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DATE
Thursday, May 7, 2026 at 5 p.m. ET
CALL PARTICIPANTS
- Chief Executive Officer — JT Fitzgerald
- Chief Financial Officer — Kent A. Hansen
- Board Chairman — Adam Patinkin
- Vice Chairman of the Board — Terry Cavanaugh
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TAKEAWAYS
- Consolidated Revenue -- $39 million, reflecting a 37.4% increase compared with $28.3 million in the prior-year quarter.
- KSX Segment Revenue -- $21.1 million, up 80.7% from $11.7 million, illustrating substantial growth across KSX’s operating companies.
- Extended Warranty Segment Revenue -- $17.9 million, representing a 7.2% increase from $16.7 million.
- Extended Warranty Cash Sales -- Increased 11.8%, driven by both higher volume and pricing on vehicle service contracts and other warranty products.
- VSC (Vehicle Service Contract) Unit Sales -- Grew low single digits, with revenue per contract up high single digits, both year over year.
- Consolidated Net Loss -- $2.2 million, an improvement from a net loss of $3.1 million in the comparable quarter.
- Consolidated adjusted EBITDA -- $2.4 million, up from $1.4 million.
- KSX Segment Adjusted EBITDA -- Rose 82% to $3.5 million from $1.9 million, reaching a record high for any quarter.
- Extended Warranty adjusted EBITDA -- $0.4 million, down from $0.9 million.
- Portfolio LTM EBITDA -- Estimated between $22 million and $23 million as of March 31, 2026, providing a measure of current operating portfolio earnings power.
- Total Net Debt -- $63.9 million as of March 31, 2026, compared with $62.4 million at December 31, 2025.
- Acquisition Activity -- One tuck-in acquisition completed in 2026 (Ledgers for Ravix Group); management stated intention to close three to five acquisitions during the year.
- Board Leadership Transition -- Adam Patinkin elected as chairman, with Terry Cavanaugh transitioning to vice chairman, ensuring continuity in corporate governance.
- Proposed Name and Ticker Change -- Board recommended changing company name to Kingsway Corporation and ticker to KWI, pending shareholder approval on May 18, 2026.
- Financial Statement Updates -- Face financials revised to reflect a service business model, providing clearer gross profit and segment detail as reported in the current Form 10-Q.
- Roundhouse Segment Performance -- Achieved record monthly revenue greater than $2 million in March, driven by robust demand from natural gas infrastructure customers in the Permian Basin.
- SPI Segment Recurring Revenue -- Annual recurring revenue up over 45%, with gross revenue retention of 97% and net revenue retention “well over 100%,” indicating expansion among existing clients.
- DDI Segment Progress -- Surpassed budget expectations and initiated new hospital onboarding, setting up for stronger performance in the second half as pipeline visibility improves.
- Ravix Segment Recovery -- Reported results “well ahead of budget” after a challenging prior year, credited to a more diversified customer base and updated commercial strategy.
- ERP Conversion at PWI -- Major enterprise resource planning system transition expected to complete by Q2 or early Q3, cited as a temporary driver of higher G&A in extended warranty.
SUMMARY
Kingsway Financial Services Inc. (KFS +0.38%) delivered accelerated top-line growth, with both the KSX and extended warranty segments exceeding internal benchmarks and setting new profitability records in key areas. Management highlighted a broad-based operating momentum across the portfolio, supported by secular demand trends in energy infrastructure and skilled trades, as well as improved client retention in recurring-revenue businesses. The company advanced its active acquisition strategy, completing the Ledgers transaction and confirming plans to execute several more deals within the fiscal year. A proposed name and stock ticker change to Kingsway Corporation (KWI) was communicated, with stakeholder approval requested to realign the public-market narrative and simplify financial disclosure. Recent changes to reporting structures—along with board leadership transitions—underscore Kingsway Financial Services Inc.’s efforts toward operational clarity and enhanced corporate governance.
- Roundhouse’s field service expansion and secular Permian Basin trends provided record revenue, with March exceeding $2 million in sales for the first time under Kingsway ownership.
- SPI’s recurring revenue expanded by more than 45%, attributed to both pricing improvements and client expansion, while retention ratios reached near-perfect levels.
