Kingsway Financial Services Inc

NYSE:KFS

Earnings Call Transcript 2024-Q1

[Operator]

Good day, and welcome to the Kingsway First Quarter 2024 Earnings Call. [Operator Instructions]. Please note this conference is being recorded. 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 may contain forward-looking statements. Forward-looking statements include statements regarding the future, including expected revenue, operating margins, expenses, and future business outlook. Actual results or trends could materially differ from those contemplated by those forward-looking statements. For a discussion of such risks and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statements. Please see the risk factors detailed in the company's annual report on Form 10-K and subsequent Form 10-Qs and Form 8-Ks filed with the Securities and Exchange Commission. Please note also that today's call may include the use of non-GAAP metrics that management utilizes to analyze the company's performance. A reconciliation of such non-GAAP metrics to the most comparable GAAP measures is available in the most recent press release as well as in our periodic filings with the SEC. Now I would like to turn the call over to J.T. Fitzgerald, CEO of Kingsway. JT, please proceed.

[John Fitzgerald, executive]

Thank you, Holly. Good afternoon, everybody, and welcome to the Kingsway Earnings Call for the first quarter of 2024. It's only been a short time since our last earnings call in March. So thank you all for joining us again today. We finished the first quarter of 2024 with financial results that are largely in line with our expectations, particularly in light of current market conditions that are impacting certain of our operating entities. Most importantly, our strategy and investment thesis remains the same: execution of our operating businesses while growing through acquisitions to deliver sustainable long-term growth in cash flows and generating attractive returns for our shareholders. Let's first look at the consolidated financial results. For the first quarter of 2024, consolidated revenue was $26.2 million, roughly in line with the prior-year quarter. And adjusted consolidated EBITDA was $2.1 million compared to $2.4 million in the year-ago quarter. For the extended warranty segment and the KSX segment, combined adjusted EBITDA was $3.0 million compared to $3.5 million for the year-ago quarter. In our extended warranty segment, our vehicle service agreement, or VSA companies were again impacted by an increase in average claims expense and persistent macroeconomic conditions, namely tighter credit conditions and lower loan volumes compared to the same period last year, making for a challenging year-over-year comparison. Despite the revenue headwinds facing the industry, we were able to sell more contracts in Q1 2024 and at a higher average revenue per contract than last year. However, the claim severity we saw moderating as we exited 2023, ticked back up in Q1 with higher labor costs, driving higher claims expenses in the quarter. I would note that we didn't see claims inflation really pick up until Q2 and Q3 last year. So we expect more favorable comparisons in the quarters ahead. All in all, the challenges faced by the businesses in our extended warranty segment are moderating. And importantly, we remain focused on controlling what we can, improving contract production, and managing our costs. We are seeing positive improvement thus far in 2024 with performance in March better than when we started the year. And importantly, we continue to expect improving financial results in 2024 compared to last year. Moving to our Search Accelerator, or KSX segment. Higher revenues were primarily driven by the recent acquisitions of SPI and DDI in the second half of 2023. Ravix has continued to perform ahead of our original investment thesis. And in the first quarter, adjusted EBITDA improved compared to last year despite a slight decrease in revenue. Strong utilization and higher gross margins, combined with tight expense management, delivered improved EBITDA margins in the quarter. At C-suite, revenue and adjusted EBITDA were lower than prior year. However, gross margins continue to be strong and expenses are down from prior year. Looking ahead, the private equity and M&A environment is showing signs of reinvigoration and the team is bolstering its pipeline of new deals. While it is early in the year, we have begun to see business activity improve and both Ravix and C-suite have added business development talent to accelerate revenue growth. At S&S, consistent with market trends, the per DM business continues to perform well, while market demand for travel nurses has continued to be challenging. This has resulted in much lower revenue and adjusted EBITDA in Q1 2024 than a year ago. However, our travel business is rebuilding, and industry intelligence supports our view that travel demand is stabilizing and long term, demand for nurse staffing will be strong given the projected persistent shortage of registered nurses over the next several years. We remain bullish on this business for the long term. At Systems Products International or SPI, the team is developing and executing a strategy to grow annual recurring revenue or ARR. Since its acquisition, the company has signed new clients who are at various stages of implementation. Once onboarded, these customers should provide a nice lift to ARR. Additionally, SPI is executing several promising strategies to increase penetration and grow market share in its core market. The company is also expanding its high-value partnerships to bring innovative solutions to their new and long-standing customers. At Digital Diagnostics Imaging or DDI, revenue continues to grow both month-over-month and year-over-year with several new hospital customer adds in the quarter. Q1 revenue exceeded the prior year by over 20%. EBITDA trailed the prior year slightly as the company is investing to support the growth they are seeing. DDI is focused on building the internal infrastructure and processes to scale alongside the high level of demand they are seeing while also ensuring continued excellent levels of quality and care. Now turning to KSX search activities. Growth through acquisitions remains central to our corporate strategy, targeting opportunities that deliver predictably high returns on tangible capital in large and growing end markets. While the timing of completing a transaction is challenging to predict, we are encouraged by the strength of our pipeline and continue to target the completion of 2 to 3 deals over the next year that can each generate $1 million to $3 million in annualized EBITDA. Given the recent performance noted above, our 12-month run rate adjusted EBITDA for the operating companies is now $16 million to $17 million. As a reminder, run rate is intended to capture the last 12 months' EBITDA of the businesses we currently own, including those we've recently acquired. It is not intended to be forward-looking. As a reminder, we currently have 4 highly talented operators and residents who are actively searching for opportunities and evaluating a number of potential acquisition targets. Our deal pipeline is the most robust that I have seen it, reflecting both the hard work of our OIRs as well as the systems and processes we have put in place for effective sourcing. That, combined with an improving overall M&A environment, gives us confidence in our ability to execute our plan. We are also actively recruiting our next cohort of OIRs. We received interest from over 60 qualified candidates in the first quarter alone. As always, we will remain highly selective about who we bring into the program. We are focused on delivering long-term results for you, our shareholders. We continue to make great progress. With that, I'll now turn the call over to Kent for a deeper review of our financials.

