KWY

Good day. Welcome to the Kingsway second quarter 2026 earnings call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. With me on the call are J T. 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 the Forms 10-K and the 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 on the most recent press release, as well as in the company's periodic filings with the SEC. I would like to hand the call over to J T. Fitzgerald, CEO of Kingsway. J T., please proceed.

Thank you, Matthew. Good afternoon, everyone. Welcome to the Kingsway earnings call for the second quarter of 2026. 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. Kingsway is uniquely positioned to capitalize on the search fund model at scale within a tax-efficient public company framework. At Kingsway's Investor Day in May, we talked about the encouraging commercial momentum we are seeing across our business.

It is gratifying today to report an exceptional second quarter that came in significantly ahead of internal expectations and that represented the strongest quarter of operating performance since my tenure as Kingsway CEO. Our Kingsway Search Xcelerator segment, or KSX, delivered a quarterly record $4.3 million in adjusted EBITDA. Performance was broad-based across the KSX portfolio, with Ravix and SPI producing particularly good results, supported by customer wins and excellent client retention. KSX adjusted EBITDA has more than tripled over the last eight quarters as we scale our public search fund strategy. Our extended warranty business also had a strong quarter, with robust performance at both IWS and Penn/PWI. IWS is a wonderful business and continued its record of solid execution, growth, and cash flow generation in the second quarter.

Penn PWI, which is led by KSX style operator CEO Robbie Hummel, has made profitable growth a key point of emphasis in 2026. This quarter showed Penn PWI is making tangible progress against this objective as its financial results came in nicely ahead of internal expectations. Adjusted EBITDA for the Extended Warranty Segment was $1.1 million and lender defined Modified Cash Adjusted EBITDA, which is used as the basis for financial covenant calculations under the company's credit agreements, was $2.9 million in the quarter. As a management team, we evaluate the company's performance by looking at Portfolio EBITDA, which is Adjusted EBITDA in our KSX segment, plus Modified Cash Adjusted EBITDA in our Extended Warranty Segment. Portfolio EBITDA of $7.2 million in the quarter is a new quarterly record. We are highly encouraged by this result.

Even in a great quarter, it feels like there is still so much more to achieve. Roundhouse and Kingsway Skilled Trades typically benefit from seasonality in the second quarter relative to the first. In 2026, however, both businesses reported flat quarter-over-quarter Adjusted EBITDA from Q1 to Q2. Roundhouse's second quarter financial performance was impacted predominantly by timing issues. Just one example is an electric motor originally expected to ship by the end of June ended up shipping on July 1st, deferring several hundred thousand dollars of revenue from Q2 to Q3. Roundhouse continues to grow, to win new customers, and to make strategic and operational progress, and we remain confident regarding where this business is headed in the quarters to come.

At Kingsway Skilled Trades, Bud's Plumbing had a great quarter, and AAA showed solid improvement, but Southside continued to face the headwind and distraction of a legacy construction project that resulted in a low six figure write down in Q2. We anticipate this project will be wrapped up in the coming weeks. Putting this project in the rear view mirror should serve as a nice financial tailwind to Kingsway Skilled Trades in Q3 and beyond. As previously shared, 2026 is a transition year financially for DDI. Following our purchase of the business, DDI invested heavily in its operations, including building out a second control center and improving detection rates, response times, and service availability. This year, DDI has invested in its sales motion, resulting in a customer pipeline that is now at a record level.

That said, there is a natural sales cycle in the business, with sales expense hitting the P&L right away while customer wins filter in over time. We are optimistic DDI is taking the right steps and is well-placed to accelerate growth in the next several quarters. Finally, SNS has had a challenging operating performance since Kingsway's acquisition of the business, as the nurse staffing industry has endured a difficult post-COVID down cycle. After years spent wrestling with this industry dynamic, operator CEO Charles Mokuau stepped away from SNS at the end of May by mutual agreement with Kingsway. We thank Charles for all his efforts on behalf of Kingsway and wish him the very best in the next chapter of his career. Paul Vidal, one of Kingsway's Operators-in-Residence, agreed to lead SNS, and we have been pleased by his energy, fresh ideas, and operating discipline.

It also appears the nurse staffing industry may have begun to stabilize in recent months, and perhaps even to grow again. We are cautiously optimistic that under Paul's leadership, and with an improving industry backdrop, SNS may finally be turning the corner. What I think these examples show is that Kingsway is doing well, but there is so much more to accomplish. We are not yet firing on all cylinders. There are many opportunities to accelerate growth and to further improve profitability across our portfolio. Kingsway is only at the beginning of our journey. Turning now from financial performance to strategy, the second quarter was eventful for Kingsway.

