Group 1 - LRT Capital Management's "LRT Global Opportunities Strategy" reported a net return of -8.00% in September 2025, with a year-to-date return of -0.17% [1] - The strategy faced challenges as market indexes surged, particularly driven by a few overvalued mega-cap stocks, while the broader market declined [1] - The fund's top five holdings were highlighted as key picks for 2025 [1] Group 2 - Chemed Corporation (NYSE:CHE) is noted for its unique structure, operating in two non-correlated sectors: hospice care through VITAS and plumbing services through Roto-Rooter [3] - Chemed Corporation's one-month return was 5.91%, but it experienced a significant decline of 25.88% over the past 52 weeks [2] - As of October 6, 2025, Chemed Corporation's stock closed at $435.38 per share, with a market capitalization of $6.344 billion [2]

Core Insights - Urban Piping has launched a national initiative to replace polybutylene (Poly B) pipes in over 720,000 Canadian homes, starting in Calgary, Edmonton, and Vancouver [1][3] - The initiative is a response to a growing infrastructure crisis, with insurance companies preparing to cancel coverage for Poly B damage due to rising claims costs [3][7] - Emergency service calls related to Poly B failures have surged dramatically, indicating a significant increase in pipe failures as they reach the end of their lifespan [4][6] Industry Context - The insurance industry is tightening restrictions on Poly B coverage, leading to higher premiums and reduced coverage limits for affected homes [8][7] - A Supreme Court of Canada ruling in 2005 deemed polybutylene inadmissible for indemnity insurance, prompting insurers to reassess their policies [7] Market Focus - Urban Piping's expansion strategy targets western Canadian markets with the highest concentrations of affected properties, with Calgary having the highest density of Poly B pipes [9][10] - Edmonton and Vancouver are also key markets, with approximately 28,000 and 240,000 affected homes, respectively [10] Service Model - Urban Piping employs a complete in-house replacement model, managing the entire process from plumbing installation to drywall repair, providing homeowners with a single point of contact [11][12] - The company is offering free estimates and home inspections as part of a national awareness campaign to educate homeowners about Poly B systems and their insurance implications [12]

Core Thesis - Chemed Corporation (CHE) is viewed positively due to its strong market position in hospice care and plumbing services, with significant growth potential in the hospice market [1][2][5] Business Overview - Chemed operates two main businesses: VITAS, the largest hospice provider in the U.S., contributing 58% of revenue and growing around 9%, and Roto-Rooter, a plumbing service provider, contributing 42% of revenue and growing approximately 1.7% [2] - The U.S. hospice market is projected to grow from $29.9 billion to $39.1 billion by 2030, indicating a strong growth trajectory for VITAS [2] Financial Performance - Chemed generates annual free cash flow between $250 million and $367 million, has no debt beyond leases, and holds $249 million in cash, allowing for opportunistic share repurchases [4] - The stock is currently trading near multi-year lows on P/E and EV/EBITDA metrics, suggesting potential for re-rating as market focus shifts to 2026 earnings [4] Challenges and Mitigation Strategies - Recent stock price decline was attributed to a Medicare cap issue in Florida, which limited revenue recognition for VITAS due to higher state reimbursement rates [3] - Management has strategies in place to address these challenges, including increasing admissions and optimizing patient mix, which are expected to mitigate cap risks and create a $30 million cushion for 2026 [3][4] Market Outlook - The stock is seen as having a compelling risk/reward profile, with a potential upside of 26% as earnings improve, while downside risk is limited to approximately 12% [4] - The operational resilience and financial strength of Chemed support a bullish outlook despite recent short-term headwinds [5]

Core Insights - ServiceTitan has announced a strategic partnership with Roto-Rooter, enhancing Roto-Rooter's operations with ServiceTitan's technology to drive growth and profitability [1][2] - The partnership aims to unlock new revenue opportunities and improve operational efficiency across Roto-Rooter's extensive network [2][3] - Roto-Rooter, a leader in plumbing and water cleanup services, operates in 121 company-owned territories and over 345 franchise territories in the U.S. and Canada [6] Company Overview - ServiceTitan is a cloud-based software platform designed to support trades businesses, providing tools for business management and customer experience enhancement [5] - Roto-Rooter, founded in 1935, is the largest provider of plumbing, drain cleaning, and water cleanup services in North America, with a strong commitment to technological innovation [6][3] Partnership Impact - The partnership will leverage ServiceTitan's technology across Roto-Rooter's national call centers and branch locations, aiming to set a new standard for service excellence in the industry [4][3] - Roto-Rooter's field employees and office staff will benefit from increased efficiency and automation, allowing them to focus more on customer service [3][2]