[Kent Hansen, executive]

Thank you, JT. As a reminder, during the fourth quarter of 2022, we began executing a plan to sell one of our subsidiaries, VA Lafayette, which owns a medical clinic who sold Tenant as the U.S. Spectra's Administration. As part of our strategic shift away from the leased real estate segment, VA Lafayette is included in discontinued operations, and assets and liabilities are reported as held for sale. The results of its operations are reported separately and not included in the results I'm about to discuss. Since JT already covered the results of the extended warranty and KSX, I won't rehash those now. I'll start with our balance sheet and cash flows. At the end of the first quarter of 2024, we had cash and cash equivalents of $12.1 million compared to $9.1 million at the end of 2023. In Q1 2024, we drew $3.5 million on our delayed draw term loan and $0.5 million on our KWH revolver. Given the delayed draw term loan expired at the end of February, we felt it prudent to have some dry powder on our balance sheet. Cash provided by operating activities from continuing operations was $0.2 million for the first 3 months of 2024 compared to cash used in operating activities of $22.8 million in the year-ago period. A large portion of the cash used in operations in the prior year was related to payment of deferred interest on the trust-preferred debt instruments that we repurchased during the first quarter of last year and payment of deferred interest on the remaining trust preferred debt instrument that we did not buy back. We had total outstanding debt, which is comprised of bank loans and trust debt of $47.1 million at the end of the first quarter of 2024 compared to $44.4 million at the end of 2023. Net debt decreased to $34.9 million as of March 31, 2024, compared to $35.3 million at the end of 2023. In March of this year, our securities repurchase program was extended for 1 year through March of 2025. During 2024, we repurchased 8,000 shares of common stock for an aggregate purchase price of approximately $100,000. To date, the company has repurchased securities at a total cost of $7.2 million. That's the total under the program. In summary, the first quarter financial results were largely in line with our expectations. Our balance sheet remains healthy, and we are poised for improving results as we progress throughout 2024. Our Annual General Meeting of Shareholders and Investor Day will be held at the New York Stock Exchange on Monday, May 20, 2024. The AGM will begin at 9:00 a.m. Eastern and the Investor Day presentation will begin at 9:30 a.m. Eastern. Will Thorndike has agreed to join us for a fireside chat to share his thoughts on capital allocation, the power of long holding periods, and his experience as an original and long-term investor in the search fund ecosystem. Anyone interested in attending the in-person Investor Day as well as the off-site cocktail reception may RSVP by e-mailing [e-mail]. His email's in today's press release. We hope to see you there. I'll now turn the call back over to Holly to open the line for questions.

[Operator]

[Operator Instructions] Your first question for today is from Adam Patinkin with David Capital Partners.