On May 11, we announced the sale of Trinity Warranty Solutions for $8 million, or 9.2x 2025 adjusted EBITDA in a management buyout transaction, including $5 million paid up front and $3 million paid out over time, subject to discounts for early prepayment. That capital is now available to redeploy in our KSX segment. CEO of Trinity, Peter Dikeos, has been a wonderful partner to Kingsway for many years, and we wish Peter and his entire team every success in the future. On May 15, Kingsway announced the appointment of Colter Hanson as President of Kingsway Skilled Trades. Colter has hit the ground running while demonstrating his commitment to operational excellence and service leadership. Kingsway Skilled Trades is in good hands with Colter at the helm. On May 18, Kingsway hosted its annual Investor Day at the New York Stock Exchange.

We were thrilled to be joined by operator CEOs Davide from Image Solutions and Miles Mamon from Roundhouse, as well as by KSX Advisory Board member Tyler Gordy for a fireside chat. I encourage anyone seeking to learn more about Kingsway to watch the replay of our Investor Day, which is posted on our website. On May 19, after receiving 99.7% support from shareholders, Kingsway officially changed its name to Kingsway Corporation and its stock ticker to KWY. Just a few days ago, on August 3, we were pleased to welcome Fletcher Vine as our newest operator in residence. Fletch was captain of the varsity baseball team in college before serving eight years in the U.S. Navy as an F/A-18 naval aviator, including planning and leading more than 40 combat missions over Iraq and Syria, and earning two Air Medals.

He then transitioned to the private sector by way of Haas School of Business at UC Berkeley, where he graduated with honors. After earning his MBA, Fletch was a consultant at Boston Consulting Group before joining Risk Mitigation Consulting, or RMC, a cybersecurity and critical infrastructure services firm, as a senior executive. RMC was a search-backed firm that had a successful exit earlier this year, Kingsway is thrilled to support Fletch as he seeks an acquisition of an asset-light, tech-enabled services business with recurring revenue. Welcome to the team, Fletch. Earlier today, we announced that Kingsway's wholly owned subsidiary, Image Solutions, closed the acquisition of Romeo Computer Company, or RCC, effective August 1. RCC is a leading provider of managed IT and cybersecurity solutions based in the state of Michigan, with a retiring founder who is looking for a long-term home for his business.

The acquisition expands Image Solutions' geographic footprint into Michigan and the upper Midwest and is a strong cultural fit given RCC's service-first approach and long-tenured customer relationships. RCC generated approximately $two and a half million of unaudited pro forma revenue and approximately $half a million of unaudited pro forma adjusted EBITDA in the 12 months ended April 30, 2026. Purchase price was $2.4 million. We are thrilled to support RCC's future growth ambitions and welcome RCC to the Kingsway family. Before turning the call over to Kent for a financial review, I would like to highlight that LTM Portfolio EBITDA remains stable relative to last quarter at $22 million-$23 million, even after subtracting a net $400,000 as a result of M&A activity related to RCC and Trinity.

With easier year-over-year comparisons in the third and fourth quarters of 2026, I am confident in the positive trajectory of this metric in the back half of the year. Kingsway is also today reaffirming the company's targets of three to five acquisitions in 2026 and for double-digit organic growth at both KSX and extended warranty. As demonstrated by today's results, we are well on our way. I'll turn the call over to Kent to walk through the financials in more detail.

Thanks, JT. Good afternoon, everyone. For the second quarter of 2026, consolidated revenue increased 27.6% to $39.4 million, compared with $30.9 million in the second quarter of 2025. Within that total, KSX revenue increased 68.3% to $22.3 million, compared with $13.3 million in the prior year quarter. Extended warranty revenue decreased 3.1% to $17.1 million, compared with $17.6 million a year ago. On a pro forma basis for the sale of Trinity, extended warranty revenue increased 6.5% to $16.1 million from $15.1 million a year ago. Pro forma extended warranty cash sales increased 6.9%. Consolidated net income for the quarter was $200,000, compared with a net loss of $3.2 million in the second quarter of 2025. Consolidated adjusted EBITDA for the quarter was $5.2 million, compared with $1.7 million in the prior year quarter.

