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FG

Fundamental Global Inc. (FGF)·Q3 2024 Earnings Summary

Executive Summary

  • Event-driven beat on headline EPS: Q3 total EPS was $15.06 driven by a ~$21M gain on the sale of Strong/MDI; continuing operations remained loss-making (EPS $(4.98)) .
  • Top-line acceleration: Revenue rose 155.8% YoY to $10.45M, aided by $4.29M of reinsurance premiums and higher managed services (+$2.05M YoY combined across products/services) .
  • Portfolio and balance sheet repositioning advanced: Consolidated three public companies, divested Strong/MDI for ~$30M, and launched Saltire Capital as a Canadian public company; ended Q3 with ~$116M in assets, ~$83M equity, and ~$2.7M total debt .
  • Estimates context: S&P Global consensus EPS and revenue estimates were unavailable for Q3; no formal guidance was issued in the filings reviewed .

What Went Well and What Went Wrong

  • What Went Well

    • Structural simplification and liquidity: “We are pleased to report significant progress … on track to achieve these goals by consolidating three public companies into a single holding company” and “Our balance sheet is strong, with over $115 million in total assets, nominal long-term debt and over $80 million in shareholders’ equity” .
    • Headline profitability: “We recognized positive earnings per common share for the quarter reflecting the intentional and strategic impact of the completed transactions” (driven by the $21M Strong/MDI gain) .
    • Revenue mix expansion: Reinsurance premiums added $4.29M; managed services benefited from ICS acquisition and higher cinema demand .

  • What Went Wrong

    • Core profitability still negative: Loss from operations widened YoY to $(5.09)M vs $(4.05)M; net loss from continuing operations was $(5.24)M, with continuing EPS at $(4.98) .
    • Investment headwinds persisted: Net loss on equity securities and other holdings was $(2.64)M in Q3 (vs $(2.65)M LY), continuing to drag on total revenue .
    • Expense base pressure: Costs of products/services and G&A remained elevated with the expanded platform; total expenses were $15.54M vs $8.13M LY .

Financial Results

Headline results (GAAP)

MetricQ3 2023Q1 2024Q2 2024Q3 2024
Total Revenue ($USD Millions)$4.09 $8.64 $7.87 $10.45
Loss from Operations ($USD Millions)$(4.05) $(5.93) $(6.05) $(5.09)
Net Income (Loss) ($USD Millions)$(3.33) $(4.45) $(5.93) $17.66
EPS (Total) ($)$(8.01) $(0.27) $(0.22) $15.06
EPS (Continuing Ops) ($)$(9.28) $(0.26) $(0.22) $(4.98)

Revenue mix and investment impact

Revenue Component ($USD Millions)Q3 2023Q1 2024Q2 2024Q3 2024
Net Premiums Earned— $0.78 $3.70 $4.29
Net Product Sales$3.63 $8.02 $4.78 $5.68
Net Services Revenue$3.10 $3.25 $3.41 $3.12
Net (Loss) on Equity Securities & Other Holdings$(2.65) $(3.40) $(4.01) $(2.64)
Total Revenue$4.09 $8.64 $7.87 $10.45

Balance sheet KPIs

Metric ($USD Millions)Mar 31, 2024Jun 30, 2024Sep 30, 2024
Total Assets$110.28 $98.40 $115.96
Total Stockholders’ Equity$66.60 $60.44 $83.20
Total Debt (Short + Long)$9.96 (=$4.59+$5.37) $3.05 (=$2.61+$0.44) $2.73 (=$2.36+$0.37)
Equity Holdings (Mgmt disclosure)$49.1 $43.6 ~$68.0

Actual vs. Consensus (S&P Global)

  • Consensus revenue and EPS for Q3 2024 were unavailable via S&P Global for FGF; no estimate comparison possible.

