Thank you for standing by. This is the conference operator. Welcome to the ECN Capital first quarter 2022 results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the meeting over to Mr. John Wimsatt. Please go ahead, Mr. Wimsatt.
Thank you, operator. Good afternoon, everyone. First, I want to thank everyone for joining this call. Joining us today are Steven Hudson, Chief Executive Officer, and Michael Lepore, Chief Financial Officer. A news release summarizing these results was issued this afternoon, and the financial statements and MD&A for the three-month period ended March 31st, 2022, have been filed with SEDAR. These documents are available on our website at www.ecncapitalcorp.com. Presentation slides to be referenced during the call are accessible in the webcast as well as in PDF format under the presentations section of the company's website. Before we begin, I want to remind our listeners that some of the information we are sharing with you today includes forward-looking statements. These statements are based on assumptions that are subject to significant risks and uncertainties.
I'll refer you to the cautionary statements section of the MD&A for a description of such risks, uncertainties, and assumptions. Although management believes that the expectations reflected in these statements are reasonable, we can obviously give no assurance that the expectations of any forward-looking statements will prove to be correct. You should note that the company's earnings release, financial statements, MD&A, and today's call include references to a number of non-IFRS measures, which we believe help to present the company and its operations in ways that are useful to investors. A reconciliation of these non-IFRS measures to IFRS measures can be found in our MD&A. All figures are presented in US dollars unless explicitly noted. With these introductory remarks complete, I will now turn the call over to Steven Hudson, Chief Executive Officer.
Thanks, John, and good evening to our shareholders and our analysts. Turning to slide seven. We've seen this slide before. Just to quickly recap it, the three key business components of ECN are, first and foremost, our proven prime credit origination platforms with deep moats surrounding those platforms. Second is our committed funding partnerships with large institutional investors. That focus on prime credit has led to superior credit performance, which I'll speak to in a second. As well as we have continued strong demand from new investors who would like to join the program. Unfortunately, we're unable to accommodate all that demand currently. Turning to slide eight. We continue to actively pursue tuck-in acquisitions of prime credit originators. As you know, Source One we announced, and has been very successful. At the time of announcement, it was a 15% increase in EPS. It's actually tracking higher than that.
We have a series of criteria that have to be met when we look at these transactions. I've itemized those for you as the six points under the third bullet. Accretive transactions, asset light, more importantly, prime credit assets and demand by our existing funders. We don't acquire something that our funders don't want. Limited integration risk and high visibility on driving growth through our existing business. Actually, on that point, we were in Jacksonville this afternoon. We've celebrated our fifth year. We're in our fifth year of owning Triad. As you know, $6 million invested in systems and products and people over that five-year period. That's allowing us to take Triad's extensive infrastructure in the form of funding partners, in the form of floor plan and servicing, and leveraging that infrastructure in these tuck-in acquisitions.
I think commenting on the current environment, we are seeing a number of opportunities for prime credit origination platforms with very attractive values. Turning to slide nine. With respect to the first quarter, we're pleased to announce $0.06 of earnings per share, which is ahead of our $0.04-$0.05, which we guided in February at our Investor Day. As referenced in late February, I'm with increased confidence reiterating our 2022 and 2023 guidance based upon the results of Q1 and the forward visibility that I now have for the rest of the year. Turning to Triad. Very strong results. 57% originations over and above in Q1. Approvals which beget originations up 47%. Those approvals will turn into fundings, originations in the next nine months. That allows me to have that increased confidence I just referred to.
Industry backlogs continue at over nine months, and we are fully funded. We're unable to accommodate new partners at this point. Key still to that funding arrangements is our previously announced partnership with Blackstone. Turning to Source One. Originations were at 33% above approvals at 83%, an exceptional number. With those approvals, again, beget originations, which will turn in those originations in a six to nine-month period, which gives me the increased confidence which I referred to earlier. We're actively pursuing modest-sized tuck-ins, which will be very accretive on the prime asset originators within this space. KG, Kessler Group, came in line at budget at $13.6 million, and the growth momentum continues across partnership, credit card, investment management, and marketing. I think very good results for the first quarter. Turning to slide 11.
