Kingsway Financial Services Inc. Stock

All right. Good morning, everyone, and welcome to Kingsway's 2026 Investor Day. Thank you for joining us here at the New York Stock Exchange on a beautiful summerish day. And also thank you to everyone joining us via webcast. My name is JT Fitzgerald. I'm the CEO and President of Kingsway. And as approved at our AGM this morning, tomorrow morning will be known as the Kingsway Corporation and trading under the ticker KWY, which is exciting. So we'll come back to that a little later.

Excited for a great day. 2 years ago, we stood here in this room, and we shared our vision for a unique model to compound capital. Last year, we showed you the operating system that we built to execute it, and today is about proof, tangible evidence that the vision is becoming reality. I'm excited to share where we are, where we're going and also to introduce you to two of our operator CEOs, who are going to walk you through how the model works at the ground level.

Before we dive in, the usual reminder, some of what we'll cover today is forward-looking and includes non-GAAP measures. These statements reflect our expectations based on what we would know today, and they involve risks and uncertainties that could cause actual results to differ from what we project. Please refer to our filings with the SEC, including the risk factors in our 2025 annual report on Form 10-K for a full discussion. And I'll let you read the detailed safe harbor language on this slide at your leisure.

So here's how today is going to go. 9 sections. I'll start with the last 12 months at Kingsway. Then I'll walk through the 2026 outlook, including a strong start of the year with Q1. Then I'll recap the equity story for anyone newer to Kingsway and also as a refresher to those who've been with us for some time. Then Kent will provide a capital markets update, including the rebrand, a new website, and improvements to how we report. I'll then come back to discuss what we call from theory to action, how the Kingsway Business System actually gets deployed in our businesses, then we'll have two operator spotlights. First, Miles Mamon, CEO at Roundhouse Electric; and then Davide Zanchi, the CEO at IS Technology. Then we'll open it up to an audience Q&A. And finally, to close, we're excited to have a fireside chat with Tyler Gordy to discuss his full cycle journey with Kingsway from operator to exit and now advisory Board member. We've got a really great day plan.

A couple of housekeeping items. For those on the webcast, if you have questions throughout the day for the Q&A session, please e-mail them to Kent Hansen, His e-mail addresses khansen, [email protected]. A little later today, they're going to clear this and bring in some lunch. So we'll have box lunches for everyone here in person for you guys to have during the Q&A session. And with that, let's jump into it.

So this is a quick framing of who we are. To our knowledge, we're the only publicly traded U.S. company employing the search fund model to acquire and build great companies. We own and operate a portfolio of high-quality, growing asset-light B2B and B2C services businesses with recurring revenue and strong profitability. And importantly, our goal is to compound long-term shareholder value on a per share basis through a decentralized management model, a talented team of operators in a tax-advantaged corporate structure.

That describes the company. The rest of today is about what it looks like in practice. Just one quick slide here before we move into the substance. Each one of our Investor Days, we've tried to build on the last. In 2024, we shared the vision, a repeatable model to compound intrinsic value per share. Last year, we introduced the system, an operating system to turn good acquisitions into great businesses. And today is the proof, tangible evidence that the vision is becoming reality. Section 1 is the last 12 months, what we said we'd do and what we did. So let's start with the report card.

On the left side is what we said we'd do at this time last year. On the right is what we delivered. We said we'd target 3 to 5 acquisitions per year and we completed 6 in 2025. Buds Plumbing, Viewpoint, Roundhouse, AAA, the HR team and Southside Plumbing. Last year, we said our run rate adjusted EBITDA was about $18 million to $19 million and we achieved portfolio EBITDA of $22 million to $23 million as of March 31, 2026. 6 acquisitions instead of 3, greater than 20% portfolio EBITDA growth. By the measures we set for ourselves last May, we did more than we said we would.

Here's a quick visual on those 6 acquisitions. Starting with the acquisition of Buds Plumbing. We completed 3 Skilled Trades acquisitions on the platform we launched last year with follow-on acquisitions of both AAA and Southside. We acquired Roundhouse Electric in July, a business in the heart of the Permian Basin. We acquired the HR Team, a B2B services tuck-in inside of Ravix. And we acquired Viewpoint, a vertical market SaaS business that was a tuck-in inside of SPI.

I think the most important thing on the slide isn't what logos are on it. It's that every one of these businesses is a high-quality company, acquired at mid-single-digit EBITDA multiples. So we held our discipline.

And this is the inflection point we've been pointing toward for several years. KSX, our search fund platform is now a majority of both consolidated revenue and adjusted EBITDA for the first time. Why does this matter? It validates the strategic pivot from a legacy insurance holding company to an operator-led public search platform. It removes investor confusion that has historically dogged our story, and KSX's higher growth profile now delivers the consolidated equity story. And it underpins the rationale for retiring the financial services name, which we'll come to in Section 4. We're no longer a legacy insurance company with a search fund side business. We're an operator-led compounding platform with a profitable extended warranty franchise running alongside it.

So Section 2, the 2026 outlook. We've had an excellent first quarter and a busy start to the year operationally and from a capital markets perspective. Four headlines here. Q1 was strong on the bottom line, profits at both KSX and Extended Warranty came in ahead of our internal expectations. KSX delivered record quarterly revenue and record quarterly adjusted EBITDA in the first quarter. And that was in what is seasonally a light quarter for several of our businesses.

We continue to execute disciplined M&A. On January 7, we announced the acquisition of Ledgers by our Ravix Group. And just last week, we announced the sale of Trinity Warranty Solutions. We also reiterated our expectation of double-digit organic revenue and profit growth at KSX and extended warranty for the year, and we also reiterated our target of 3 to 5 acquisitions in 2026.

Bringing this back to the framework you've heard from us before, we believe we've got dual engines of value creation. On the one hand, organic growth, targeting double-digit revenue and EBITDA growth across both segments, and on the other hand, inorganic growth, 3 to 5 high-quality acquisitions per year, underwritten with discipline. Compounding together those two engines drive per share value accretion. That's the Kingsway flywheel. It's the same flywheel we've been showing you for several years. The difference now is that it is becoming visible.

On the organic growth pillar, we've got 2 segments and 2 different drivers, but both pointing in the same direction. Extended Warranty has strong cash sales and moderating claims growth. Cash sales momentum from the second half of 2025 is carrying into 2026 and warranty claims growth is moderating in both frequency and severity. Our KSX investments are also paying off. The acquisitions we made in 2024 and 2025 are now poised to accelerate growth into 2026 and beyond.

On the inorganic pillar, 3 to 5 acquisitions underwritten with discipline. Our underwriting filter hasn't changed. We target a 30% IRR hurdle and acquire businesses at mid-single-digit EBITDA multiples. We target capital-light businesses with strong demand tailwinds and clear operational improvement priorities.

And what's somewhat new, and the reason we're increasingly confident in the 3 to 5 number is that KSX is now running 2 M&A engines side by side. New platforms sourced through our active OIR pipeline along with operator-led tuck-ins, sourced inside the businesses, our operators already run, 2 engines running in parallel.

A quick governance update. Adam Patinkin, who is here, and most of you know, is the Founder and Managing Partner of David Capital Partners, a long-term oriented alternative investment firm. And Adam has been appointed as our Chairman of the Board. Adam has been a Kingsway Director since 2025 and is playing an active role supporting our management team and delivering on the company's objectives. Terry Kavanagh, who's also here has served as our Chairman for a long time, going back to 2012, so 14 years. And Terry has graciously transitioned to Vice Chairman. Terry really guided the company through a long and oftentimes complicated strategic shift from our legacy insurance business to now the search fund platform. And we're deeply grateful that he is staying on the Board and continues to provide his experience and expertise as we enter this next phase. Thank you, Terry.

So Section 3, the equity story. A lot of you in the room have probably heard a lot of this before, including at last year's Investor Day. So I'm going to move through these slides at pace. Think of the next few minutes as a refresher and for the newer investors, a set up for the proof points still to come.

So why search funds? Well, in short, they work. The Stanford GSB has tracked the asset class since 1984, and the median annualized return is 35.1%. Entrepreneurship through acquisition or ETA, has a multi-decade track record of producing outsized returns by backing talented entrepreneurs to buy and grow small businesses, and that's the asset class that we're playing in. And the model fills a real gap in the market, retiring small business owners with no succession plan, no sons or daughters in the company, want a financial exit that also protects their employees and their legacy. Their businesses are generally too small for traditional private equity as a platform and selling to a strategic buyer can be a poor cultural fit.

On the other side, motivated post-MBA operators can solve the succession challenge while preserving the founder's legacy. Search funds bridge that, a win-win for both the seller and the buyer. Why does the model outperform? Smart, energetic, properly incentivized operators take over a business that often hasn't been optimized for growth. Founder-led sales become a professional sales team. Pen and paper processes become modern systems and technology. Local becomes regional, regional becomes national, cash that was being distributed gets reinvested for growth. The business shifts from lifestyle to growth. At Kingsway, that's exactly the engine. We target $1 million to $3 million in EBITDA businesses, pay roughly 4 to 6x, finance the acquisitions with a conservative amount of debt and install a great operator, install KBS and position it for growth.

Here's the runway in 3 numbers, nearly $4.8 trillion of net worth changing hands over the next 20 years, the largest intergenerational wealth transfer in U.S. history. More than 2 million small businesses expected to transition leadership in the next 10 years and only 100 or so active searches at any given time. Lower middle market private equity is hesitant to buy businesses where the primary operator wants to step away. Supply outstrips demand, and that creates favorable buyer dynamics for many years to come. We're well positioned to ride the silver tsunami wave.

And here's the access problem. Direct search investing often means small checks of $100,000 to $300,000 or $400,000 into individual deals sourced through tight networks, illiquid, difficult to access and hard to scale. Fund of search funds provide access, but add a second layer of fees on top of the carry the searchers themselves earn. Kingsway is the alternative. A publicly traded vehicle that gives investors instant liquid access to a diversified portfolio of search fund acquisitions, self-funded at scale with multiple operating platforms already in place and with public company reporting and transparency built in.

And here's why we think we're well positioned to succeed. I'll do a quick run-through of the 9 boxes on the slide. We have a proven track record. We have infrastructure and support, disciplined investment criteria, top quality searcher talent, a world-class advisory board, a public company reputation, permanent capital, access to debt capital on competitive terms and the tax advantage structure that we're the beneficiaries of. Each one of those matters. And together, they are very powerful.

I'll touch more deeply on a few of these advantages. The first is talent. And for us, it's not a slogan. It's really core to our strategy. In 2025, we had over 200 applicants to OIR positions, which means we can be highly selective.

The roster on this slide is the current operating bench: Davide Zanchi, who you'll hear from later today; Timi Okah at Ravix, Peter Dausman at Digital Diagnostics; Charles Mokuolu at SNS, Drew Richard at SPI, Miles, who you'll also hear from later today; and Colter Hanson at Skilled Trades, plus Paul Vidal as an active OIR and more OIRs to be announced soon. A deepening operator bench is the most important investment we make.

Our criteria hasn't changed. B2B or B2C services, we target industries that are large and growing with growth supported by long-term secular tailwinds. We target fragmented industries with lots of opportunities for shots on goal and interesting niches.

And at the company level, we seek recurring revenue businesses with low customer concentration, high margins and a history of consistent profitability that are also capital-light, meaning they don't require incremental capital to grow. That's the margin of safety, and we stick to it.

And we've got a great advisory board. Here's a quick refresh. Tom Joyce is the former CEO of Danaher. He was here last year for the fireside chat. Tom was instrumental in developing and implementing the Danaher Business System, the gold standard of our KBS playbook.

Will Thorndike, who many of you know, was the author of The Outsiders, but also one of the most prolific and first institutional investors in the search fund asset class. Decades of pattern recognition our operators can tap into.

And finally, Tyler Gordy. Tyler was formerly the CEO of PWSC. PWSC was the Kingsway subsidiary that delivered our 10x return when we sold it in 2022. And Tyler was a great operator in our structure and had tremendous success. And I'll be sitting down with Tyler a little later today for the fireside chat, which I'm excited about.

And finally, our NOLs, approximately $628 million of net operating loss carryforwards from our legacy insurance business. They're tax assets that shelter future earnings, meaning more of what we produce drops to the bottom line and the rate of compounding goes up. Ian Cumming at Leucadia once said, profits are great, profits without taxes are even better. We agree.

So here's the flywheel in one breath: acquire a profitable business, invest to grow often through a J-curve as we position the business for the next stage, reap the increased cash flow and reinvest in the next acquisition, rinse and repeat. More acquisitions create more cash flow, which funds more acquisitions, talent and capital compounding.

And finally, does the model work in practice? We've got 3 data points here. First, PWSC, which I mentioned was really our proof of concept. It was a home warranty business. We acquired it for $10 million, $5 million in equity. And Tyler, who's a West Point and Harvard Business School grad, led it, and we sold PWSC for 10x net return roughly 4.5 years later.

I've been investing in search funds for a very long time. The search fund investment firm I founded is now wholly owned by Kingsway. It's called ARGO. And I've invested in dozens and dozens of search fund acquisitions and the returns that I've witnessed and been a part of are as good or better than the search fund returns. The model works.

And through that time, I've developed some pattern recognition. And my experience, I think, brings a great set of background and understanding to what we're trying to build.

And finally, the Kingsway Search Accelerator itself. Many of the businesses in our portfolio today are demonstrating significant business momentum with the potential to produce PWSC type outcomes. We're definitely still in the early innings, but the evidence so far validates the approach.

And so finally, just closing the equity story on one slide, 10 boxes, but they sit on 4 pillars: people, exceptional searcher talent, a robust infrastructure and support and coaching by a world-class advisory board; our playbook, KBS is our operating system plus disciplined investment criteria to improve the probability of success; and all inside a public permanent capital vehicle with access to attractive debt financing with a strong track record and a tax-advantaged structure. No other public company in the U.S. has this combination.

All right. I'm going to turn it over to Kent now for a quick capital markets update.

Thanks, JT, and good morning, everybody. It's a pleasure to be here at the New York Stock Exchange. I'd like to give a quick shout out to the NYSE team as well as James and Laura at Hayden IR for doing all the heavy lifting to make this day possible for us.

Also want to quickly mention that today's presentation has been posted to our website. There was a press release that went out this morning with a link to the presentation as well as my e-mail address for those attending via webcast to submit questions, as JT mentioned before.

For my portion of the presentation, I'd like to walk you through the capital markets update, which at its core is about ensuring that how investors see and understand Kingsway accurately reflects the company we are today. A lot has changed at our company and our capital markets presence needs to catch up. Let me walk you through what we're doing.

We've organized this work into 3 work streams: branding, reporting and discoverability. Each one has a clear set of deliverables and together, they're designed to accomplish 4 things: a rebrand that reflects where we're actually headed, a new website built for our key stakeholders, reporting that makes shareholder value creation more visible and easier to understand and accurate external descriptions and classifications so that the right investors can actually find us.

These aren't cosmetic changes. They're foundational to how we show up in the market. This is probably the most tangible piece of news today. Shareholders voted this morning to approve the name and ticker change. Starting Tuesday, May 19, we expect to begin trading as Kingsway Corporation under the ticker KWY. The financial services name has outstated its welcome, kind of like when visiting relatives don't know when to leave. It came from our legacy as an insurance holding company. That's not what we are anymore.

The majority of our revenue and EBITDA now comes from the KSX segment, which is high growth and has nothing to do with insurance. Not that there's anything wrong with insurance. The name simply didn't match the business, and that's been a source of confusion for investors.

One thing I want to be clear about is that the CUSIP number is not changing. This is purely a name and ticker change. Your shares are your shares and no action is needed on your part.

Regarding the brand and website, the goal is simple. When someone lands on our site or sees our name, they should immediately understand who we are and what we do, whether they're a current shareholder, an entrepreneur looking at the KSX program, a business owner thinking about succession or an intermediary who might bring us a deal.

This just isn't a fresh coat of paint. The new site will have dedicated sections for each of those audiences, which is a meaningful shift from where we are today. For shareholders and investors, there will be a dedicated investor portal, clear explanation of the KWY model, and materials on the KSX program. For entrepreneurs and business owners, we're building out case studies, succession planning content and a streamlined application process.

And for intermediaries, we're giving them the criteria and deal submission capability to work with us effectively. The unified brand, new logo, refreshed color scheme and brand guidelines ties it all together. We're targeting the launch of this later this summer.

As CFO, this work stream is particularly exciting to me, simplifying the financial statements. We're moving to simplify them and better reflect our focus on the KSX segment. I'll spend a minute on the income statement changes because I think these matter quite a bit for how investors read our financials.

If you look at the old structure on the left, it was built around the insurance business, lots of line items that reflected legacy accounting conventions. It made sense then, but it doesn't really make a lot of sense now. The new structure is cleaner, fewer line items. We've introduced a gross profit line, which is something most investors in growth businesses actually look for.

Depreciation is clearly labeled. And importantly, nothing is being hidden. The detailed notes already exist for every line item for anyone who wants to go deeper. This is about legibility, not simplicity for its own sake. The same thinking applies to the balance sheet, which we've also recently restructured. This one is a little bit more under the hood, but it matters a lot for discoverability.

Right now, our company profile across the major data aggregators, think about Cap IQ, Bloomberg, Yahoo!, FactSet is inconsistent or just wrong. That creates noise and confusion and affects which investors even see us when they're doing their research. The name change is actually a natural opportunity to fix this. We're going to submit updated information, new name, ticker, logo, company profile and also get to work in our GICS classification and SIC classifications, right? That's GICS and SIC.

