Information Services Corp

TSX:ISV

Earnings Call Analysis

ISV Announces Record Revenues in 2023

ISV's 2023 marked a year of strategic expansion, new record-setting financials, and essential certification achievements. With revenue hitting an all-time high of $214.5 million, 15% more than the previous year, the company attributed its growth to an expanding service base which included adding two new registries and successful contracts in the international arena, boosting its global reputation. Despite higher finance costs, net income reached $25 million with operational cash flow increasing by $13.2 million. The company ended the year with $24.2 million in cash and a substantial debt of $177.3 million due to strategic investments. Forecast for 2024 looks promising with expected revenue between $240 million and $250 million, and adjusted EBITDA predicted to be in the range of $83 million to $91 million.

Historic Year with Extended Contract and Strategic Expansions

ISV celebrated a landmark year by securing an extension of its exclusive rights to operate the Saskatchewan registries until 2053, a deal that's projected to generate $1.3 billion in cash flow and bolster total assets by 90%. This move not only cements its commitment to registries, but also aligns with ISV's growth strategy through the acquisition of two additional registries. The company's global expansion was also evident through securing contracts on the international level, affirming its reputation for delivering robust technology solutions.

Financial Highlights of a Record-Breaking Year

ISV reported record revenues of $214.5 million, up 15% year-over-year, and record adjusted EBITDA. Notably, the company saw a decrease in net income due to higher expenses associated with financing and amortization. Nonetheless, net cash flow from operating activities increased by $13.2 million. Looking at the balance sheet, the total debt rose significantly to $177.3 million owing to the Saskatchewan contract extension. Despite this, free cash flow reached a record $50.8 million, deeming the financial performance strong and robust.

Guidance for Accelerated Growth in 2024

Revenue for 2024 is forecasted to be in the range of $240 million to $250 million, with adjusted EBITDA expected to range between $83 million and $91 million. These projections are backed by organic growth primarily from the Services segment, although targeted M&A is also on the table. The dividend also remains a cornerstone of shareholder return with the board approving a quarterly cash dividend of $0.23 per share.

Aligning Strategy for Future Success

The company's updated strategy underscores a five-year goal of meaningful growth, both organically and through meticulous M&A. These plans are built on the back of consistent performance and a focus on technology, customer satisfaction, and enhancing service offerings. ISV is intent on leveraging its established strengths while pursuing prudent investments and partnerships.

Investing in People, Technology, and M&A Outlook

Significant investments were made in sales, customer support, and technology infrastructure, with a renewed focus on customer-centric growth strategies. On the M&A front, ISV continues to look for accretive acquisitions that resonate with ISV's core competencies. Despite the guidance being based on organic growth, the company remains open to strategic M&A opportunities in 2024.

Operational Efficiency and Embracing AI Technology

ISV plans to maintain its margin numbers by reaping the benefits of previous investments in people and technology. Additionally, there's an emphasis on integrating AI and automated processes to streamline operations, a reflection of ISV's commitment to staying at the forefront of industry advancements.

Earnings Call Transcript 2023-Q4

[Operator]

Hello, and thank you for standing by. Welcome to ISV Fourth Quarter and Year-End Earnings Conference Call and Webcast. [Operator Instructions]

I would now like to hand the conference over to Jonathan Hackshaw, you may begin.

[Jonathan Hackshaw, executive]

Thank you, [indiscernible], and good morning to everyone joining us today. Welcome to ISV's conference call for the fourth quarter and year ended December 31, 2023. On the call today with me are Shawn Peters, President and CEO; and Bob Antochow, Chief Financial Officer.

This morning, Shawn will take you through some of the highlights of the year. Bob will then provide some financial and operating highlights for the year as well as speak to our outlook and guidance for 2024 before passing the call back over to Shawn for some closing remarks, including the growth plan we announced today.

