Kingsway Corporation · NYSE:KWY
Kingsway — Kingsway Financial Services — Investor Presentation (January 2025)
37 slides from Kingsway's investor presentation, Jan 21, 2025
Slide 1: Investor Presentation
0 NYSE: KFS Investor Presentation January 2025 Efficient Operations, Thoughtful Capital Allocation
Slide 2: Forward-Looking Statements
Forward-Looking Statements | 2 This presentation includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical facts and involve risks and uncertainties that could cause actual resu
Slide 3: Our Leadership: Officers
Our Leadership: Officers | 3 John T. Fitzgerald Kent Hansen President, CEO, and Director Chief Financial Officer Mr. Fitzgerald has served as CEO of Kingsway since September Mr. Hansen has served as CFO of Kingsway’s subsidiary, Kingsway 2018. Mr. Fitzgerald joined Kingsway as Executive Vice Preside
Slide 4: A Compelling Investment Opportunity
A Compelling Investment Opportunity | 4 Kingsway is a lean holding company of niche businesses within two distinct segments operating primarily in the business services and extended warranty industries HIGHLY ATTRACTIVE, SCALABLE STRONG FINANCIAL POSITION TOP ENTREPRENEURIAL TALENT BUSINESS TO EXECU
Slide 5: A Highly Attractive, Scalable Business
A Highly Attractive, Scalable Business | 5 Two Distinct Operating Segments Extended Warranty Kingsway Search Xcelerator (“KSX”) Operating Businesses Operating Businesses ETA Model FOUR OPERATING BUSINESSES SIX OPERATING BUSINESSES • Talented, entrepreneurial searchers (aka • Automobile and mechanica
Slide 6: Strong Track Record of OpCo Adjusted EBITDA Growth
Strong Track Record of OpCo | 6 Adjusted EBITDA Growth (in thousands) Annual OpCo Adjusted EBITDA(1)(2) ~$18,500 to $19,500 19% CAGR 2018 to TTM 2024 $15,521 $14,137 $13,814 $11,440 $7,108 $5,497 $4,844 2018 2019 2020 2021 2022 2023 TTM 9/30/24 Run-rate Full Year Full Year Geminus; Sold PWSC 7/22; A
Slide 7: Financial Results: Most Recent Quarter
Financial Results: Most Recent Quarter | 7 Q3 2024 Emerging signs of strength in Extended Warranty and solid execution in KSX driving operational performance (in thousands) Quarterly Revenue +9.5% Quarterly Adj. EBITDA(1) +5% $27,136 y/y y/y $24,790 $3,227 $3,385 $9,293 $7,536 $1,105 $1,313 $17,254
Slide 8: Simplified Capital Structure with Low Debt
Simplified Capital Structure with | 8 Low Debt (in millions) Continued focus on judicious debt levels to fund acquisition activity $305.3 $274.5 Sold rail yard end of 2021, which $260.8 $246.9 eliminated the Notes Payable; 2022 cash balance used to repurchase significant portion of TruPs debt in Q1
Slide 9: Kingsway Search Xcelerator
| 9 Kingsway Search Xcelerator
Slide 10: Kingsway Search Xcelerator: Entrepreneurship through acquisition
Kingsway Search Xcelerator | 10 Entrepreneurship through acquisition Leveraging a tested investment vehicle: Search funds ("ETA") are a method of entrepreneurship where an individual or a team acquires an existing, profitable business and then uses their entrepreneurial skills and strategies to impr
Slide 11: Kingsway Search Xcelerator: Entrepreneurship through acquisition
Kingsway Search Xcelerator | 11 Entrepreneurship through acquisition Leveraging a tested investment vehicle: Search funds have been used by over 650 entrepreneur teams to support efforts to locate, acquire and manage an existing private company • A 2024 study(1) concluded that from 1984 through 2023
Slide 12: Building a unique platform focused on long-term value creation
Kingsway Search Xcelerator | 12 Entrepreneurship through acquisition Building a unique platform focused on long-term value creation Partner with exceptional Acquire great businesses Apply operational and Compound capital at high entrepreneurs strategic support rates of return over a long time horizo