Those classifications drive how investors see us on their screens. So if we're miscategorized, it can be a really big problem. The goal is a single source of truth that makes Kingsway findable by the investors who should be looking for our story.

This last piece is enhanced investor reporting, and this one is about where we're headed as we scale the KSX portfolio. In the near term, we intend to begin reporting organic and EBITDA growth on a consolidated basis, likely later this year or early next year. And as the portfolio grows and our peer group becomes more meaningful, our mid- to long-term goal is to move towards segment reporting within KSX, providing those same organic metrics at a business unit level.

The enabler for all this is the centralized accounting platform. By consolidating accounting at the holdco level, we have the infrastructure to produce this kind of reporting accurately and consistently as we continue to grow.

For current shareholders, this is about giving you better visibility into the underlying performance of the businesses that we own. For prospective investors, it's about giving you the metrics you need to evaluate this as a compounder.

With that, I'll turn it back over to JT.

All right. Great. Thanks, Kent. Section 5, from theory to action. We've talked about what we did and what's ahead, the equity story and the rebrand. And so now let's talk about how the Kingsway Business System actually gets installed at the ground level.

Two of our operator CEOs will walk you through their journey in a moment. But first, let me set the table with a handful of orientation slides.

Why does KBS matter? Because buying a good business is only step one. What really determines whether a search fund acquisition becomes a great outcome is what happens after the deal closes.

On the left side of the slide, you'll see the pre-deal risks, the things our underwriting filters for: customer concentration, low gross margins, investor and seller conflicts, poor industry growth, complex operations, excess leverage and many more. Our investment criteria are designed to avoid those.

On the right side are the post-deal risks. There's just a couple. But in our experience, 2 of these risks dominate outcomes. The first is a failure to retain or hire great people. And the second is a failure to execute on the operating plan.

Just as we have a playbook for underwriting compelling deals, we have a framework to derisk execution after closing. KBS is that framework. We provide our CEOs the coaching and the playbook to bend the curve towards better outcomes.

Just a quick recap of what KBS is. It's a comprehensive integrated approach to continuous improvement, inspired by the best operating system in the world and most directly by the Danaher Business System, anchored around 4 pillars.

The first is talent, hiring and promoting the best people available at every salary level. There's really nothing more important than that. The next is planning, creating practical business plans that actually drive results with continuous feedback through KPIs.

The next pillar is what we call enterprise excellence, repeatable, teachable processes that power customer satisfaction and scalable growth. And finally is the growth pillar. Great companies understand the components of value creation and actively pursue strategies to improve performance in those key areas. 4 pillars, same playbook, every business.

It's one thing to have a playbook. It's another thing to put it to work. We provide 3 layers of practical support to every operator.

Leadership training, establishing and managing priorities, building culture, communicating effectively, stage appropriate coaching aligned to where each operator is in the journey.

The second is our centralized knowledge hub, a proprietary platform of tools and case studies structured around the realities of being a CEO in a small business.

And finally, the KSX community, peer feedback among our operators, structured coaching and advisory board support from Tom, Will and Tyler. The result is that an operator CEO at Kingsway has more support while preserving the entrepreneurial autonomy of a stand-alone search fund. The combination is hard to replicate.

We'll hear more from Miles and Davide on this, but we really view the operator journey as a multiyear process structured on a crawl, walk, run framework. And so we've sequenced our playbook. We don't ask a new President to do everything on day 1.

KBS sequences what each operator installs in what order and on an appropriate time line. There's a reason for that sequence. Most first-time CEOs want to jump straight to strategy and transformation. But without operational stability and performance visibility underneath, strategic initiatives often collapse into firefighting and chaos. This framework is explicitly designed to prevent that. Tom Joyce, who helped build the Danaher Business System, describes the whole approach in a single phrase, common sense vigorously applied. I think that captures it.

We've got 4 stages on this slide. The first is crawl, the first 100 days, entry and diagnosis. The new President enters with curiosity and humility, listens, learns, stabilizes any immediate risks and earns the right to lead. This isn't don't do anything for 100 days. It's a disciplined diagnosis. They're building the fact base that they will use to install the operating system and establish priorities, not the priorities they assumed before they arrived.

Stage 2, the crawl-to-walk phase happens typically the remainder of year 1 and into year 2, and it has 5 interconnected systems that go in. The first is a leadership cadence, daily management with data, a talent system and a standardized core set of processes. By the end of Stage 2, the business runs on a system, not on a person, creating the foundation for growth.

Stage 3, the walk phase is where our operators go deeper on each of the 4 systems and add a fifth and a sixth planning and growth. Voice of customer gathering becomes systematic and a 3-year vision gets articulated. Breakthrough objectives are defined and a 1-page plan aligns the leadership team.

And Stage 4 is the walk to run phase, typically years 2 through 3. This is mastery of the 6 systems and adding a seventh system, what we call policy deployment or also known as Hoshin Kanri. Strategy gets translated into cascading action plans with the same PDCA discipline we already apply to our operations, continuous daily management and Kaizen runs alongside it.

And 2 principles travel with this framework, and they're non-negotiable. The first is we customize the time line for each operator. We never customize the sequence, however. The time line can change, but the sequence is rigid. Stage 2 stability has to precede Stage 3 strategy, which has to precede Stage 4 deployment. If you try to skip ahead, the layer above will collapse the layer below.

The second principle is that daily management is permanent. It never graduates into something else. Every new layer of KBS sits on top of it forever. When Hoshin planning arrives in Stage 4, the team runs both at once. Operators stay stable, while breakthrough execution happens on top.

And to bring this all to life, I'd like to now turn it over to Miles Mamon, the CEO of Roundhouse Electric. Miles is going to walk you through exactly how this looks at the ground level. Miles, the floor is yours.

Good morning, everyone. Excited to be here and tell you about my experience with Kingsway so far.

Quick background on me. From Chicago, I went to college nearby Northwestern. After I graduated, I joined the Army as a missile defense officer. I served for about 4 years with deployment where we protected a Turkish Syrian border city from ballistic missiles during the Syrian civil war.

After the Army, I went back to Northwestern for grad school, where I did the JD MBA program. And from there, I moved to San Francisco to join Morgan Stanley, where I did acquisitions with their real estate private equity business.

So I'd like to talk a little bit about how I found Kingsway and what drew me to the platform. So I learned about search in business school. It was extremely compelling. In a lot of ways, it sounded too good to be true. And to be totally candid, I didn't have enough confidence in kind of my business acumen and experience to pursue it immediately after graduating.

So I, like I said, went to Morgan Stanley and kind of worked on my finance chops. I had a great experience there. But I came to a point where I was promoted to VP and more and more of my comp was becoming deferred. It kind of felt like a now or never moment to take this entrepreneurial leap.

So I did my due diligence. I talked to about 30 searchers and through that process, connected with Peter Dausman, who's currently the CEO of DDI. He told me a little bit about the platform and introduced me to some other folks at Kingsway. And once I learned about the program, it was the obvious choice.

So some of the key benefits that I saw were the ready-to-go platform. So I was in a fairly high-intensity job. I didn't have a lot of time to set up a search fund on the side, and Kingsway provided a ready-to-go tech stack, marketing materials, relationships with brokers, so I could really kind of hit the ground running. That was really compelling.

I also liked the economics, which I kind of see as traditional search plus. A couple of features of that are in traditional search, your pursuit costs are stepped up 50% usually. So if you spend $500,000 pursuing a deal, your basis will increase by $750,000 at acquisition and Kingsway doesn't step up those costs, which is nice.

But probably the most important economic benefit is participating in Kingsway's tax advantages. So what we would have spent paying federal tax at the business is included as a distribution in our waterfall and our carrier, however you describe it, is calculated.

And then also the peer network was really compelling. I really like the idea of having other people going through the same thing that I could talk to and reach out to on an informal basis.

So those were kind of obvious to me at the start. I got a sense for the deep search experience within Kingsway, especially from JT, alignment on how we thought about investing and operating decisions and then mentorship from JT and the Advisory Board. But those, the value of those really was fleshed out for me in the search acquisition and operating process. So I'll talk about those benefits more in these upcoming slides.

So fast forward, I joined Kingsway in September of '23, and we acquired Roundhouse in July of '25. Roundhouse is a 50-year-old business in Odessa, Texas. They serve midstream oil and gas companies by selling, repairing and maintaining especially electric motors, also switchgear and transformers. And the motors that they service are used primarily for compression of natural gas, so at natural gas processing facilities and along pipelines.

We talked about the business before, some of the highlights, what we really love about it, what I really love about it. It's relatively capital-light. The services it provides are critical and recurring or reoccurring in nature. We have over 200 active customers, really great retention metrics and long-term relationships with our customers. And then there are some nice tailwinds driving growth.

So production of natural gas is increasing in the Permian, and that's fueled by a variety of demand drivers. And then kind of compounding the growth potential is the fact that our customers are switching from legacy combustible engines to electric-powered motors, which is what we do. So in the rest of the presentation, I'm going to kind of talk about the impact that Kingsway had and how Kingsway and KBS has kind of added value from the search phase all the way through the first 10.5 months of operating.

So I think Kingsway was instrumental in getting the deal done. We -- I found this business. It was a broker process in January of '25. And we had an LOI accepted in February, and then we closed in under 120 days. I think with any transaction, especially in this segment of the market, there's some hair and some friction and some issues that need to be solved. And this was no different.

A couple of examples of kind of issues that we had to work through. The sellers own the real estate. This is not uncommon, and we had to solve for kind of 2 things. On the one hand, owning real estate isn't a great fit for Kingsway's cost of capital. But on the other, real estate is a strategic consideration for Roundhouse. It's a physical business. We store motors, the layout and design of space is a key part of our kind of operations and physical space can be a bottleneck for growth.

So we needed to be able to grow the real estate as the business grew. We were able to work through that and come to a solution where we're now leasing, the sellers kept the real estate. We're leasing it from them at a rate that compensates them for owning it. And we were able to negotiate a lease where we have control over the real estate to make changes as necessary for the business and also expand as the business grows.

Another kind of piece of complexity was the ownership structure. So there were 2 owners of the business, co-owners. One was looking to retire. The other was open to staying on. And there was also the retiring owner's son is in the business. He was and is overseeing the Field Service division.

So the issues that we had to solve for there were we wanted the people staying on with the business to retain some economic stake to be properly incentivized. And we also had to solve for, to make sure that we were maximizing kind of tax advantages for both sides of the transaction. So there was just a little complexity there and some give and take in how we negotiated that.

So those are just kind of examples of a multitude of issues that we needed to solve. I think that we were able to come to really great resolutions on those issues for 2 reasons. One is the support from the team at Kingsway. So we had the full support of Kent, Yvonne, Charlie working on the deal with us, along with the full HR and finance teams.

And so I had strong confidence that kind of the things that I told the sellers we could do, I could bring them back to the team and we could actually execute on them.

The other piece is the decision-making process is ultra streamlined. I was working in constant contact with JT. And I think we had developed kind of our understanding and trust over the 15 months when I was searching through the whole process. So I kind of knew his thoughts on investment philosophy and priorities and boundaries, what we could and couldn't do. And that enabled me to fly out to Odessa and sit down in the conference room with the sellers and come to an agreement on what would work for both sides to make the deal happen.

I think that streamlined process is super powerful, especially relative to traditional search where you might have 8 to 12 investors, maybe 4 or 5 lead investors and you're kind of trying to herd cats to get a deal done, especially when a broker is breathing down your neck to meet a time line or whatever it is. So I think that was really powerful.

And then into operating, a key priority for me has been earning the right to lead the business. And this was especially important as an outsider from California without a technical background coming into a 50-year-old family business, highly technical where most of the employees were born and raised in Odessa and many of them came up repairing electric motors from early on.

So Kingsway has kind of codified our plan to address that challenge in a 100-day plan, which incidentally is very similar to kind of the management philosophies I learned as a lieutenant in the Army. The 3 pillars are learn the business, build trust and ensure continuity.

And I did that with some structure provided by Kingsway and tactics to use. But it's basically talking to the employees, interviewing everybody one-on-one, taking the management team out to lunch, meeting with customers, reassuring them that there won't be an interruption in their service and then getting your hands dirty and demonstrating commitment to the business.

So that can mean hopping in a truck with a tech and driving a couple of hours out to New Mexico and learning how to change the oil on a piece of equipment or showing up in the morning for a safety meeting or I'm serving on the Board of a regional chapter of our industry association, the Electrical Apparatus Service Association. So all kind of things like that where you're learning, you're building the trust of the employees and kind of making sure that the train stays on the track.

And I think that kind of mindset and execution of that plan has led to some really nice outcomes at Roundhouse. The most obvious is the lack of the J-curve in the Roundhouse investment.

I think JT has done some more rigorous data analysis. I know anecdotally, in search fund acquired businesses, it's common for there to be a J-curve and oftentimes, that can be caused by a first-time CEO just breaking some things and employees can leave and customers can leave and maybe the business is better for it, but in many ways, it's not optimal.

At Roundhouse, we not only haven't had a J-curve, but we have achieved on a year-over-year basis post acquisition close to 20% revenue and adjusted EBITDA growth. So continuing kind of the growth trajectory that the business has been on historically in a nice way. And some qualitative features of that lack of the J-curve are listed here. So Lee Hudson is one of the sellers who stayed on. He's the President. I'm the CEO of the business. I see us as equal partners running it. We have a similar economic stake and really our incentives are well aligned.

We have a strong relationship with the retired seller. He did a 6-month transition full time at the business. He still serves in kind of an advisory consulting capacity. And then I think this is really important. We've had no turnover in the management team or in techs at the senior level. So retaining all that really valuable talent at the business has been super important.

And then not only have we not dramatically screwed anything up, but we've done some nice things, made some improvements to the business. So how I think about this one? Sometimes I get pushback on things I want to do because the business has been doing well. We acquired it for a reason. It's been growing, and it's got a great culture. So it's like if it's not broken, why fix it?

But for me, the systems and processes that brought the business from $2 million to $20 million in revenue over the 5 years before acquisition are not going to be the same systems and processes that bring it from $20 million to $100 million. So we're moving in that direction.

To do that, we've identified and filled talent gaps. So we've meaningfully upgraded the accounting function, sales and operations functions from a quality control standpoint. We've implemented ERP system upgrades for better sharing of files and data and tracking, especially customer relations. We have implemented some basic kind of KPIs for the different departments to get better data flowing.

We've secured an accreditation from our industry organization through auditing our shop processes, which is a meaningful improvement from a quality control standpoint. And we have, through working with the accounting and HR team at Kingsway to bring our processes up to Kingsway standard, we've meaningfully derisked the business.

So that's kind of, we're still early days, but we've made some really nice progress and improvements across the organization. And then kind of zooming in a little further, one challenge that we identified before the acquisition is talent and being able to hire and retain qualified techs. This has historically been a challenge for Roundhouse. I talked earlier about these nice growth tailwinds.

And the Permian Basin, Midland-Odessa is a really supply-constrained market, which is nice from a competitive dynamic standpoint, but it's a challenge because there isn't enough labor to meet demand oftentimes.

So after getting into the business and kind of validating that, we have made improvements to just upgrade our hiring and retention programs. So we've implemented an in-house training program. We kind of defined roles and progression for all the technicians and the steps you have to take to move from one level and salary band to the next.

So those are on-the-job items and also third-party training requirements. In tech, I think that's a really powerful retention tool. When you start at Roundhouse, you kind of have visibility into what your career might look like, and it's a career, not just a job.

So I think that's been really powerful and also just kind of like streamlines the decision-making process when you're thinking about hiring or promoting somebody or when somebody comes asking for a raise, you have kind of guidelines on making that decision. So it creates leverage for our managers.

We've engaged a third-party staffing firm to help accelerate recruiting. We do pretty well on the entry-level side of the business. Like if you just need a hard worker who's willing to learn, we can go out to job fairs or put a post on Indeed to find those people. Where we needed the most, where we had the most acute need was hiring techs who already had experience and the staffing firm has been really great for helping us find people to hire who have a short ramp to lead a crew.

We have prioritized retention of technicians via multiplier approach. That's kind of like all these things combined to that. And the quantitative outcome of all of this is that we've increased headcount in the business about 20% in the 10 months since acquisition with outsized gains in the field service department where that's been our priority.

So yes, in conclusion, Kingsway has been instrumental in finding and getting this deal done. And we've laid some great groundwork that is ongoing, continue to learn and build trust and do more there. And we've kind of put enough groundwork in place where we can move on to the next stage of KBS and continue to professionalize and streamline and ultimately grow the business into the future.

So with that, I'll turn it over to Davide. Thank you, everyone.

All right. All right. Thank you, Miles. Thank you, JT.

On the morning of September 27, 2024, my wife woke me up, closed the window. I'm hearing the cars on the highway. As I'm walking into the window, I realize that those that we've been hearing were not cars. There were trees falling down. This was Hurricane Helene, the most devastating natural disaster in the last 100 years in Western North Carolina.

My mind went immediately to IS Technology. We closed on the deal the day before. And now I was wondering whether there was anything left to run.

My name is Davide, and I'm from Italy originally but studied in the heart of the pharma world in Europe, in Switzerland, did my PhD in neuroscience there, work in operating roles in pharmaceutical companies at Roche and Eli Lilly. In 2020, I moved to California, where I did my MBA at Stanford. After that, I spent a couple of years investing in venture capital. And in 2023, I joined Kingsway, and I'm now the CEO at IS Technology.