Before we begin, we would like to remind everyone that we will only be summarizing results today. The company's financial statements and MD&A have been filed on SEDAR+ and are available on our website. We encourage you to review those reports in their entirety. I would also like to remind you that any statements made today that are not historical facts and are considered to be forward-looking statements within the meaning of applicable securities laws.

These statements may involve a number of risks and uncertainties that are described in detail in the company's SEDAR+ filings. Those risks and uncertainties may cause actual results to differ materially from those stated. Today's comments are made as of today's date and will not be updated, except as required under applicable securities laws.

Today's conference call is being broadcast live over the Internet and will be archived for replay shortly after the call on the Investors Section of our website. With that, I would now like to turn the call over to Shawn.

[Shawn Peters, executive]

Thank you, Jonathan, and good morning to everyone joining us for today's call. 2023 was one of the most significant years that ISV has had as a public company, securing an extension with the government of Saskatchewan for the exclusive right to operate the Saskatchewan registries until 2053, marked a milestone for ISV, projecting an estimated $1.3 billion in cash flow through the extended period and an impressive 90% increase in total assets.

This achievement, the first to be successfully completed in the Canadian registry market since ISV secured its initial master services agreement with the government of Saskatchewan in 2013 and underscores the company's commitment to registries and the opportunities for sustained growth and long-term stability that they represent.

During the year, our expansion continued, adding the operational rights for 2 new registries, the Bank of Canada Bank Act Security Registry and the International Registry of Interests in Rolling Stock. These additions reflect our strategy to expand our service offerings, enhancing our presence in key registry sectors. We also attained notable success in the international front, securing multiple contracts for our Technology Solutions segment.

Contracts such as the State of Michigan, States of Guernsey, and the Department of Registrar of Companies, and intellectual property in Cypress demonstrate the company's global reach and reputation for delivering high-quality solutions. At the same time, our Services segment continued to be the driver of organic growth in a market that continues to see strong demand for our solutions.

In line with our focus on high-quality solutions and overall excellence, we also achieved ISO 27001 certification enterprise-wide, underscoring our dedication to maintaining the highest standards of security and reliability in our operations. The investments we made in 2023, while still delivering record revenue, record adjusted EBITDA and maintaining our robust quarterly cash dividend payments, has positioned us for the next stage of our growth, beginning in 2024 and underscores our strong financial performance and dedication to delivering shareholder value.

I'll now turn the call over to Bob to discuss some financial highlights before providing some closing thoughts.

[Robert Antochow, executive]

Thank you, Shawn, and good morning, everyone. As Shawn said, 2023 was a record year for the company with new record highs in revenue and adjusted EBITDA. Results were very strong and aligned with the company's overall growth plan. This performance was driven by a number of factors, which I'll talk about. Revenue was a record $214.5 million for the year ended December 31, 2023, an increase of 15% compared to $189.9 million in 2022.

This growth was due to fee adjustments implemented in July for the Saskatchewan registries and registry operations, which offset reduced volume in the land registry, reflecting reduced activity in the Saskatchewan real estate sector due to a higher interest rate environment, a full year of revenue from the Ontario Property Tax Assessment Services division of Registry Operations in the current year compared to 7 months in the prior year, customer and transaction growth in Services Regulatory Solutions division and execution of third-party solutions and implementation contracts in Technology Solutions.

Net income was $25 million or $1.41 per basic share and $1.39 per diluted share for the year ended December 31, 2023, compared to $30.8 million or $1.75 per basic share and $1.71 per diluted share in 2022. The year-over-year decrease is due to a higher net finance cost, amortization expense and acquisition, integration and other costs related to our Saskatchewan contract extension and the commencement of registry enhancements offset by increased adjusted EBITDA contributions from registry operations, services and technology solutions.

Net cash flow provided by operating activities was $56.8 million for the year ended December 31, 2023, an increase of $13.2 million compared to 2022. This was attributable to higher contributions from all operating segments, augmented by a net decrease of noncash working capital of $2.6 million related to accounts payable and the timing of income tax payments.

