[Music] All right. Uh, thank you everyone. We're excited for to be here and thank you for uh, coming to our talk.Uh, my name is Chong. I'm the CEO and co-founder of LANCB. I've been making data tools for machine learning and data science for about 20 years.I was one of the co-authors of pandas library and I'm working on LANCB today for all of that data that doesn't fit neatly into those pandas data frames. And I'm Calvin. I lead one of the teams at Harvey Aai working on rag um tough rag problems across mass ...

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Financial Data and Key Metrics Changes - The company reported a net income of $26.4 million, translating to earnings per share of $0.93 and a return on assets (ROA) of 1.28% [4] - Deposits increased by 13% annualized, with total revenue growth approximating 10% [4][5] - The net interest margin for the quarter was strong at 4.07%, maintaining above 4% for eleven consecutive quarters [14] Business Line Data and Key Metrics Changes - Service fee revenue performance improved significantly, with a revenue mix increase of over 300 basis points compared to the previous quarter, now representing almost 26% of total revenues [5] - Mortgage banking income surged by $4.2 million, driven by a 43% increase in origination levels compared to the prior quarter [16] - Total new loan fundings reached $484 million in Q2, marking a 21% increase from the previous quarter and a 29% increase year-over-year [12] Market Data and Key Metrics Changes - The company experienced robust deposit growth, particularly in money market and transaction accounts, with noninterest-bearing deposits now representing 24% of the total deposit mix [11] - The loan to deposit ratio improved to 91.6%, up from 94.3% at the end of the previous quarter [13] Company Strategy and Development Direction - The company is focused on delivering value-added solutions and maintaining a balanced mix of service fee business offerings to support long-term sustainable growth [5][6] - There is a strategic emphasis on relationship-based banking to differentiate from competitors and deepen existing client relationships [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the U.S. economy despite macroeconomic volatility, expecting continued growth in their vibrant Southwestern and Western markets [8][15] - The company anticipates mid-single-digit growth for both loans and deposits for the full year, reflecting a conservative outlook [13][28] Other Important Information - The company reported an elevated level of charge-offs during the quarter, primarily linked to specific credits in the telecom and public finance sectors [7][19] - The allowance for credit loss ratio ended at 1.28%, with expectations for net charge-offs to be in the high 30s to low 40s basis points range for the full year [18][19] Q&A Session Summary Question: Inquiry about charge-offs and specific credits - Management clarified that two specific credits were the primary drivers of the charge-offs, with one credit accounting for about 80% of the total [22][23] Question: Future reserve levels in anticipation of charge-offs - Management indicated that the normalized allowance for credit loss (ACL) is expected to be in the range of the current level, around the 120s [24][25] Question: Deposit growth guidance despite strong first-half performance - Management acknowledged strong deposit growth but maintained a conservative mid-single-digit growth guidance for the second half, citing potential headwinds from timing items [26][28] Question: Insights on deposit mix and pricing leverage - Management noted a favorable mix shift from CDs to money market and transaction products, with limited pricing changes anticipated absent macro rate moves [35][36] Question: Loan growth contributions from newer markets - Management confirmed that newer markets, particularly Southern California, are contributing significantly to loan growth, with strong performance expected to continue [43][44] Question: Capital priorities and potential for M&A - Management emphasized a focus on organic growth while remaining opportunistic regarding M&A opportunities, particularly in the Southwest region [48][62]