[Adam Patinkin, analyst]

So I wanted to ask a few questions about your pipeline of new deals. I think that on the call today, you guys expressed a little bit more enthusiasm than we've heard in the past about what your deal pipeline looks like and how robust it is. And I'm wondering if you could share a little bit more color about that. So first, maybe if you could share maybe what kind of KPIs you look at when you judge how your pipeline is coming along. And then maybe if you could share a little bit more about kind of what systems and processes you've put in place, which I think you also alluded to or mentioned outright on the call, to help us just get a better feel for how you've improved your sourcing funnel over time.

[John Fitzgerald, executive]

Yes, sure. Happy to chat about that a little bit. I mean, I think that we try to break down our KPIs between what we call lead measures, which are things that are both influenceable by our OIRs and predictive of what we call our lag metrics. And so our lead measures would be a combination of industries identified and qualified and then the first instance of outreach to primary business owners. So that could be an e-mail campaign, LinkedIn in-mail campaign, snail mail, or phone call. And then the lag measures would be NDAs executed, SIMs received, that would be on like broker and intermediary channel, indications of interest issued or conversations with owners, and then ultimately, letters of intent executed into closed deals. So we sort of -- it's no different than a typical sort of sales pipeline but sort of bifurcated between lead and lag measures.

[Adam Patinkin, analyst]

And so on all of those data points numerically?

[John Fitzgerald, executive]

Yes, weekly, monthly, quarterly. That's right. By OIR. And in terms of the systems. So we track all of that in a CRM system. It's called HubSpot that we -- our NDA execution, we have an electronic platform that allows us to outsource some of the legal and track all of our NDAs. And we have internal repositories for handling all of those standard forms for NDAs and indications of interest, all of those kinds of things. And so just like lots of activity. I think in the first quarter, we probably said we spooled up a new outsourced sort of sales development resource. And we'll dig into this in the Investor Day quite a bit more, Adam, but I think in terms of outbound first instance of contact with business owners in the first quarter, somewhere like 15,000 contacts conversion rate that translates into conversations with owners is probably low single-digit percent, but then dozens and dozens of NDAs executed and on down through the funnel. So a lot of activity.

[Adam Patinkin, analyst]

Got it. And you would say that this is more activity or the most activity that you've had?

[John Fitzgerald, executive]

Yes. There's just a lot of structure and rigor around both tracking and monitoring. I think what gets measured gets done. And the guys are really leaning into maximizing on the lead measures that are then hopefully predictive of the lag measure.

[Adam Patinkin, analyst]

Got it. And then that's really helpful, and I look forward to hearing more at the annual meeting on the same topic. So then when do you -- so I saw that Kingsway recently posted applications for new OIRs to apply to the company. And I think you mentioned that you've had over 60 applicants for 1 seat. I assume that you're posting those only when you feel like you're getting closer to transactions? Or maybe if you can speak to, obviously, without giving away or saying that you're going to deliver a transaction at any point in time. But when do you make the decision, hey, we need to go out and start recruiting for the next rounds of OIRs.

[John Fitzgerald, executive]

Yes. I mean I think part of it is ongoing. I mean I think that we firmly believe and have an expectation that each one of our current guys is going to get a deal done in the normal time frame. And so we want to be thoughtful about knowing that we want to bring new people on as they move into a President and CEO role that we want a backfill and don't want to be sort of behind the curve. And so a lot of it is an ongoing process. So I wouldn't read too much into the timing but just know that I think it's indicative of our confidence that we're still recruiting. And so we post those job descriptions and profile descriptions sort of quarterly, and then there's kind of ongoing a little bit more organic development that comes through other channels as well. And we'll speak about that at the Investor Day, too. That's a big part of our process is our talent recruitment pipeline and process as well.

[Adam Patinkin, analyst]

Got it. So then let me ask one last question, which is I saw that you guys added Tyler Gordy to your advisory board for KSX. Can you talk about how you utilize your advisory board? So you've got Tom Joyce and you've got Tyler Gordy and you got Will Thorndike on there. How do they interact with your OIR? Is it mostly before a deal gets done? Is it mostly after a deal gets done? Is there a regular line of communication? Is it more structured or informal? Can you just maybe talk through how you utilize that advisory board?