Adjusted net income was $34.2 million or $1.92 per basic share and $1.90 per diluted share for the year ended December 31, 2023, compared to $33.3 million or $1.89 per basic share and $1.86 per diluted share for the year ended December 31, 2022. The year-over-year increase was due to increased contributions from all operating segments, partially offset by increased interest expense due to an increase in long-term debt to fund the upfront payment for extension and higher interest rates as compared to the prior year.

Adjusted EBITDA was a record $72.9 million for the year compared to $64.4 million last year. The growth in adjusted EBITDA relates to the same reasons I mentioned for the increase in revenue, partially offset by increased cost of goods sold associated with the growth in the Services Regulatory Solutions division, along with increased investment in the corporate segment in people and technology.

Adjusted EBITDA margin for the year was 34%, consistent with 2022. Adjusted free cash flow for the year ended December 31, 2023, was a record $50.8 million, which represented an increase of $6.4 million compared to $44.4 million in 2022. The increase was due to stronger results from our operating segments, partially offset by increased cash interest expense during the current year due to increased borrowings to fund the upfront payment and an increase in interest rates.

Turning to our balance sheet. With respect to our debt, as at December 31, 2023, the company had $177.3 million of total debt outstanding compared to $66 million as at December 31, 2022, mainly due to the borrowings associated with the extension agreement signed in July 2023.

As part of the extension, the company increased its credit facility and entered into an amended and restated credit agreement to fund upfront payment [indiscernible] Saskatchewan of $150 million. The company is focused on continuing sustainable growth and deleveraging its balance sheet towards a long-term net leverage target of 2 to 2.5x.

The prepayments described in management's discussion and analysis for the fourth quarter and year ended December 31, 2023, are a reflection of the deleveraging plans. After all this, as at December 31, 2023, we held $24.2 million in cash compared to $34.5 million as at December 31, 2022.

Further details on our debt and our credit facilities can be found in our MD&A and financial statements. In February, we provided our outlook and guidance for 2024, and this is also included in our MD&A, which I encourage you to read. As a reminder, we have guided that for 2024, revenue is expected to be between $240 million and $250 million.

Adjusted EBITDA is expected to be between $83 million and $91 million. Before I turn the call back over to Shawn, I'd like to finish by highlighting that we also announced yesterday that our Board of Directors approved a quarterly cash dividend of $0.23 per share. That dividend will be payable on or before April 15, 2024, to shareholders of record as of March 31, 2024. I will now turn the call back over to Shawn for some concluding remarks.

[Shawn Peters, executive]

Thanks, Bob. I've been fortunate to have been part of the ISV journey over the last 10 years. As I reflect on that time and all of our accomplishments, one thing is obvious. ISV is a tremendous business, one which has gotten better and better over time and one which will get even stronger in the future.

In our MD&A, you'll see that we've updated our strategy, outlining our goal for meaningful growth through our existing business, augmented by further M&A. Notably, this is just an evolution of our previous strategy. When we completed our IPO in 2013, we had the building blocks to do something special with ISV.

We partnered our strong business with a clear understanding of the market trends at the time and how we expected them to unfold in the years to come, and we executed against that. As a result, over the past 10 years, we've doubled the size of the company on a revenue and adjusted EBITDA basis.

As discussed with shareholders and potential investors over the last couple of years, in 2022 and 2023, we deliberately invested in our people and our technology to be able to scale our growth, all while achieving record results. With that in place, we've outlined our goal for the next 5 years in our updated strategy, which includes substantial growth.

Much of this will come from our focus on organic growth, especially from our Services segment, which we started in 2015 and have spent the last 8 years strengthening the offering and making us the partner of choice for our customers. The balance, as you would expect, will be achieved through targeted M&A which, as you know, has been underpinned by our prudent and proven approach.