Financial Data and Key Metrics Changes - Consolidated revenue for Q2 2025 was $30.9 million, an increase of 16.9% compared to $26.4 million in Q2 2024 [20] - Consolidated adjusted EBITDA for Q2 2025 was $1.7 million, down from $2.5 million in the prior year quarter [20] - Trailing twelve month adjusted run rate EBITDA for the businesses owned was approximately $22 million to $23 million [16] Business Line Data and Key Metrics Changes - In the KSX segment, revenue increased by 42.1% to $13.3 million in Q2 2025, up from $9.3 million in the same quarter a year ago [20] - Adjusted EBITDA for the KSX segment increased by 31% to $2.4 million compared to $1.8 million in the year-ago quarter [20] - Revenue for the Extended Warranty segment increased by 3.1% to $17.6 million in Q2 2025, up from $17.1 million in the prior year period [23] Market Data and Key Metrics Changes - The four largest midstream natural gas pipeline operators expect to increase their capacity by approximately 17% by 2026, indicating strong demand for additional pipeline capacity in the Permian Basin [9] - The shift from combustible engine motors to electric motors in the Permian Basin has increased from an estimated 10% in 2020 to over 20% today, suggesting a significant industry trend [10] Company Strategy and Development Direction - The company aims to accelerate growth through its public search fund strategy, increasing its target for KSX acquisitions from 2-3 per year to 3-5 per year [7] - The company is focused on building a diversified collection of high-quality services companies that are asset-light and generate recurring revenue [5] - The company is positioning itself to efficiently source, acquire, and scale additional businesses that fit its model [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth potential, stating that the second quarter marked significant progress with three acquisitions and increased capital for growth ambitions [19] - The company believes that the earnings power of its KSX segment is at a record high and is optimistic about future performance [19] - Management noted that the extended warranty segment remains cash generative and is well-positioned for continued success despite recent challenges [24] Other Important Information - The company completed a private placement of common shares, raising $15.7 million to support its growth strategy [6] - As of June 30, 2025, the company held $12.1 million in cash and cash equivalents, up from $5.5 million at year-end [24] - The company recorded a $600,000 expense related to a settlement agreement, which will not recur going forward [27] Q&A Session Summary Question: Clarification on run rate EBITDA - Management clarified that the run rate EBITDA of $22 million to $23 million includes both existing businesses and recent acquisitions [32] Question: Future acquisition expectations - Management indicated that they do not plan to stop acquisitions after reaching their target range and will continue to seek opportunities [38][40] Question: Active OIRs and talent pipeline - Management confirmed there are currently two active OIRs and expressed intentions to increase this number, highlighting a strong pipeline of talent [41][42] Question: Learning from acquisitions - Management acknowledged learning from past acquisitions and emphasized a tighter focus on revenue quality and recurring revenue in future deals [44] Question: Attributes of future OIRs - Management stated that while future OIRs may vary, they will continue to seek candidates with specific attributes indicative of success in small company leadership [47]

Core Insights - Chemed missed expectations on both revenue and earnings for Q2, leading to a 9% decline in share price [1] - The company reported a 4% increase in sales but a significant 22% drop in adjusted earnings per share (EPS) [2] - Management has lowered the 2025 EPS guidance from $25.20 to $22.15, indicating a 4% decline from the previous year [2] - CEO of Vitas Healthcare, Nick Westfall, announced his resignation, adding to the uncertainty surrounding the company [2] Revenue and Profitability - Chemed's Q2 revenue growth was steady at 4%, but profitability issues were evident across all business segments [3] - Vitas Healthcare experienced a 4% revenue growth but faced Medicare cap billing limitations, resulting in a 24% decline in earnings [4] - Excluding one-time impacts, Vitas's adjusted EBITDA remained flat for the quarter [4] Roto-Rooter Performance - Roto-Rooter, Chemed's plumbing business, achieved only 1% sales growth while net income fell by 20% due to increased marketing costs [6] - The company faces challenges from advertising pressures, particularly from Google, which affects visibility in free search areas [6] - Despite these challenges, Roto-Rooter remains the largest plumbing company in North America, warranting investor attention [7] Future Outlook - Chemed is currently navigating several challenges but is valued at 20 times free cash flow, suggesting potential for a turnaround [7]

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Chemed despite higher revenues, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - Chemed is expected to report quarterly earnings of $4.76 per share, reflecting a 13% decrease year-over-year, while revenues are projected to be $619.83 million, a 4% increase from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 9.39% over the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate matches the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, suggesting no recent differing analyst views [12]. Historical Performance - Chemed has beaten consensus EPS estimates in two out of the last four quarters, with a recent surprise of +0.54% when it reported earnings of $5.63 per share against an expectation of $5.6 [13][14]. Zacks Rank - The stock currently holds a Zacks Rank of 4, indicating a less favorable outlook for an earnings beat [12]. Conclusion - Chemed does not appear to be a strong candidate for an earnings beat, and investors should consider other factors before making investment decisions [17].