[John Fitzgerald, executive]

Yes. So the structured part is we meet in person full day 3 times a year. We met in March, and that is a fairly structured day. We start with identifying some critical kind of operating areas for new presidents. This year, we focused on talent and talent sort of development and coaching as the President of a small company, and we focused on time management for a new CEO, and we focused on investment underwriting and key criteria in search acquisitions. And so on those 3 topics, Will took one of them, Tom took one, and Tyler took one. And they kind of did a workshop on that. So that was a big chunk of the day. The rest of the day was split between operating updates, key challenges, and issues for each one of our KSX CEOs, a little bit more of like a board meeting, if you will, for each one of those operating companies. And then the last sort of 1/3 of the day was pipeline, new opportunities, quick looks at deals we're looking at. Key [ gota ] beliefs are important bets to help them think about both the attractiveness of the potential target and valuation criteria. So that would be our sort of 3x a year more structured formal gatherings. And then each one of these advisers has encouraged our guys to develop more informal mentor-mentee relationships that I'm not involved in. And so there is, I think, a lot of natural back and forth via text and phone call whenever they have something that maybe they don't want to bring to me but want some advice on that kind of thing. So it's pretty amazing that they give their time, and we have, I think, very impactful gatherings when we all get together.

[Operator]

Your next question is from Douglas Ott with Ann Barry Associates.

[Douglas Ott, analyst]

My first question is regarding the extended warranty business. Even though there have been current headwinds, I'd just like for either or both of you to talk about why this is or isn't a good stand-alone business over the long term.

[John Fitzgerald, executive]

Yes, it's a great question. Obviously, when you have companies whose product sales are tied to the sale of used vehicles that you have natural exposure to the economic cycle, in this case, sort of consumer credit cycle, and so there is some cyclicality and we've been living with that for several quarters, call it, 6 quarters since the Fed started raising interest rates. Probably even before that, with the pandemic and the dislocation in the used car market and all of that. And so I start with there is some cyclicality to the business that would be viewed as a negative. But the underlying economic fundamentals of these businesses also tick a lot of boxes for us. So it is a diversified contractual revenue at a high margin and low working capital requirements, negative working capital. So these are prepaid contracts. And so the returns on tangible capital are infinite because they require negative capital. And so we like the economic characteristics a lot. We don't love the cyclicality.

[Douglas Ott, analyst]

And perhaps you could also talk about the pros and cons of the extended warranty business being paired with a business like KSX.

[John Fitzgerald, executive]

Yes. I mean I think from the beginning, we have always said that the warranty business, they're just like wonderful cash-generating businesses. There's obviously a little bit of volatility in that given the cyclicality. But they see their profits in cash. And so we have always viewed them as -- and we've got wonderful managers running those businesses that are focused on growing them organically, and we've been able to buy a few over the years at reasonable prices. And in the absence of our ability to redeploy the cash they generate by buying more warranty businesses, which has been very hard. We have said, well, this is a wonderful source of cash flow that we can allocate to funding our cereal acquisition program by leveraging KSX. So it is sort of the cash generator for now. And then as KSX scales, it will also be a cash generator to fund ongoing acquisitions as well.

[Douglas Ott, analyst]

Yes. Well, maybe I can ask a follow-up on that response. All things being equal, whatever that means to you, is there a preference for funding either KSX or the warranty business? Or would you like to do both as much as you can, given attractive opportunities?

[John Fitzgerald, executive]

Yes. The warranty businesses require 0 capital to scale because of the capital-light nature of the businesses. And so any capital that we're required to build more in the warranty would be via acquisition. And we have just found these are very attractive businesses and people really like them. And so we have found that a good business in the warranty industry is very difficult to buy. The valuations are much higher than we would be willing to pay. They trade at 15x. And so we're just not going to be a good buyer of those businesses. And so all things being equal, except valuation, we would rather direct our capital to backing really talented young people looking for businesses with similar attributes in the search Accelerator segment.

[Douglas Ott, analyst]

Next question for the KSX segment, I'd like you to remind us of a few of the most important things that you guys continue to do today that are going to benefit shareholders over the very long term.

[John Fitzgerald, executive]

That's a great question. So I think it's a very unique model, Doug. I've been involved in search for a long time. But the idea of matching really wonderful talent to go into a small business that otherwise probably couldn't attract it. Alignment of incentives and then focus on buying the right kind of businesses, large and growing industries where that growth is supported by long-term secular trends. And then within that industry businesses that have great business models, recurring revenue at high margins and low capital intensity and then paying very fair multiples for those businesses. History has proven that we can buy great businesses in growing industries from a founder or retiring founder for under 7x EBITDA and then take a really talented young entrepreneur and put them in and accelerate growth. And that's been the model in search. That's what we're doing in Kingsway. And I think Kingsway is like a really exciting platform to do that in both some long-term nature of our outlook and our ability to hold businesses for a long time and the tax efficiency because of our NOLs.