As it stands today and is reflected in our 2024 guidance, the first year will be driven by organic growth, mainly from our Services segment with support from our Registry Operations and Technology Solutions segments. This is by design and a reflection of the strength of the house we've assembled using the building blocks we had at the start of our journey.

As we move into our next phase, I know that if it's anything like our last, it will mirror our track record for consistent performance but with an increased focus on growth, which will be to the benefit of all of our shareholders. I look forward to the journey. With that, I'll now turn the call back over to Jonathan.

[Jonathan Hackshaw, executive]

Thank you, Shawn. [indiscernible], we'd now like to begin the question-and-answer session, please.

[Operator]

[Operator Instructions] Our first question comes from the line of Scott Fletcher with CIBC.

[Scott Fletcher, analyst]

I wanted to ask on the longer-term outlook. So if I adjust out the impact of the incremental MSA fees in this year and the guidance next year, I get to an organic growth rate, sort of in the range of 10% for 2024. Is that a level that you think can be sustainable over the next 5 years with M&A sort of supplementing the difference that gets you to double by 2025?

[Shawn Peters, executive]

Yes, Scott, it's Shawn. Thanks for the question. I think we've shown over the last number of years that we've been able to achieve organic growth levels in excess of that 10%. And that's a combination of just the increase in our service offerings and our focus on technology as well as you just said, which is accretive acquisitions that allow us to continue that.

So I think as we move forward over the next 5 years, that is part of our plan that a significant part of our growth is going to come through organic, which is the existing businesses we have today, combined with accretive M&A and organic growth in those acquisitions.

[Scott Fletcher, analyst]

And then just to clarify something you said earlier, the organic growth, it's likely to mostly come from the Services segment. I mean is that -- it sounds like that's the case for 2024, but is that likely the case through 2028 as well?

[Shawn Peters, executive]

Yes, it will continue through 2028. But as -- we're also focusing on other segments. Our realigned acquisition in our registry operations services. Registry Operations segment is an example of how we're thinking a little bit outside the traditional in there and looking for growth as well. So I think services, for sure, will be the strongest and maybe most dominant one in the early stages, but we're looking to grow all 3 of the segments organically as well.

[Scott Fletcher, analyst]

Okay. And then I'll ask one question on the M&A front. If you could share anything in terms of any color on what types of businesses you plan on targeting? And then what a reasonable leverage level is before you would start looking at M&A, given that you're still sort of working through the impact of the MSA?

[Shawn Peters, executive]

Yes. So I'll maybe start and ask Bob to jump in if I miss something. What kind of companies we're looking at, I think it would be consistent with what we've looked at in the past, which is we always look for companies where we believe that we can add value, where we've got some expertise where they've got a strong business with a strong client base, and we think that we can do some continued organic growth.

So I don't think any of that's going to change. I think the extent of how far and our services, I guess, expand, is really growing right now. And you've seen that in the acquisitions that we've made, so where we might have been very, very focused on companies in and around registries early in the days, I think we've expanded our thinking there now to sort of anything that's in our wheelhouse around information technology, data management, that type of thing.

From a leverage perspective, we've always said that we'd be comfortable with leverage up to 4x. And we sort of, as you know, hit that here with our funding around the MSA extension. I think the prepayments that we've done in 2023, and we expect to continue to do in 2024 are going to bring that down and bring it down very quickly actually. And then I think the acquisitions that we look at are always very accretive, and we think that we'd be able to lend against them but still maintain that sort of 4, 4.5x ratio. So nothing outside of what we've said in the past or that would be out of the ordinary.

But we think that we've got a strong business that will allow us to continue to do M&A, particularly if we're as focused and as targeted on the M& as we've been in the past, that will allow us to maintain that leverage.

[Operator]

Our next question comes from the line of Jesse with Cormark Securities.

[Jesse Pytlak, analyst]

Just wondering if we can update on where you are in the development of the Regulis platform and when [indiscernible] begin contributing revenue?