Turning to segment profitability, KSX adjusted EBITDA increased by 77.9% to $4.3 million, compared with $2.4 million in the second quarter of 2025. Extended warranty adjusted EBITDA was $1.1 million, compared with $600,000 a year ago. On a pro forma basis for the sale of Trinity, extended warranty adjusted EBITDA was $1 million, compared with $300,000 a year ago. Portfolio LTM EBITDA for the operating companies was $22 million-$23 million as of June 30, 2026. This metric subtracts the contribution from Trinity, which produced adjusted EBITDA of about $900,000 in both 2025 and in the 12 months ended March 31, 2026, but does not include a contribution of positive $500,000 related to the acquisition of RCC. We continue to view Portfolio LTM EBITDA 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 $59.9 million as of June 30th, 2026, compared with $62.4 million at December 31st, 2025. Before I hand the call back to J.T., there are a few accounting items worth highlighting during the quarter. First, the sale of Trinity resulted in a one-time gain of $1.3 million, which appears on the income statement below the operating income line as a gain on disposal of subsidiary. It also can be found in the cash flow statement in cash from investing activities. Second, Kingsway received approximately $1.1 million in cash distributions during the quarter from search fund investments related to Argo that remain active. These distributions appear in the income statement below the operating line in interest in investment income and also can be found under the cash flow statement in cash from investing activities.

As search is core to Kingsway's strategy, the Argo gains are included in consolidated Adjusted EBITDA at the hold co level. Third, Kingsway incurred $1.4 million of non-cash expenses related to the grant and modification of long-term stock-based awards. This non-cash expense ran through the income statement above the operating line during the quarter. We expect the impact of stock-based awards to be lower and more in line with historical levels going forward. Fourth, during the quarter, the company successfully resolved a legacy legal liability related to the 2022 sale of a Texas rail yard to BNSF. This one-time expense totaled about $600,000 and ran through the income statement above the operating line in the Q2 financials. We're glad to have this resolved and this legacy matter behind us. Finally, a brief financing note.

As disclosed in our Form 10-Q, three of our operating subsidiaries representing under 10% of LTM Portfolio EBITDA were out of covenant compliance during the quarter, and we have attained or are in process of obtaining a waiver of each of these violations. These loans are non-recourse to Kingsway Corporation and to our other subsidiaries, and they do not cross-default to one another, so any individual covenant matter is contained at the operating company level. These are the same businesses we discussed as being in transition earlier, with line of sight to operational improvement that should bring each of them back into compliance over time. We believe all three companies are headed in the right direction and look forward to their operational and strategic progress being reflected in improving results in the quarters ahead. Overall, I'd like to reiterate JTs message.

This was an exceptionally strong quarter for Kingsway, both financially and strategically. It feels like we have abundant opportunities across our businesses to drive further top-line and bottom-line growth and to do even better. I'm pleased by the progress we've made and excited for what's ahead. With that, I'll turn the call back to JT.

Thanks, Kent. Before opening up for questions, I'd like to briefly share a big picture perspective regarding where Kingsway is today and where I believe Kingsway is headed. It's my view that Kingsway fits the profile of what is known in the public markets as a compounder, a company that consistently grows its intrinsic value on a per-share basis over a long period of time at an above-average rate. Proven compounders have generated significant long-term returns for shareholders. They've also been rewarded with premium valuation multiples by public market investors. Compounders tend to share two essential qualities. First, they have attractive business models that generate high cash flow return on capital. They convert a large share of their earnings into cash, and they earn high returns on the capital they deploy. Second, they're able to reinvest that cash flow at high rates of return over a long period of time.

Many publicly listed compounders achieve this second point by being serial acquirers of good businesses at attractive prices. This is exactly what we are building at Kingsway. Our operating companies are asset-light, recurring revenue services businesses capable of a high cash flow return on capital. What differentiates us is the opportunity to reinvest that cash flow. The search fund model points us at a vast, fragmented universe of small, high-quality businesses whose owners are steadily reaching retirement, giving us years or even decades of acquisition runway. Pairing that runway with the operational playbook of the Kingsway Business System inside a tax-efficient public vehicle is what gives Kingsway the potential, over time, to join the ranks of publicly listed compounders. Over the last few years, we have shared this vision with investors, including at our Investor Day, as we've worked to spin up the model.

It's not enough to talk about it. We also have to deliver the numbers to back it up. Today is a milestone day for Kingsway because it is a clear data point that Kingsway is on the right track. Record KSX EBITDA, record Portfolio EBITDA, we're still in the early days of our journey. As we continue to prove out the model and just demonstrate attractive financial results quarter after quarter, we believe it is just a matter of time before the value we are building will become unmistakable to the market. With that, operator, we're ready to take questions.