[Douglas Ott, analyst]

Got it. And one last kind of nitty-gritty question. I'm curious from the prior questioner when it comes to communications with potential OIRs, I'm just curious how much of the communication is outbound versus inbound. And has that changed any at all over time?

[John Fitzgerald, executive]

Look, I think it's both. We do outbound just to build awareness, but the best quality is inbound through the networks that continue to get stronger and bigger. Each one of our current presidents and OIRs have large networks Tyler, Will, Tom, et cetera. And so the communication is both directions, I would say, the higher quality communication is inbound.

[Douglas Ott, analyst]

Yes. Well, I mean I would -- that makes sense that the OIR that you've attracted, they have their own networks, and they wind up becoming brand ambassadors, so to speak, right?

[John Fitzgerald, executive]

That's right.

[Operator]

There are no further questions from the phone lines. I would now like to turn the floor over to James for e-mail questions.

[Unknown Executive]

Thank you, operator. Yes, a number of questions did come in on e-mail. I'll start with the first one. As you have talked about how you think the business conditions that many of the company divisions look to improve over the next 6 to 12 months? Can you give 2 or 3 anecdotes or signs of improvement in these businesses?

[John Fitzgerald, executive]

Yes. Thanks, James. Yes. So kind of break it apart, start with the warranty businesses. I think we mentioned it in the prepared remarks, but I'd point out that cash revenue in the quarter was actually up year-over-year, about 1.5%, and our operating expenses were down 4%. And so we're seeing that pricing that we pushed through at the end of last year starting to come through, and that will come through earned revenue over time. And then sort of anecdotally, Trinity in the -- we didn't talk about equipment backlogs, I think those are clearing up, and that business is starting to pick back up, which is great. And then IWS, which is our vehicle service contract company that distributes the credit unions. They recently signed a very large new credit union customer. I mean they've onboarded several new credit union customers this year and last year, but they recently signed a deal with a very large one, which is slated to launch late second or early third quarter this year, which could be a really nice needle mover. So we're super excited about that. And then in KSX, I mean, I think the big drag on performance there for several quarters has been SNS, our nurse staffing business. We think that the industry has sort of found the bottom. The travel nurse demand has stopped going down. At the same time, over the last many months, Charles has first built kind of tech stack internally and then recruited 3 new recruiters to bring more nurses onto our platform. And in the first quarter, the number of travel nurses on assignment we call TOAs, was up sort of 40% from the same -- from year-end. So at the end of March, there were 40% more TOAs than they were at the end of December. And most of that happened in March. And that ramp continues in April as these recruiters get up to speed. And so the trajectory of TOAs at SNS was going down last year and going up this year. And we think that those 2 lines will cross very soon, and we'll have a much better back half of the year. And then DDI, which we mentioned is significant growth with no corresponding sort of improvement in EBITDA, they're onboarding new hospital customers on every 1.5 weeks, I think. And there's a pretty significant upfront expense to bring that a new hospital into their system, like technology expenses, and in some cases, they're purchasing monitors. And many of those onboarding costs get expensed, but they have a very quick payback period. And so we would -- that business is ramping very significantly, and we're just trying to kind of keep up with the growth while maintaining the very high level of patient care and quality of our services. So we're pretty excited about what's going on.

[Unknown Executive]

Great. And I think you answered a few of the other questions here, but there are some additional ones that came in. It says, can you talk about how the first quarter or 2 of results might look at new businesses we buy? Do you experience some economic drag in the early financial results even if the businesses are doing well and meeting or exceeding expectations?

[John Fitzgerald, executive]

Yes, I think that's a great question. I mean first of all, we have a very long-term view. And so 1 or 2 quarters is not sort of make or break our thesis. And we would absolutely expect some -- I think the word you used is drag here in the first couple of quarters. And if you think about when we buy a small business, they're generally small and relatively unsophisticated and more often than that -- well, I think we can say, have never been part of a public company reporting. And so there's a lot of work we have to do. And so we add incremental overhead out of the gate, audit, both external and internal. We put them on new accounting systems, new HR, and benefits that are maybe enhancements to what was there in the past. Professionalization of these small businesses and creating a foundation that will support their growth. And so yes, there's a J curve is probably not the right term, but a couple of quarter drag, and then they get going. And let's be honest. These are young managers and first-time presidents. And they and we and I make mistakes and you got to work through that too and learn from that and get better. So yes, I think that would be expected, for sure.