[Shawn Peters, executive]

Yes. So the Regulis went live last Friday, March 8 on Friday. So it is live now. As you know, it's a brand-new registry and the protocols have all been adopted and the transactions are starting to happen. We'll have more about that really in our Q1 MD&A. I think it's a bit early for us to talk too much about it now other than the fact that it is live, and we're excited that that's happened.

[Jesse Pytlak, analyst]

Okay. Maybe just on Tech Solutions. The internal revenue picked up quite a bit this quarter. Should we kind of think of this as a new baseline number? Or is there maybe something onetime in the quarter that drove that growth?

[Robert Antochow, executive]

Yes. So thanks for the question, Jesse. So yes, the internal revenue, like our Technology Solutions division, both as party contracts and then it provides services to our internal divisions.

And so one of the -- a couple of those internal items. The big one is the registry enhancements related to registry operations. And then other systems as we -- the example would be Regulis since we launched out on March 8. That would be another example of internal system developed.

[Jesse Pytlak, analyst]

Okay. And then just one final question, kind of understanding that you might slow down a little bit on M&A, kind of given that it's more of an organic growth focused here. Can you still just speak to your pipeline and maybe how you plan to kind of nurture that through maybe acquired M&A [indiscernible] over the next couple of quarters?

[Shawn Peters, executive]

Sure, Jesse, yes. So -- and just to be clear, I don't think we're slowing down on our M&A. What we put out in the guidance is what we think we can achieve through our organic growth. We are constantly sort of looking for companies that make sense for us, and we've always taken that same approach as the right company at the right time. And as I said before, where we think we can add value. We're cognizant, of course, of the leverage level.

And just in the previous question, I think when we look at companies, we look for good companies and we'd also be able to borrow against and still maintain our leverage ratio. So I don't think we're slowing down on M&A. We are just very focused. We've done a good job over the last year of integrating the acquisition further, integrating the acquisitions we've made and focusing on organic growth, and that's paid off, and we're going to continue that in 2024.

But our pipeline for M&A is still sort of the same as it was. We look at lots of options. We figure out if there's anything that makes sense and then we move forward. So we've issued our guidance based on the organic growth in 2024, but that doesn't preclude any M&A in 2024.

[Operator]

Our next question comes from the line of Natalya Davies with Edison Investment Research.

[Natalya Davies, analyst]

Great. Just [Technical Difficulty]

[Shawn Peters, executive]

Sorry. We lost you, Natalya. Sorry. We are not hearing you, Natalya. Can you repeat the question. Could we go to another caller and then come back to the Natalya?

[Operator]

Our next question comes from the line of Stephen Boland with Raymond James.

[Stephen Boland, analyst]

Just a couple of questions on asset recovery. You mentioned the used car prices impacting some of the revenue. Can you just remind me of your -- the total fee structure for that business?

[Robert Antochow, executive]

Yes, a portion of that revenue comes from commission on -- to the extent we recover the asset and we sell it. However, the other portion comes from where we pursue the case file [indiscernible]. In that case, we just had an administration fee. So most of the revenue -- the biggest chunk of the revenue comes from the commission when we actually take the asset to sale.

And of course, that sale price is based on what the market is for used cars at the time. And so what we're seeing is with the increased supply of vehicles now since COVID and the chip shortage is over, is that there's more used cars on the market, and hence, why the price that we can sell used cars for has dropped.

[Stephen Boland, analyst]

Okay. And is the majority of the revenue driven by used cars or used vehicles versus like boats, power sports, et cetera? Is it mostly used vehicles...

[Shawn Peters, executive]

Yes. [indiscernible] vehicles.

[Stephen Boland, analyst]

Okay. And last question on that is, you said that the revenue should grow by winning new customers. Is that lenders that are beginning to outsource or you're taking market share from another asset recovery firm?