Slide 13: Partner with Exceptional Entrepreneurs
Partner with Exceptional Entrepreneurs | 13 Operator-in-Residence program Aim for 4 to 5 active searchers at any given times searching for acquisitions to create long-term value Operator-in Residence (“OIR”) Program • Search Fund incentives (OIR opportunity to earn up to 25% promote in acquired comp
Slide 14: Acquire a Portfolio of Great Businesses
Acquire a Portfolio of Great Businesses Entrepreneurship through acquisition | 14 Seeking compelling investment opportunities via a Search Fund Model with Enduringly High ROTC Industry Attributes Company Attributes Deal Attributes • Large and growing (>2x GDP) due • High percentage of recurring • Ac
Slide 15: KSX Operating Subsidiaries
KSX Operating Subsidiaries | 15 All Acquired Using our Xcelerator Methodology Six distinct businesses operating independently and delivering strong unit economics Staffing / Recruiting Software Healthcare Tech Company Acquired 2021 2022 2022 2023 2023 2024 Management of Cardiac Accounting / Financia
Slide 16: Kingsway Business System
Kingsway Search Xcelerator | 16 Kingsway Business System The Kingsway Business System is a comprehensive and integrated approach to continuous improvement and operational excellence that has been modeled from best practices at other companies such as Area KBS in Action Danaher Corp. and refined by o
Slide 17: Strategic Advisory Board
Kingsway Search Xcelerator | 17 Strategic Advisory Board Thomas P. Joyce, Jr. William N. Thorndike, Jr. Tyler Gordy Mr. Joyce most recently served as Mr. Thorndike is the Managing Partner of The Mr. Gordy is a Partner at Artesian, a family office President, Chief Executive Officer, and Cromwell Harb
Slide 18: KSX Financial Overview
KSX Financial Overview | 18 TTM 9/30/24(1) Revenue KSX Segment Adjusted EBITDA(2) (in thousands) ~$9,500 to $10,000 14% 9% $5,916 $5,711 $3,783 36% $555 30% 2021 2022 2023 TTM 9/30/24 Run-rate Acquired SPI Full year SPI / Acq Ravix 9/23; Acq DDI DDI / Image 13% 10/21 Solutions 10/23 11% Full year No
Slide 19: Case Study: PWSC
Kingsway Search Xcelerator | 19 Case Study: PWSC Business Deal Terms Financial Metrics Profile Warranty provider for new Acquired in Nov. 2017 ~$8.2mmRevenue, $2mm Recurring revenue construction residential Price: $10M Adj. EBITDA at acquisition High margins housing (via builders) Financing: $5M pre
Slide 20: Extended Warranty
| 20 So Extended Warranty ——————_——$—$——$——__—
Slide 21: Extended Warranty: Our Subsidiaries
Extended Warranty | 21 Our Subsidiaries Scalable, High-Margin, Low Capital Intensity Business = Enduringly High ROTC Auto Mechanical Company Acquired 2012 2020 2019 2013 Warranty and mechanical repair Services Vehicle Warranty Vehicle Warranty for HVAC, generator, LED lighting, commercial refrigerat
Slide 22: Extended Warranty Financial Overview
Extended Warranty Warranty Segment Adjusted | 22 Financial Overview EBITDA(1) (in thousands) TTM 9/30/24 Revenue Adjusted EBITDA(1) $11,599 $10,885 ~$9,000 to $9,500 45% 29% $8,426 $7,898 $7,108 $5,497 $4,844 2018 2019 2020 2021 2022 2023 TTM Run-rate 9/30/24 14% 12% Acquired Sold Continued Full Yea
Slide 23: Extended Warranty: Industry Outlook and Our Strategy
Extended Warranty | 23 Industry Outlook and Our Strategy Scalable, High-Margin, Low Capital Intensity Business = Enduringly High ROTC Auto Mechanical New and used automobile market Demand for HVAC and related products Market • • • IWS distributes via credit unions, which are becoming • U.S. retail m