With respect to the highlights of Triad, the pre-tax operating income up 78% year-over-year at $12.6 million. Originations up year-over-year at 57%. Floor plan stood at $221 million at the end of March 31st, actually $250 at the end of April. As you know, those floor plan assets are the foundation of our prime retail loans. A dealer who uses our floor plan produces three times the retail loan of someone who doesn't. It's a critical component of our prime retail platform. We're fully funded for 2022 and 2023. We're actually turning away institutional investors looking to participate in our loan investor programs. All of that, as I mentioned earlier, gives me increased confidence to guide you toward the top end of not just earnings, but also originations. Turning to Q1 program update.
If you look to approvals in the top line, focusing on the right-hand side, you see the increasing momentum in approvals, 18% in Q3 2021, 24% in Q4 2021, and 47.3% in 2022. The turbulence that's occurring in the traditional housing market, which I'll speak to in a second, has created unprecedented demand for manufactured housing. Turning to what's leading to this increased share. It's our expanded funding partners, it's our loan menu, and our floor plan. All three of those are driving results. We're pleased that we added 400 new MH communities in the first quarter. That's 15% growth in the quarter-over-quarter. That's exceptional foundation. That growth in communities, combined with our growth in floor plans, speaks strongly to the remaining part of 2022 and into 2023. These increased originations have also accelerated the growth in our managed portfolio, which is increasing our service revenue.
Turning to slide 13. You've seen this before, but we have completed the full menu of offering for our dealers and manufacturers. We are quite proud of this program, and we are quite proud that we offer this on behalf of 100 institutional investors, albeit banks, credit unions, insurance companies, GSEs, REITs, and credit funds. Speaking to a bit of the turbulence in the marketplace on 14. There is no doubt that the traditional housing market is going through some rough times. That is an opportunity for us. If you look to affordability on page 14, you saw in February that price increases are up 20%, which is very significant. Actually a little more color on page 15. If you look at the increase in mortgage payments, which has reached record highs on average of CAD 1,800, which is up 70% since COVID.
Payment to income, which is a important credit metric, is at 32.5%, is approaching the all-time high of 34.1%. Black Knight, which is our provider of software, significant player in the mortgage area, estimates another 50 basis points in rates or a 5% increase in housing prices would push affordability to the worst level on record. Turning to 16. What's the solution to traditional manufactured housing? Sorry, traditional built homes? It's manufactured homes. We are the affordable solution for traditional housing. I want to have you focus for a second on two items. Monthly payments. If you look to the monthly payments at Triad pre-COVID at $611 per month. At $760, that's an increase of $149. Traditional mortgage has gone from $1,094- $1,884, it's up $790. Manufactured housing at Triad is only 40% the level of that traditional mortgage.
That is what's driving our exceptionally strong origination numbers and our backlog of loans and mortgages awaiting delivery of homes. If you look to PTI, currently we're at 14.1%, up a little bit from 12.3%. As I mentioned earlier, the traditional mortgage PTI is approaching all-time levels. It's a great time to be in manufactured housing. You'll see that I referenced a couple of our partners on the manufacturing side and their comments on recent public releases. An interesting point when you think about monthly payments and PTI, the credit performance of manufactured housing over a 50-year period versus traditional mortgages is three times better than the mortgages in that sector. That's one of the reasons why exceptionally strong demand from institutional investors for our product. Turning to slide 17, impact on interest rates.