Certainly. Everyone at this time, we'll be conducting a question and answer session. If you have any questions or comments, please press *1 on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press *1 on your phone. Please hold while we poll for questions. Thank you. Once again, everyone, if you have any questions or comments, please press star then one on your phone. Please hold while we poll for questions. Thank you. That concludes our Q&A session. I'll now hand the conference back to James Carbonara for emailed questions.

Thank you, operator. The first question that came in asks, "Can you please share more information about the RCC acquisition, how you found it, and why it makes sense for Image Solutions?

Hey, James. Thanks. Yeah. RCC is a really nice little business. Greater than 80% recurring revenue, strong margins, and a history of really nice organic growth, sort of outpacing the industry. If you combine that with a motivated seller for retirement reasons and an attractive multiple, I think the deal stands alone on its merits. Additionally, if you think about Image Solutions and part of the thesis there, obviously, long-term secular growth trend in IT managed services. There's an element of organic growth to the thesis. As part of our original investment thesis and value creation plan, inorganic strategy was always contemplated. Davide is now almost two years into that acquisition.

Got through the first few phases of KBS deployment, learned the business, stabilized the business, installed the operating structure, and in that period of time, has earned both the confidence of us and also de-levered the business to give him the capacity to start exploring tuck-in acquisitions. I just feel like it was a really great fit for Davide for all of the strategic reasons, and a really nice business at a fair price. To the first part of your question about how we found it. Through our normal sourcing channels, this one came through a broker. Davide was pretty quickly able to set himself apart from anyone else interested, given the complementary fit of the two businesses and the aspirations of the seller.

Great. Thank you. The next question says, the $1.1 million of cash received from Argo, are there many active Argo search investments that remain? Do you think Kingsway might receive additional cash distributions in the future from Argo?

Yeah. There are several, a handful probably, active Argo search investments that remain. Probably three of significance. I think it's important to point out that the cash we received in the quarter was a distribution, a dividend from two of those companies. We still own our equity interest in those businesses, and they continue to operate. Yes, I definitely expect that we should receive additional distributions from those companies in the future, either in the form of another dividend or ultimately, as a result of a monetization event.

Great. Thank you. Additional questions that came in. Roundhouse, AAA, and Southside have now passed their one-year marks. Now that they're fully in the reported numbers, is the $22 million-$23 million Portfolio EBITDA figure something investors should think of as a floor to grow from?

Small net. Roundhouse is now one year. I think we got another month or so with AAA and Southside. We have done a couple of small, I guess HR Team and Ledgers maybe still have a few months to go. Yeah, I think that that's a fair way to say it, that $22 million-$23 million is the last 12 months of operating performance of the businesses that we have largely owned for now 12 months. I would think that that is a good thing for investors to anchor to, which is that should start showing up in the full-year results on a trailing basis.

Thank you. Next question. RCC was funded at the operating company level without new capital from Kingsway. Where does portfolio leverage fit today, and how much tuck-in capacity does that give you?

Hey, James, it's Kent. I'll take that one. I think we track our leverage. I think right now we're around 2.7 consolidated, maybe a little bit lower on that. I think we do have plenty of room there to continue going for the reasons that J.T. had mentioned earlier. We did it with RCC, we did it with Ledgers, we did it with The HR Team a year ago. I think it's a pretty good model to keep going forward.

Thank you. One last one that just came in a few seconds ago on email states: the Stanford Search Fund study continues to show very strong historical returns. Search is also becoming much more popular and competitive. Are you seeing that increased competition show up in acquisition multiples today? As the space gets more crowded, how do you think Kingsway's platform positions your OIRs relative to someone pursuing a traditional search?

Certainly, a lot of interest and enthusiasm around search broadly. I think that for traditional search, the recent study would show that search is getting harder, with the percentage of searchers who fail to make an acquisition continuing to climb. I think that Kingsway is a strong place for people who are worried about that. You get to come into a platform with an active sourcing engine, a full tech stacks, fully stood up. An industry game board with dozens of industries where we've done a lot of work and are actively sourcing opportunities. Just in terms of improving the probability of success of closing a search, I think Kingsway is a great place. I think that as a result, we have seen the number of searchers interested in KSX, entrepreneurs interested in KSX continue to climb. Our pipeline has never been more active.

Thank you. I don't see any additional questions here on email. J.T., I'll throw it back to you for any closing comments.

