Reliance Global Group, Inc.

Greetings. Welcome to the Reliance Global Group second quarter business update conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Ted Avis, Investor Relations. Ted, you may begin.

Thanks, Paul. Good afternoon, and thank you for joining Reliance Global Group's 2025 Second Quarter Financial Results and Business Update Conference Call. On the call with us today are Ezra Bayman, Chairman and Chief Executive Officer of Reliance Global Group, and Joe Markovits, Chief Financial Officer of Reliance. Earlier today, the company announced its operating results for the quarter ended June 30, 2025, and a press release is posted on the company's website, www.relianceglobalgroup.com. In addition, the company will be filing its quarterly report on Form 10-Q with the U.S. Securities and Exchange Commission today, which will also be accessible on the company's website as well as the SEC's website at www.sec.gov. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at 212-671-1020. Before Mr. Baiman reviews the company's operating results for the quarter ended June 30, 2025, we would like to remind everyone that this conference call may contain forward-looking statements. All statements other than statements of historical facts contained in this conference call, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words anticipate, estimate, expect, project, plan, seek, intend, believe, may, might, will, should, could, likely continued design, and the negative of such terms and other words in terms of similar expressions are intended to identify forward-looking statements. These forward-looking statements are based largely on the company's current expectations and projections about future events and trends that it believes may affect its financial condition, results of operations, strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to several risks, uncertainties, and assumptions, as described in the company's Form 10-K filed with the U.S. Securities and Exchange Commission. Because of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this conference call may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statement. You should not rely upon forward-looking statements as predictions of future events. Although the company believes that the expectations reflected in the forward-looking statements are reasonable, It cannot guarantee future results, level of activity, performance, or achievements. In addition, neither the company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The company disclaims any duty to update any of these forward-looking statements. All forward-looking statements attributable to the company are expressly qualified in their entirety by these cautionary statements as well as others made on this conference call. You should evaluate all forward-looking statements made by the company in the context of these risks and uncertainties. Having said that, I would now like to turn the call over to Ezra Bayman, Chairman and Chief Executive Officer of Reliance Global Group. Ezra?

Thanks, Ted. Good afternoon, and thank you to everyone for joining us today. We had a strong second quarter, mostly a solid execution on several initiatives aligned with our long-term goals. Although revenue saw a slight decline compared to the same period last year, mainly due to shifts within our medical and health client base, This was partially offset by an 8% increase in property and casualty revenue. Overall, the fundamentals of our business remain solid. Our core operations held steady, and the improvements we've implemented across the organization are paving the way for greater efficiency, stronger margins, and scalable growth. Building on that momentum, in July, we took a significant step to strengthen our financial position by repaying approximately $5.6 million, about half of our long-term debt. This move reduced our annual debt service by more than $1.8 million and meaningfully enhanced both our cash flow and financial flexibility. One of the cornerstones of our ongoing transformation is our one-firm strategies. which brings all of our agency operations together under a single unified model. It's helping us work more efficiently, collaborate more smoothly across teams, and provide a better overall experience to both clients and agents. Just as importantly, it's setting us up to scale more effectively and grow our margins as we continue to expand. As part of this strategy, selling Fortman Insurance Services was an important step in streamlining our portfolio. By monetizing this asset, we strengthened our balance sheet and sharpened our focus on the tech-enabled high-growth areas that are central to our long-term vision for sustainable, innovation-driven growth. We moved quickly to put that capital to work. Soon after the sale, we used the proceeds along with some at least restricted cash to pay down over half of our long-term debt. On top of that, we expect to record a gain on the sale of approximately $3 million from the Fortman sale in Q3 2025. Although these steps have significantly reduced our leverage, I'm sorry, altogether these steps have significantly reduced our leverage and lowered our annual debt service by 61%, resulting in a meaningful boost to our cash flow and giving us greater financial flexibility moving forward. Our outlook remains strong as we stay focused on disciplined financial management while also making steady progress in driving innovation and expanding our presence in the market. On the innovation front, we're really excited about the launch of Rely Auto Leasing. This new service empowers our Rely Exchange agency partners to connect their clients with great auto leasing options, with delivery available anywhere in the country. Even better, agents can earn commissions on both the lease and the accompanying insurance without needing to become experts in auto finance. The entire process is integrated into their existing dashboard, so it's seamless, efficient, and a great value add for clients. We've already heard strong feedback from the field, and we think this offering further sets real-life exchange apart in the marketplace. I also want to touch on the Spentner Associates. As many of you know, we had previously entered into a stock exchange agreement with Spentner as part of a potential acquisition. Last week, both parties agreed to formally terminate that agreement. There were no penalties or disputes, just a mutual decision to revisit the structure of the deal. We have previously issued about 297,000 shares as a non-refundable consideration, which we've since expensed in our current second quarter financial statements. To be clear, our interest in Spettner has not changed. there is still that great strategic fit with complementary strengths that would enhance our platform. What's changed is that we now have the opportunity to explore a different structure, one that could make more financial sense for us and ultimately create more value for our shareholders. We're still in active discussions with the Spettner team, and we're optimistic about finding the right path forward. To sum it up, we've simplified our portfolio dramatically, improved our balance sheet, introduced a new revenue stream for our agency partners, and remain focused on smart, strategic expansion. These aren't just tactical wins. They're foundational steps that position Reliance for long-term success. I would now like to turn the call over to Joe Markowitz, Chief Financial Officer of Reliance Global. to review the financial results for the quarter ended June 30th, 2025. Joel.