- Management flagged ongoing investments in sales, marketing, and ERP infrastructure (especially at PWI), acknowledging that these higher G&A costs are temporary and expected to deliver operating leverage as growth is realized.
- The revised financial statement presentation, beginning this quarter, displays clear gross profit metrics and a classified balance sheet, enhancing transparency of segment operating performance for investors.
- The skilled trades platform received targeted organic and inorganic growth plans, with management articulating a goal of two or three acquisitions per year for this operating vertical.
- Management highlighted the “compounding learning” and “compounding talent” engines as core advantages of the multi-vertical search-fund model, indicating long-term platform scalability.
INDUSTRY GLOSSARY
- KSX: Kingsway Search Xcelerator, the business segment comprising outsourced finance and HR services, including operational and technical accounting as well as workforce advisory.
- VSC: Vehicle Service Contract, a product sold through the extended warranty segment covering repair services for vehicles.
- PWI: Provider of warranty services within Kingsway’s extended warranty segment, mentioned as undergoing an ERP system transition.
- LTM EBITDA: Last twelve months’ earnings before interest, taxes, depreciation, and amortization for the operating company portfolio, used internally to benchmark trailing profitability.
Full Conference Call Transcript
JT Fitzgerald: Good afternoon, everyone, and welcome to the Kingsway Financial Services Inc. earnings call for 2026. Our search-fund model is to acquire and build great businesses. We own and operate a diversified collection of high-quality services companies that 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 Financial Services Inc. is uniquely positioned within a tax-efficient public company framework. We operate our 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 outlook 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 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 us 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 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 Financial Services Inc.’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 Financial Services Inc.’s skilled trades, Bud’s 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 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 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 in the Ravix platform and see meaningful long-term opportunity in the business. Overall, this was a strong quarter for the KSX segment, with performance that was broad-based rather than dependent on one or two bright spots. KSX is off to a great start in 2026 with more to come.
In 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 us touch on capital markets. In March, Kingsway Financial Services Inc. announced that our board of directors had proposed a name change to Kingsway Corporation and a proposed stock ticker change to KWI, 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, 2026. We have consistently heard from investors that Kingsway Financial Services Inc. 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 Financial Services Inc. 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 KWI. 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 Financial Services Inc.’s business and strategy. In the months ahead, we expect to relaunch Kingsway Financial Services Inc.’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 Financial Services Inc.’s face financials have read like those of an insurance company, which has been challenging to decipher for many investors.
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 revenue and profit. We believe this is a positive change that will make Kingsway Financial Services Inc.’s financial statements more readable and accessible to the investment community. Finally, corporate governance. I am thrilled to share that Adam Patinkin was recently elected chairman of Kingsway Financial Services Inc.’s board of directors. Adam has played an important role in Kingsway Financial Services Inc.’s evolution and has been a valued partner to the management team and the board.
We are 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 Financial Services Inc. I am also delighted that Terry Cavanaugh, 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 Financial Services Inc. 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 will turn the call over to Kent to walk through the financial results in more detail.
Kent A. Hansen: Thanks, 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 03/31/2026. 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 03/31/2026, compared with $62.4 million at 12/31/2025.
As JT mentioned, we completed an update of our face financial statements as reported in today's filing with the SEC on Form 10-Q. Specifically, Kingsway Financial Services Inc.’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 Financial Services Inc.’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 Financial Services Inc.’s revenue and profit, and will make our financial statements more readable and accessible to investors.
I would like to express a big thank you to our Kingsway Financial Services Inc. accounting team, especially Kelly Marchetti and Nanette Boyles, as well as our external service providers for working together to implement this positive update. It should be helpful to investors going forward. With that, I will turn it back over to JT.
JT Fitzgerald: Thanks, Kent. Overall, the first quarter came in ahead of our internal expectations, and we are 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 Financial Services Inc. is off to a great start, with lots more to come. Finally, before moving to Q&A, I would like to remind everyone that we are hosting our Annual Investor Day on Monday, May 18, 2026, 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 Financial Services Inc. 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 Mammon, the CEO of Roundhouse, and Davide Zanke, the CEO of IS Technologies. I am 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.
I look forward to seeing you on May 18, 2026, at the New York Stock Exchange. With that, operator, we are ready to take questions.