Financial Data and Key Metrics Changes - Consolidated revenue for Q1 2025 was $28.3 million, an increase of 8.4% compared to $26.2 million in Q1 2024 [16] - Consolidated adjusted EBITDA declined by $800,000 year over year, reflecting lower profitability in the extended warranty segment and higher holdcoat costs [16] - Trailing twelve month adjusted run rate EBITDA for the businesses stood at approximately $18 million to $19 million [15] Business Line Data and Key Metrics Changes - In the Kingsway Search Accelerator (KSX) segment, revenue was $11.7 million, up 23.3% from $9.5 million in the same period last year, with adjusted EBITDA also increasing by 23.3% [17] - The extended warranty segment's revenue was flat at $16.7 million compared to Q1 2024, but cash sales increased by 3.7% year over year [21] - Adjusted EBITDA for the extended warranty segment was $800,000, down from $1.4 million in the prior year quarter [22] Market Data and Key Metrics Changes - Cash sales in the extended warranty segment showed a sequential increase of 9.3% from year-end [21] - Trailing twelve month modified cash EBITDA for the extended warranty segment was up 11.7% year over year [22] Company Strategy and Development Direction - The company aims to capitalize on the search fund model at scale within a tax-efficient public company framework [5] - Recent acquisitions, including Bud's Plumbing and Viewpoint, are expected to enhance the KSX platform and provide additional growth levers [10][11] - The company is focused on driving growth and profitability while maintaining a robust deal pipeline [29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth trajectory in the KSX segment, indicating that many businesses are nearing an inflection point for accelerated growth [13] - The extended warranty segment is entering a more favorable phase of recovery after two challenging years, with signs of returning cash sales growth [14] - The company is excited about the progress made and the potential for future growth in 2025 [30] Other Important Information - The company appointed two new independent directors to strengthen corporate governance [11] - A $6 million private placement was completed to fund the Bud's Plumbing acquisition, increasing cash and cash equivalents to $6.4 million [26][28] Q&A Session Summary Question: Can you provide any color on the Viewpoint acquisition and its strategic fit? - The acquisition was sourced by Drew at SPI and strategically fits by providing a cloud-native software solution for smaller customers in North America while expanding geographic reach [33] Question: Can you explain the J curve with search acquisitions? - The J curve represents the initial negative impact on profitability due to investments in talent and technology, followed by a period of growth as these investments pay off [36] Question: Can you share more about the robust deal pipeline? - The company has experienced operators building their M&A pipelines and is excited about potential tuck-in acquisitions across various platforms [40] Question: Why is the owner of Bud's staying on for a one-year transition? - This is typical in search acquisitions to ensure a smooth transition of customer relationships and institutional knowledge [42] Question: Are there other industries targeted for platforms? - The company evaluates industries based on growth potential and operator fit, considering sectors like insurance brokerage and wealth management for future platforms [46]

