock for the long term. And they're converting those or exercising their warrants into common stock, which is effectively putting cash on our balance sheet. So when you think about the $8.1 million that we've spent in the buyback, we've received $3.5 million back in exercise warrants. Really, this reduced our cost of the buyback significantly. And I think that it was an absolute kind of win for us that we didn't plan for initially. We were just looking at our company and felt that our stock was undervalued. And then when you looked at the warrants starting to exercise, it's effectively converting people into long-term shareholders and believers in our stock. So we couldn't be more proud or happy about how that process has worked. In addition to that, creating a really positive narrative. Now, how many more outstanding warrants are there? There's about a little north of 17 million outstanding warrants. And we think that as we continue to deliver results like this, Those warrant holders will, you know, continue to see the opportunity to exercise and become common stockholders. So, you know, any warrant holders out there, we are as aggressive as we can, you know, sharing with them this story. And thankfully, we're seeing them turn into long-term stockholders because of it. So super excited about it.

Yeah, you're not far from what? Is it 18 where you can call them and force conversions? That's sort of the number?

That's right. So per the warrant agreement, what happens is that if the common stock reaches 18 for 20 or 30 days, then we can call all the warrants to exercise at 1150, which would effectively create somewhere around you know, $190 to $200 million of cash to our balance sheet if that were to occur. We'll see, right? I, you know, I think that's a little further down the road if that were to happen, you know, great. We would love to have those warrant holders convert to stockholders. But if it doesn't, that's okay too. But as the stock continues, you know, to rise based upon, you know, the performance of the company, it's, it is a viable possibility that that could happen. And I would love to have all those warrant holders convert over to common stockholders. Plus, if you think about what that $200 million would, the impact that would have to our balance sheet would be substantial.

Yeah, I mean, the acquisitions, you just have so much more capital to grow and low-cost capital. So really, I got to commend you on the capital management, really. It's

Thank you. Thank you. And you think about that capital and the EBITDA that it runs at, that would have a dramatic impact, I think, or a significant impact to forward 12-month EBITDA, right? But we'll see. We'll obviously keep a really close eye on it, but it's definitely one of the strategies along with debt and along with equity that we would take a good hard look at in 2024.

Yeah, put you in a virtuous circle for sure. I really appreciate it, guys.

There are no further questions in the queue. I'd like to hand it back to Jay Jackson for closing remarks.

Great. Thank you again to everyone for joining our Q4 2023 conference call and earnings call. We couldn't be more excited about the prospects of 2024. And we also want to express our gratitude to each and every one of our shareholders for our research analysts and everyone who attended this call today. We look forward to working with you more in the future. And as always, as more questions arise after this call, you'd like to schedule some time with Bill and I, feel free to reach out. Have a great afternoon. Thank you.

Ladies and gentlemen, this does include today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.