Financial Data and Key Metrics Changes - The company reported revenue of $423 million for Q2 2025, an increase of $32 million or approximately 8% compared to the previous year [34] - EBITDA grew to $94 million, representing a sequential increase of approximately $18 million or 24% from Q1 2025, with an EBITDA margin of 22%, marking the best quarterly result in the company's history [35][36] - Free cash flow on an adjusted basis was $36 million, or 9% of revenue, with a commitment to repurchase $40 million in shares [7][36] Business Line Data and Key Metrics Changes - North and Latin America (NLA) revenue was $143 million, up $8 million quarter over quarter, driven by higher well construction activity [42] - Europe and Sub-Saharan Africa (ESSA) revenue increased by $20 million to $132 million, primarily due to activity in the North Sea and Angola [43] - Middle East and North Africa (MENA) revenue was $91 million, slightly lower than Q1, driven by reduced well construction revenue in Saudi Arabia and the UAE [43] - Asia Pacific (APAC) revenue was $57 million, an increase of $6 million, reflecting higher well flow management activity in Malaysia, Indonesia, and Brunei [44] Market Data and Key Metrics Changes - The company secured new order awards of $595 million in Q2 2025, marking the second highest quarter of new order intakes in its history [10] - The backlog increased to approximately $2.3 billion at the end of Q2 2025, indicating a healthy pipeline of future work [11] - The Brent crude price fluctuated within a $20 per barrel range, peaking at $80 per barrel in June, impacting market dynamics [12][13] Company Strategy and Development Direction - The company is focused on maintaining cost and capital discipline while expanding EBITDA margins and free cash flow generation [15][46] - The strategic focus is on well intervention, production optimization, and digital services, aligning with market trends towards optimizing existing assets [14][15] - The company aims to leverage its strong international and offshore presence to navigate market fluctuations and capitalize on growth opportunities [15][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the oil and gas industry despite recent challenges, with expectations for new project approvals to return to growth in 2026 [14][26] - The company anticipates mid-single-digit revenue growth for 2025, supported by customer scheduled activities and product delivery [27] - Management highlighted the importance of customer engagement and operational execution in maintaining a positive outlook [96] Other Important Information - The company is implementing a cost optimization program called Drive 25, targeting $30 million in run rate cost savings [44] - Total available liquidity at the end of Q2 was approximately $343 million, with a new credit facility providing up to $500 million in available liquidity [45] Q&A Session Summary Question: Was the strong Q2 orders mostly timing or indicative of future growth? - Management indicated that the strong orders were a mix of contract renewals and timing, with robust bidding activity continuing [51][52] Question: What are the opportunities for improved free cash flow conversion? - Management emphasized ongoing margin expansion and cost efficiency initiatives, with flexibility in CapEx spending to enhance free cash flow [53][56] Question: How does the company view the segments for the remainder of the year? - Management expects continued margin expansion and stable performance across segments, with a solid execution quarter in Q2 [64] Question: What is the outlook for the subsea well access segment? - Management noted that the recent decline in revenue is not expected to be sustained, with a strong fourth quarter anticipated [78][80] Question: What are the dynamics in the MENA region? - Management highlighted that MENA remains the most profitable geography, with strong activity levels, particularly in Saudi Arabia and Algeria [86]

Summary of the Conference Call Company Overview - The company operates in the prepaid wireless market in the United States, catering to approximately 100 million prepaid wireless subscribers, primarily targeting the blue-collar working class and government-subsidized demographics [3][4] - The company has integrated with AT&T as a Mobile Virtual Network Operator (MVNO), with the MVNO market projected to grow from $30 billion in 2023 to nearly $53 billion by 2031 [4] Distribution and Growth Strategy - The company currently has around 9,000 retail points for distribution, with a goal to expand to over 100,000 stores [6][8] - The target market frequently visits local community stores, which are crucial for the company's distribution strategy [6][7] - The company aims to help store owners increase revenue through transactions and foot traffic [7] Revenue Channels - The company has three main revenue channels from its contract with AT&T: 1. **Prepaid Brand (LinkUp)**: Competing with other prepaid companies like Cricket and Boost [10] 2. **Government Subsidized Channel (Torch Wireless)**: Focused on the Lifeline program, which provides free connectivity to eligible households [11][12] 3. **Wholesale to Other Wireless Companies**: The company is integrating with other MVNOs on its platform [13][14] Financial Performance and Projections - The company is confident in its revenue guidance due to a strong team with extensive experience in the prepaid market [15][16] - The Lifeline program is expected to scale faster than previous programs, with projections for cash flow positivity by the end of 2025 [18][26] - The company is currently seeing subscriber growth in the thousands per day, with a focus on states that offer higher payments under the Lifeline program [24][25][26] Market Dynamics - The prepaid wireless industry is relatively new, having gained significant traction since 2009, indicating potential for continued growth [16] - The company has diversified its revenue streams to avoid reliance on a single channel, which mitigates risks associated with funding uncertainties [21] Future Outlook - The company anticipates exponential growth as it scales its four revenue channels, all of which are recurring revenue models [23][24] - There is a strong emphasis on real-time visibility of growth metrics to keep shareholders informed [24][25] Conclusion - The company is positioned for significant growth in the prepaid wireless market, with a robust strategy to expand its distribution network and diversify its revenue streams, while leveraging its partnership with AT&T to enhance its service offerings and market reach [4][10][21]