Let me tell you a little bit why I decided to pursue a search fund. Really my passions are investing and operating. And the search fund as asset class is the only or one of the few asset class that would allow me to buy a business and then run it.

So I was looking for the right investor. I talked to several of them. I spoke to my professors at Stanford and other big funds out there. But they all kind of looked the same to me. Until I connected with Timi, the CEO at Ravix, part of the Kingsway portfolio, and he spoke about the public company structure that Kingsway provides, the reputation that comes with it, the support system from JT, Kent, Charlie, the management team, the other OIRs and finally, the NOLs and the financial incentives.

For me, it was a no-brainer. That's why I decided to join Kingsway and start my journey in 2023, May 15.

In September 2024, we closed on IS Technology. It's an MSP in Western North Carolina located 20 minutes outside Asheville in Fletcher. The business was running at $3.1 million in adjusted EBITDA, and we bought it for 19.5, 6.3 multiple.

What was attractive for us was that the business really had all the characteristics that we like at Kingsway, starting with revenue quality between recurring and reoccurring, the business had about 90% of recurring revenue, was a business that had been growing between 10% and 15% year-over-year in the past 3 years and was capital-light. So it was able to convert into cash on the EBITDA, so high ROCE.

The stickiness was really translated into more than 100% net revenue retention and low single digit. The business was running on pen and paper. I'm going to talk a little bit about this later. So we liked it because we could improve the business and make it more efficient.

And the industry per se is very fragmented. About 80% of the MSP market is not consolidated and very few MSPs reach the $10 million in revenue.

So I was ready to step in, in the job and implement the KBS playbook. But I immediately that day, September 27, I immediately realized that we needed to do a step back and first deal with the aftermath of Hurricane Helene. So supporting the community and bringing the business back to normal operation was our number 1 goal.

And we wanted to accomplish this within our first 90 days. After that, we could move to apply the KBS playbook and focus on 3 major improvements: rebuild the sales team and our engine, growth engine; implement processes and technologies that would allow us to improve the efficiency of the business and cut costs; and finally, implement systems that will give us a data-driven approach. And that's what we did.

You see here on the right, a picture of me doing supply runs from Asheville to Charlotte. This was one of the first initiatives that we implemented. In fact, that morning, when I realized that Hurricane Helene was taking place in North Carolina, I drove to the office. And luckily, the office was sitting on a hill and was protected by the flooding.

So with the help of our engineers, we installed Starlink and within 48 hours, the business had Internet connection. We were the first business in Western North Carolina to have Internet just 48 hours after the hurricane.

This gave us the possibility to get connected with our employees. And while we learned that luckily their lives were not affected, they didn't lose their lives, but they lost their homes. And so we initiated what we call office as a safe place, where thanks to those daily runs that we have been doing, our employees and their loved ones could come to the office and find food, potable water and the possibility to have a shower.

We took a similar approach with our customers, where we proactively sent our technicians to visit our customers in person to take care of their technology needs. The local Chamber of Commerce played a pivotal role in that. And then we wanted to have a clear picture of the financial impact on the company from day 1. And so the first thing that we did was to reach out to our vendors and negotiate net 90 payment terms with them.

All of this gave us the possibility to normalize the business by November 2024 when water was restored in Asheville, our business was back to normal. And we could then move to improve via the KBS playbook. The first area of improvement for us was our growth engine. When I joined IS Technology, we had only one sales rep, one account manager that was taking care of 450 accounts. So as the business was growing because those accounts were expanding, we didn't really have a predictable sales engine that could allow us to cross-sell and go after new logos.

So to recruit a sales team, the first thing we did, we partnered with an external organization, The Pros 800 and Steve Rolla, they are more than 40 years in the field. We used their tool called Pivot to map Western North Carolina ZIP code by ZIP code based on the TAM. And we identified 3 main regions: Asheville, Greenville and the west side of Asheville.

Each region had the potential for 2 sales reps, one account manager that would manage the current accounts and cross-sell and one account executive that would go hunt for net new businesses. So we divided the region in 3 big areas, and then we started to recruit to find really strong talent that could come in and make a difference.

So we applied the KBS talent identification approach where we drafted job scorecards, role-specific people analyzers and an accountability chart for all those new sales hires. Thanks to Timi and other OIRs that have been in my shoes before me with their businesses, we also used a third party to assess those candidates with tools that would predict the performance 1 year into the job.

So I'm proud to report that a year in the job, we went from 1 sales rep to 8 sales representatives that are really scouring the 3 territories that we identified in Western North Carolina. The second area for improvement for us was processes and technology. We made many improvements that had real financial impact on the business. The best one, I think, is how we dealt with the cost of supplies.

Our customers, part of the service that we provide for our customers is taking care of their copiers. So big machines for hospitals and lawyers or CPAs. Our customers pay a monthly fee, and we go there and we provide service and support. We also provide free toner replacement when the inks level go down.

Historically, the business relied on the customer to pick up the phone, call the office and ask for a replacement. This created some friction because customers had to interrupt their working day to assess the toner level and make the call. And also it created a lot of waste because customers are not copier experts. And so when something was not working, they thought it was the toner and they were calling us.

And so we implemented a remote fleet management tool that we still have right now so that we monitor their fleet, our fleet in their environment 24/7. So we know where our machines are, if they have any issues, if there is any part that needs a replacement, and we monitor the ink level in the toners at any time.

Applying this tool and having those processes, we were able to, a, increase customer satisfaction because we are now shipping those toners proactively. So the customer doesn't need to call the office; and b, we were able to cut costs significantly because we are now able to replace those toners when there is only 1% to 3% ink remaining.

Just little numbers. I know you guys like numbers. Just by introducing this, we saved about $0.5 million last year on supply costs.

And the third improvement is on systems. The business was running on pen and paper. It was literally the income statement at the end of the month was corrected by hand by the prior accountants and all procurement and so on was done, again, using pen and paper.

But now the business is running on an ERP system that is fully implemented. The whole company runs on cloud. All of my employees have access to cloud. We have APIs between cloud and our ERP and cloud and our CRM so that any time we can analyze data coming from either sales activities or procurement, project management and so on.

We implemented monday.com for project management, procurement, delivery and installation. Our credit cards run using Ramp, HR, ADP. And just a little anecdote, we implemented a tool called Smile Back so that at the end of each call, once the technician completed a job, our customer can fill out a survey on what they liked and what we could improve.

So thanks to this tool, we worked to improve our customer service. And I'm proud to report that we've been running 36 consecutive weeks at 100% CSAT, so customer satisfaction.

I gave you a little snapshot in my first 18 months as the CEO of IS Technology. We started with Hurricane Helene. We implemented the KBS with an early diagnosis and installing operating systems. We're now focusing on going deeper and focusing on strategic developments.

Before I end my presentation, I just want to give you a snapshot of the financial performance on the business. If we look at Q1 2025 right after Hurricane Helene, and we look at Q1 2026, the business has grown 25% in revenue and 53% in adjusted EBITDA. And this has been a constant growth quarter by quarter.

So thank you for listening to me. I hope I gave you a little snapshot about my journey and the financial performance of the business. I know you guys are eager to grill us with questions, and I give it back to JT.

All right. Thank you both, Miles and Davide. Two operators, 2 very different businesses, same playbook, real measurable results. That's the theory in action.

We're going to open it up to Q&A now. We've got someone with a mic that's going to, Charlie is going to run around and give you the microphone. I'll ask both Miles and Davide to come back up here, and we'll be happy to field any questions you guys have and whether it's our strategy, the performance or the opportunities we see ahead. So I've got a microphone here.

Thanks for the presentation. I was wondering, I've been following the stock price, and it's been as high as around $16 and as low as around $10. Is there a reason for the fluctuation so much, given that everything in your presentation is so excellent that it would seem kind of hard not to want to be long the stock, but yet it's come off a bit.

Yes, that's a good question. I guess I don't really know how to answer that. I can't speak to the day-to-day or week-to-week, the [indiscernible] of the stock price. I think that we're very much focused on building the engine and hopefully have that fully reflected in the stock price over time.

Thank you. Miles, I believe your business if I heard you correctly, went from $2 million of revenue to $20 million of revenue over the trailing 5-year period when you bought it. How did you get comfortable with that, that historical growth was going to -- you were going to go backwards after that period? And what do you see for the business as you look out 5 or 10 years?

Sure. I think we were able to get comfortable because the growth was comprised of services that were critical and recurring, we're going to continue into the future. So it wasn't one-off project revenue that had kind of built the business to that level. It was things that were going to continue year after year, and we were going to add on top of that. We looked at revenue retention numbers from our customers, and they were strong. So not only retention, but we looked at churn and thought we were losing customers and that was low. I don't remember the number off hand right now, but I think we talked about them in the prior presentation. So out there. But yes, those are really compelling. And we also looked at kind of the underlying demand. There is a lot of data analysis around oil and gas production in the Permian. And most of our customers are public Fortune 500 companies that publish investor materials and kind of talk about what they're doing. And the customer set that we've been serving is projected to continue to grow. So really, I think the growth at Roundhouse pre-acquisition is a function of kind of -- part of it is -- this might be going too far down the rabbit trail, but Lee Hudson is the current President of the company. He came into the business about 5 years ago and kind of did a version of what we're trying to do to bring the business from $20 million to $100 million of revenue. And so he implemented some processes and procedures that unlocked leverage for the employees, streamlined the hiring and management to bring the business out of the other sellers' had and off pen and paper into an ERP and with repeatable processes that employees could take over, and so it kind of unlocked capacity and then they were able to seize on underlying demand. And there's enough meat on the bone and additional underlying demand that by kind of professionalizing it again and taking it to the next level, we think we can continue on that trajectory that's kind of been said and also instilled in the culture around us.

I think this is for both Davide and Miles. You both are sort of towards the tail end of your walk period of the journey. So you went from an M&A mindset to an operational mindset. How do you balance the time and energy to think about inorganic growth versus driving additional organic growth at your businesses?

Yes. Well, I would divide the process into 2 steps. The first one is acquiring a platform that's M&A intensive and they are required 100% of my focus. The second part of it is organic opportunities, organic M&A opportunities that are coming in once I've owned -- we owned, I became the CEO of IS Technology. This is something that surprised me. But in the 18 months that I've been with the business, I get 2 quality businesses per quarter on my desk that's ready to sell. And so in the second stage, that's at least my experience, the tuck-in acquisitions and the M&A portion requires less involvement than the acquisition of the initial platform. So I can combine both the operating part and keeping an eye on potential inorganic opportunities.

I might just tack on to that. As part of our philosophy, we believe that pacing is really important in an inorganic strategy, right, for some of the reasons that we talked about new operator, new business, new industry. You've got to get through that couple of year journey, learn the business, build credibility, establish trust, get a strong foundation before -- and when we've seen search fail, it's like do an acquisition very quickly thereafter, and you're buying something on a very shaky foundation. And so you really have to build the foundation on which to then run an inorganic strategy. And typically, that's that 2- to 3-year. And coincidentally, during that period, these businesses have the ability to use the cash flows of the business to delever their balance sheet so that follow-on acquisitions can be done with little or no additional equity capital required from Kingsway. And you've seen evidence of that at SPI, for instance, or Ravix as well. So they happen to go hand-in-hand, that journey, but I think that it's very powerful and allows us to follow that capital-efficient framework and an inorganic strategy.

So it's kind of kind of related to the question the other person had, which is, there is a Stanford study and there is something which you did prior to doing this at KFS and both are probably around 30% range in terms of IRR. Like now how do we know where is this portfolio of companies tracking in relation to the targets like -- is it anywhere close to 30%? That's one. And second is if you can -- you have all these companies. I know some of these didn't do well, like Secured Nursing. I know because of the staffing and nursing company because of COVID, probably not doing well. So yes, on the portfolio level individual level, how are we tracking towards what we expected and from the past experience? And do we need more time? Do we need more companies like only after 25 investments, does it track that? Like...

Yes. It's a wonderful question. How are we tracking relative to the base rate that we read about, right? I would start by saying that even almost universally, even the very best outcomes go through a period, what we refer to as the J curve, right? And just sort of a function of being in the lower end of the lower middle market. In the first couple of years, every operator is going to face a crisis. It's part of the curriculum really. And so every business, even the very best outcomes go through a pattern where they may step backwards. And it's just part of the journey. I would say that with the exception of perhaps SNS, we're very pleased with the development of all of our companies and feel like they're on a really good path and trajectory. Some might take a little bit longer time to get through the journey. Others didn't step back at all. But yes, I think that generally, we feel like the trajectory with the exception of probably SNS are on a very good trajectory. And we're more focused on MOIC than IRR probably. But I think that over time, these businesses are going to develop and we're going to deliver similar types of returns.

To get to -- does it like in your experience running Argus, was it like it takes like a certain number of years or a certain number of companies before you reach this statistical median number, which is projected in all these studies.

Yes. I would think -- what I've seen is that the ones that are going to go bad, right, the mistakes I've made those become apparent very quickly. And the great outcomes take a long time to develop, probably not unlike venture capital investing, right? So you're going to -- the failures are going to emerge very quickly. And the great businesses are going to develop over a much longer time period.

This is for both of you. But maybe, Davide, I know that you initially had a very different type of business that you had gotten far along the path with and I think the life sciences or health care before going to the MSP business. I'm curious for both of you, if you could maybe talk about the number of targets that you evaluated and kind of how different they were, how focused you were on a particular industry or business model. Could you just speak to that?

Yes, absolutely. So my background is in pharma. So health care with a specially focus in pharma and that was the thesis that I brought to Kingsway and was my initial focus. And so I focus on all of those services, ideation to the drug development industry. We look at a CRO, but 6 months in -- or actually already identified the target when I came to Kingsway. So from the get go, we had our eyes on that acquisition. Unfortunately, as we were -- as we kind of order in the due diligence going back to the Kingsway criteria, we saw that the revenue was not really recurring as we thought. Initially, it was more reoccurring with some lumpiness. And the growth trajectory was not really given by a strong industry tailwind, but by a specific moment in time when COVID hit. So we decided to take a pause there and step back. In terms of how many deals we looked at, it's really a funnel to me. So I would say probably look at hundreds a quarter, just initial gains. And then you move through the funnel, does that meet the Kingsway criteria for a good profile. Finding the right acquisition is difficult. It's -- you're looking at businesses that have all of those criteria, and we want to minimize the risk. And so in the Stanford study there's a 2-year time period for -- on average for a searcher to find a business for those that are able to find those business. So that's what I would take to a couple of years. Yes.

For me, I guess let's tell my story and then we'll kind of illustrate. So I came from real estate. So I started looking initially in like facility services businesses because it was a similar customer set to companies that I had some experience working with and that kind of led me to explore a variety of different industries. A lot of them were guys and trucks type businesses like fire protection, kitchen exhaust cleaning, et cetera. And I like those types of businesses, preventive maintenance because all the economic features that go along with them, but also I thought it aligned with my experience in the Army. Everybody in the Army, at least half of your job is doing preventive maintenance. So I kind of felt like I could get a handle on that. And so I wasn't looking at a specific industry, but we had a couple of really important guiding principles as recurring revenue, critical services, low cyclicality, manageable customer concentrations, all the things that everybody loves and talk about. And I think that having a strong sense of those features that we were targeting kind of positioned us well to identify the opportunity in Roundhouse. Yes, Roundhouse, was a broker deal on its face, had some kind of yellow flags, being in oil and gas and a little bit more capital intensity than like than some of the other businesses in Kingsway's portfolio like an MSP or a software or an accounting business. But we were able to see through those items, see that it's in a segment of the market that's insulated from cyclicality and capital intensity is actually low on a relative basis to the market. So yes, I think those guiding principles kind of allowed us to see. And then from like a quantitative standpoint, yes, the name of the game is trying to look at as many opportunities as possible. So I think we were targeting setting out like 150 proprietary e-mails. I was targeting setting out something like 150 proprietary e-mails per week and then just trying to monitor every source for broker deals possible and maintaining relationships with brokers. I think before identifying Roundhouse, which happened about 15 months into my search. I put out 5 LOIs, one of which was accepted and broken to due diligence, but yes, those are kind of my stats.

Sorry, one more question. The same thing, which is -- so that as investors can sort of follow the story a little better, which is like when you did that JD, your personal search for -- were the returns dominated by a few outliers? And is that the normal sort of story that we need some 20x or 30x for the model to prove itself? Or is it -- so is it more evenly distributed the returns on the portfolio?

Yes, look, there's like distribution returns been published. My experience was actually not that. Pretty consistently, that 3.5 to 5x MOIC over 5 to 8 years. A few that were better than that, but pretty consistently, the good ones, and that's probably a little bit different. I think that some people would say that you do need some of those right tail outcomes to move the needle. But that wasn't -- that's actually not been my experience. I missed out on the 100 baggers, but pretty consistently, maybe it's my sort of risk aversion or something, but pretty consistently in that 4.5x MOIC over 7 years would be kind of what I have seen personally. And the attribution of those returns is a combination. Obviously, there's financial leverage involved, which enhances the equity returns. And then it's organic EBITDA growth or inorganic or a combination of the two and then some multiple expansion as you build a bigger and better run business, you get some multiple expansion on exit, I think that -- for us, we want to own these businesses for a very long time and let the organic and inorganic growth engines compound.