[Robert Antochow, executive]

We're -- it's a balance of both. We've got certain lenders, they use multiple customers. And of course, part of it is on performance, your performance in terms of how you get increased allocations of case files to work. But then part of it is we're pursuing new customers in that business as well. And then one of the other factors is with the increased interest rates here, we're now seeing some impact where lenders are -- activity has picked up, and we did comment that we are seeing increased assignments in the quarter.

And part of -- but then not increased assignments while positive, you then have what we're recovering on the sales is a lower value because the used car prices dropped. So in that business to balance [indiscernible] recovering per vehicle.

[Operator]

Our next question comes from the line of Natalya Davies with Edison Investment Research.

[Natalya Davies, analyst]

Hi. Can you hear me now?

[Shawn Peters, executive]

Yes, perfectly. Thanks. Go ahead.

[Natalya Davies, analyst]

Sorry about that. So firstly, just on the Services division, how sticky are the customers in the regulatory solutions space? And do you expect customer and transaction growth in this area to continue in the short to medium term despite the anticipated interest rate cut?

[Robert Antochow, executive]

Yes. We continue to expect growth in that regulatory solutions division. That's going to be the division with the biggest percentage of growth. As we mentioned, we're seeing increased business from financial institutions, equipment and auto financers. And part of that is due to the increased regulatory requirements on lending in this higher interest rate environment as well as announcements such as [indiscernible] in Canada, which is increasing their monitoring of financial institutions.

And so they may be -- they're going to continue with that. So we do expect that to continue to grow.

[Shawn Peters, executive]

And maybe to the first part of your question to tell you how sticky are the customers, they're generally fairly sticky. We don't take that for granted though because most of these clients are larger clients and do have RFP processes every few years.

And so we make sure that the product offering is what they need and that they're very happy. We've always said that customer satisfaction is one of our core values, and we pay attention to that to make sure that they do stick around.

[Natalya Davies, analyst]

Great [indiscernible] was there any incremental revenue from the full year contribution [indiscernible]?

[Jonathan Hackshaw, executive]

Sorry, Natalya, you are breaking up again. Can you try one more time? Natalya, we'll follow up after the call and get your questions answered. I'm afraid we're having some communication issues on your line. So I'm going to ask to go to the next call if there is one.

[Operator]

Our next question comes from the line of Paul Treiber with RBC Capital Markets.

[Paul Treiber, analyst]

Just wanted to dig into a bit on the margin side and also the investments that you've been making. Can you just elaborate at a high level, like the nature of investments that you've made in people and technology? And then also, can you comment on the use or planned use of AI to help automate some of your internal processes?

[Shawn Peters, executive]

Sure. I'll start that off, even though it's a margin question. I'll turn it over to Bob in a second. Just on the investment in people and technologies, really where we were focused because this is an organic growth sort of year in 2023 and 2024, as we focused on our sales and business development folks and also building the infrastructure beneath that [indiscernible] I just talked about our customer service and how we make sure we look after customers. We have to have the infrastructure to be able to service the customers. And that's both people and advancements in our technology like our registry complete and our recovery complete product. So it's really been around the customer, whether that's on the sales and marketing side or on the customer support side.

Now at the same time, that necessitates people in IT because, as I just mentioned, the investments in technology, these are in-house systems, and we've really ramped up our investment in our technology as well as our investment in security protocols like ISO 27001. So there's been some additions from that standpoint as well.

So it's really been across the company, but all very customer-focused. So I'll maybe pause there and let Bob talk about sort of how the impact of that is on the margin number itself and then we'll come back to your AI question.

[Robert Antochow, executive]

Yes. Thanks, Shawn. So in terms of our corporate segment, overall in Technology Solutions, those are the big sort of areas where we've done the investment in people and technology. So costs over the year, up approximately $1 million in those areas. And within the corporate segment, additionally, as part of our growth strategy, it's also in our business development area. We're also investing in people to be able to support that growth that we've laid out.