Every 25 basis point increase in rates increases monthly payments of a $100,000 home at about $15. It's not material to the average consumer buying our homes. 75 basis points increases it at just under $45 a month. Also, as we increase interest rates, our origination fee goes up as well. 25 basis points increases it by $90. Some commentary that I alluded to earlier on page 18. Skyline Champion is the second-largest manufacturer of manufactured homes. Some recent commentary. I highlight two items in their commentary, which is the combination of housing shortage, interest rates, and inflationary pressure are all favorable to the manufactured housing community. Also, a comment on the third comment, which is inflationary times, manufactured housing becomes a far more effective cost solution. Cavco, which is the number three provider of manufactured homes. Look at three of their commentaries. We're in a mode.
We're turning away business at this point. We're taking meaningful share by share away from traditional homes into manufactured housing. Basically, the wind is at their back. The rising interest rate market has had a very muted impact, I would say, a positive impact on manufactured housing. Turning to our credit performance on 2019, extremely strong. You see our delinquencies and net charge-offs. This is driving investor demand, funding demand for our credit assets. 2020 is just a month-by-month review of the originations I referred to earlier. Turning to page 21 on guidance. I'm again reiterating with increased confidence the high end of our guidance for 2022 at CAD 1.6 billion of originations and over CAD 70 million of operating earnings. We have outsized performance in Q1. We have strong visibility into Q2, Q3, and Q4. John?
Thanks, Steve. Starting on page 22, we're thrilled to reporting our first operating quarter for Source One. Adjusted operating earnings were $2.1 million, which is ahead of our internal forecast, with Q1 origination growth exceeding budget by more than 16% at $111 million. We've been active in adding new funding partners at Source One. We added four in the quarter, including M&T, including three credit unions and M&T. Including M&T, which is a very important strategic lender in the space and a longtime partner of ECN's. We've made strong progress on the expansion initiatives that we discussed at Investor Day, and we are reiterating our guidance for originations, which we'll expect to be between $525 million and $595 million.
On the next page, we highlight Q1 approval growth of 83%, which, as Steve mentioned earlier, is really an exceptional number and should lead to some fantastic growth for later in the year, and origination growth of 33% year-over-year. Both are well ahead of plan and continue to be very strong post-quarter. In fact, to date, we are not seeing any changes in demand, and volume looks to be tracking easily to previously announced guidance. As mentioned before, we did add four new funding partners, including three credit unions, with over CAD 150 million in capacity, as well as M&T Bank. Now, M&T is a very strategic lender in the boat and RV space and actually is a very long-term relationship of ECN. They're a syndicate member in our senior line, and ECN's relationship really enabled Source One to close M&T as a funding partner.
On the next page, a bit of an update on our national expansion plans, which we really highlighted and took you guys through at Investor Day. We've added sales personnel in the critical Florida market as well as in the Southwest. We anticipate having full coverage across the country in the Northwest and the Northeast by year-end. Servicing and licensing projects are fully underway and will be largely completed by year-end as well. Through Triad, we launched our floor plan inventory finance effort in Q1. To date, we have hired nine dedicated professionals in management, sales, underwriting, and operations and are now up and running with several launched customers. Finally, we have added additional back office and processing personnel as a result of the increased volumes that we've been seeing across the quarters. Just like at Triad, we tried to find some industry commentary here.
These are some comments from Brunswick, OneWater, Thor, and RVIA, which is an RV industry group. Both manufacturers, dealers, as well as an industry group. Marine inventory levels remain quite low with large amounts of pre-sales. Demand remains very high with no signs of slowing down. RV inventories have rebounded to almost pre-COVID levels, but sales backlogs are at all-time high, and demand has continued to be quite strong. The impact of fuel prices appears to be quite manageable for both marine and RV, with Brunswick estimating that the average boater will see an annual fuel bill rise of just $200 as a result of fuel price changes since the beginning of 2021. According to RVIA, fuel prices would need to double to make RV travel unaffordable. More than 80% of RV owners say RV vacations still cost less than other forms of travel.