Was there any difference like [indiscernible]

I think that over time, we've learned what good looks -- more like what bad looks like, and began avoiding things that didn't have the attributes, like didn't have the revenue quality, more project-based stuff, less recurring, maybe lower gross margin, maybe higher capital intensity. And so if you just some pattern recognition of when things don't work out, they had a set of attributes that were different than when things did work out, which is what caused us to focus on a handful of the attributes that we're very focused on now. And the B2B and B2C services isn't like we didn't set out to do that. It's what fell out of the focus on large and growing industries with small niches, fragmentation, high margin, low capital intensity, recurring revenue, and that's just kind of where you default to.

Miles, I know you just touched on your deal saying that it was a broker deal. Davide, I can't really recall the extent to which yours was brokered. But very curious on just like competition, I know maybe you won't have hundreds of people bidding on these businesses. But can you just share a little bit more about how competitive that was and then the extent you knew kind of the deciding factors and how you're able to separate yourself, that would be helpful.

Okay. Yes, I think -- so my deal was brokered. I think there's a spectrum of how efficiently a brokered process is run and oftentimes in this segment of the market, there's inefficiencies even in broker deals. But that said, we were going up against the broker beta market. I think there were a handful of bids, maybe 5 or 6. And they were all kind of within a reasonable range. I think we were able to win for a few reasons. We -- so not to get too far in the weeds, but the business was a C corp in Texas. And so doing a stock sale was very tax advantaged for the sellers, and we were able to offer that because of Kingsway's NOLs and tax advantages. So that was a real differentiator. And then beyond that, like there's a huge qualitative aspect to the sellers. The retiring owner has worked -- it was an early employee. He's worked in the business for 40 years. His family is involved. His family friends are involved. He's born and raised in Odessa and his reputation in the community, his customers are his friends. And the business is his baby. And I think he -- I'm grateful to say that I think you have a lot of trust in me and Kingsway, that we would be good stewards of his legacy. So that was a major consideration. And also for the other seller who is staying on, I think you had a lot of confidence that we'd be able to work well together. We had a similar vision for the future of Roundhouse, and that he'd be able to execute with Kingsway and me. So yes, I mean the personal touch goes a long way. And yes, I don't know, Davide, do you have anything else to add?

So we just have a couple of questions that came from the webcast participants and then we'll go to a short break. So JT this one is probably for you. I think we've talked about it in prior presentations, but can you just remind people how the OIRs are compensated and how that aligns to create value for Kingsway shareholders.

I assume this means after they get a deal done. Yes. So we've really structured our compensation to be pretty consistent with the way that traditional search has run. When they step into the President or CEO role in the business that they acquire, they're -- they get a reset on their annual comp, a base salary commensurate with the role, typically around $250,000 a year, something like that, and the potential for short-term incentives tied to cash flow return on invested capital. But the most important thing is their ability to participate in the value creation through the equity upside. And so they have both of these guys and all of our guys have the opportunity to earn up to 25% in the common equity of the business. And that equity is after our initial investment, which goes in the form of preferred gets paid back. And then they are shareholders in the common and the upside participation and invests in 3 tranches. So 25%, 8 1/3, 8 1/3, 8 1/3. The first 1/3 vests at closing as compensation for finding a great acquisition. The second, third vests over time, 4 or 5 years. And the final third vests based on performance on an IRR or in some cases, an IRR threshold with MOIC, but generally on the equity returns on a sliding scale, minimum 20% and full earn at 35% IRR.

Great. Then the last question, we've got a few different questions with respect to the recent movements in OIRs. Can you comment on the recent changes in the plans to fill those open roles for OIRs

Yes. So we -- like I mentioned, we have a very strong pipeline of OIR candidates. We've got some backfilling to do. Charlie, I mentioned in 2025 of 200 candidates. I think in the last 12 months, it's more like 270. So we've got a lot of interest, and we've got -- from that, obviously, we filtered down and people move through. We have like a 6-stage process of recruiting. And we've got I would say probably 5 or 6 candidates. They're moving further along that stage and some in very late stages. So we're excited about the quality of the people that we're seeing. And yes, that's an important engine to keep the OIR pipeline full.

Great. Thank you, everybody, for your questions. We'll take about a 10-minute break, and we'll set up for the fireside chat.

Awesome. Thank you.

[Break]

Hi, everybody. We're going to get started with the fireside chat here shortly.

Awesome. Hopefully, everyone got some lunch. And yes, I thought it would be fun to close out today. I'm really delighted to welcome someone who, more than anyone else really embodies the Kingsway model in action, Tyler Gordy. Thank you for being here.

Thanks for having me.

Tyler's story is proof in action of what we're building. Obviously, we've talked a lot about his experience at PWSC and the benefits that inured to us as a result of that. But maybe I thought I would just give a little bit of a background and a bio on you. Tyler has a really sort of impressive background and history. After 9/11, he was called to serve in the Army and was part of the first wave invasion of Iraq.

Elevated through the ranks very quickly where he became a Sergeant and got the attention of the theater commander there who saw something special in Tyler, and recommended that he go to West Point, which is a fairly nontraditional path for an enlisted NCO. And so Tyler ripped the stripes off of his sleeve and went back as a freshman at West Point as a plebe, had an incredible career at West Point and graduated as First Captain of West Point, which is the highest ranking cadet in his class. Commensurate with that honor, I think the expectation is that you take a role that befits no title and was deployed at the tip of the spear to Afghanistan where he fought the Taliban for 4 or 5 years. After which he went to Harvard Business School, was a Fullbright Scholar finalist and also learned about search funds while he was there. We had just started building at Kingsway around the time that Tyler graduated from HBS and had embarked on a self-funded search. And we met -- you had a deal late stages under LOI that was sort of falling apart is our first conversation. And Tyler had kind of run out of personal capital and enthusiasm to get that deal done, and we were sort of concurrently about to close on a Warranty acquisition. And so Tyler graciously agreed to come and join us and take over that operation. We knew that it needed a new manager and a new management team. Thanks to Terry. He indulged me and us on our vision to take an inexperienced, but highly talented young operator and put them into a new business. It was a new thing for you guys and you took a flyer. And we had a great outcome. And Tyler really embodied all of the things that we hope to, I think that KBS has come a long way since then, but you were instrumental in helping us build it. And obviously, we had a wonderful exit and now Tyler is a very active member of our advisory board, providing counsel and guidance to our young operators, which is really amazing. So Tyler, thank you for being here.

Happy to be here. Thank you for having me.

Yes. So maybe we'll just dive right into some questions here for you. I've got them written down, so bear with me. So maybe in your words, I've just described your incredible journey from the 101st Airborne to West Point, to Harvard Business School. What initially drew you from military to business? And then follow-on, how did that path eventually lead you to Kingsway?

Yes. I think the big thing was in the military, you just have no control over where you're going next and I got tired of that. So I wanted to have more control over my life and my career and I wanted to do something different. My dad actually was a small business owner. He started a really small company in Northern California 25 years ago. And I thought it was so cool. He got to work whichever 80 hours he wanted to per week. You got to choose what time of day you would work and where he would do it. And I got to see that. And it was wonderful watching that as a young man, and I wanted to kind of follow in his footsteps. So that's what set me down the path of getting out of the army and going to business school and then I didn't know anything about search funds when I got to business school. I did a traditional internship at a big company and I got done with the end of the summer, and I thought, wow, this was very similar to what I experienced in the Army, and I don't want to do that again. And I had a section mate at business school that had spent 4 years in private equity on the investing side and I was talking to him about what he was going to do. And he said, "I'm going to go buy a business and run it," and I was like, "Wow, you can do that. That's amazing." I never heard of that, and I didn't even know the path existed. So he talked to me about it and he said -- and the cool thing is there's a class called entrepreneurship through acquisitions. It's a full year. You take financial management small firms 1 semester and then you take the second part, which is kind of how to run and operate a business. So I took the course with Rick & Royce. And unlike Miles, who said he didn't have the confidence to sit out on his own, I was overly confident and naive. And so I went out and launched a self-funded search. And I was in Austin, Texas, and I had a deal under LOI that I've been working on for probably 8 months, and I have gone through all the steps of diligence. It was a neat little -- it was a laboratory actually. They did QA screening for pharmaceuticals and supplements and things like that. And it had all the characteristics that you would want of a search fund acquisition deal, except for one, but it was highly recurring revenue. It was noncyclical, wasn't capital intensive, no customer concentration, nothing like that. But the problem was when we got to the end of diligence and we drafted the purchase sale agreement, we were ready to close. Chase wanted all of the leaders in the company to go through a background check. And the sellers were okay with it, but the Lab Director was not, and he refused to do a background check. And then the sellers came back to me and said, the Lab Director won't do a background check, but we have another guy who will act as a Lab Director and he'll do a background check. And I said, yes, that's not going to work, unfortunately. So I was broke at the time, I remember I was looking at my bike and my skis and thinking which one I could pawn and get more money for to continue my search -- and right at that time, I heard about Kingsway had just acquired a business through a guy who was a searcher and that they were looking for an operator. And so he actually put me in touch with JT, and I flew out to Itasca and heard about the opportunity and JT's vision and what they were trying to do with the platform and that's when I decided to make the leap. And so I shut down my search basically right there. That was the end of it and accepted the offer and came on board.

Yes. Awesome. When you first met us, what do you think it was that attracted you to Kingsway? How is it different than trying to reload with a self-funded search or maybe go the traditional search model?

Well, I just got my tail kick. So I was in a position where I realized that I did not have the answers and then I needed that structure, and I really needed a mentor. I mean, frankly, that was the biggest thing was I recognize that, my own deficiencies that I needed a mentor and JT had invested in a lot of searchers and had gone through a search himself back before search was a cool thing. And so I really gravitated towards the idea of we're partnering with a mentor that had been there and done a search before. And I kind of knew what right look like. And then JT explained the Kingsway Business System to me at the time. And I think that's when I clicked it was like, "Wow, not only do I not know how to buy a business, but I don't know how to run one either. And this is like really hard stuff." So I think that it was kind of those 2 things, not just how to buy, but how to operate a company and then to have access to you and to the resources at Kingsway to help me be successful because it's really hard stuff to do on your own.

Yes. Amazing, amazing. Well, you did an amazing job. So let's go back to when you took over PWSC. And for those of you not familiar, PWSC was a home warranty business. They essentially sold what I would describe as OEM manufacturer and warranty on new home construction. So their customers were the largest residential homebuilders in the country. And as a way to move sort of let's call it 1 to 10, so 1 year everything, 2 years sort of behind the wall, 10-year structural defect warranty off of their balance sheet, they partner with a company like PWSC, which acted as what I would describe as like a managing general agent. They didn't take the risk, but they placed the risk and priced it. So it was an interesting business, had come out of the aftermath of the housing crisis and was at sort of a midyear we thought and probably had an opportunity to sort of build out of that but it was in tough straights when you stepped in. So maybe just kind of set the stage, what did the business look like when you walked in the door? And what were the first couple of things you focused on?

Yes. When I got into the business, I thought that the business was going to be in great shape because it was owned by a pretty big private equity firm. And -- but they had bought it pre-housing crisis, and then the EBITDA was decreased by 80% during the housing crisis. It was a huge loss for them. And when I got into the company, what I realized was that the management team that was in place, they were kind of caretakers of the business. They were just kind of keeping the business going, but there was no growth strategy that was put in place. And everyone on the leadership team, but one VP was getting ready to retire in the next 18 months. So they were all kind of getting ready to check out. There were no real processes in place. There was no business system in place to kind of operate the company, and there was also really no strategy at the time. So one of the lessons that I learned early on was that we were actually losing customers where we were getting ready to lose customers and no one really knew that. So the first big aha moment for me was I went out and I decided I was going to meet with all the big customers and just kind of listen to what they were telling us about the business and how we can improve. And I went to meet Beazer Homes at the time, which is a big builder. I think they're a top 10 at the time in the country. And I sat down with the guy and the outgoing CEO, introduced me, to the Risk Manager there. And within 10 minutes, he was like nice to meet you. And just so you know, we're leaving, and we're going to take the product or the service that you guys provide in-house. And they were our third largest customer at the time. So that was like, "Oh, my gosh, we just lost our third largest customer." I think they were probably 5% of revenue, but the business had terrific operating leverage. So 5% of revenue was probably 15% of EBITDA at the time. And it was just a kind of a big wake-up call for me that the business maybe wasn't exactly what we thought it was. There was still a strong need for what we were doing, but we just hadn't been doing it well over time is essentially what I learned for the customer. So we had to make some changes quicker than I had anticipated. And that was really what the kind of the first 100 days for me. We're just listening to our customers, listening to our employees and understanding what the big problems were and then starting to formulate the plan, not even strategy on how we were going to compete and wear, but just how we were going to keep the business from dying in that moment.

Yes. I think every operator goes through that. There's a -- that was probably your first mini crisis to sort of set the curriculum. And would you say that you went through a bit of a J curve?

Yes. I mean we -- it was I don't think atypical. But certainly, EBITDA declined from the first year to the second year by probably 15% to 20%. It was a nice drop. And I was very nervous. You talked about why Kingsway? And I think I mentioned having a mentor and having that support system, if I was on my own, I would have been even more nervous, but JT didn't really blink. He was just like a as part of the process. And one of the things that I learned early on was that it was okay to share bad news, which I think is so important for a young operator early in his or her career is to be able to go to the Board and say, these are the things that are going on and to have candid conversations and not be afraid that you're going to get your head bitten off for that. And I shared bad news early and often with JT and together, we kind of put together the plan on how we were going to transform the business, and we went through the J curve, and it was certainly scary at the time. But looking back on it and now being involved with other small businesses, I just see it as part of the process.

Yes. Yes, for sure, for sure. It can be terrifying, right? Looking back, what were maybe 2 or 3 of the key operating decisions that you made after you sort of had this sort of realization that the business maybe wasn't quite what we thought it was and a mini crisis. What did you set out to do?

I would describe the first 1 as kind of tactical patience not making any knee-jerk reactions right when I got into the company, even though there were big problems that needed to be solved, I wanted to kind of develop a full picture of what was going on. So like I said, I met with every single employee, not just at a high level, but I really got into the processes to understand how the business worked. And then once I felt like I had a fully developed kind of picture of what was going on with the business and with the industry, I think we did a really good job of hiring the right team. And I think that's probably the single most important thing a search operator can do is overwhelm the business with talent. We really go out and hire talented people. And we did that. We went out and found 3 people that were former employees of our customers that those businesses had gone away during M&A. One was a General Counsel. The other one was a Senior Vice President of Construction. The other guy was a Superintendent for a builder. And we went out and hired builders that really knew the space. They really understood the product. And then through them and the relationship that they had, we were able to capture the voice of the customer and the problems that those customers had, and then from that, we were able to develop strategy to address those problems. But I would say, so tactical patience, building the right team and then using the KBS system to kind of deploy the strategy that we had put together while building this team. And I think we used it pretty strictly. I mean, we really would go off-site every year at the beginning of the year, we would develop the strategy, we would share the strategy and the budget with the Board. With JT, they would approve it, and then we would deploy the strategy, and we had a model at the time that what essentially has become the Kingsway Business System. It was a little bit rougher than, but we use that to execute the strategy that we had in place using the fundamentals of plan, do check, adjust and all of the things that we talk about.

It doesn't get talked about that often. What do you think it is about a search fund operator that allows them to attract really great talent into a small company? I often sort of punch above their weight in terms of their ability to attract really capable people to an otherwise like less exciting small company.

I think it's the energy and the vision and having the right compensation plan in place. So Kingsway allowed us to build a phantom equity package for all of the team members that came into the business. So they got to participate in the upside. So it started with me going to them and saying, like, here's the vision that I have. Here's what I want to do with the business? And why don't you join me for the ride and here's what we can accomplish together in -- I think if there's something about like a young, hungry person coming in that has that energy and that vision and saying like, I'm going to go out and build this big business that gets people excited. And then when you are able to give them a compensation package that incentivizes that buy-in and kind of aligns them with what you're trying to accomplish. It creates a really kind of powerful experience for those people that I think attracts them to the business that they otherwise wouldn't join.

And to your comment, allowed you to overwhelm that business with talent where there had been a real void.

Yes. We -- there was a competitor in our space that was probably 10x our size and their top people were coming to us in the end trying to get a job with us because they wanted to be a part of what we were doing. And we were just able to attract incredible people.

Yes, amazing, amazing. Let's talk a little bit about the exit. Obviously, PWSC, we sold for over $50 million, a really incredible exit. But maybe just give some insight into how that process came together. And maybe how did you -- why that timing, how do you know the timing was right for you?

There were a lot of things. Part of it was personal. My dad got sick, and I had been really busy in the business and wanted to devote more time to family. Interest rates were also going up. That was affecting the housing market at the time, and builders were starting to struggle. So it felt like maybe we had not reached the top, but that things were going to be a little bit more bumpy. And multiples were really high for MGAs at the time. It was like the peak of the market for managing general agencies and retail insurance brokers. And so I talked to JT about it and told them that I thought it was a good time to sell. And he gave me the green light to explore that and go out and talk to a banker. And so I actually called a friend of mine who was doing M&A for a big platform and asked him who the top bankers were in the space, and he gave me a couple of names. And he said, "What do you guys do?" And I told him what he did, and he was like, "Man, we would love to buy that company." So I told them awesome. I'm going to go hire the banker and then you guys can participate in the process. So that's what we did. We hired a great banker, and they ran the process for us and we were able to -- from LOI to close was 30 days.

Yes, record. Super short. Yes, it was amazing and ultimately sold to that group.