[Shawn Peters, executive]

Yes. So then coming back to your AI question. We've used automated processes for a number of years, although just didn't call them necessarily AI. But it is -- it's obviously a field that's got a lot of interest and eyes on it right now.

It is something that we continually look at, especially as we move forward with our registry enhancement program and if there's any opportunities in our software to use AI. There are lots of areas where we continue to focus on how to process efficiently and those might be [indiscernible]. So it's something that's definitely in our road map and we use it -- look at it continually as well as what we're already doing in that space.

[Paul Treiber, analyst]

That's helpful. And then just looking at like the margin numbers, particularly in regard to your '24 outlook, it does imply slight margin expansion. The -- what's driving that margin expansion. Is it primarily operating leverage off the organic growth that you're assuming?

[Shawn Peters, executive]

Well, it would be a couple of things. We are -- as we said, over 2022 and 2023, we made the investment in people and technology we just talked about, which had an impact on margins, as Bob outlined. So I think what we see in 2024 is the realization of that. So adding the extra revenue without having to add the same level of investment in people and technologies contributing a bit to the margin expansion as well as in our Technology Solutions group, which has had a good strong year in 2023, and we believe that's going to continue and grow in 2024 and expand the margins in that part of the business. So I think it's just a combination of -- we built -- we further built this house, and now we're ready to really see it grow.

[Paul Treiber, analyst]

And last one for me, but still on margins. Just longer term, just with your 2028 outlook. How do you see the margins in your services business scaling over time? I mean should we expect economies of scale in that business as it becomes larger? Is it an area where you focus on over the next several years?

[Stephen Boland, analyst]

Yes, that would be our expectation, Paul, as we leverage the investment in technology that we've made, that we see some realization and there was year-over-year, a pickup. We also have a -- there's the product mix in services as well that we have between Regulatory solutions, Recovery Solutions and Corporate Solutions, but Recovery Solutions is a higher-margin business.

And that's one that we continue to -- as we talked, try to attract more customers to grow that business. And so then that will contribute as well.

[Operator]

Our next question comes from the line of Trevor Reynolds with Acumen.

[Trevor Reynolds, analyst]

I just wanted to follow up on that recovery solutions a little bit. Like used cars prices were down slightly, but I thought that when prices were a little bit higher, that was one of the headwinds that you are facing as well. So maybe just -- I mean, I guess, what is your ultimate outlook? And like what is kind of further recovery solution side of things? And -- or is this kind of what we should expect from Recovery Solutions moving forward?

[Shawn Peters, executive]

Yes. Maybe I'll start and then let Bob jump in too. You're right on that, Trevor, that it's kind of an interesting business because you -- before we were talking about the fact that high used car prices was contributing to lower assignments, people were actually redeeming their vehicles and selling them themselves.

So we were getting less assignments even though the used car -- when we sold them the used car price was higher and we get a little more revenue. Now we've got the flip side of that situation where used car prices have come down, but the number of assignments is going up. So it's not a total wash, but it sort of looks like a total wash.

We do expect that to continue here in the short term, the number of assignments as Bob commented before, we are seeing lenders starting to take more action on this, and that is increasing the number of assignments. Used car prices are going to generally probably remain relatively stable now that they've come down a bit.

And if you combine that with increased number of assignments, we do expect still to see our Recovery Solutions business perform well. Again, it's countercyclical. So we know that in this type of an environment, this is where it could perform well, and that's what we expect. Bob, I don't know if you have anything to add to that as well.

[Robert Antochow, executive]

No, I think, Shawn, you've covered it well.

[Operator]

[Operator Instructions] I'm showing no further questions in the queue. I would now like to turn the call back over to Jonathan for closing remarks.

[Jonathan Hackshaw, executive]

Thank you, [indiscernible]. With no further questions, I would like to thank everyone, once again for joining us on today's call. Have a great day.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.