Interestingly, most of these companies have recently raised guidance as a result of the continued robust marine and RV market. On page 26, we discuss some of the impacts from rising rates on Source One. First, Source One bears no interest rate risk as all the loans are originated on behalf of our partners, and all rate increases are passed through to consumers. We want to show the effects of rate changes on both consumers and Source One. As you can see, interest rate change has a minimal impact on Source One's consumers, with only a $5 increase in monthly payments on average for each 25 basis point increase in rates. Source One's affordable RV and marine products have low ticket sizes around $40,000, and that keeps payments low.
Importantly, Source One makes more money as well, just like Triad does with higher rates, with an additional $25 in fees per loan with each 25 basis point increase in rates. On page 27, we just have a quick review of originations. Finally, we are reiterating our guidance from Investor Day of $525 million-$595 million of originations and adjusted operating income before tax of $12 million-$14 million. Moving on to page 29, we'll talk about KG. KG reported adjusted operating income of $13.6 million, up a bit more than 20% year-to-year. Revenues increased by 28% with growth across each of the businesses. EBITDA margin remains a strong 55%, which is slightly ahead of our guidance from Investor Day. Just to reiterate, we launched a strategic relationship with SLC in Q4 and closed on a $450 million portfolio.
Page 30, we present some highlights for the quarter. In partnership services, we closed a transaction with our new bank partner in Canada and secured a important closing fee. Importantly, KG was able to secure a two-year agreement to help manage the portfolio in transition and grow the business. In addition, KG closed the renewal of a major retailer credit card portfolio program in Q1. CCIM results were ahead of plan in Q1, and we continue to anticipate $1 billion-$3 billion in transactions annually with the SLC relationship and additional opportunistic transactions over time. Finally, marketing continues to be on track for the year. One of our customers moved a significant gift campaign from Q1 to a bit later in the year, but we continue to anticipate increased marketing expense for all of 2022. Card Services also remains on track.
Our launch customer is well ahead of plan, and our new customers are in the process of ramping, and we look to have a good year. With that, I'll turn it over to Michael to run through the quarter.
Thanks, John. Turning to page 33 in the Q1 consolidated operating results. Total originations were CAD 398 million compared to CAD 182.2 million in Q1 2021, which reflected a 57% year-over-year increase at Triad to CAD 286.7 million and CAD 111.3 million in loan originations at Source One. Strong loan origination growth and strong performance by KG resulted in Q1 adjusted net income applicable to common shareholders of CAD 19.3 million or CAD 0.06 per share compared to CAD 8.6 million or CAD 0.02 per share in the prior year quarter. As noted by Steve earlier, this is above our Q1 guidance range of CAD 0.04 to CAD 0.05 per share, so a great start to the year. Turning to page 34 in the balance sheet. Key highlights include total assets up over CAD 46 million compared to December 31st, primarily driven by the increase in Triad Financial Services assets.
Total debt was up approximately CAD 91 million, which is primarily driven by the increase in finance assets. Of note, our senior unsecured debentures are fixed-rate and are used as long-term capital to finance acquisitions. Our senior line of revolver is floating-rate debt and is generally used to finance our on-balance sheet Triad Finance assets, which are primarily comprised of floor plan loans that are short duration and floating-rate. Consequently, they are a natural hedge against the impact of rising interest rates on our senior line. Off-balance sheet managed and advisory assets were approximately CAD 31.3 billion, comprised of CAD 3.2 billion in managed loans at Triad and approximately CAD 28 billion in advisory assets at KG.
Turning to page 35 in the income statement. Total revenues of CAD 59.9 million were up 40% compared to Q1 2021, and total operating expenses were up 22%, demonstrating the strong operating leverage inherent in our business model.