Financial Data and Key Metrics Changes - VITAS net revenue was $407.4 million in Q1 2025, an increase of 15.1% compared to the prior year period [18] - Adjusted EBITDA, excluding Medicare cap, totaled $70.3 million in Q1 2025, an increase of 15.9% [20] - Adjusted EBITDA margin in Q1 2025, excluding Medicare cap, was 17.2%, which is 13 basis points above the prior year period [20] - Roto Rooter generated total revenue increase of 1.8% in Q1 2025 compared to the prior year quarter [13] - Adjusted EBITDA at Roto Rooter in Q1 2025 totaled $59.2 million, a decrease of 2.4% compared to the prior year quarter [25] Business Line Data and Key Metrics Changes - VITAS admissions totaled 18,139 in Q1 2025, a 7.3% improvement compared to the same period of 2024 [8] - Average daily census (ADC) for VITAS expanded to 22,244, an increase of 13.1% compared to the prior year quarter [8] - Roto Rooter branch residential revenue increased by 1.7% to $167.2 million, driven by a 3% increase in excavation revenue and a 12.5% increase in water restoration [21][22] - Roto Rooter branch commercial revenue increased by 7.3% to $57.7 million, driven by a 38% increase in excavation and a 14% increase in water restoration [23] Market Data and Key Metrics Changes - Hospital-based admissions represented 49% of overall admissions for VITAS, the highest level since the pandemic [36] - Hospital-directed admissions increased by 12% compared to Q1 2024 [32] - The average revenue per patient day for VITAS in Q1 2025 was $207.58, which is 221 basis points above the prior year period [19] Company Strategy and Development Direction - VITAS management is focusing on increasing hospital-based admissions to navigate Medicare cap issues [11][34] - The company is expanding its operating scope within Florida and other states with certificate of need restrictions [16] - Roto Rooter management is refining its excavation pricing model to balance revenue growth and EBITDA margin [28] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in VITAS's ability to maintain above-average growth both organically and through acquisitions in 2025 and beyond [39] - The company anticipates providing updated earnings guidance as part of the June 30, 2025 earnings press release [29] - Management acknowledged that the growth path seen in 2023 and 2024 was likely higher than what is sustainable due to the Medicare cap [53] Other Important Information - The Covington Health acquisition positively impacted revenue, adjusted net income, and EBITDA by 3 to 4% [21] - The company experienced a $48 million increase in receivables due to the return of funds from a previous audit [56][58] Q&A Session Summary Question: Details on long-term cap management strategy - Management discussed the importance of managing cap cushion and the impact of hospital admissions on average length of stay [44][45] - The focus is on ensuring long-term sustainable growth while navigating regulatory changes [50][51] Question: Cash flow dynamics and working capital - Management explained that cash flow was affected by the timing of receivables and a PIP payment [55][58] - They clarified that the increase in receivables was not indicative of cash flow collection problems [60]

Financial Data and Key Metrics Changes - VITAS net revenue was $407.4 million in Q1 2025, a 15.1% increase compared to the prior year period, driven by an 11.9% increase in days of care and a 3.2% increase in Medicare reimbursement rates [12] - Adjusted EBITDA for VITAS, excluding Medicare Cap, totaled $70.3 million, reflecting a 15.9% increase, with an adjusted EBITDA margin of 17.2%, up 13 basis points from the prior year [13] - Roto Rooter generated a total revenue increase of 1.8% in Q1 2025 compared to the prior year, with gross branch revenue increasing by 3.1% [8][15] Business Line Data and Key Metrics Changes - VITAS admissions totaled 18,139 in Q1 2025, a 7.3% increase from the same period in 2024, with average daily census (ADC) expanding to 22,244, a 13.1% increase [6][21] - Roto Rooter branch residential revenue increased by 1.7% to $167.2 million, driven by a 3% increase in excavation revenue and a 12.5% increase in water restoration [15] - Roto Rooter branch commercial revenue increased by 7.3% to $57.7 million, supported by a 38% increase in excavation and a 14% increase in water restoration [15] Market Data and Key Metrics Changes - Hospital-based admissions represented 49% of overall admissions for VITAS in Q1 2025, the highest level since the pandemic, with a 12% increase compared to Q1 2024 [24] - The average length of stay for VITAS patients increased to 118.7 days in Q1 2025 from 103.9 days in Q1 2024, reflecting the impact of community access initiatives [22] Company Strategy and Development Direction - The company is focusing on increasing hospital-based admissions to manage Medicare cap exposure, which is expected to provide a cushion for revenue growth [7][24] - VITAS is expanding its operating scope in Florida, with new locations in Pasco and Marion Counties, which are anticipated to enhance growth potential [10][25] - Roto Rooter management is refining its excavation pricing model to balance revenue growth and EBITDA margin, particularly in the commercial sector [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in VITAS's ability to maintain above-average growth both organically and through acquisitions in 2025 and beyond [26] - The company acknowledged that the growth path observed in 2023 and 2024 may not be sustainable in the mid to long term due to Medicare cap constraints [36] Other Important Information - The financial results for Q1 2025 were within expectations and guidance, with plans to provide updated earnings guidance in the upcoming earnings press release [20] - The company experienced a significant increase in accounts receivable due to the timing of cash flow related to a previous audit refund [39][40] Q&A Session Summary Question: Details on long-term cap management strategy - Management discussed the importance of managing Medicare cap exposure and the impact of regulatory changes on revenue growth [30][31] Question: Insights on cash flow dynamics and working capital - Management explained that cash flow dynamics were affected by the timing of receivables and a significant refund related to an audit, clarifying that these do not indicate collection problems [37][39]