Financial Data and Key Metrics Changes - For Q2 2025, GATX reported net income of $75.5 million or $2.6 per diluted share, an increase from $44.4 million or $1.21 per diluted share in Q2 2024, which included a net negative impact of $8 million or $0.22 per diluted share from tax adjustments and other items [3][4] - Year-to-date 2025 net income was $154.1 million or $4.21 per diluted share, compared to $118.7 million or $3.25 per diluted share for the same period in 2024, which also included a net negative impact of $7.4 million or $0.20 per diluted share from tax adjustments and other items [4] Business Segment Data and Key Metrics Changes - In Rail North America, fleet utilization was 99.2% at quarter end, with a renewal success rate of 84.2% and a renewal rate change of 24.2% for the quarter [5][6] - GATX Rail Europe had a utilization rate of 93.3% at quarter end, facing challenges due to macroeconomic headwinds and slower GDP in Germany, impacting fleet utilization [7] - GATX Rail India maintained high fleet utilization at 99.6% at quarter end, benefiting from ongoing infrastructure investments [8] - The engine leasing joint venture with Rolls Royce produced strong results, driven by robust demand for aircraft spare engines [8] Market Data and Key Metrics Changes - The secondary market in North America remains robust, generating over $34 million in remarketing income during the quarter, totaling approximately $65 million year-to-date [6] - The European railcar leasing market is facing challenges, but the long-term outlook remains positive despite current conditions [7] Company Strategy and Development Direction - GATX is increasing its 2025 full-year earnings guidance to a range of $8.5 to $8.9 per diluted share, excluding the impact of tax adjustments and the Wells Fargo transaction [10] - The company is optimistic about the pending Wells Fargo Rail transaction, which is currently undergoing regulatory reviews [9] Management's Comments on Operating Environment and Future Outlook - Management noted that the market for existing railcars remains strong, with no significant changes expected in lease rates without external catalysts [13][14] - The company does not anticipate any near-term impacts on demand from the recent merger announcement in the rail industry, as capital continues to flow into the secondary market [39][42] Other Important Information - The company expects to see healthy investment activity in the engine leasing business in the second half of the year, with total investment volume anticipated to exceed $800 million [30] - The Rail International segment's profit is tracking at the lower end of expectations, primarily due to exchange rate impacts and challenges in the intermodal market [45] Q&A Session Summary Question: Impact of potential transcontinental merger on leasing business - Management stated it is difficult to assess the immediate impact due to timing and uncertainty, but long-term efficiency improvements could benefit railcar lessors [12] Question: Future lease renewal rates - Management indicated that the market remains strong, and absent any external stimulus, lease rates are expected to remain flattish [14][16] Question: Update on engine leasing profit mix - Operating income constituted about 85% of total income for the second quarter, with expectations for strong performance in the engine leasing business [22][23] Question: Investment volume in wholly owned portfolio - Management expects to see some investment volume in the second half of the year, with a target of around $200 million for the year [29] Question: Update on Wells Fargo transaction - Management confirmed that due diligence was largely completed prior to the announcement, and they remain positive about the transaction [51][52]

Financial Performance - The Funds From Operations Per Share (FFOPS), adjusted for comparability, reached $0.68 for 2Q25 and $1.33 for 1H25[12] - Year-over-year FFO per share growth was 6.3% for 2Q25 and 4.7% for 1H25[12] - The company increased 2025 FFO per share guidance by 1 cent at the midpoint, implying 3.9% year-over-year growth[19, 81] - Same Property Cash Net Operating Income (NOI) increased by 2.2% for 2Q25 and 4.6% for 1H25 across the total portfolio[12] Portfolio Metrics - Occupancy rate for the Defense/IT Portfolio was 95.6% occupied and 96.8% leased[12] - Total leasing activity amounted to 724,000 square feet in 2Q25 and 1.4 million square feet in 1H25[12] - The company increased the annual vacancy leasing target to 450,000 square feet from 400,000 square feet[12, 55] - Tenant retention rate for the total portfolio was 90%[12] Strategic Factors - The One Big Beautiful Bill Act (OBBBA) passed in July 2025, adding approximately $113 billion for Department of Defense (DOD) activities in FY 2026, representing a 13% increase over FY 2025 enacted levels[30] - The company expects to renew approximately 95% of large leases (greater than 50,000 square feet) expiring through year-end 2026[66]