Increased revenues were largely driven by higher origination revenues due to higher loan originations, higher asset management and servicing revenues driven by higher servicing revenue at Triad and higher partnership revenue at KG, higher marketing revenues at KG, and higher interest income at Triad due to increased floor plan balances. The strong operating performance drove an increase in adjusted EBITDA of 72% to $27.5 million and a 224% increase in adjusted operating income before tax to a total of $19.3 million. As noted, this resulted in Q1 adjusted EPS of $0.06 per share compared to $0.02 in the same prior year quarter. Turning to page 36 in operating expenses. Key highlights are business segment operating expenses, primarily driven by the growth in originations in managed assets and new products at Triad, higher revenues at KG, and the inclusion of Source One operating results.
Overall operating expenses increased by approximately 22% year-over-year compared to total revenue growth of 40%, as noted earlier. Corporate operating expenses of $4.1 million compared to $6.2 million in the same prior year quarter and reflect the cost reduction efforts post the sale of Service Finance, including reductions in senior executive cash compensation. With that, I'll pass it back to John.
Actually, we'll pass it to Steve.
Thanks, fellas.
Yeah.
On the final slide, let me make a few highlights before opening the call for questions. The first is our strong originations at Triad. The wind at our back in the industry for all the challenges that are occurring in the traditional housing markets. The approvals at 47%, combined with the backlog at nine months, gives us strong confidence and a very strong momentum going into the final part of this year, the mid part of this year, final as well as 2023. We just closed the books on April, and they were very strong as well. The reduced traditional housing availability combined with affordability crisis has created unprecedented manufactured housing demand. We are fully funded through 2022 and 2023. Source One, as John mentioned, up 33% in originations.
More importantly, approvals which beget future originations are up 83%. Indicating strong momentum into 2022, which give those combined with the results of KG, give my increased confidence in focusing on the high end or reiterating my comfort on the high end of our guidance for 2022 and for 2023. Source One has been a very successful accretive tuck-in transaction. We posted a 15% accretion at the time of announcement. We're actually running ahead of that. KG's results are above budget across its business. In this environment, our prime credit focus matters, which has driven strong credit performance and continued strong funding demand from all of our partners. In fact, we are sold out for 2022 and 2023. With those highlights, operator, we'd like to open the call for questions.
The first question comes from Nik Priebe with CIBC Capital Markets. Please go ahead.
Okay, thanks. You called out the strong appetite from funding partners for the credits that you're originating, and that you haven't been able to accommodate all of the interest you've received. Would that give you some flexibility or latitude to negotiate better commercial terms? How resilient would you expect that demand to be if the macroeconomic backdrops start to deteriorate as many are expecting?
Nik, I think we're happy with the pricing. We've improved it, as I mentioned, in Q1. We're happy with the improvements. We're now focusing on longer terms. It's pushing out the term of the commitment. These credit assets are unique. We spent, my case, 35 years funding these platforms. The demand is strong. In fact, if you see deterioration in other asset categories held by the bank, they're probably going to lighten up. They will lighten up on those and look for more of us. I think we've got great economic terms from the right partners. As you know, we've moved from some of the smaller partners to larger partners. We've pushed out term. We improved the economics in Q1. I don't see any change in demand.
In fact, the deterioration in other credit assets, if that comes, probably increases the demand from our investors. As you know, Nik, in our tuck-in strategy, we don't do those deals without our funding partners at the table and committing to take volume.
Yeah. Okay. That's helpful. You've been open about exploring the potential for further bolt-on acquisitions to build and expand that origination platform. Does the volatile market environment change the calculus at all there, either in a favorable direction by making targets less expensive or in an unfavorable direction by making your own stock less effective as a form of currency? I'm just wondering if that has any influence on your efforts on the M&A side.
Sure. Let me start, then John can pick it up. These are owner/operator businesses. They are relatively small. If you're an owner/operator and you're 60, 65 years of age, I think the current environment makes the platform We can get better value. Your options for exiting are more limited. You won't be exiting in an IPO. You won't be exiting in a private equity transaction. I think that we're in a great spot to do the right deal, Nik, at a better value. In terms of sources of capital, common equity is one source, but we're in good shape on our balance sheet. We have lots of liquidity. Michael's nodding his head here, CFO. Lots of liquidity in our credit facilities. We have lots of liquidity in our balance sheet. I think we're adequately funded to begin this tuck-in process.