Guidance Changes

  • No formal quantitative guidance (revenue, EPS, margins, OpEx, tax, or segment guidance) was disclosed in the Q3 press release or associated 8-K materials reviewed .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2024 and Q2 2024)Current Period (Q3 2024)Trend
Streamlining/ConsolidationQ1: Focus on simplifying ops, reducing public company costs . Q2: Targeting >$4M annual cost savings; merging Strong Global Entertainment; Saltire plan .On track consolidating three public companies into one holding company; completed Strong/MDI sale; merged Strong Global Entertainment .Improving execution
Reinsurance ExpansionQ1: Initial contribution (one month post-merger) . Q2: $3.7M premiums; $3.2M reinsurance OpEx .$4.29M premiums; LAE $2.93M; DAC amortization $1.05M .Scaling, with expenses
Managed Services/Cinema DemandQ1: Higher demand from cinema operators . Q2: Revenue up 18.7% at Strong; ICS acquisition helped .Managed services revenue $3.12M; product sales $5.68M; stronger gross profit cited .Stable to improving
Asset Management/Investment VolatilityQ1–Q2: Investment losses from unrealized marks (e.g., $(4.0)M in Q2) .Continued net loss on equity holdings $(2.64)M .Volatile headwind
Balance Sheet/LiquidityQ1–Q2: Assets $98–110M; debt declined to ~$3.1M by Q2 .Assets ~$116M; equity ~$83M; debt ~$2.7M .Strengthening deleveraging
Corporate Actions/CatalystsQ2: Saltire structure pending; SGE merger planned .Strong/MDI sale (~$30M), Saltire launch, and Aldel Financial II IPO (SPAC client) .Multiple near-term events

Management Commentary

  • “We are pleased to report significant progress … and are on track to achieve these goals by consolidating three public companies into a single holding company.” — CEO Kyle Cerminara
  • “Our balance sheet is strong, with over $115 million in total assets, nominal long-term debt and over $80 million in shareholders’ equity. We recognized positive earnings per common share for the quarter…” — CEO
  • Q2 context: “We’ve executed a series of strategic moves this year that have resulted in over $4 million in annual cost savings...” — CEO .
  • Q1 context: “Our goal is to simplify all of our operations, reduce public company costs and focus our efforts on accelerating growth in select scalable and high ROIC businesses.” — CEO .

Q&A Highlights

  • No earnings call transcript was available in the filings set for Q3 2024; therefore, no Q&A themes or clarifications could be assessed from a call this quarter.

Estimates Context

  • Wall Street consensus from S&P Global for Q3 2024 revenue and EPS was unavailable; as a result, we cannot assess beats/misses versus consensus this quarter.
  • Given the absence of formal guidance and the event-driven nature of results (discontinued operations gain), we expect estimate models to focus on continuing operations (reinsurance and managed services) and to strip one-time gains going forward .

Key Takeaways for Investors

  • Headline EPS positivity is non-recurring: Q3’s $15.06 EPS was driven by a $21M gain on the sale of Strong/MDI; continuing operations remain loss-making, so underlying earnings power is still being rebuilt .
  • Revenue inflection supported by reinsurance: Net premiums earned rose to $4.29M; managed services remained solid, indicating the platform is broadening beyond legacy cinema exposure .
  • Deleveraging and equity base expansion: Total debt fell to ~$2.7M by Q3; equity increased to ~$83M, improving financial flexibility .
  • Multiple corporate catalysts: Completion of Strong/MDI sale (~$30M), Saltire launch, and Aldel Financial II IPO could unlock value and simplify the story .
  • Investment marks remain a swing factor: Continued net losses on equity holdings present volatility to reported revenue and earnings .
  • Expect focus on continuing-ops trajectory: With no formal guidance and unavailable consensus, investors should track operating loss reduction, reinsurance loss ratios/DAC amortization, and managed services gross profit to gauge underlying progress .
  • Narrative for trading: Event-driven quarter with significant simplification progress may be a positive near-term catalyst, but sustained rerating likely requires improvement in continuing-ops profitability and visibility on reinsurance scaling .

Additional Detail and Source Notes

  • Q3 2024 8-K earnings press release and financials: Revenues, EPS, operating loss, investment losses, and balance sheet metrics .
  • Q2 2024 press release and 8-K: revenue composition, reinsurance metrics, investment losses, and balance sheet .
  • Q1 2024 8-K press release: revenue, expenses, reinsurance commencement, and balance sheet .

Notes on estimates: S&P Global consensus was unavailable for FGF this quarter.