Yes. They ended up being the buyer.

The banker just kept a modest.

Yes. Yes.

So this is kind of an odd question, but what do you think a successful exit looks like inside a public company like our permanent capital vehicle versus an exit in a traditional search vehicle? And why are they different in your mind?

Well, I think in a traditional search vehicle, the capital goes back to LPs and that's probably the end of it. But in the Kingsway model, the capital comes back the Kingsway and gets redeployed into hopefully, a similar situation with a similar outcome, and it just continues to compound. So more successful exits equals more opportunities to back searchers, which equals more successful exits and the flywheel just continues to spin up, and it compounds over time. So I think that's the biggest. And the lessons learned within that one search company stay within the Kingsway platform and get refined and pushed out to the other searchers and the operators, and they get to be the benefactors of those lessons learned. So everything kind of stays within the ecosystem, which is very different than a traditional search fund where the capital goes back to the investors, they reload and they'll deploy that capital amongst a handful of other opportunities.

Yes. Yes. So you have sort of the combination of compounding of capital, which is interesting, but maybe more importantly, the compounding of knowledge and talent.

Yes, yes, which I think is just kind of reduces the amount of errors and efficiencies and you get better over time. I mean I look at the Kingsway Business System now. The fundamentals were there when I was doing it, but it's so much more refined now than it was when I started. It's really remarkable to see the change.

Well, thanks to your help and input and experience on that. So after the exit, we were lucky to have you come back and continue to contribute to what we're trying to build here. You joined the Kingsway Search Accelerator Advisory Board. And that's -- in my mind, that's a meaningful choice. You probably could have done anything you want with your time. And obviously, it doesn't take all of your time, but that's a meaningful choice. Why did you feel like you wanted to stay in the ecosystem?

I mean I just love small businesses. I love being involved in them. I would like to see operators get a chance to have an opportunity to change their lives and their families' lives and the lives of the people that are in the business and it's just a wonderful space to be in. And it's an opportunity for me to give back. And I had a blast. It was just a lot of fun. It really is. So it's a joy to be back here.

You now sit with Tom and Will on the Advisory Board. What's it like for you being in that room with those guys and how do you complement each other?

Yes. I mean we all bring such unique perspectives. Tom brings the Danaher kind of Fortune 500 perspective, which is terrific because you get to see how things are done at scale. And Will, I think of all the search fund investors I've heard speak, I feel like he really is able to kind of cut through the nonsense, like he really gets to the heart of what's important with these small businesses. And that as a searcher being able to listen to someone like that talk that has that knowledge is invaluable. You just get to see what right looks like when you're analyzing an opportunity, and I did not have that when I was searching. And then I think I bring the perspective of like reality in a small business.

Yes, close to the fact...

I mean it's a knife fight every day. And you face problems in small businesses that you don't face in large companies, managing talent, capital allocation decisions are different. I mean there things just are different in a small business. And I think I bring a perspective that is unique in between the 3 of us, I think we kind of cover all the bases.

Yes. I think it's a wonderful sort of trinity of expertise at different levels and different backgrounds. I think having been very close to the fire very recently and your experience both deploying but also helping refine and build KBS is really powerful. So looking ahead, where do you see Kingsway going from here? You've seen the company evolve from the inside. And now you've seen what we're building at KSX. What do you think -- what excites you the most about our future?

I think it's -- what I talked about earlier is the kind of the compounding the lessons learned, taking all of the lessons and putting that back into the KBS system and refining it, and continuing to attract really talented people that are smart and hungry, buying great businesses, growing those businesses, selling those businesses and then redeploying that capital and just kind of the flywheel continuing to spend. So it was a small dream when I first got here, it's expanded into what it is today. And I think it's just going to -- I mean, just is going to continue.

Yes, I feel like we're sort of just getting started in many ways. Well, thank you. Amazing. We're kind of running close on time, but you're okay with a few questions, if you.

Yes, absolutely.

Does anyone have any questions for Tyler or me?

So Tyler, the EBITDA went down first year after because of a customer loss, how did you grow it and I was wondering like the 10x return, what was the contribution of like, let's say, leverage, growth? And like what contributed to 10x, like was...

It was a number a number of things. Certainly, leverage was a part of that. But all of our growth was organic growth. So we put a growth strategy in place. We almost doubled EBITDA and then JT and the team bought the business, right? And we sold it, right? We, like I said, the insurance industry at the time was going through consolidation on the retail side and MGA side. So there was a ton of M&A activity. And we were the benefactors of significant multiple expansion at exit. So we almost doubled EBITDA organically, and then we had nice multiple expansion. And we were able to delever, I think, in 3 years and start paying dividends.

Yes. Yes. So I think it was a contribution of things and multiple expansion was probably at least 40% of the attribution of the outcome. And I would ascribe that to a business that is now growing and growing at a nice clip with a very strong management team that Tyler built, right? And that's just a much more valuable business than the business that we started with.

I was wondering, does the company have any plans to issue dividends to the investors over time? Or is it just to reinvest the money in additional businesses because I noticed that there was kind of cash on the books, and I wondered if that might be helpful to getting more people to invest in the stock if there was some kind of dividend? And then lastly, I noticed that there's a lot of veterans working for the company. And I wonder, do you have any strategy to try to hire veterans and perhaps use it as a publicity campaign for the company to let people know that you're veteran-friendly and we try to have some program to train them or hire them because you're working in areas where a lot of veterans have skills in the trades.

Yes, great questions. I'll take the first one on the dividend. It's really a capital allocation decision. I think that -- and so to me, in my mind, that boils down to where do we think that we can get the highest return on our shareholders' capital. And so obviously, we have a strategy that we believe works that generates high returns. And so historically, we have predominantly used excess cash to find more businesses to buy and grow. We have returned capital to shareholders but not via dividend. I think that we're focused on tax efficiency. And so we've done that from time to time through share buybacks, but only if and when we thought that those buybacks would be done at a reasonable discount to our view of intrinsic value so that we are -- so those buybacks are done in an accretive way, so generating a return vis-a-vis the alternative, right, of redeploying. So I don't know that dividend per se would be a part of our strategy for the tax efficiency. But from time to time, you might see us be buyers of our shares if there was -- if they were sort of detached meaningfully below our view of intrinsic value per share.

On the veteran side, and I think Miles spoke to it a bit, and you could probably speak to it. There's something about time in the military, whether that's first through a service academy or getting dropped in as a young leader with the title, but maybe not the experience that is a very close analog to life as a searcher CEO. And so we have felt like the training that someone like Tyler or Miles has received is really valuable when you get dropped in, you sort of taught to rip the bars off of your shoulder and go and learn from the people, the NCOs and the people that are at the point of impact to figure out what's actually going on as opposed to coming in with your preconceived ideas and build the trust and work alongside them. I'm not a military guy, so I don't want to make a mischaracterization. So maybe you can expand.

Yes, I think that's right. I I think contrary to what people might believe when you're at West Point, you're taught that you don't know anything. And the best thing to do is to go in and with a level of humility and to be hungry and to listen to the people around you that do know things, particularly noncommission officers that have been in the units for years or decades and learn from them, and to stay humble and to really utilize collective intelligence within the team to kind of build the strategy and to deploy the strategy. And so it's a natural fit. It felt very much like that for me when I went into PWSC, where it's like, I don't know anything about insurance, but I have a team here that does and these guys are experts, and I'm going to kind of put on the same hat that I wear as a lieutenant to learn the business and learn the industry and leverage their expertise and through them and with them, we're going to build a strategy together that we're going to go out and deploy. So it's a very natural fit to go from being an officer in the military to being a small business leader because it's such a similar experience. It really is.

And so I think that you'll see us continue to view that as a positive attribute when we're talking to prospective OIRs. The good news is ex military in top-tier MBA schools. It's a pretty tightknit community and they all talk. And so I think that we've seen a lot of referrals into our pipeline because of people like Tyler or Miles or other folks that have done it and talk to each other, and so we get nice referrals that way. We can probably do more from a marketing standpoint, but I think we're seeing lots of activity already.

All right. I think that is probably it. Thank you all for being here on a Monday morning in New York. I really appreciate all the great questions and thanks for sticking with us through the presentation. I hope to connect with all of you over the coming days and weeks, and appreciate your support. So thank you.

Good day, and welcome to the Kingsway First Quarter 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. With me on the call are JT Fitzgerald, Chief Executive Officer; and Kent Hansen, Chief Financial Officer.

Before we begin, I want to remind everyone that today's conference call may contain forward-looking statements. Forward-looking statements include statements regarding the future, including expected revenue, operating margins, expenses and future business outlook. Actual results of trends could materially differ from those contemplated by those forward-looking statements.

For a discussion of such risks and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statements, please see the risk factors detailed in the company's annual report on Forms 10-K and subsequent Forms 10-Q and Forms 8-K filed with the Securities and Exchange Commission.

Please note also that today's call may include the use of non-GAAP metrics that management utilizes to analyze the company's performance. A reconciliation of such non-GAAP metrics to the most comparable GAAP measures is available in the most recent press release as well as in the company's periodic filings with the SEC.

Now I would like to hand over the call to JT Fitzgerald, CEO of Kingsway. JT, please proceed.

Thank you, Holly. Good afternoon, everyone, and welcome to the Kingsway Earnings Call for the First Quarter of 2026. Fund model to acquire and build great businesses. We own and operate a diversified collection of high-quality services companies that are compound long-term shareholder value on a per share basis, and we -- we also continue to benefit from significant tax assets that enhance our returns.

In short, Kingsway is uniquely positioned within a tax-efficient public company framework. Kingsway or KSX segment and our Extended Warranty segment. March stood out as a particularly good month, and we see clear business momentum across our portfolio, entering what are seasonally stronger summer months for many of our businesses. As a result, we are pleased to reiterate our expectation for double-digit organic growth in revenue and profit at both KSX and Extended Warranty.

We are also pleased by our acquisition pipeline, which remains robust. We have already -- we already have one acquisition under our belt in 2026 with the tuck-in purchase of Ledgers by our subsidiary, Ravix Group. We continue to anticipate completing three to five acquisitions in 2026, in line with our target. Before turning the call over to Kent for a review of our financials, I would like to provide additional color on three key topics: operating performance, capital markets and corporate governance.

Let's start with operating performance. As mentioned, both our KSX and Extended Warranty segments came in ahead of our internal expectations in the first quarter. I was particularly encouraged, however, by how broad-based the performance was across our portfolio. The KSX segment achieved record quarterly adjusted EBITDA of $3.5 million in Q1. The first quarter is seasonally lighter for many of our operating companies compared to the stronger summer months, which positions KSX for even better results in the quarters ahead as seasonal tailwinds kick in.

Roundhouse had another strong quarter and continues to execute well. Demand from natural gas infrastructure customers is robust, especially in the context of recent geopolitical events, and our team at Roundhouse is racing to keep up. March was record-setting for Roundhouse with monthly revenue above $2 million for the first time ever under Kingsway's ownership. IS Technologies had a great quarter with substantial top line and bottom-line gains relative to the year, ago quarter. All three service lines were up year-over-year and the combination of a fully staffed sales team and a stronger commercial footing are now paying off as business momentum accelerates. Within Kingsway Skilled Trades, Buds Plumbing had an excellent quarter with healthy growth relative to the prior year. Southside and AAA are still in their investment phase, but we believe both companies are poised to accelerate financial performance as they enter the seasonally strong Q2 and Q3 periods.

SPI was up significantly versus the prior year, reflecting both solid execution and healthy demand in the market it serves. Annual recurring revenue increased by over 45% from the prior year quarter and retention metrics were strong with gross revenue retention of 97% and net revenue retention well over 100%, reflecting both pricing and expansion with existing customers.

DDI came in ahead of budget and continued to gain traction with new customers. After a period of investment, DDI is poised for a strong second half as DDI converts last year's operational work into this year's commercial momentum. Ravix came in well ahead of budget in Q1. 2025 was a challenging year for Ravix, but with a more diversified customer base and a refreshed commercial strategy, we believe Ravix has good momentum and will return to growth in Q2 and beyond. We remain confident on the Ravix platform and see meaningful long-term opportunities in this business.

Overall, this was a strong quarter for the KSX segment with performance that was broad-based rather dependent on one or two bright spots. KSX is off to a great start in 2026 with more to come. At Extended Warranty, modified cash EBITDA came in ahead of internal expectations and cash sales were up 11.8% year-over-year. The growth was both volume and price driven. VSC contracts sold were up low single digits and revenue per contract increased high single digits year-over-year. The combination of strong top line growth and moderating claims growth supports our view that Extended Warranty is on track for an excellent year.

Next, let's touch on capital markets. At the end of March, Kingsway announced that our Board of Directors had proposed a name change to Kingsway Corporation and a proposed stock ticker change to KWY, which are intended to better reflect the company's business evolution and long-term strategy. The proposed name change is subject to shareholder approval at the company's upcoming Annual General Meeting of Shareholders scheduled for May 18. We have consistently heard from investors that Kingsway Financial Services no longer accurately describes the company's operations and creates unnecessary confusion in the capital markets, particularly given our exit from the insurance business nearly a decade ago. This change is an important step towards simplifying and clarifying the Kingsway equity story.

Following approval of the proposed name change, we intend to move expeditiously to effectuate both the name change and the stock change to KWY. Importantly, the company's CUSIP number will not change. We also look forward to working closely with the major financial data and index providers to ensure the investment community can quickly and accurately understand Kingsway's business and strategy. In the months ahead, we expect to relaunch Kingsway's brand, corporate identity and website. Please stay tuned for more details on this exciting update.

I would also like to draw attention to an update we made to our face financial statements, starting with our Form 10-Q for this quarter. In the past, Kingsway's face financials have read like those of an insurance company, which has been challenging to decipher for many investors. As Kent will explain in greater detail, our face financial statements have been updated to better reflect the service business model of our KSX segment, which now represents the majority of the company's revenue and profit.

We believe this is a positive change that will make Kingsway's financial statements more readable and accessible to the investment community. Finally, corporate governance. I'm thrilled to share that Adam Patinken was recently elected Chairman of Kingsway's Board of Directors. Adam has played an important role in Kingsway's evolution and has been a valued partner to the management team and the Board. We're pleased to have his continued leadership in this role, and his experience and perspective will be welcome as we seek to build a far larger, more profitable and more valuable Kingsway. I'm also delighted that Terry Cavanaugh, who served as Board Chairman in the last 12 years, accepted Adam's request to continue to serve as Vice Chairman of the Board.

It makes for a smooth transition and positions Kingsway to achieve our financial and strategic ambitions in the months and years ahead. The entire company is thankful for Terry's many years of service as Chairman and grateful for the continued wisdom and counsel he provides. With that,

I'll turn the call over to Kent to walk through the financial results in more detail.

Thank you, JT, and good afternoon, everyone. For the first quarter of 2026, consolidated revenue increased 37.4% to $39 million compared with $28.3 million in the first quarter of 2025. Within that total, KSX revenue increased 80.7% to $21.1 million compared with $11.7 million in the prior year quarter. Extended Warranty revenue increased 7.2% to $17.9 million compared with $16.7 million a year ago. As JT mentioned, Extended Warranty cash sales increased 11.8%, positioning our Extended Warranty segment for continued double-digit organic top line growth in 2026. Consolidated net loss for the quarter was $2.2 million compared with a net loss of $3.1 million in the first quarter of 2025. Consolidated adjusted EBITDA for the quarter was $2.4 million compared with $1.4 million in the prior year quarter.

Turning to segment profitability. KSX adjusted EBITDA increased by 82% to $3.5 million compared with $1.9 million in the first quarter of 2025. Extended Warranty adjusted EBITDA was $0.4 million compared with $0.9 million a year ago. Portfolio LTM EBITDA for the operating companies was $22 million to $23 million as of March 31, 2026. We continue to view this as a useful measure of the trailing earnings capacity of the operating portfolio and one that aligns with how we assess the business internally.

Turning to the balance sheet. Total net debt was $63.9 million as of March 31, 2026, compared with $62.4 million on December 31, 2025. As JT mentioned, we completed an update of our face financial statements as reported in today's filing with the SEC and Form 10-Q. Specifically, Kingsway's income statement has been updated to better reflect the business services operation by including gross profit, breaking out depreciation and simplifying other line items.

Kingsway's balance sheet has also been updated to a classified balance sheet with a clear breakout between short-term and long-term assets and liabilities. We believe this update better reflects our current operation as KSX is now the majority of Kingsway's revenue and profit and will make our financial statements more readable and accessible to investors. I personally would like to express a big thank you to our Kingsway accounting team, especially Kelly Marchetti and Nanette Voyles as well as our external service providers for working together to implement this positive update that should be helpful to investors going forward.

With that, I'll turn it back over to JT. JT?

Thank you, Kent. Overall, the first quarter came in ahead of our internal expectations, and we're encouraged by our business momentum as we enter the seasonally strong summer months. Our performance was broad-based and provides us with confidence in reaching our 2026 targets. Kingsway is off to a great start with lots more to come.

Finally, before moving to Q&A, I'd like to remind everyone that we are hosting our Annual Investor Day on Monday, May 18, at the New York Stock Exchange. But the theme of the day is from theory to action, and we plan to tie together the theory of the search fund model and the Kingsway Business System to the tangible business results of our operating companies. To that end, I am pleased to share that joining us at our Investor Day will be Miles Mamon, the CEO of Roundhouse; and Davide Zanchi, the CEO of IS Technologies. I'm excited for them to share their stories with the investment community and look forward to an informative day. Those interested in attending the Investor Day in person can RSVP by emailing [email protected]. A webcast will also be available for those who cannot attend in person. We look forward to seeing you on May 18 at the New York Stock Exchange.

