Good afternoon, everyone, and welcome to the Reliance Global Group 2023 Year-End Financial Results and Business Update Conference Call. [Operator Instructions] Please note, this conference is being recorded..

I will now turn the conference over to your host, Ted Ayvas, Investor Relations. Ted, over to you. .

Thanks, Jenny. Good afternoon, and thank you for joining Reliance Global Group's 2023 Year-end Financial Results and Business Update Conference Call. On the call with us today are Ezra Beyman, Chairman and Chief Executive Officer of Reliance Global Group, and Joel Markovits, Chief Financial Officer of Reliance. .

Earlier today, the company announced its operating results for the year ended December 31, 2023. The press release is posted on the company's website, www.relianceglobalgroup.com. In addition, the company has filed its annual report on Form 10-K with the U.S.

Securities and Exchange Commission this morning, which can also be accessed 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. Beyman reviews the company's operating results for the year ended December 31, 2023, 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, continue, 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 operation, 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 on April 4, 2024.

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 statements.

You should not rely upon forward-looking statements as predictions of future events. Although the company believes that 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 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 in 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 Beyman, Chairman and Chief Executive Officer of Reliance Global Group.

Ezra?.

Thanks, Ted. Good afternoon, and thank you to everyone for joining us today. It's a thrilling time to share our journey and the remarkable progress we've made at Reliance Global Group. This past year has been nothing short of extraordinary. And I'd like to dive into the details that highlight our progress..

In 2023, we achieved a robust 17% and 40% year-over-year increase in revenue compared to 2022 and 2021, respectively. Of the 17% revenue increase compared to 2022, 2/3 came by the way of organic growth and 1/3 was acquisition related.

Our net loss was substantially driven by noncore operating and noncash expense charges such as net estimate on fair value change in acquisition, earn-out, payables and warrant liabilities, goodwill impairment, amortization, interest, share-based compensation and discontinued operation results, tallying a net total of $11.3 million, resulting in a GAAP net loss of $12 million.

When excluding these items to arrive at adjusted EBITDA, our adjusted EBITDA loss in 2023 shrinks to $687,000, representing an improvement of $2.1 million or 75% from 2022..

We attribute much of this improvement to our recently announced one firm strategy, which brings together Reliance nine owned and operated agency across the United States to function as one cohesive unit.

This allows for efficient and effective cross-selling towards collaboration and cross utilization of the company's human capital, which has resulted in increases to both the company's top and bottom line..

Furthermore, we believe that this will strengthen our relationships with carriers, enabling us to negotiate better commissions and bonus contract, thanks to increased business volumes.

The acquisition of Barra & Associates in April of 2022, which was subsequently rebranded as RELI Exchange and was transformed through the addition of cutting-edge technology has changed how we connect with our agency partners nationwide. Our commitment to technology, specifically AI and machine learning has redefined the insurance landscape.

Agents on our platform can now swiftly offer quotes by wide array of carriers ensuring competitive rates across an expansive product range.

This has led to the expansion of our cutting-edge RELI Exchange Agency Partner digital platform, which now boast solutions -- I'm sorry, which now boasts solutions in 46 states access to 35 carriers and a network of hundreds of committed agency partners..

Reflecting on the vast landscape of the U.S. Global Insurance agency brokerage market, which in 2023 had an estimated value of $436 billion, forecast to grow to $613 billion by 2028, the potential is staggering.

Our position is not just to participate but to lead in this expansive yet highly fragmented market, which we believe we can accomplish through our innovative OneFirm strategy, which is already helping us streamline our operations and reduce expenses.

M&A deal volume in our sector was approximately $78 billion or around 17% of the overall market value in 2023..

Reliance remains active and focused on identifying and growing its insurance agency brokerage portfolio through strategic and synergistic acquisitions. As previously announced, the company has an open letter of intent to acquire a leading provider of voluntary benefits to more than 45,000 employees throughout the United States.

This acquisition is expected to generate an adjusted EBITDA of more than $4 million in 2024. The company in question is distinguished in its field, utilizing cutting-edge technologies that elevated above its industry peers. The acquisition would be monumental for Reliance, not just in scale but in strategic fit within our broader strategy..

We expect this transaction to close in the first half of 2024, and I am pleased to provide an update that negotiations are progressing positively with both parties currently in the final stages of definitive agreement discussions. The significance of this type of transaction cannot be overstated.

