Kingsway Corporation 2026 Q2 Earnings Call

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.