Kingsway Corporation (KWY) Earnings

Management highlights

- **Overall Portfolio Performance** * Q1 2026 results came in ahead of internal expectations, with broad-based momentum across the portfolio, particularly strong performance in March 2026. * Portfolio LTM EBITDA for operating companies was $22 million to $23 million as of March 31, 2026. * One tuck-in acquisition (Ledgers, by subsidiary Ravix Group) has been completed in 2026, and the acquisition pipeline remains robust. - **KSX Segment Sub-Segment Highlights** * Roundhouse: Record monthly revenue above $2 million in March 2026, with robust demand from natural gas infrastructure customers driven by recent geopolitical events. * IS Technologies: Substantial top-line and bottom-line gains YoY, with all three service lines growing, supported by a fully staffed sales team. * Kingsway Skilled Trades: Buds Plumbing delivered healthy YoY growth; Southside and AAA remain in the investment phase and are positioned for acceleration entering seasonally strong quarters. * SPI: Significant YoY growth, with annual recurring revenue up over 45% YoY, 97% gross revenue retention, and net revenue retention well over 100%. * DDI: Results came in ahead of budget, with new customer traction after a period of operational investment, poised for stronger growth in the second half of 2026. * Ravix: Results came in well ahead of budget, with improved momentum after a challenging 2025, positioned to return to growth from Q2 2026 onward. - **Capital Markets Updates** * The Board has proposed a company name change to Kingsway Corporation and a ticker change to KWY, subject to shareholder approval at the May 18 AGM, to reflect the company's evolution away from its legacy insurance business and reduce investor confusion. * Face financial statements have been updated to align with the current service business model (KSX now generates the majority of revenue and profit), improving readability for investors via clearer line items, a classified balance sheet, and added gross profit reporting. * A full brand, corporate identity, and website relaunch is planned after the name change is approved. - **Corporate Governance Updates** * Adam Patinken was elected new Board Chairman, with former Chairman Terry Cavanaugh transitioning to Vice Chairman for a smooth leadership transition. - **Upcoming Events** * Annual Investor Day will be held May 18, 2026 at the New York Stock Exchange, focused on connecting the company's search fund model to tangible operating results, with presentations from the CEOs of key portfolio subsidiaries.

Guidance

- Management reiterates expectations for double-digit organic revenue and profit growth for both the KSX and Extended Warranty segments in full-year 2026. - The company maintains its 2026 target of completing 3 to 5 acquisitions for the full year. - For the Kingsway Skilled Trades platform, management targets 2 to 3 acquisitions per year to grow the platform organically and via M&A. - Extended Warranty is on track to deliver double-digit organic top-line growth in 2026, per management guidance.

Segment performance

Consolidated Q1 2026 revenue increased 37.4% year-over-year to $39 million, with consolidated adjusted EBITDA of $2.4 million (up from $1.4 million in Q1 2025) and a consolidated net loss of $2.2 million (narrowed from a $3.1 million net loss in Q1 2025). 1. KSX Segment: Revenue increased 80.7% YoY to $21.1 million, accounting for 54.1% of total consolidated revenue. Adjusted EBITDA increased 82% YoY to a record $3.5 million (up from $1.9 million in Q1 2025). 2. Extended Warranty Segment: Revenue increased 7.2% YoY to $17.9 million, accounting for 45.9% of total consolidated revenue. Cash sales grew 11.8% YoY, driven by low single-digit volume growth and high single-digit growth in revenue per contract. Adjusted EBITDA was $0.4 million, down from $0.9 million in Q1 2025.

Risks & headwinds

No new material risks or operational failures were discussed in this earnings call. Management referenced standard forward-looking statement risk disclosures included in the company's prior SEC filings (Forms 10-K, 10-Q, and 8-K), which note that actual results could differ materially from forward-looking projections.

Analyst Q&A

• Q: What work will management do with financial data providers after the proposed name change, and why is this necessary? /

  A: Most major financial data aggregators currently misclassify Kingsway as an insurance, real estate leasing, or automotive dealership business, which creates unnecessary investor confusion. Management will work directly with all providers to update company descriptions and reclassify Kingsway's GICS code from property and casualty insurance to a specialized services holding company, to accurately reflect its current operating model. (179 characters)

• Q: What is driving the strong recent momentum at Roundhouse? /

  A: Two key secular tailwinds are driving growth: increased natural gas activity and midstream infrastructure buildout in the Permian Basin, and an industry shift from legacy gas-powered motors to the electric motors that Roundhouse services. Strong performance in Roundhouse's core specialized field service line, supported by its local position in Odessa, is also contributing to sustained momentum. (244 characters)

• Q: What G&A investments are driving expense growth in the Extended Warranty segment, and when will expense growth slow to allow operating leverage? /

  A: The majority of incremental G&A spending is for sales and marketing investments to drive organic growth, plus a large ERP system conversion at subsidiary PWI. The ERP conversion is expected to be completed by the end of Q2 or early Q3 2026, and management will discipline cost structure to capture operating leverage as the business grows. (235 characters)

• Q: What is the long-term vision for the Kingsway Skilled Trades platform? /

  A: The platform targets a large $120 billion total addressable market that is highly fragmented and provides mission-critical services. The strategy is to operate existing businesses with excellence, grow them organically, and scale the platform via a measured acquisition campaign targeting 2 to 3 add-on acquisitions per year, with a long runway for growth. (221 characters)

• Q: What has management learned about scaling the search fund model within a public company framework as the portfolio has grown? /

  A: The most impactful discovery is the power of compounding learning and compounding talent: incremental acquisitions and operating experience improve underwriting, diligence, and operational capabilities company-wide, while attracting higher-caliber leadership to the platform. Decentralized operations also deliver increasing holdco operating leverage as the portfolio grows, and subsidiary-level internal flywheels (tuck-in acquisitions funded by operating cash flow, no incremental holdco capital) have emerged as an unexpected powerful source of growth. (381 characters)