It is expected to more than double our current revenue with the current company projected to generate over [ $14 ] million (sic) $4 million in revenue during fiscal 2024, while contributing meaningful EBITDA was a high revenue to EBITDA ratio. .

Let's dive deeper into why this is such an important development. The target suite of unique voluntary benefits programs and reached serving over 45,000 individual lives introduces great potential synergies for rounding out accounts through cross-selling for personal lines of insurance to be offered to those consumers through the RELI Exchange..

As previously mentioned, synergies of potential acquisitions are always reviewed thoroughly. And this target, while accretive on its own merit is even more valuable with our existing infrastructure. Our journey up to this point has been marked by careful planning both strategies and a clear vision for the future.

This planned acquisition underscores our commitment to not only enhancing our portfolio, but also to fundamentally transforming the insurance landscape..

With the integration of this new company, Reliance Global will be poised to offer an even broader array of innovative solutions. Further solidifying our prominent position as a company properly deploying technology in the insurance sector in a way that leads to bottom line growth..

As I reflect on our path forward, I'm reminded of why I embarked in this journey RELI driven by my belief in what we're building. My history of creating the third largest mortgage broker in the country and amassing a multibillion-dollar portfolio of multifamily properties speaks to my commitment of not just growth, but sustainable growth..

With more than $5 million of my own personal capital invested in RELI, my commitment to building a tech forward, the market-leading organization has never been stronger. Our focus on operational efficiency, technological innovation and strategic acquisitions is more than just a strategy. It's our mission to redefine what's possible in the industry.

In addition, our planned acquisition represents a pivotal chapter in our story, one that brings us closer to our goal of creating an industry-leading powerhouse..

Reliance Global Group is not on a path to becoming just another player in the market. We're here to build a multibillion-dollar organization. With the foundation we've already established and the strategies we're implementing, we're well on our way. Thank you for your continued support and belief in our vision.

The future is bright and together, we're going to make this vision of reality..

I would like to turn the call over to Joel Markovits, Chief Financial Officer of Reliance Global, who will review the financial results of the year ended December 31, 2023.

Joe?.

Thank you, Ezra and good afternoon, everyone. Good to be here with you today, and I'm excited to share our financial results for the year ended December 31, 2023. Note that all figures presented are approximate. Commission income increased by $2 million or 17% to $13.7 million in 2023 compared to $11.8 million in 2022.

This increase is 67% organic and 33% acquisition-related. Commission expense increased by $592,000 or 19% to $3.7 million in 2023 compared to $3.1 million in 2022. This was driven primarily by the company's increased commission income revenues..

Salaries and wages remained relatively flat at $7.5 million, representing a nominal decrease of $5,000 or minus 0.1% during 2023 compared to 2022. The stagnant costs are a testament to the company's ability to effectively leverage its in-place talent, human capital despite robust increases in top line revenue..

General and administrative expenses decreased by $869,000 or 18% to $4.1 million in 2023 compared to $5 million in 2022. The decrease was driven in part by OneFirm efficiency gain, coupled with lower acquisition-related costs. Net loss was $12 million in 2023 compared to net income of $6.5 million in 2022.

The change in swing was primarily driven by 2023 goodwill impairment charge of $7.6 million, combined with a gain in the fair value change of warrant liabilities of only $5.5 million in 2023 compared to $23.5 million in 2022..

Adjusted EBITDA, our important and very relevant non-GAAP metric improved by 76% or $2.1 million from a loss of $2.8 million in the prior year to a loss of only $670,000 in the current year.

This improvement was a result of increased revenues and decreased AEBITDA costs again, driven in part by OneFirm plan, our strategy to operate leaner as a well-oiled machine covered with lower acquisition-related costs..

Working capital increased by $5.8 million or 126% to $1.2 million in 2023 compared to negative working capital of $4.6 million in 2022. Cash and restricted cash of $2.7 million at the end of 2023 increased by $829,000 or 43% compared to $1.9 million at the end of 2022..

With this, we'll conclude our prepared remarks. We'll be happy to answer any questions or comments participants may have.

Operator, can you open the lines?.

[Operator Instructions] I'm not seeing any questions come into the queue. I will now hand back over to the management for any closing comments. .

Thank you very much. On behalf of Ezra, and entire Reliance team, thank you very much for your participation in this business update. We're excited about the prospects of the company. Thank you for joining us on our journey. Until next time, all the best. .

Thank you very much. This does conclude today's conference. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation..