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Good day, and welcome to the Kingsway Full Year 2024 Earnings Call. [Operator Instruction]. 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 everybody 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 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-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 in the company's periodic filings with the SEC. Now I would like to turn the call over to J.T. Fitzgerald, CEO of Kingsway. J.T., please proceed.

Thank you, John. Good afternoon, everyone and welcome to the Kingsway earnings call for full year 2024. 2024 was another year of significant progress in executing our corporate strategy. We delivered financial results largely in line with our expectations, successfully completed the acquisition of Image Solutions, and divested our VA Lafayette subsidiary. At the same time, we made meaningful strides in refining and improving operations across our existing businesses. Overall, 2024 was a productive year, and importantly, we have a proven business model that continues to gain momentum. The sequential improvement in our quarterly results throughout 2024 is a validation of our corporate strategy and is a clear indicator of the progress we are making. Turning first to our financial results. For the full year 2024, consolidated revenue was $109.4 million, up 6% from a year ago, and consolidated adjusted EBITDA was $10.6 million, up 17% compared to 2023. Notably, consolidated adjusted EBITDA improved sequentially in each of the four quarters of the year. Combined adjusted EBITDA for the Extended Warranty and KSX segments, our operating segments was $14.1 million, in line with 2023. Breaking this down by segment. In Extended Warranty, revenue grew modestly for the full year by 1% to $68.9 million from $68.2 million in 2023. While top line growth was modest, we did achieve a 3.6% increase in cash sales during the year, reflecting healthy underlying demand for our warranty products. Geminus and IWS saw increased contract volumes, thanks in part to a higher number of service contracts sold and the onboarding of new credit union partners at IWS. Trinity also contributed slightly higher revenue as growth in warranty product sales offset a small decline in their maintenance services. PWI experienced a minor decline in contract count, but notably achieved stronger cash sales in 2024 than in 2023 on better product mix, which bodes well for future revenue recognition. Extended warranty adjusted EBITDA came in at $7.6 million versus $8.4 million in the prior year. The year-over-year decline was primarily due to an increase in claims costs as inflation continued to impact parts and labor expenses in our auto warranty lines. We have been proactively adjusting pricing to mitigate these pressures. The good news is that we started to see relief in the back half of the year. The claims cost increases slowed in the second half of 2024 and overall claims frequency declined. This allowed us to deliver sequential improvement in adjusted EBITDA in each of the four quarters of 2024 in the Warranty segment. This trend gives us optimism that our margin pressures are easing. Despite the challenges, the extended warranty business remains solidly profitable and cash generative. The stability and recurring revenue of the Extended Warranty segment provide a strong foundation for Kingsway, and we're confident in its ongoing performance as we head into 2025. Turning now to our other business segment, Kingsway Search Accelerator, or KSX. As announced yesterday, we're excited to add Buds Plumbing to our growing portfolio of operating companies. I'll talk more about this acquisition in a few minutes. As a reminder, KSX is currently comprised of seven operating subsidiaries, including Buds, that were acquired using our entrepreneur-led acquisition strategy and platform. For 2024, KSX reported revenue of $40.5 million, an increase of 16% compared to $35 million in 2023. KSX adjusted EBITDA for 2024 was $6.6 million compared to $5.7 million in 2023, an increase of 15%. These increases were primarily driven by the acquisitions of SPI and DDI in September and October of 2023, respectively, and includes approximately three months of Image Solutions results. I'd like to begin with Ravix, our provider of outsourced finance, accounting and human resources consulting services. Since its acquisition in October 2021, Ravix has continued to perform ahead of our original financial model. In 2024, gross margin improved by 200 basis points compared to 2023 despite a modest decline in revenue. EBITDA declined very slightly in the year as gross margin improvements didn't fully offset the lower revenues. Management at Ravix is realigning incentives, targeting their marketing spend and investing in sales, training and development to reignite growth in 2025. Similar to Ravix, CSuite is a professional services firm that provides experienced chief financial officers and other finance professionals to its clients. Its sales are driven in large part by the volume of private equity and M&A transactions. In 2024, leadership effectively managed its gross and operating margins to soften the impact of lower sales due to overall lower deal volume in the capital markets. EBITDA for the year was down. However, CSuite finished 2024 with a strong fourth quarter with a nice positive year-over-year EBITDA variance and has good momentum entering 2025 as the M&A market is set to improve. Turning to SNS. At SNS, the team recently added new recruiting talent, pardon me and completed upgrades to its operations to better support its clinician recruiting efforts. SNS provides nurse staffing services to hospitals on a travel or per diem basis, primarily in the state of California. The team has done a nice job of lowering its operating costs while building a team and technology to support its anticipated growth as the travel nurse market recovers. SNS also recently acquired several new hospital contracts, which should enable further growth in the number of per diem and travel nurse placements. The improving trend we cited in Q3 continued to accelerate, with total shifts increasing 8.5% in the fourth quarter, while travel shifts were up 42% in the quarter. We remain optimistic about this business. The industry appears to have stabilized, and the long-term outlook for nurse staffing is strong, given the combination of an aging population and the projected shortage of registered nurses over the next decade. Turning now to DDI. DDI revenues grew nearly 20% from the prior year, with zero outbound selling efforts as they continue to add new customers through word-of-mouth referrals. While revenues grew nicely, EBITDA actually decreased slightly for the year as management invested in the company to support anticipated future growth. During the year, DDI opened a second monitoring facility in Salt Lake City and made meaningful investments in new talent to support anticipated volume and to mitigate the risk of having a single point of operations. As a reminder, DDI is a provider of outsourced 24/7 cardiac telemetry monitoring services to long-term acute care and rehabilitation hospitals. This business has a high level of recurring revenue and high customer retention and operates in a fast-growing and underpenetrated end market. As the company builds its selling function this year, we expect to see continued growth and realize the benefit of operating leverage as our talent and new facility are more fully utilized. Turning now to SPI. SPI is another of our 2023 acquisitions. This business was immediately accretive to our consolidated results, and revenue continues to be strong. Pro forma comparisons are difficult due to the conversion of U.S. GAAP software accounting post-acquisition. SPI provides software products created exclusively to serve the management needs of all types of shared ownership properties. SPI enjoys recurring revenue under long-term contracts, low customer churn, strong margins and low capital requirements. Operational metrics at SPI were up across the board in the year with solid ARR growth, excellent gross and net retention dynamics and Rule of 40 metrics exceeding 40%. The company saw impressive gains in EBITDA growth, albeit from a small base and in its first full year under the KSX umbrella, it exceeded our baseline financial model. The company is poised for continued momentum in 2025. Turning to Image Solutions. In September 2024, we acquired Image Solutions. The company provides information technology-managed services for small- to medium-sized businesses. Despite the devastating hurricane that struck the Asheville area the day after we acquired the company, Davide and the team have delivered strong operating results. In spite of the short-term crisis, EBITDA during our first quarter of ownership was essentially flat to prior year and no significant customers were lost. Davide is making investments in his team, processes and technology, and we're confident in the prospects for Image Solutions in the year ahead. And finally, as we announced yesterday, our latest acquisition is privately held MLC Plumbing or Buds Plumbing, as it is known locally. We acquired this through our newly created platform, Kingsway Skilled Trades. Bud's Plumbing is a 100-plus year-old service and repair plumbing company serving residential and commercial customers in Evansville, Indiana. We acquired it for $5 million plus transaction expenses and a working capital adjustment in a transaction funded with cash on hand and a $1.25 million seller note. OIR, Rob Casper, will be transitioning into the day-to-day operating role as CEO of Kingsway Skilled Trades following the transaction, while the previous owner, Mark Corn, will stay on as President of Bud's Plumbing for a 1-year transition period. Our strategy is to support Rob to grow skilled trades into a much larger platform through a combination of organic growth and future acquisitions. Growth through acquisitions is at the core of our corporate strategy. We follow a disciplined framework to evaluate acquisition opportunities based on a predefined set of operational and financial metrics that drive our decision-making. We are targeting businesses that operate in growing attractive end markets are asset-light and deliver predictably high rates of return on invested capital. We are eager to expand our KSX business, targeting two to three deals per year, but prioritize strategic fit over speed or pacing, ensuring each transaction aligns with our long-term objectives. In September, [Davide

Thanks, J.T. Prudent capital allocation and managing our debt levels are critical elements to executing our corporate strategy. I would like to highlight a few of the actions we took in 2024 to achieve our goals. As J.T. mentioned, during the third quarter of 2024, we sold one of our subsidiaries, VA Lafayette. The final adjustment between the net carrying value of the assets and the selling price as well as the loss on disposal are recorded below the operating line in discontinued operations. This sale, which was the last of our leased real estate assets, netted cash proceeds of $1.1 million to Kingsway after expenses. Also in the third quarter of 2024, we completed the purchase of the 10% interest in IWS that we did not previously own. This transaction was immediately accretive to our earnings, and IWS is now a wholly owned subsidiary of the company. In September 2024, we sold and issued 330,000 shares of a new series of Class B convertible preferred stock in a private placement transaction for aggregate proceeds of about $8.3 million. These proceeds were used primarily to fund our acquisition of Image Solutions. Importantly, the successful acquisition of Image Solutions was carried out with a balanced mix of available liquidity and minimal new debt. As a result of our strategic and financing transactions, as of December 31, 2024, we had cash and cash equivalents of $5.5 million compared to $9.1 million at the end of 2023. Subsequent to year-end in February of '25, we issued and sold 240,000 shares of a new series of Class C convertible preferred stock, also in a private placement transaction for total proceeds of $6 million. These proceeds provided us with the cash needed to execute the Bud's Plumbing acquisition. Total debt outstanding of $57.5 million compared to $44.4 million at the end of 2023. Our debt balance is comprised of $44.1 million of bank loans and $13.4 million of subordinated debt. Net debt increased to $52 million as of December 31, 2024, compared to $35.3 million at the end of 2023, primarily due to the acquisition of Image Solutions. We continue to benefit from our net operating losses, which provide a meaningful tax advantage and enhance our cash flow generation. As of December 31, 2024, our NOLs totaled approximately $622 million. In March of '24, our securities repurchase program was extended for one year through March of 2025. During 2024 and through January of this year, the company repurchased 355,750 shares of its common stock for an aggregate purchase price of $2.8 million, including fees and commissions. With the January repurchases, the company fully utilized the amount of the security repurchase program authorized by the Board of Directors. With a prudent debt profile and tax-efficient framework, we are well positioned to support future strategic initiatives that increase long-term shareholder value. We believe our corporate strategy and financial discipline position us well for continued success in 2025 and beyond. I'll now turn the call back over to John to open the line for any questions. John?

Thank you. [Operator Instructions] There are currently new questions in queue. I'd like to turn the floor over to James Carbonara for any questions you may have via email.

Thank you, operator. Yes, a few did come in on email. The first one was, could you provide more color on the claims expense moderation you mentioned in the Extended Warranty segment, during the second half of 2024?

Yes, great question. Maybe just sort of baseline 2023, we saw claims increase roughly 10% year-over-year versus 2022. And for full year 2024, claims increased roughly 6.6%. So definitely some moderation there. In Q1 of 2024, claims were actually up like 13% year-over-year. And so in Q2, through Q4 that subsided down to roughly 4.5% with Q4, being only 4.1%. So after 10% in 2023, 6.6% full year. And then if you sort of Q2 through Q4, just north of 4%. So definitely seeing things calm down. Most benefit of declining frequency, but also severity.

Great, thank you. Next one is with the formation of your new skilled trade services platform. What's your vision for growing this vertical within KSX?

Yes, first of all, I think it's a huge opportunity within plumbing service and repair, and mechanical services, and it's just a great fit for Rob's background. We posted his background when we announced him joining as an OIR. His professional background, he did consolidation first in the veterinary care space, and then more recently in the plumbing and HVAC industry. And so, he came with a very sort of precise thesis, around the opportunity for organic and inorganic growth in plumbing and HVAC. And so, I think with Bud's, we're absolutely first focused on organic growth, penetrate - more fully penetrate their existing market, through combination of pricing enhancements, search engine optimization, expanding into an adjacent market that's very nearby. And then move to cross-sell new plumbing services that they don't have, like hydro jetting, and then eventually hopefully service line expansion into HVAC? We'll see about that. But that would be a couple years out. And so, for any one of these plumbing businesses, Rob's thesis would be that plumbing is the beautiful trade. Because of their service level agreements, and the requirements in terms of the amount of time they have, to serve their customer. It's much easier to add complementary trades to a plumbing business than vice versa. So a lot of organic growth opportunities for the businesses we acquire, but also a lot of inorganic growth, potential growth via acquisition, a very large and fragmented industry. And Rob will be focused on opportunities in, what we would call Tier 2 and Tier 3 markets, where we can partner with a number one, or number two incumbent in that market. And so I think that you will see us, in addition to trying to grow organically, the businesses we acquire, a strategy around growing via consolidation, which is a great fit for his background.