We don't have to rely upon common equity to do that. You didn't ask this question, Nik, but I'll jump into it. I think our common equity is a buying opportunity, and you'll probably see management buy some stock here once we come out of blackout.
Yeah. I was just going to add, Nik, especially in the sort of RV and marine space, one of the things we've found since acquiring Source One is that it really is quite fragmented. There's lots of very interesting operators that are generating a significant amount of volume across the space in sort of a very fragmented way. One of the stats I saw the other day that there's over 902 financing brokers of boats and RVs in Florida alone. Just to give you an idea of how fragmented this is. In addition to that, it's just boat and RV space has been, at least on the financing side, is a bit behind the times, whether you compare it to auto or some other places. There's some real efficiencies. Most of the kind of things that we're looking at are great owner/operator type franchises.
I think in this environment, you're talking about sort of mid low, mid high type, single digit type multiples on current year or even prior year earnings. Quite attractive from a financial deal perspective and really could be additive to franchise value over time. We'll see how it goes. I think, like Steve says, we're quite excited about some of the opportunities we're seeing. I do think we're probably getting a little better value than we would have 12 or 18 months ago.
Okay, very good. That's great color. I'll pass the line to allow others to participate. Thank you.
Thanks, Nik.
The next question comes from Geoff Kwan with RBC Capital. Please go ahead.
Hi. Good evening, I guess. On Source One, it sounds like from what you're saying is there is no change in demand you're seeing right now for the RVs or the boats. Just was wondering, historically, what would have happened to drive a decline in industry originations or at Source One? Do you think those would be reasons that would drive it if it does happen in the near future? If we do see a decline in the near future, what do you think would drive the decline?
Hi, Geoff. This discussion about volatility is a subprime, near-prime conversation. Super prime and prime credits are in great shape. Your personal balance sheet all-time high liquidity. They want to travel. They want to experience life. You see that evidence in the Brunswick numbers. They're still up for 2022 into 2023. As you know, we're not in the subprime market. I imagine there'll be subprime borrowers that would have bought some RV or marine, but that's not us. We're in great shape and its volatility, in my view, is focused on the subprime market.
I would think, though, at some point, wouldn't there be something that these prime and super prime borrowers, that demand may temper somewhat?
Geoff, I see no evidence of a subprime or prime borrower having any challenges, nor demand.
Okay. Then, just on the Kessler side, again, everything sounds like everything's going fine right now. Just was wondering, again, with the volatility that we're seeing in the markets, is that changing how your institutional investor clients are thinking about the opportunity in this space, also too from credit card program managers around their willingness to transact in this type of environment?
Once again, to date, we haven't seen any real change in demand. If anything, we're seeing some excellent opportunities both across CCIM and other spaces within KG. We gave you guys an update right at the beginning of March when we reported last quarter. February was Investor Day. Not a huge amount happened in just the month of March. We've had a very solid Q1, we've got a great pipeline here going through the rest of the year. We just haven't seen any real demand pullback. In fact, you've seen credit card balances sort of rebound to above where they were pre-COVID here over the last quarter or so. Like anything else, we're going to have to wait and see, to date, everything looks pretty solid.
Okay. Sorry, my last question was just going back to that point that deferred their marketing campaign from Q1 into Q2 or Q3. Sorry, did you say what the reason for that was or?
No, they just decided to change the timing on basically a checking marketing campaign. It's like they were going to do the first quarter. They decided to spread it out into the second and third quarter. For that particular customer, we actually were going to have pretty significantly up spend year-over-year. It's just we moved the campaign from the first quarter to the second quarter, third quarter.
Okay. Great. Thank you.
The next question comes from Jaeme Gloyn with National Bank. Please go ahead.
Yeah. Thanks. First question is on the four partners that were added at Source One. Are these all cross-selling partners from Triad or other relationships, or is there anything new here?
Well, one is a direct referral from Triad. Another one also does business with Triad that Source One had been talking to prior, but it helped given the preexisting relationship with Triad. The other two were Source One-sourced credit unions that they were talking to prior to us acquiring the company. We've got three more in the pipeline, credit unions that we're working with today to try and bring them on board. I think two of those come from Triad and one was something previous. M&T I sort of view separately because it's a much larger potential relationship. That CAD 150 million I referenced was really just referencing the credit unions that have been added. M&T is kind of unlimited as long as you can meet their credit criteria, et cetera. M&T was a direct result of ECN's long-term relationship with M&T.
We stepped in and brought M&T over to Source One and got them signed up very quickly and very excited about that relationship going forward.
Jaeme , the M&T relationship is hugely important because they're in our senior line. For them to sign up in this is important. If you go back to history, there was a conversation back in time, there was a conversation between Source One and Triad about combining their companies before we invested in Triad. There was agreement six years ago that there was commonality in their prime and super prime credit. There was agreement that their loan investors, the funding partners were common, and the systems for prime was common. There was a sense then to put the two companies together, they just needed both private equity capital to get it done. It's a powerful analogy once six years.
Great. As we're thinking about the M&A outlook, CAD 550 million of, I guess, accessible debt liquidity. Are there any caps on debt to equity that we need to think about, or is that CAD 550? Should we think about that as dry powder?
Hi, Jaeme. Yeah, you can think of that as dry powder.
Okay. In terms of the deals that you're looking at today, I get the sense that it's a lot of, or several smaller deals, much smaller in scale than Source One. Are there other deals of a similar scale and similar accretion as Source One? I guess the question is it going to be a handful of transactions to get similar accretion, or do you have a couple or two or three that are of similar size?
Well, we have a whole pipeline of different opportunities, and I would say they range in scale from size that looks something close to Source One to some that are smaller. The smaller ones that are out there, I'm saying the really smaller ones out there are not really a priority at this point. You'd rather spend your time on things where there's more bang for the buck. There are some unique properties out there that have really been around for a long time and do quite a nice job where we think we could add some value and help them grow quite a bit. Yeah, I think we really like the idea of looking at some of these ones that are a little bit bigger, add a little more heft to the business. You're still not talking about multi-100-million-dollar type transactions.
These are more like Source One or something like that.
I think these transactions will matter. However, we're not losing our focus on super prime and prime credit. This is not the time to go down the scale in credit. We're staying exactly where we're at. Equally as important, we're using all the infrastructure we've built over the last five years at Triad to power these businesses. We're not having to integrate them. We're not taking a large business with a large business, integrating all the risk that goes with it. We're using Triad's floor plan, we're using Triad's funders, we're using the proven processes and systems, licensing, and servicing. We, I'm just saying us as shareholders, have spent $6 million to build this box, and it's time to use it in a proven way.
Yeah, got it. I was kind of getting that, should we be thinking about a couple of S1 type deals that generate 10%+ accretion each or several deals that accumulate and aggregate to something along those lines?
I think it's safe to say that we'll be revisiting 2023 guidance in a positive way on our next Q2.
Okay, great. Last one for me, just on the Sky and Cavco conversations, appreciate you including that in the deck. Wondering if there's something a little bit more updated from your conversations with them and what they're seeing more recently. Granted, they haven't reported, wondering if you have any insight that's a little bit more recent than their previous quarter.
Both those manufacturers are important partners to us, and I can't share non-public information. I would say that I've met with the management teams recently, and the demand is strong. They're still seeing the same level of backlogs that we are. Both those companies, although their stock has been impacted because they got grouped in with traditional home manufacturers. I think that's an unfair grouping, but it is what it is. Our numbers reflect their growth.