With that, operator, we're ready to take questions.

[Operator Instructions]

James, the floor is yours.

Thank you, operator. I'm for investors, I'm reading in the questions that came by e-mail. The first one that came in is you mentioned you were working with financial data providers and index providers following the name change, to help investors better understand Kingsway. Can you please provide more details on what you mean by this?

Yes. Thank you, James. Yes, look, if you go across the various data aggregators, Bloomberg, Cap IQ, FactSet, Yahoo! Finance, et cetera, I think we're sort of listed alternatively as either a property and casualty insurance business, a leased real estate business or I think in one case, an auto and truck dealership. And so, what I mean by that is reaching out to each one of these data aggregators and providing them a unified description of our business that accurately describes what we actually do and also getting classified under our GICS code, GICS code away from property and casualty to a holding company, specialized service business holding company. So yes, hopefully, that answers the question.

Thank you, JT. The next one, Roundhouse, had another strong quarter. Can you share more about what's driving the momentum there?

Yes. Good question. I would say that I think it starts with the secular tailwinds that we knew were in place when we made the investment, those being, one, increased natural gas activity in the Permian Basin and continued build-out of the infrastructure to support midstream gas transmission, which -- where the motors that we service are in place. And combined with an ongoing shift away from legacy gas-powered motors to electric motors. So that would be kind of the secular -- 2 secular tailwinds.

And I think -- for the business itself, we saw very strong momentum in the field service, service line, which is a unique specialty that Roundhouse has being in Odessa in quick contact with the installed base there. And so, I think that this is just a continuation of the momentum that was already present when we acquired the business. So we're happy to see it.

Excellent. The next question, cash sales grew nicely in the quarter, and you mentioned G&A growth outpacing revenue reflects investments in organic growth. Can you touch on the G&A investments driving the expense growth and when might that spread close?

Yes. I assume this is in the warranty segment. So the G&A investments we're talking about there are predominantly sales and marketing expense, but also a fairly large ERP conversion at PWI, which should be complete by the end of Q2 or early Q3. And so yes, I think that we'll just be disciplined and manage our cost structure to make sure that we're getting the benefit of operating leverage as those businesses continue to grow.

Excellent. The next question, you mentioned DDI is setting up well for a stronger second half. Can you share any color on the customer acquisition traction that you are seeing?

Yes. I mean I think the story with DDI that we talked about in the prepared remarks was kind of speaking to the natural sort of operator journey in these small businesses, which is stabilize and then build the foundation and then grow. You got to kind of build a foundation that creates reliability and quality and earn the right to grow. And so, late last year and early this year, starting from 0, basically, the company didn't have any outbound sales function. They have built a sales process and have begun building kind of top of the funnel, mid-funnel and actually onboarding new hospitals.

So we're pretty excited about the activity there and have visibility into a nice pipeline that gives us confidence in the second half. I will say that because of how integrated this business is with their hospital customers that it can be a longer selling cycle, but we're certainly very encouraged by kind of the size and shape of the pipeline at this early stage.

Great. I see two more questions in queue. The first, you mentioned the skilled trades platform continues to take shape with Buds Southside and AAA. Could you talk about the vision for that platform and what you're most excited about as you continue to build it out?

Yes. I mean I think that we've said from the beginning that you start with kind of big picture macro, it's a very large addressable market, $120 billion TAM that is both highly fragmented and kind of mission-critical services, right? And -- so our objective is to first operate those businesses with excellence, grow them organically and then continue to grow that platform via a measured acquisition campaign. I think that we've sort of said that we would like to do two or three acquisitions a year on that platform. And I think that there's a very long runway ahead of us to do that.

Great. And lastly, the last question is you've talked about Kingsway being uniquely positioned to run the search fund model at scale within a public company framework. As the portfolio has grown, what are you learning about what makes this model work?

Yes. Well, that's a great plug for our Investor Day. I think we'll probably dive into that again on the 18. But yes, I would say I think that we're learning the value of what I would call compounding learning, which is very valuable. I think we're getting better and better and learning more and more, whether that's on OIR selection, acquisition underwriting and diligence and closing and operationally, I think that the sort of compounding effect over time of the learning engine of both us at the holding company, more importantly, our very talented young CEOs is just really a powerful force.

I think we're also compounding talent, right? I think that with every new acquisition, every new OIR, both the kinds of their capabilities are compounding, but it is also allowing us to attract an even higher caliber of candidates to the platform. So, compounding learning and compounding talent. I think as the portfolio has grown, I think the model works, our decentralized model as it grows, we'll continue to see more operating leverage from the kind of holdco expense over a much broader base of businesses, which is exciting. And then I would say that maybe we didn't fully appreciate this when we first started. But I'm seeing now sort of the flywheels within the flywheel, right? So we think of Kingsway as a large flywheel. We buy businesses, we grow them, we generate cash flow, we delever, we redeploy that capital to the new acquisition. But when I say flywheels within a flywheel, we're getting to the point of maturity now where several of our businesses themselves are their own flywheels within the system, where they are doing tuck-in acquisitions without any additional incremental capital from Kingsway.

And so that was maybe something that we didn't fully appreciate or anticipate at the outset, but I think it will be a very powerful source going forward. And I think it takes kind of that long-duration capability within a public company to be able to see that play out.

Great. I see no further questions emailed in. JT, I'll pass it back to you for closing remarks.

Okay. Well, thanks, everyone. I appreciate it. I think it was a strong first quarter. It sets us up well for a great year, and I hope to see everybody or as many of you as possible at the Investor Day in New York in a couple of weeks.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Good day, and welcome to the Kingsway Fourth Quarter 2025 and Full Year Earnings Call. [Operator Instructions] Please note, this conference is being recorded. With me on the call are JT Fitzgerald, Chief Executive Officer; and Kent Hansen, Chief Financial Officer.

Before we begin, I'd like to remind everyone that today's conference may contain forward-looking statements. Forward-looking statements include statements regarding the future, including expected revenue, operating margins, expenses and future business outlook. Actual results or trends could differ materially from those contemplated by those forward-looking statements. For a discussion of such risks and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statements, please see the risk factors detailed in the company's annual report on Form 10-K, subsequent Forms 10-Q and Forms 8-K filed with the Securities and Exchange Commission.

Please note that today's call may include the use of non-GAAP metrics that management utilizes to analyze the company's performance. A reconciliation of such non-GAAP metrics to the most comparable GAAP measures is available in the most recent press release as well as in the company's periodic filings with the SEC.

Now I'd like to hand the call over to JT Fitzgerald, CEO of Kingsway. JT, please proceed.

Thank you, Matt. Good afternoon, everyone, and welcome to the Kingsway earnings call for the fourth quarter and full year 2025. To our knowledge, Kingsway is the only publicly traded U.S. company employing the search fund model to acquire and build great businesses. We own and operate a diversified collection of high-quality services companies that are asset-light, profitable, growing and that generate recurring revenue.

Our goal is to compound long-term shareholder value on a per share basis, and we believe our businesses can scale due to our decentralized management model and our talented team of operator CEOs. We also continue to benefit from significant tax assets that enhance our returns. In short, Kingsway is uniquely positioned to capitalize on the search fund model at scale within a tax-efficient public company framework.

I'm pleased to report a strong fourth quarter and a year of meaningful financial and strategic progress in 2025. During the year, we completed 6 acquisitions within the KSX segment, launched our Skilled Trades platform, significantly grew revenues and earnings power and made meaningful investments in our operating businesses that position Kingsway to accelerate growth in 2026 and beyond. Importantly, and for the first time, our KSX segment represented a majority of both revenue and adjusted EBITDA in both the third and fourth quarters. For the full year 2025, consolidated revenue grew to $135 million, reflecting both organic growth across our businesses and contributions from recent acquisitions.

Consolidated adjusted EBITDA for the year was $7.8 million and portfolio LTM EBITDA was $22 million to $23 million as of December 31. Kent will provide further detail in his remarks on the portfolio LTM EBITDA metric, which we believe more accurately reflects the trailing 12-month earnings capacity of the company. As you may have noticed in our earnings release this afternoon, Kingsway is budgeting for double-digit organic growth across both KSX and Extended Warranty. I'm also pleased to reiterate our target of 3 to 5 acquisitions in 2026. Our vision at Kingsway is to combine both organic and inorganic growth to drive value creation.

And before we get into the details of our 2025 performance, I wanted to share why I am comfortable with these targets and optimistic about where the company is headed. First, it's worth noting that our annual budgeting process is comprehensive, evaluating each business one by one and then setting realistic performance targets for the coming year. The goal is not to underestimate or overestimate. It is to forecast as accurately as we can with a high confidence interval, but the performance of each business is likely to be in the year ahead. The outcome of our process this year is a budget for strong organic growth across both our segments.

It's worth a few words on why we are confident in this forecast. In KSX, it starts with the characteristics of the businesses we own. Our strategy is to purchase companies with recurring revenues, fragmented customer bases and strong secular growth tailwinds. We then match these businesses with talented operator leaders who are motivated and incentivized to drive performance. A few examples highlight the growth prospects for our portfolio. Roundhouse, our most profitable KSX operating business, services electric motors for natural gas compression and transmission infrastructure in the Permian Basin, the most productive hydrocarbon-producing area in the world at a moment when domestic energy infrastructure is expanding at significant scale. The demand for reliable motor maintenance and repair in that environment is essential, growing and structurally undersupplied. Roundhouse was a high-growth business before we acquired it in the middle of last year and is already tracking ahead of our acquisition underwriting.

For Image Solutions and Kingsway Skilled Trades, 2025 was an investment year that positioned both companies for growth in 2026. Image Solutions invested heavily in expanding its business development team in the first half of the year, which temporarily depressed profitability as the sales team ramped up. That rebuilding is complete. The team is in place, the pipeline is developing and the early results are encouraging. We are excited for where this business is headed under the leadership of operator CEO, Davide Zanchi.

Kingsway Skilled Trades has followed a similar path. Buds Plumbing, its first acquisition, went through an initial investment period and is now going from strength to strength, ahead of our expectations. AAA and Southside, which were acquired in the back half of 2025, have received significant investment in recent months and are poised to follow in the footsteps of Buds as we progress into 2026. We see potential for both robust top line and bottom line growth in these businesses in the year ahead.

When I look across the KSX portfolio, I see companies with not only attractive business characteristics and talented leadership in place, but also with strong secular growth trends supporting them. That context is important as we think about our 2026 growth targets. In Extended Warranty, our businesses achieved double-digit cash sales growth in the back half of 2025 at a time when claims costs were also moderating. We are anticipating a much improved 2026 for our Extended Warranty businesses.

Turning to inorganic growth. We are pleased to have completed 6 strategic acquisitions in 2025. Our acquisition pipeline remains robust, and I'm pleased to reiterate our target for 3 to 5 acquisitions during the coming year. We got off to a fast start in January, completing our first transaction of 2026 via our subsidiary, Ravix's acquisition of Ledgers Inc. Ledgers is a leading provider of outsourced bookkeeping and accounting services serving nonprofits and small and midsized businesses, primarily in the Midwest. This addition diversifies Ravix's revenue foundation and expands its geographic reach while bringing a strong base of recurring revenue and an experienced team that fits well with Ravix's service-first culture.

We see meaningful opportunities to enhance value through cross-selling and continued organic growth, and we are excited about the role ledgers will play as we continue scaling Ravix into a leading provider of finance and accounting solutions. Underpinning our confidence in our transaction pipeline is our dual-track approach to finding great companies to acquire. First, our operators and residents are dedicated to sourcing, evaluating and executing our M&A activity. Our active searchers, each focused on identifying new platform and stand-alone acquisitions that meet our asset-light recurring revenue and structural growth criteria.

Second, our owned businesses can pursue tuck-in acquisition activity within our existing platforms. The HR team and ledgers at Ravix, Viewpoint at SPI and Buds, Southside and AAA at Skilled Trades are all examples of our operator CEOs identifying and executing acquisitions within the businesses they run. That activity is not dependent on the OIR pipeline. It runs in parallel. It compounds the value of the platforms we've already built. And in many cases, it produces faster integrations and better returns because the acquiring operator already understands the market. When you look at our 2025 acquisition activity in that context, 6 transactions across both tracks. It reflects a model that is generating deal flow from multiple sources simultaneously, exactly how we designed it.

To summarize, 2025 was a year of disciplined execution. We expanded the portfolio through the 6 acquisitions, launched a new platform in Skilled Trades and strengthened our existing businesses with targeted tuck-ins at Ravix, SPI and Skilled Trades. The compounding effect of those investments is reflected in portfolio LTM adjusted EBITDA of $22 million to $23 million. As we look forward to 2026, we expect both double-digit organic growth and a steady cadence of inorganic growth to underpin our value creation aspirations. We entered the year with momentum, a diversified set of growth levers and an active M&A pipeline across both our searchers and our platform operators.

With that, I'll turn the call over to Kent for a few more -- for a more detailed review of the financials.

Great. Thank you, JT, and good afternoon, everyone. Total revenue for the quarter was up 30.1% to $38.6 million and up 23.4% to $135 million for the year. Consolidated net loss for the quarter was $1.6 million and $10.3 million for the full year. Consolidated adjusted EBITDA for the quarter was $2.7 million and $7.8 million for the year. Within our KSX segment, revenue increased by 63.6% to $20.3 million for the quarter and was up 58.5% to $64.2 million for the year. KSX adjusted EBITDA rose by 28.6% to $2.5 million for the quarter and was up 40.8% to $9.5 million for the year. It is worth noting here that while KSX adjusted EBITDA declined slightly from Q3 to Q4, this is the result of seasonality in our Plumbing businesses and Roundhouse, which typically have their lowest seasonality profitability during the winter and their seasonality best quarters in Q2 and Q3.

Turning to Extended Warranty. Revenue increased 6.1% to $18.3 million for the quarter and was up 2.8% to $70.8 million for the year. Cash sales were up 11% for the quarter and 9% for the year. IWS, which sells warranty products exclusively through credit unions, continued to perform well with cash sales up 10% year-over-year. Total Extended Warranty claims moderated in 2025 and were up 4.4% for the year compared to an increase of 6.3% in the prior year, primarily due to inflation on parts and labor as the number of claims was slightly lower in 2025 than 2024. Overall, Extended Warranty is performing well. Cash sales are robust, and the segment is positioned for improved performance in the periods ahead.

Turning now to the balance sheet and the capital structure. As of December 31, 2025, the company had $8.3 million in cash and cash equivalents, up from $5.5 million at year-end 2024. Total debt was $70.7 million at the end of 2025 compared to $57.5 million as of December 31, 2024. Our year-end '25 debt is comprised of $55 million in bank loans, $2 million in notes payable and $13.7 million in subordinated debt. Net debt or debt minus cash at year-end was $62.4 million, up slightly from $61.4 million at the end of 2024. The increase in net debt is primarily related to additional borrowings related to the recent acquisitions of Roundhouse and Southside Plumbing, partially offset by continued debt amortization payments.

I'd like to conclude by sharing additional detail on the portfolio LTM adjusted EBITDA metric that JT referenced earlier. Following a review, we concluded it made sense to update our portfolio earnings metric for 2 reasons. First, we received feedback that the name run rate adjusted EBITDA was confusing for investors. The metric actually describes trailing 12-month performance, not a forward run rate. Second, for the Extended Warranty segment specifically, we have always evaluated performance internally using modified cash adjusted EBITDA, and it didn't make sense to report one metric externally while managing to a different one internally. Importantly, our lenders also use the modified cash adjusted EBITDA metric when assessing the operating performance of our Extended Warranty businesses.

Aligning our internal and external reporting metrics eliminates any disconnect and provides investors a clearer view of how we actually run and evaluate the business. Portfolio LTM adjusted EBITDA represents the pro forma trailing 12-month performance of our operating businesses and is calculated using adjusted EBITDA for KSX and modified cash adjusted EBITDA for Extended Warranty. Modified cash reflects timing differences between GAAP revenue recognition and GAAP commission expense to the timing of cash receipts and cash commission expense associated with warranty contracts as well as an adjustment to investment income for the difference between actual book yield and current market yield. No other adjustments are made.

For clarity, modified cash adjusted EBITDA defers only the portion of contract premium needed to pay claims over the life of the underlying contract and does not defer any commission expense. We believe this change better aligns our external disclosure with how management and our lenders evaluate the performance of the Extended Warranty business, provides a clearer view of the operating performance of Kingsway's portfolio of businesses and is consistent with the metric used in our credit agreements for financial covenant purposes.

I'll now turn the call over to JT for a few final thoughts before we open the line for questions. JT?

Thanks, Kent. To close, I want to thank Kingsway's employees, partners and shareholders for their continued dedication and support. 2025 was a year of tremendous progress, 6 acquisitions completed, a new platform launched and a portfolio that enters 2026, generating $22 million to $23 million in platform LTM EBITDA. We have budgeted for double-digit organic revenue and EBITDA growth this year across both our segments, and I believe the work we did in 2025, expanding platforms, diversifying revenue streams, investing in our businesses and strengthening our operator bench has set us up to deliver on those expectations. I'm confident in the plan, and I'm excited about what this team is capable of and where Kingsway is headed.

I'll now turn the call over to Matt to open the line for questions.

[Operator Instructions] Your first question is coming from Nick Weiman (sic) [ Mitch Weiman ].