Great, thank you. The next one says the earnings release mentioned acquisition opportunities in your pipeline. Are you targeting specific verticals within your existing segments, or is most of the pipeline new industries that you are not currently operating in?

Yes, great question. I would say it's probably a bit of both. I mean so think about the KSX industries. We sort of bucket them into four broad verticals. B2B services, healthcare services, vertical market software, and now skilled trades. And so, our existing OIRs are definitely focused on things in B2B services, like accounting services and IT and cyber MSP. They're focused on opportunities in vertical market software. And maybe not directly plumbing and HVAC, but other skilled trades as well. And maybe some field service stuff like pest control, or fire and life safety.

Great. Looks like there are two more. First one is, can you refresh us on how long each existing OIR has been searching for, and how many you still need to backfill? Is it just Casper?

Yes. So we have three current OIRs. Peter Hearne is probably the longest tenured. He's been here coming up on two years in May. Miles has been here roughly 18 months, and Paul Vidal just over a year. And so obviously with Davide launching and now Rob launching, in order to maintain our current pacing, we'll probably want to be backfilling. Like I mentioned in previous calls, we talked to over 130 prospective OIRs last year. So we have great inbound interest in the platform. And for us, it's about maintaining the discipline around getting the people with the right set of attributes, and competencies and background that are a great fit for - this, what is a really hard entrepreneurial endeavor.

Excellent. And then the last one is, notwithstanding macro factors, were there areas Kingsway did not do well in 2024, and what are your plans to improve them?

Yes, great question. Where do I start? Yes, absolutely. While we had several notable successes, there are always lots of areas we could perform better. One of our core values here at Kingsway, is a culture of kaizen or continuous improvement. And so, we're always looking for opportunities to be better, certainly within warranty. I think an area of focus, and kind of root cause and countermeasure analysis is around pricing. Continuously re-underwriting our book, to make sure that we're getting adequate price to offset this claims inflation, even though that's subsiding, and we have been taking price. That's an area that we will continue to focus, kind of one area really under the hood. A lot of the claims inflation was at one company, Geminus, Penn Warranty in a product called GAP, G-A-P, Guaranteed Asset Protection, which is basically protection against negative equity in your car loan. And just sort of the macro environmental factors of declining used car prices, high loan to value. Going back to 2023, we saw really tough environment for GAP pricing. So we've - that we probably weren't out in front of - and fast enough. We've taken significant price increases, think like 50% price increases that will probably impact volume and revenues in that product, but will protect our earnings in 2025. And then, I think looking at KSX, I think certainly one of the areas that we could always get better at, is around talent. I know SNS and CSuite, both brought on new folks that they were very excited about. In some cases didn't work out quite as well, as we had hoped. And so, we use a process here for talent identification, and screening called top grading. I think that we're just trying to improve our hit ratio on the people that we bring on board, but always room for improvement there. And then finally, I think at KSX, we have a stated goal of two to three acquisitions per year. We only did one, fortunately it was a little chunkier in terms of the size, but certainly had a few misses throughout the year. I think that in some ways is a testament to our discipline. But we would like to improve the velocity of getting things through our deal flow pipeline, from indication of interest through to closing.

Terrific. Yes. I see no further questions on the email at this time. J.T., I'll throw it back to you, for any closing comments.

Okay. Great. Thanks, James. Well, I guess I can say I'd like to thank all of our dedicated employees, across all of our businesses, for their hard work and innovation. They are the driving force behind our success. We also thank our customers and partners, for their trust and importantly, our shareholders for their continued support. Kingsway enters 2025 with momentum and optimism. We remain committed to executing our strategy, serving our customers with excellence, and creating long-term value for our shareholders. So thanks to everyone, who joined us today and for your interest in your company. We look forward, to updating you on our progress in the coming quarters.