Just remember, Jaeme, that the recent move up in rates from the Fed, that's effectively pushed U.S. housing to the least affordable it's ever been in history. Manufactured housing is the best affordability solution. You look in most markets around the country, it's not just against mortgages, it's against rent. If you want to rent a single-family apartment or a single-family home, a manufactured home is far more affordable in most markets around the country. In addition to that, we've got a pretty sizable migration that's happening from a lot of areas around the country that don't really feature manufactured housing to the areas that do. Quite a bit of demand. You can see from those quotes from Cavco and Champion, it's effectively what we're saying. It's certainly what we're seeing in the numbers.
Understood. Thanks very much. Appreciate it.
Once again, if you have a question, please press star, then one. The next question comes from Tom MacKinnon with BMO Capital. Please go ahead.
Thanks, and good afternoon. First question is with respect to Kessler Group. EBITDA margin is 55%. I think you had guided to something like 50% for the year. Just wondering what was driving the higher EBITDA margin for Kessler Group in the quarter and the $25 million in revenue. How does that sort of compare to your plan, just given I think you're looking at $114 million-$123 million in revenue guidance for Kessler Group going forward?
Hi, Tom, it's Michael. I'd say overall, KG is right on plan, maybe a little ahead of plan. In terms of the margin, as John noted, they did close two important partner transactions in the quarter, revenue would be slightly higher in Q1. That would drive the margin slightly higher overall for Q1. We still expect for the year to be around the 50% level. Yeah, it was a good start of the year. Close two transactions, it's timing in terms of the margins, overall, we still expect around 50% for the year.
I mean, slightly less than 25% of what you want in revenue for the year. Is there any kind of seasonality here, or is it just timing of, I don't know?
Tom, it's not specific seasonality like we see in RVs marine or manufactured housing. There's lumpiness to Kessler's earnings. We typically have the fourth quarter tends to be the biggest quarter of the year as we end up closing a lot of stuff that they've been working on. First quarter tends to be a little bit lighter. It's not specific seasonality or as easy to track as, say, manufactured housing. We do see some lumpiness quarter over quarter. The numbers we saw in Q1, they're actually ahead of our budget thus far on the year, or at least in line with budget. We don't think that there's any issue whatsoever. We feel pretty good about the pipeline.
Okay, that's great. Just more of a conceptual question, I think possibly for Steve. There's been lots of chatter about more and more tuck-ins, how do you feel about continuing to do smaller tuck-ins? You sort of become a bit of a roll-up play. You've got lots of little businesses, you have a holdco kind of discount perhaps ascribed to you as well. There's that story you could do or why not just take this CAD 550 in dry powder and sort of buy back your stock, and you'd probably buy almost 30% of your shares back. I'm just throwing that one out there to see what kind of response you would give.
Well, I think, Tom, we're not looking at several tuck-ins. We're looking at a few strategic that come with manufacturing relationships. These are all being integrated into Triad, so we're not rolling up individual disparate companies. We're putting them within Triad. I'm not so sure I agree with that characterization. This is less than a handful for sure, and there would be specific targets on manufacturing relationships that we want to plug into the Triad system. At CAD 550, if I got the stock, maybe I want to buy a whack of the top. We'll sort that out. A lot going on in the marketplace right now in a macro sense. I think we've delivered exceptional results, and have guided you to a strong 2022 and maybe even a better 2023. Let's get that information in the marketplace. We have an NCIB. We'll be active.
We'll just leave it at that for the time being.
Yeah, okay. I guess the takeaway here is when you do tuck-in, you do get synergies through relationships. It's not like a roll-up with a series of independent companies. Is that conceptually-
Correct.
the way you should frame it?
Yeah.
Okay, that's great.
Yeah.
Okay. Thanks for that. I just wanted to throw that one out there to see what you had to say. Thanks.
It's manufacturing relationships we pick up, not a business per se.
As there are no further questions registered, this concludes today's conference call. You may disconnect your lines. Thank you for participating and have a great day.