Well, thanks, everyone. Just thinking through the two-part question there. I want to just make sure that I'm responsive to the whole thing. A couple hundred active searches, we rarely bump into those searchers in deal processes. We haven't and I think demonstrated by the multiples that we're doing deals at, even announced today, we're not seeing that creep into the multiples. Just wanted to make sure I was answering that. Anyway, with that, thank you, everyone, for joining us for the quarterly call, and onward and upward, as we like to say here. Thank you.

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

Good day, and welcome to the Kingsway first quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. With me on the call are J.T. 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 the 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 the call over to J.T. Fitzgerald, CEO of Kingsway. J.T., please proceed.

Thank you, Holly. Good afternoon, everyone, 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. Compound long-term shareholder value on a per share basis. 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. KSX segment and our Extended Warranty Segment. March stood out as a particularly good month, 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 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 3 to 5 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 Techonology 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, Bud's Plumbing had an excellent quarter with healthy growth relative to the prior year. Southside and Triple A 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 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 Group came in well ahead of budget in Q1. 2025 was a challenging year for Ravix Group, but with a more diversified customer base and a refreshed commercial strategy, we believe Ravix Group has good momentum and will return to growth in Q2 and beyond. We remain confident in the Ravix Group platform and see meaningful long-term opportunity 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. An 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 18th. 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 ticker 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 Patinkin 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 Kavanagh, who served as board chairman 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.

Thanks, J.T., 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 J.T. 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-$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 at December 31, 2025.

As J.T. 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 a 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 Nancy 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 J.T., J.T.

Thanks, 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 18th, at the New York Stock Exchange. 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 Image Solutions LLC. 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 18th at the New York Stock Exchange. With that, operator, we're ready to take questions.

Certainly. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that is star one to ask a question. One moment, please, while we poll for questions. James, the floor is yours.

Thank you, operator. I'm for investors, I'm reading in the questions that came via email. 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?

Thanks, James. Look, if you go across the various data aggregators, Bloomberg, CapIQ, FactSet, Yahoo Finance, et cetera, I think we're sort of listed alternatively as either a property casualty insurance business, a leased real estate business.

Dealers.

I think in one case, an auto and truck dealership. 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, G-I-C-S code, away from property casualty to a holding company, specialized service business holding company. Yeah, hopefully, that answers the question.

Thank you, J.T. The next one. Roundhouse had another strong quarter. Can you share more about what's driving the momentum there?

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 were the motors that we service are in place. Combined with an ongoing shift away from legacy gas-powered motors to electric motors. That would be kind of the two secular tailwinds. 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.

I think that, you know, this is just a continuation of the momentum that was already present when we acquired the business. We're happy to see it.

Excellent. The next question, cash sales grew nicely in the quarter. 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?

Yeah, I assume this is in the warranty segment.

Correct.

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. Yeah, 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?

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 gotta kind of build a foundation that creates reliability and quality and earn the right to grow. Late last year and early this year, starting from zero, 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. We're pretty excited about the activity there and have visibility into a nice pipeline that gives us confidence in the second half.

You know, I will say that, you know, 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 the kind of 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 Bud's Plumbing 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?

Yeah, I mean, I think that we've said from the beginning that you start with kind of big picture macro. You know, it's a very large addressable market, sort of a $120 billion TAM that is both highly fragmented and kind of mission-critical services, right? You know, 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. 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?

Yeah, well, that's a great plug for our investor day. I think we'll probably dive into that again on the 18th. Yeah, 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 learn more and more, whether that's on OIR selection, acquisition underwriting and diligence and closing. Operationally, I think the sort of compounding effect over time of the learning engine of both us at the holding company, but 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, you know, every new OIR, both, you know, the kind of their capabilities are compounding, but it is also allowing us to attract an even higher caliber of candidates to the platform. Compounding learning and compounding talent. I think as the portfolio has grown, I think the model works. You know, our decentralized model, as it grows, we'll continue to see, you know, more operating leverage from the kind of hold co expense over a much broader base of businesses, which is exciting. I would say that maybe we didn't fully appreciate this when we first started, but I am seeing now sort of the flywheels within the flywheel, right? We think of Kingsway as a large flywheel.

We buy businesses, we grow them, we cash flow, we delever, we redeploy that capital to the new acquisition. 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. That was maybe something that we didn't fully appreciate or anticipate at the outset, but I think will be a very powerful force going forward. I think it takes kind of that long duration of capability within a public company to be able to see that play out.

Great. I see no further questions emailed in. J.T., 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. Sets us up well for a great year, and I hope to see everybody, or, you know, 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.