Congrats on a good quarter.

You said Nick, but I know it's Mitch.

Correct. One question I had was what is -- you didn't talk about digital diagnostics in the prepared remarks. What's going on there? We kind of -- I just remember in prior conversations kind of 6 months ago or so, you really thought they'd start to grow in the second half of the year.

Yes. DDI, I think, grew high single digits on the year. And plugging along here. I think that we've got a great operator. He's building the team there on the ground, got a new leadership team alongside him and is now really -- it's a very -- because of the criticality of the service they're providing, Mitch, the focus for the first 18 months or so is really on creating a foundation upon which they felt comfortable growing. We're dealing with patients' lives here and patient safety is first and foremost.

So hardening the infrastructure, all of the technology systems and the telemetry that connects the hospitals to the company, creating redundancy with the second location and building all of the internal protocols to make sure that you have perfect patient safety 24/7, 365 was really the focus. We have a great operator there. And Peter, Navy Nuclear Officer, worked in the nuclear industry for a long time, and so understands how to create safety programs. And so that was a lot of the time and energy spent is investing in the foundation.

In -- I would say, kind of the back half of the year and now into 2025, the focus is now shifting to organic growth and new customer acquisition. And so we're hopeful that we see -- we had nice growth and a nice growth tailwind there. And now with the foundation in place, we hope that Peter and the sales efforts are going to be bringing new customers and therefore, new revenue on board.

Operator, before we take the next question, I'd just like to clarify. In my remarks, I said net debt at the end of '24 was $61.4 million. That was not correct. Yes. So a little bit of...

That was end of Q3.

That was end of Q3. At the end of 2024, net debt was $52 million. So I just wanted to make that correction. Thank you.

[Operator Instructions] There are no further questions in the queue. I'll now hand the floor over to James Carbonara for e-mailed questions.

Our first e-mailed question is, can you speak to the acquisition pipeline?

Yes. Like I mentioned in the prepared remarks, sort of dual track acquisition pipeline. We've got several now platforms within KSX, if you look at VMS, Ravix, Skilled Trades, and I would anticipate probably Image Solutions in the years ahead, all looking at tuck-in acquisitions and very strong pipelines in many of those businesses. And then obviously, our OIR pipeline, as I've said in the past, remains robust. Recognize that acquisitions there have to meet our very disciplined underwriting criteria, and there is an element of serendipity, but there is very strong deal flow, and we're looking at a lot of things.

Excellent. And the next question is, could you update us on OIRs Peter Hearne and Paul Vidal, please? They both have great CVs. Why do you think they have not made an acquisition just yet?

Yes, that's a fair question. Obviously, Peter and Paul are both highly, highly capable. We wouldn't have brought them in the program if they weren't. I guess the honest answer is there's a huge amount of, as I mentioned, serendipity to finding the right business at the right price with the right operator fit and can sometimes take longer than any of us would like. Between the 2 of them, they've evaluated dozens of opportunities, and we've passed on deals where either the valuation, business quality or cultural fit didn't meet our threshold. We'd rather have them walk away than close on a marginal deal. That said, I won't pretend that in Peter's case, 3 years without a close is where we expect it to be, and that's certainly something that we're actively managing.

Excellent. The next one is, can you share some of the adjustments or the bridge from the consolidated adjusted EBITDA of $7.8 million to portfolio LTM EBITDA of $22 million to $23 million, if that's the right way to look at it?

Yes, James, it's Kent. I'll take that one. There's basically 3 main things that are the walk between those 2 numbers. The first is pro forma. So our consolidated EBITDA number that's published in the earnings release does not include any pro forma. It's just the actual results for the companies that we own during the period.

The second adjustment would be any difference between -- for the warranty companies between the modified cash EBITDA number and what is reported under U.S. GAAP revenue and commission expense. As we said in the prepared remarks that modified cash doesn't defer 100% of the revenue over the life of the contract, only the portion that relates to claims. The rest is sort of recognized day 1 and then all commission expense -- no commission expense is deferred. It's all recognized day 1. And then there's a smallish adjustment for the difference between book yield and investment yield on our investment portfolio.

And the third difference would be any corporate expenses. So adjusted -- the adjusted consolidated EBITDA number includes everything, all companies. And if you look at the numbers in the earnings release for KSX adjusted EBITDA and Extended Warranty adjusted EBITDA, those do not include the sort of the holding company and the KSX, the OIR expenses. So those are the -- so just to recap, the 3 main buckets are pro forma, modified cash and corporate expenses.

The next question is, you noted that Image Solutions and the newer Skilled Trades acquisitions went through an investment period in 2025 that temporarily depressed profitability. Have those investments fully normalized? And what kind of margin expansion should we expect from these businesses in 2026?

Yes. As I mentioned, in both cases, Image Solutions went through hurricane disruption, a full rebuilding of the sales team and that's all kind of in place, and we feel really good about the momentum there. I don't know that I want to give like margin targets, but we feel really good about the trajectory. Similarly, at Skilled Trades, both as I mentioned, AAA and Southside acquired late in the year, and we made some deliberate investments in systems, infrastructure, integration, some transition services with the owners, et cetera. And we don't anticipate that will repeat at the same level going forward. Buds is a good template for what these businesses look like at maturity, and we feel like it's a good template and these businesses are well on their way to hitting their stride.

Excellent. Next question, we had a couple of them come in on the double-digit growth, try to merge them here. Can you provide a little bit of color on how you achieved the double-digit growth in revenue and EBITDA on the KSX Holdings, given the number of recent acquisitions and the typical J-curve, pleasantly surprised by the guidance. What are some of the drivers of the growth? Is it a particular company?

No, I would say that we're looking at pretty universal growth across all of the businesses, maybe at slightly different rates. Some businesses have revenue growth as the big driver. In a couple of cases, there's some efficiency gains that will drive bottom line growth. And then obviously, pricing is an important lever as well. And so it's a combination of pricing and units at the top line and in some cases, some efficiency gains at the bottom line.

Great. And the last one I'm seeing, you touched on this a little bit earlier in terms of the 3 to 5 acquisitions targeted for 2026. How many do you expect to be tuck-ins for the existing platforms versus entirely new platforms sourced by your operators and residents?

Yes, these are sort of targets, not commitments. But I would guess with 3 OIRs, we ought to conservatively target at least 1 to 2 new platform investments. And by deduction, that would mean 2 to 3 new tuck-in acquisitions at our existing platforms.

Thank you, JT. Seeing no further e-mailed questions in. I'll throw it back to the operator, who will no doubt throw it back to you.

Thank you. And that concludes our Q&A session. I'll now hand the conference back to JT Fitzgerald, Chief Executive Officer, for closing remarks. Please go ahead.

Wonderful. Thank you. Well, I appreciate everyone taking the time here this afternoon to listen to our remarks and ask some wonderful questions. Thank you for your support and looking forward to a great 2026.

Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.

Good day, and welcome to the Kingsway Third Quarter 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

With me on the call are JT Fitzgerald, Chief Executive Officer; and Kent Hansen, Chief Financial Officer.

Before we begin, I want to remind everyone that today's conference call may contain forward-looking statements. Forward-looking statements include statements regarding the future, including expected revenue, operating margins, expenses and future business outlook. Actual results of trends could materially differ from those contemplated by those forward-looking statements. For a discussion of such risks and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statements, please see the risk factors detailed in the company's annual report on Form 10-Ks and subsequent Forms 10-Q and Form 8-Ks filed with the Securities and Exchange Commission.

Please note also that today's call may include the use of non-GAAP metrics that management utilizes to analyze the company's performance. A reconciliation of such non-GAAP metrics to the most comparable GAAP measures is available in the most recent press release as well as in the company's periodic filings with the SEC.

Now I would like to hand the call over to JT Fitzgerald, CEO of Kingsway. JT, please proceed.

Thank you, Morgan. Good afternoon, everyone, and welcome to the Kingsway Earnings Call for Q3 2025.

Let me start by saying that to our knowledge, Kingsway is the only publicly traded U.S. company employing the Search Fund model to acquire and build great businesses. We own and operate a diversified collection of high-quality services companies that are asset-light, profitable, growing and that generate recurring revenue. Our goal is to compound long-term shareholder value on a per share basis. And we believe our business can scale due to our decentralized management model and our talented team of operator CEOs.

We also continue to benefit from significant tax assets that enhance our returns. In short, Kingsway is uniquely positioned to capitalize on the Search Fund model at scale within a tax-efficient public company framework.

I'm pleased to report an excellent third quarter for Kingsway. Revenues were up 37% year-over-year, and the company reached an important milestone as our high-growth KSX segment represented the majority of our revenue for the first time. Our KSX segment achieved stellar results with revenue growth of 104% and adjusted EBITDA growth of 90%.

Our stable cash-generating Extended Warranty segment also performed well in the quarter, producing top line growth of 2% with robust cash flow and resilient modified cash EBITDA. While these headline numbers are impressive, there is reason to believe our underlying operating performance may have been even better than the reported figures show.

First, in the quarter, there were 2 onetime expenses in our KSX segment that were mostly noncash and should not repeat. Late last year, a hospital system filed for bankruptcy that was a client of our SNS nurse staffing business. Based on new information received in the quarter, we fully reserved the remaining $325,000 receivable from that client, which ran through our P&L as a noncash item.

In addition, we had roughly $180,000 of mostly noncash expenses recorded in our Kingsway Skilled Trades segment as we converted recent acquisitions from cash accounting to accrual accounting. Had we excluded these expenses from our adjusted EBITDA calculation, KSX adjusted EBITDA would have been roughly $500,000 higher in the quarter or $3.2 million instead of $2.7 million.

Second, we made 4 acquisitions during the quarter with 3 completed mid-quarter. We look forward to having a full quarter of benefit from all of these businesses beginning in Q4.

Third, we are seeing tangible business and financial momentum in a number of our operating subsidiaries. Roundhouse and Kingsway Skilled Trades have performed well since day 1 and are ahead of our underwriting case. Just in the month of September, Roundhouse achieved EBITDA of roughly $500,000, and the Roundhouse team is actively recruiting for open roles to meet strong customer demand.

Image Solutions saw EBITDA grow sequentially by $100,000 from Q1 to Q2 and another $150,000 from Q2 to Q3.

DDI also saw a notable improvement in EBITDA from Q2 to Q3.

The impressive performance at Roundhouse and Kingsway Skilled Trades and the clear evidence that Image Solutions and DDI may be exiting their J-curves provide confidence that organic growth is likely to play an increasingly key role in driving Kingsway's success going forward. In short, we are seeing real business momentum across our portfolio that sets us up well as we go into Q4 and 2026.

Turning now to some of the strategic developments in the quarter. On our last earnings call, we discussed our acquisitions of Roundhouse, Advanced Plumbing and Drain and the HR team. And we're excited to welcome all 3 to the KSX segment and to the Kingsway family.

On August 14, we completed our 12th KSX acquisition with the purchase of Southside Plumbing for a purchase price of $5.625 million, plus a potential earn-out of up to $1.125 million for a total maximum purchase price of $6.75 million. At the time of acquisition, Southside Plumbing's unaudited pro forma annual revenue was $4 million and its unaudited pro forma annual adjusted EBITDA was $900,000. Based in Omaha, Nebraska, Southside Plumbing is a leading provider of commercial and residential plumbing services. This transaction, which was sourced and led by Rob Casper, President of Kingsway Skilled Trades, marks the third addition under our Kingsway Skilled Trades platform in 2025.

We believe that Southside Plumbing has significant potential to accelerate growth through expanded marketing efforts and new service lines and to increase the proportion of sales that are recurring or reoccurring given the strong momentum in its service and repair operations. The Southside team has earned an exceptional reputation in its market for quality and service, driving consistently robust growth in its core business.

We are thrilled to partner with Josh Gruhn, who is remaining with the company as President and maintaining an economic interest, ensuring an alignment of incentives and continuity of leadership. We look forward to supporting Josh and his team and upholding Southside Plumbing's long-standing legacy of excellence and reliability.

Subsequent to quarter end, on October 20, we welcomed Colter Hanson as our newest Operator-in-Residence, or OIR. His combination of military leadership, strategic consulting experience and a passion for entrepreneurship make him an exceptional fit for our platform. Colter will conduct his search out of Minneapolis, where he intends to pursue an acquisition in the testing, inspection and certification sector with a focus on the Midwest.

Year-to-date, we have now acquired 6 high-quality asset-light services businesses, exceeding our target of 3 to 5 per year. While that range remains an important benchmark, it is worth noting that it serves as a target, not a cap. Our primary objective is to remain disciplined investors, focused on quality opportunities that meet our strict acquisition criteria, and we continue to see a robust pipeline of attractive opportunities. With the addition of Colter, we currently have 3 OIRs actively searching for our next platform acquisitions in addition to our other KSX businesses, which are, in many cases, evaluating potential tuck-ins and inorganic growth opportunities themselves. We are energized by the pace and quality of acquisition activity.

Finally, as of quarter end, our trailing 12-month adjusted run rate EBITDA for the businesses we own stands at approximately $20.5 million to $22.5 million. This metric provides a view of how the company would have performed over the last 12 months if Kingsway had owned all of our current businesses for that entire time.

GAAP results in contrast only capture the performance of acquired businesses from their respective close dates onward. We believe this metric is particularly relevant during periods of high M&A activity like the past few years and better reflects the run rate earnings power of our current portfolio of businesses.

It's important to call out that in calculating this metric, we are not using modified cash EBITDA for our Extended Warranty businesses. As we have discussed in previous earnings calls, many in the Extended Warranty industry, including our management team here at Kingsway, prefer to use a metric called modified cash EBITDA when assessing and valuing Extended Warranty businesses. This is because under GAAP accounting, growing Extended Warranty businesses often see their EBITDA penalized, while shrinking Extended Warranty businesses often see their EBITDA boosted due to timing differences in how revenue and expenses are recognized.

Kingsway's Extended Warranty businesses are in growth mode. Cash sales in our Extended Warranty businesses accelerated from up 9.2% year-over-year in Q2 to up 14.2% year-over-year in Q3. However, due to these timing differences, a gap has opened up between adjusted EBITDA and modified cash EBITDA, which widened further in the third quarter. This can be seen in the company's financial statements where deferred service fees from Extended Warranty are up $2.8 million year-over-year. In addition, hundreds of thousands of dollars of commission expenses associated with issuing new warranty contracts have been booked upfront. Over time, these timing differences even out and adjusted EBITDA and modified cash EBITDA converged. We expect the same to occur for Kingsway.

Our management team at Kingsway assesses the company's earnings power by looking at adjusted EBITDA for our KSX segment and modified cash EBITDA for our Extended Warranty segment. Using this framework, Kingsway today has the highest earnings power from its operations during my tenure as CEO. It's a remarkable place to be, though in many ways, it feels like we're just getting started in our journey.

To conclude, this was an excellent quarter for Kingsway. We grew overall revenue by 37%. Our KSX segment roughly doubled its revenue and adjusted EBITDA relative to last year, and our Extended Warranty segment once again performed well with resilient cash flow and accelerating cash sales. We remain focused on disciplined execution, scaling our KSX portfolio and supporting our operator CEOs to deliver sustainable long-term growth.

With that, I'll turn the call over to Kent for a closer look at our third quarter financial performance. Kent, over to you.

Thank you, JT, and good afternoon, everyone. For the third quarter, consolidated revenue was $37.2 million, an increase of 37% compared to $27.1 million in the prior year. Adjusted consolidated EBITDA was $2.1 million for the 3 months ended September 30, 2025, compared to $3 million in the prior quarter.

In our KSX segment, revenue increased by 104% to $19 million in Q3, up from $9.3 million in the same quarter a year ago. Adjusted EBITDA for KSX increased 90% to $2.7 million compared to $1.4 million in the year ago quarter.

Moving to our Extended Warranty segment. Revenue increased by 2% to $18.2 million in the quarter, up from $17.8 million in the prior year period. Adjusted EBITDA for Extended Warranty was $800,000 in the current quarter compared to $2.1 million a year ago. As JT discussed earlier, however, the Extended Warranty segment's modified cash EBITDA, a key industry metric that more closely reflects the cash flow dynamics of warranty businesses, was resilient as our Extended Warranty businesses continue to perform well. The improvement in cash sales in our Extended Warranty segment reinforces our confidence that GAAP earnings will recover over time as deferred revenue from our recent cash sales was recognized. Overall, the Extended Warranty segment remains cash generative and well positioned for continued success.

Turning now to the balance sheet and the capital structure. As of September 30, 2025, the company had $9.3 million in cash and cash equivalents, up from $5.5 million at year-end 2024.

Total debt was $70.7 million at quarter end compared to $57.5 million as of December 30, 2024. Our September 30 debt is comprised of $55.8 million in bank loans, $1 million in notes payable and $13.1 million in subordinated debt.

Net debt or debt minus cash at quarter end was $61.4 million, up from $52 million at year-end 2024. The increase in net debt is primarily related to additional borrowings related to the recent acquisitions of Roundhouse and Southside Plumbing.

I'll now turn the call over to JT for a few final thoughts before we open the line for questions. JT?

Thanks, Kent. To close, I'd like to express my thanks and appreciation to Kingsway's employees, partners and shareholders. We have an amazing team, a wonderful set of operating businesses and both KSX and Extended Warranty are performing well. This really was an exceptional quarter. The business and financial momentum is tangible, and we are positioned to finish the year strong.

I'll now turn the call back over to the operator to open the line for questions. Morgan?