Operator: Certainly. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 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 1 to ask a question. One moment, please, while we poll for questions. James, the floor is yours.
James Carbonara: Thank you, operator. I am 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 Financial Services Inc. Can you please provide more details on what you mean by this?
JT Fitzgerald: Yes, thanks, James. If you go across the various data aggregators—Bloomberg, Cap IQ, FactSet—
James Carbonara: Yahoo Finance, etcetera.
JT Fitzgerald: I think we are listed alternatively as either a property and casualty insurance business, a leased real estate business, and, 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—away from property and casualty—to a holding company, specialized service business holding company. Hopefully that answers the question.
James Carbonara: Thank you, JT. The next one: Roundhouse had another strong quarter. Can you share more about what is driving the momentum there?
JT Fitzgerald: Yes, good question. I would say that 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 are the motors that we service, combined with an ongoing shift away from legacy gas-powered motors to electric motors. So that would be the two secular tailwinds. For the business itself, we saw very strong momentum in the field service line, which is a unique specialty that Roundhouse has—being in Odessa and in quick contact with the installed base there.
This is just a continuation of the momentum that was already present when we acquired the business, so we are happy to see it.
James Carbonara: 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?
JT Fitzgerald: Yes. I assume this is in the warranty segment. Correct. So the G&A investments we are talking about are predominantly sales and marketing expense, but also a fairly large ERP conversion at PWI, which should be complete by Q2 or early Q3. We will be disciplined and manage our cost structure to make sure that we are getting the benefit of operating leverage as those businesses continue to grow.
James Carbonara: 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?
JT Fitzgerald: Yes. I think the story with DDI that we talked about in the prepared remarks was speaking to the natural operator journey in these small businesses, which is stabilize, then build the foundation, and then grow. You have to build a foundation that creates reliability and quality and earn the right to grow. Late last year and early this year, starting from zero—the company did not have any outbound sales function—they have built a sales process and have begun building top of the funnel, mid-funnel, and actually onboarding new hospitals. We are 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, it can be a longer selling cycle, but we are certainly very encouraged by the size and shape of the pipeline at this early stage.
James Carbonara: Great. I see two more questions in queue. The first: You mentioned the skilled trades platform continues to take shape with Bud’s, Southside, and AAA. Could you talk about the vision for that platform and what you are most excited about as you continue to build it out?
JT Fitzgerald: Yes. We have said from the beginning—big-picture macro—it is a very large addressable market, about a $120 billion TAM, that is both highly fragmented and mission-critical services. Our objective is to first operate those businesses with excellence, grow them organically, and then continue to grow via a measured acquisition campaign. We have said that we would like to do two or three acquisitions a year on that platform, and I think there is a very long runway ahead of us to do that.
James Carbonara: Great. And lastly, the last question is: You have talked about Kingsway Financial Services Inc. 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?
JT Fitzgerald: That is a great plug for our Investor Day—we will probably dive into that again on the 18th. I would say we are learning the value of what I would call compounding learning, which is very valuable. We are getting better and better and learning more and more—whether that is on OIR selection, acquisition underwriting and diligence and closing, and operationally. The compounding effect over time of the learning engine—of us at the holding company and, more importantly, our very talented young CEOs—is a really powerful force. I think we are also compounding talent.
With every new acquisition and every new OIR, their capabilities compound, and it also allows us to attract an even higher caliber of candidates to the platform. So compounding learning and compounding talent. As the portfolio has grown, our decentralized model will continue to see more operating leverage from the holdco expense over a much broader base of businesses, which is exciting. And then, maybe we did not fully appreciate this when we first started, but I am seeing now the flywheels within the flywheel. We think of Kingsway Financial Services Inc. as a large flywheel: we buy businesses, we grow them, we cash flow, we delever, we redeploy that capital to the new acquisition.
The flywheels within the flywheel are that we are 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 Financial Services Inc. That was maybe something we did not fully appreciate or anticipate at the outset, but I think it will be a very powerful force going forward. It takes that long-duration capability within a public company to be able to see that play out.
James Carbonara: Great. I see no further questions emailed in. JT, I will pass it back to you for closing remarks.
JT Fitzgerald: 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 as many of you as possible—at the Investor Day in New York in a couple of weeks.
Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