Thank you very much, Ezra, and good afternoon. It's my pleasure to share with you some key financial highlights. The quarter ended June 30th, 2025. All figures presented are approximates. Commission income came in at $3.1 million for the quarter versus $3.2 million in 2024. The slight swing was primarily due to a shift in our medical health client base, but offset by an 8% increase in our profit and casualty P&C revenue stream. Commission expense came in at $989,000 versus $886,000 in the prior year. Slight increase is primarily due to the 8% growth in the P&C revenues. Salaries and wages were $2.6 million for the quarter versus $2 million in 2024, with the increase being primarily driven due to non-cash share-based compensation, offset by one-firm efficiencies and overall leaner operations. General and administrative expenses came in at $1.5 million for the quarter versus $1 million in 2024, with a change being driven by acquisition-related cash and non-cash costs, offset by one-firm efficiencies and overall leaner operations. Net loss for the quarter was $2.7 million compared to $1.5 million in 2024, primarily reflecting the changes in the accounts we just discussed. Adjusted EBITDA, our non-GAAP metric, was a loss of $382,000 for the quarter versus $178,000 in 2024. The change is primarily driven by fluctuations affecting the commission income and commission expense accounts, offset by improvements in the general expense accounts, pursuant to one-term efficiencies, and overall leaner operations. In summary, As mentioned by Ezra, we've made some good progress here in the first half of 2025, with amongst other things, stabilized and growing corporations, improved financial flexibility by the 50% reduction in our long-term debt, and a decreased annual debt service cost, which improved by more than 60%. That's it from me for now. We'll turn the call back over to the operator to open the lines for questions, comments, and feedback. Operator?

Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question, please 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 keys. One moment, please, while we poll for questions. Once again, that is Star 1 if you wish to ask a question on today's call. The first question today is coming from Nick Pincus from Ford's Capital. Nick, your line is live.

Thank you. First and foremost, congrats on the sale of Fortman, the improvement in the balance sheet, and the continued progress of the business. Thank you also for the additional clarity in your prepared remarks on the Spettner transaction. Seems like the deal's not dead, but rather you're evaluating different options. I'm just wondering if there's anything else you could share on the overall strategy as it relates to Spentner.

Yes, Spentner is still a good deal. We are looking at it. But we certainly did not want to hurt the company doing a transaction or financing for the transaction that would hurt it. We have to look at the big picture. But we are still, we're on good terms actually with the Spentner team, and we are in touch with them. And we're working on a structure and financing that would be beneficial for us and the company. And if we can accomplish that, it'll be a win-win without the pain. So we look forward to that, certainly to that potential, which is certainly a potential there. And of course, also looking at other transactions as well.

Well, I appreciate that and that you're looking out for the best interest of the shareholders. As a follow-up, can you also just provide some more color on the commercial aspect insurance business?

I'm going to give a little bit of that. I'm going to ask most fishermen then to chime in. In the big picture, commercial, the average commercial premium is probably, you know, could be three, four, five, ten times a personal line. So with the same work, basically, and pretty much. So we look forward to much, you know, the potential for much bigger revenue. But I'm going to, it also enhances our you know, arrangements with our agents in the Relay Exchange, you know, exchange program that they now have a much, we can entice them to come and join us because we have a much more attractive platform now with commercial as well. And Mark Fishman.

Good afternoon. Thank you. The commercial InsurTech platform is built out and currently supports multiple lines of business from multiple carriers and our agency partners, hundreds of agency partners, can go in and actually bind commercial business in real time. Additional lines of business are being added. Additional carriers that support that commercial business are being added as well. I know another carrier just was turned live today. And we anticipate that growth of that business, as Mr. Baiman mentioned, the premiums of commercial business can make up close to 90% of P&C business in the industry. So we're really looking to take advantage of that and have our agency partners write more and more commercial business alongside the current personal lines that they do phenomenally well today.

Thank you for the extra feedback, and keep up the good work, guys. Thank you.

Thank you. And once again, it will be star one on your phone at this time if you wish to ask a question on today's call.

There were no other questions from the lines at this time.

I would now like to turn the call back to management for closing remarks.

Thank you very much. On behalf of Ezra and the entire Reliance team, we appreciate you joining us today for this business update. We're excited about the road ahead. and truly value the continued support and partnership with our shareholders as we move forward together. Thank you, and we wish you all the very best.

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