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…

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…

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.