[Operator Instructions] Your first question comes from Mitch Weiman with Sumner Financial.

JT, congrats on a great quarter. So a question for you. With the current environment with all the uncertainty regarding Medicare and reimbursements and everything, how is that going to affect secure nursing and digital diagnostics? Because you hear a lot of anecdotal evidence that hospitals are going to be having some issues going forward here.

Yes, I think we've seen that. Certainly at SNS, we mentioned that customer bankruptcy at the end of last year. I think some of that has to do with the pressure that they're feeling from kind of reimbursement pressure. And so I think it's kind of looking at each one of those businesses independently, if you start with SNS. I think a real focus on the types of hospitals where we're placing nurses, right? So I think that the most sensitive would obviously be where the predominant number of your patients are Medicare, Medicaid. And I think that, that's even more acute in some of the more rural hospital settings.

I think we feel pretty good about our hospital mix at SNS in terms of both the payer mix and sort of geography and the type of profile of the people that are coming in and their balance sheets and budgets. And a lot of that stuff is publicly available. I think that these hospitals have to file their financials. And so Charles, when he's thinking about new hospital relationships or existing relationships is sort of acutely aware of that and checking the financial positions of his hospital customers. So certainly something to monitor. But I think, yes, I think hospitals are under quite a bit of pressure.

With DDI, I think these are outpatient rehab and long-term acute care hospitals. I think a little bit less exposure to Medicare and Medicaid and certainly something after the experience at SNS, something that Peter is very focused on as well in terms of customer selection and credit extension, right? So it's something we'll continue to keep an eye on.

[Operator Instructions] Your next question comes from Scott Miller with Greenhaven Road Capital.

JT, congratulations on all the progress. Basically, it seems like the key to this business is buying at reasonable multiples, doing it repeatedly and then driving organic growth. And the first 2 pieces, you've been buying at reasonable multiples. You've I think done 7 deals this year. So the repetition seems plausible. The organic growth, you called it out, I think, in the press release. Can you talk a little bit about kind of the type of organic growth you're seeing, what you think is possible, how it might differ across businesses?

Yes, great question. Certainly, organic growth is a key component of the flywheel, right, that you grow -- the cash flows of the businesses you own organically and then redeploy that capital to do more acquisitions, either at that business or in some of our activities. And I think that you touched on. I would add that your ability to attract talent is a key part of the equation as well. But...

And by the way your latest guy is -- I mean, whatever, yes.

Yes. And so organic growth is a key part of the thesis, and it goes into our underwriting as we go into these things, trying to buy businesses in industries where there is long-term secular trends and wind at your back. And we also recognize that you're buying small businesses that need to be professionalized. They need to come into a public company context and filing and all of those things. And so for the first many quarters, there is a significant investment in operating expense and those kinds of things to bring the talent, the systems, the technology into those companies to build a platform to support organic growth, right?

A lot of times, these things -- these businesses are operating on the margin and aren't scalable effectively because they don't have the robust systems and processes and people in place to allow that to happen without making mistakes, right? And so we go in, and this is that whole J-curve concept, right, that we bring in an inexperienced operator, they have to get up their own experience curve, and we invest in these businesses, bring in new people, invest in the companies and their accounting and their HR and their technology systems, in sales and marketing, et cetera, depending on the business to prepare them to grow. And so as we mentioned with DDI and Image Solutions, like they've been on that journey and now are starting to emerge and accelerate growth. And I think that we would expect to see that pattern play out in every instance.

I think in terms of individual company sort of potential, I think it depends on the industry and kind of underlying industry dynamics. But I would say that we would -- we ought to be targeting high single-digit organic growth potential at all of the businesses we acquire.

Got it. That's very helpful. And can you talk a little bit about Image Solutions and what's driving the progress there? And yes.

Yes, sure. I mean, obviously, Image Solutions had a very steep early J-curve because in addition to all of the things that I talked about, they had to weather a pretty significant hurricane and the disruption to the business across all of Western North Carolina and things. But Davide has done an awesome job. He got in there, got his hands around that, built real trust and support with the team, has added to the team, brought in some exceptional people to really professionalize their IT MSP platform, new technology, et cetera, and is now investing in sales leadership to drive new account, recurring revenue accounts in the IT MSP and get that business growing. And so we kind of got through business disruption, onboarded some great people, built an operating plan, assigned accountability to the various people to execute that plan and you're starting to see the benefits of that coming through the business now. And so he's sort of exiting his J-curve and in growth mode.

And how big could a business like that be? Are there any like -- what's the ceiling on something like that?

Sorry, you broke up kind of halfway through. I got that...

How big could a business like that be? Like what's the ceiling on a business like Image Solutions?

Well, look, I mean, I think that one of the things in each one of these businesses, each also has the potential to be their own grower inorganically as well, right? And so IT MSP, very large industry in North America, growing at high single-digit secular growth rate, but also very fragmented. And so as Davide has gotten through his J-curve, he's been delevering and building cash. And so I think in addition to just organic growth that there will be a potential there to do additional capital allocation things like inorganic growth and buying tuck-ins and really scaling that business. And so I think there's a big opportunity, but we want to do it in a very equity capital-efficient way.

Got it. I think my last question is actually in vertical market software. Can you talk a little bit about the acquisition you guys made there? It seemed like it was an interesting setup in terms of -- there aren't a lot of players in the industry. I think you just took one out. I think you bought well. Can you talk a little bit about like kind of how that deal came to be and what you think it looks like going forward?

Yes. So the original acquisition, so it's run by a young guy named Drew, and Drew acquired the business from the widow of the founder, built a relationship with her and we were able to buy a great business with a long history and super loyal customers, mission-critical software kind of operating system of record for their customers and was able to structure a deal that was attractive for us and attractive for the sellers as well, continuity and continued legacy, et cetera. And then more recently, he did a small tuck-in acquisition of a small competitor in Australia, which gave him access to that region and some customers.

And so Drew is pulling on all of the levers, right? He's improving the application layer and the technology. He has rolled out a couple of significant upgrades to the core software product and is investing in sales and marketing for new customer acquisition to continue to grow ARR. So he's done a really nice job growing that business and ARR and did one small tuck-in acquisition, and he's really focused on sort of the organic execution, but also becoming a solid operator in vertical market software with like a longer-term view that, that could be a platform to do other interesting niche VMS acquisitions.

Your next question is a follow-up from Mitch Weiman with Sumner Financial.

Two more quick questions. On the OIRs, with the current infrastructure, what is the ideal number in your mind to have on board searching?

Yes. I mean, I think we're trying to balance being super selective with respect to the attributes and background of the people, right? And I think we can be. Our ability to support them to run an effective search and our capital constraints to deploy capital, right, and pacing. And so I would suspect that with this kind of talent flywheel that we're building here, as we continue to demonstrate success, we will have access to even more and higher quality OIRs over time. And concurrently, we're building those systems to support more and the cash flow generation of the businesses hopefully will grow and we can deploy even more capital. So right now, we'd like to say 3 to 5 at any given time, but I would expect that we could scale that over time as well.

Okay. And then one last question. On the skilled trades platform, we've come out of the gates pretty quick here and made 3 acquisitions. How do we look at that going forward? Is it going to be -- it's safe to assume a couple a year? Am I low in assuming that?

I don't want to give any guidance on like -- how many acquisitions we're going to do. But I would say, Mitch, I'm not trying to be cute or dodge the question, but I would say in Rob, we have like high attribute OIR qualities, coupled with like deep industry experience. And so we're comfortable really leaning in and doing acquisitions at maybe a faster pace than we would with an Operator-turned President who's getting up the experience curve. And so I think the pacing is just a little faster there. I think kind of all of those things coupled with what we see as like a really interesting and exciting opportunity set. Yes, I think we'll go a little faster than we otherwise would.

This concludes the audio question-and-answer portion. I'd like to turn the call over to James for further questions.

Thank you, operator, for the e-mailed questions that came in. We'll try to move past ones that may have already been asked. Seeing one that says, can you please discuss how Roundhouse and the plumbing businesses are doing in the first quarter or 2 since acquiring them?

Yes. I mean, I think I spoke to that a little bit in the prepared remarks, but it's early days, but both of them are doing great, right? I think they're both operating at or above our underwriting plan. We've got really talented young guys in there running the business, Roundhouse Miles plus the management team that was there. So we're really excited about the combination of Miles plus Lee, who stayed and rolled equity in the business and that -- their ability to continue to truck right along without a J-curve because Miles has the support of Lee, who's been an owner and an operator in that business for a long time.

And then obviously, with Kingsway Skilled Trades, I just was talking about that with Mitch. We've got a very experienced operator. We think we bought great businesses. He's got his playbook and benchmarks, and he gets right to work. There's no kind of learning curve there. So yes, so early days, but certainly at or above our original underwriting plan, which makes us happy.

Great. And the next one is cash sales are up a lot in Extended Warranty. Can you speak to what is leading to this growth?

Yes. I mean sort of 3 different businesses and maybe just kind of take them in order. I'll start with Trinity. I would say that Trinity is up modestly, but has higher growth within its ESA segment, which is the warranty segment. So that's encouraging. Peter has invested in a new sales team on the national account side, the vendor managed service side. And he had some large customers that are going through -- one of their largest customers is Leslie's Pools. I think many of you probably know what's going on there. So he's been working hard to replace that. And so to still have modest growth in light of some of that sort of customer turnover is great. And he's got a great team, and they're out executing and adding new customers and new accounts and the underlying warranty business is starting to really truck along as well. So doing great there.

The next is IWS. That's our credit union-focused business. IWS is doing great. It's a really good business. Six consecutive quarters of growth in cash sales. I think that's a combination of both units and pricing. And the unit -- the kind of the unit driver is they've been adding new credit union partners ticking over every month. They're adding new credit union partners and then they onboard them and get more opportunities to sell extended warranty at those credit unions when their credit unions are doing direct loans.

So just really nicely chugging along. Great team, been at that business for a long time, have a lot of deep industry expertise and knowledge. And like I said, 6 consecutive quarters of growth in cash sales after coming off of the pandemic high in 2022, bottomed out probably kind of mid-'23 and then been chugging along ever since.

And then finally, PWI and Geminus, which has seen some significant growth in the third quarter. As many may recall, we transitioned management in -- at the end of the first quarter and brought in Robbie Humble, who is -- he is a search accelerator-type President, but also has extensive auto warranty experience. So kind of a 2 for sort of a Rob Casper, but for auto warranty. And that business had been declining even in Q1 and almost immediately with Robbie's energy, enthusiasm, he brought some great new people to the team that he had relationships prior to coming over to Kingsway. And that business inflected quickly in Q1 and that cash sales growth actually accelerated pretty significantly in Q2 and Q3. So yes, I think 3 different stories there to get all the way back to the original question, but you add all of those up, and we're seeing really nice sales growth.

Excellent. And the next one is Kingsway has an interesting structure. Why do you think search works in a public vehicle? And what are the advantages versus traditional search?

Okay. Kind of a 2-parter here. Why does search work in a public vehicle? I think that there are a lot of -- maybe not a lot, but there are certainly several public companies that you would describe as serial or programmatic acquirers. I think that our model shares a lot of the DNA of other programmatic acquirers, a focus on buying small businesses at reasonable valuations and those businesses have sort of enduring profitability.

I think that marrying that model with search is super compelling. One, it sort of gives you access to a very long runway to redeploy capital using this model. I think some of that's demographic. I think -- but a lot of it is this exceptional talent that can go and source opportunities, right, really taking advantage of our OIRs as sourcing engines themselves. And then like I was talking about with Scott, many of these searcher-led acquisitions themselves become platforms to do their own organic growth. So flywheel within a flywheel type concept.

So I think it's very compelling. I think it has -- programmatic acquisitions have worked. It shares a lot of that sort of common DNA with the added benefit of this talent flywheel concept that I was mentioning when I'm talking to Scott. So I absolutely think it works.

Second part -- with the advantages of -- versus traditional search, I think advantage -- differentiations, I think, than traditional search where searcher raises capital from LPs. I think one is -- and sort of breaking it into the different phases of search. So you've got the sourcing, the diligence and closing and then the operating. I think the first would be just sort of trust and track record and that builds like significant credibility for an OIR when they're talking to business owners who might be sellers. I think it builds tremendous credibility with lender partners during the deal phase to get attractive debt terms and capital. And I think that track record and trust builds a lot of credibility in our ability to attract new OIRs to the platform as well. So talent selection.

And then we combine that with like really great sourcing tools. That's not unique to being in a public company. It's more like incubated. But in traditional search, you kind of have to start from scratch and build all of this stuff from the ground up. And we have great sourcing engine and a tech stack to support that. We've got due diligence and lending relationships and lawyers and all of those things that help in the closing and so speed the time to search and close. And then obviously, we're very proud of how we support our operators once they become the President of the business, the operating scaffolding, if you will, of the Kingsway Business System plus our advisory board. And then this expanding peer network of presidents who are all going through these -- the same thing together and sharing best practices across the group.

And then finally, I think the permanence of the capital is super unique vis-a-vis traditional search. There's no kind of forced exit for fund life or liquidity motivations. We can own these businesses and compound capital for a very long time. And that's like a unique distinction, I think.

Excellent. Next one is you mentioned Roundhouse and Kingsway Skilled Trades have performed well since day 1 and are ahead of budget. What do you attribute that to? And is there a key learning that can be applied to the M&A process going forward?

Yes, sure. There's learnings and everything. I usually take most of -- maybe my learnings from failure. But it's good to learn from the good ones, too. First of all, I'd say it's early days, right? But I think that kind of the unique differentiator of these businesses relative to the other businesses that we've acquired is the operator doesn't have to get up the experience curve. These are -- Rob, we've talked about that, like he's done this before. And so he can get in and start moving day 1. There's not this 100-day learning campaign and a little bit of trial and error and a few mistakes, like he can get in and start making an impact immediately. And I think that same concept holds at Roundhouse, where Lee stayed on. He was the VP of Ops and President, and he's staying on to help and support Miles. So Miles is just truly additive there. And so I think that, that kind of not having to go through the experienced J-curve is a big part of it.

I think those are somewhat unique. I don't think that, that's a requirement for ETA or search to work. In fact, it's kind of rare, but it certainly helps. And to the extent that we can partner with OIRs who have deep industry experience and a thesis around buying a business in that industry, we'll definitely do that. And I think that it will -- as we think about industries that we're interested in, we're also looking at that as we're talking to potential OIRs to try to match experience with industries we're interested in.

Excellent. Next one is if Image Solutions and DDI are exiting their J-curves, how do you manage that positive scenario, let them continue to perform, look for tuck-in M&A, increase the investment for organic expansion?

Yes. I mean they're 2 totally different businesses, right? I talked about Image Solutions with Scott. I think that as Image Solutions has gone through its J-curve and is exiting, Davide, the company has been delevering and building cash. They're in a fragmented market. I would expect that a big part of that story in the coming quarters will be the opportunity for tuck-in M&A, just a function of the dynamics of the industry.

DDI is different. I think that J-curve was around like this high-growth business that needed to be stabilized and professionalized in order to then go invest in sales and marketing to grow organically. It's kind of a one of one in their industry and a large addressable market that has really barely been penetrated. So no other -- it's not fragmented. It's kind of a one-on-one and there's a huge organic growth opportunity and that J-curve was just around stabilize, professionalize and prepare for scale.

Great. And I see just 2 more. The first one is, can you speak to the testing, inspection and certification sector that Colter will be pursuing? Any market sizing and dynamics that you can share? And in success, do you envision that being a platform or non-platform-based strategy?

Yes. So TIC, large and fragmented with a long tail, probably growing mid- to high single digits as an industry, lots of little niches in subsectors. And that growth supported by really nice secular trends, aging infrastructure, regulation. And then there's an element of criticality. These are mission-critical, nondiscretionary testing inspection certification requirements that are often required by law or insurance. And it's also like a small thing into a big thing, right? Low cost of the service relative to high consequence of failure of the asset. And so that is all a very nice setup.

And I think certainly, the industry has the hallmarks for this -- for anything that we do there to be a platform. But ultimately, it would depend on the target we identify and the niche that it's in. I think we go into these things being open to the idea that they become platforms, but you need the operator to find the right opportunity, build the operating muscle and then delever a bit so that we can be equity capital efficient and then explore that. But yes, I think we would be open to it.

Excellent. And the last one is related, and you may have just answered it, is how do you view KSX's search strategy moving ahead to pursue more aggressively platform opportunities or non-platform opportunities? Or do you even view them all as platforms?

Yes. I mean, I think with the exception of KST, which we went in with a very specific thesis around platform and pacing of acquisitions, we have always looked first at the industry dynamics and the business quality, right, to buy a great business, but also with the view that they could become platforms to do inorganic growth. And so if you look at what we've done at vertical market software, we've done a tuck-in acquisition there and potential to do more.

IT MSP, as we've talked about with Image Solutions, potential to be a platform. And then Timi, obviously, with outsourced accounting and HR, has done a couple of tuck-in acquisitions and then there's an opportunity there. So coming all the way back, like first underwrite to like great industry dynamics and a great business with the optionality of it becoming a platform over time.

Excellent. I don't see any more questions. JT, I'll throw it back to you.

All right, James. Thank you. Well, thanks, everyone. I really appreciate it. Great third quarter, and I appreciate you being with us here this afternoon and this evening. That's it for me.

This concludes today's call. Thank you for attending. You may now disconnect, and have a wonderful rest of your day.