[Unknown Executive]

Great. And then continuing along and feel free to say you have nothing additional to add if you feel like you've already answered it. But the next one is it sounds like the software and cardiac monitoring businesses are doing well, but the financials don't yet reflect our upward trajectory. Can you speak to this and tell us when the financials will start to show positive momentum in these 2 businesses?

[John Fitzgerald, executive]

Yes. I mean, I think I spoke to it. I'll just sort of underscore it. SBI mentioned in the prepared remarks, we added 8 new enterprise customers. And once those customers get onboarded, there's a little bit of customization of the software once they come on, that will see a nice uplift in ARR and Drew is very focused on continued penetration in his markets and got a great strategy and a great team. And yes, so I'm very happy about that. And software business is really in his case, about growing ARR talking about the rule of 40, right, ARR growth plus EBITDA margin greater than 40%, and that's what he wants to be there. And so right now, he's leaning into ARR growth as he more fully penetrates this market, the focus may shift towards improving EBITDA margins. But for now, he wants to make it a much larger business.And DDI, as I said, there's a lot of upfront investment to onboard these new hospitals, tech installations. Those are upfront costs, but they have an extremely fast payback, and he's growing very quickly in terms of new hospital adds.

[Unknown Executive]

Excellent. Okay. And one of the questions is, can you talk about the float at the insurance companies and the size of the portfolio? What is the yield today? And how long will it take to get closer to a market rate at 5% plus?

[John Fitzgerald, executive]

Yes. I assume they mean warranty, not insurance, an important distinction. But yes. So the flow -- we have roughly $40 million bond portfolio and another $8 million or so in restricted cash. The bond portfolio is externally managed. And right now, that portfolio sits at about a 2-year duration. And that duration has been coming down over the last couple of years and really is trying to match the sweet spot of the yield curve, which is right there kind of 2 years to pick up the most yield. And so with a 2-year duration and we've been in this higher interest rate environment, kind of a year, I would think probably one more year as these maturities roll over to be fully invested to get back up to that market rate of 5 plus. Right now, the market yield on the portfolio is north of 5%. So as we roll over, that should happen about a year -- when you say, Kent, about a year.

[Kent Hansen, executive]

I would think so. Yes, we're currently yielding looks to say low 3s right now. So that continues to go up as the portfolio continues to turn over.

[Unknown Executive]

Okay. The next question is, do you think we will be able to close on 2 new acquisitions prior to year-end 2024?

[John Fitzgerald, executive]

Well, with all of the safe harbor language that Holly gave since the beginning of the call, yes, look, I mean, I think we've demonstrated our ability to do it. I feel really good about both the level of activity. We talked about those lead measures that Adam asked about and the amount of rocks, our OIRs are turning over and a very healthy pipeline. I feel very good about it. But buying a company, buying 100% of a small business is always a very hard endeavor and with risk and things that go wrong. And so with the proper caveat, that it's hard to predict.

[Unknown Executive]

Got it. And then the last one here is, without giving guidance, do you think that EBITDA growth will start to find positive as we go through the next 2 or 3 quarters?

[Kent Hansen, executive]

Yes. Just because JT mentioned on the warranty side, the claims expense really started to increase about this time a year ago, in Q2 and Q3. So we just believe with not giving any guidance, but keeping at our pace, we should have favorable year-over-year comps going forward.

[Unknown Executive]

Great. I see no further e-mail questions. I'll pass back to the operator.

[Operator]

There are no further questions from the phone lines. I'll turn the floor over to management for any closing remarks.

[John Fitzgerald, executive]

Okay. Thank you, Holly. No additional remarks other than we hope to see you all at our Investor Day in New York on May 20. We'll do kind of a management presentation, a deep dive on KSX. Under the hood on DDI, Peter Dausman will be there to talk about his business. And then a wonderful fireside chat with our KSX Advisory Board member, Will Thorndike. In addition to talking about his book, Outsiders, and his podcast, we'll talk about his experience as a search fund investor and some of the research he's done around that asset class and the power of long-term holding periods. So I think it will be a really nice way to tie it together a bunch of interesting threads and hope you're all there. I think for those that come, I think we have purchased copies of Will's book, and we probably signed them for you. So that would be fun.

[Operator]

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