Slide 24: Kingsway Consolidated Overview
| 24 Kingsway Consolidated Overview
Slide 25: Creating Value for Shareholders
Creating Value for Shareholders | 25 Adj EBITDA Action Cash Debt December 2022: Sale of CMC rail yard +$21.4M ($177.2M) -- February 2023: Sale of final NLIG commercial property +$6.9M -- -- March 2023: Repurchase of $75.5M of TruPs, for 60.8 cents on the dollar ($56.5M) ($96.7M) -- H1 2023: Class A
Slide 26: Strategy for Growth
Strategy for Growth | 26 Expanding a powerful flywheel to significantly grow Adjusted EBITDA both organically and through acquisitions in a tax-advantaged structure ORGANIC GROWTH GROWTH THROUGH ACQUISITIONS Grow and Improve Portfolio of Existing Kingsway Search Xcelerator Businesses • Utilize prove
Slide 27: A Compelling Investment Opportunity
A Compelling Investment Opportunity | 27 Kingsway is a lean holding company of subsidiaries with two distinct verticals operating primarily in the business services and extended warranty industries HIGHLY ATTRACTIVE, SCALABLE STRONG FINANCIAL POSITION TOP ENTREPRENEURIAL TALENT BUSINESS TO EXECUTE T
Slide 28: Appendix
c= Appendix NYSE: KFS | 23
Slide 29: Xcelerator Executives
Xcelerator Executives | 29 Timi Okah Charles Mokuolu President & CEO, Ravix Financial and President & CEO, Secure Nursing Service, Inc. CSuite Partners Mr. Okah serves as CEO of Ravix Financial Inc., a Kingsway subsidiary, Mr. Mokuolu serves as CEO of Secure Nursing Service Inc., a Kingsway followin
Slide 30: Xcelerator Executives
Xcelerator Executives | 30 Peter Dausman Drew Richard CEO, Digital Diagnostics Imaging, Inc. CEO, Systems Products International, Inc. (SPI) (DDI) Mr. Dausman joined Kingsway in the summer of 2021 as our Mr. Richard joined Kingsway in August of 2022 as our fourth third Operator-in-Residence in the S
Slide 31: Xcelerator Executives
Xcelerator Executives | 31 Davide Zanchi CEO, Image Solutions Davide Zanchi joined Kingsway in May 2023. Prior to joining Kingsway, Mr. Zanchi worked in several Venture Capital firms focusing on the biotechnology and pharmaceutical industries. Davide has a proven track record in due diligence, compa
Slide 32: Xcelerator OIR's
Xcelerator OIR's | 32 Peter Hearne Miles Mamon Operator-in-Residence Operator-in-Residence Kingsway Search Xcelerator Kingsway Search Xcelerator Peter Hearne joined Kingsway in May 2023. Prior to joining Miles Marmon joined Kingsway in August 2023. Prior to joining Kingsway, Mr. Hearne was a princip
Slide 33: Xcelerator OIR's
Xcelerator OIR's | 33 Paul Vidal Robert Casper Operator-in-Residence Operator-in-Residence Kingsway Search Xcelerator Kingsway Search Xcelerator Paul Vidal joined Kingsway in January 2024. Prior to joining Kingsway, Mr. Robert Casper joined Kingsway in September 2024. Prior to joining Kingsway, Vida
Slide 34: Xcelerator Business Development
Xcelerator Business Development | 34 Charles Joyce VP Business Development Kingsway Search Xcelerator Focus Areas Charles Joyce joined Kingsway in April 2023 from Forest Circle LLC - a Search investment firm - where, as Principal and Chief Executive • Indirect sourcing: will free up OIR’s to focus o
Slide 35: TTM Run-Rate Defined
TTM Run-Rate Defined | 35 • This metric is not intended to be guidance by management regarding the future earnings of the Company; rather, it is intended to capture the twelve-month earnings of what the Company currently owns or has recently acquired; as such, it includes: • The actual operating res
Slide 36: Reconciliation of GAAP Operating Income for Extended Warranty Segment
Reconciliation of GAAP Operating Income for | 36 Extended Warranty Segment (in thousands) TTM For the Year Ended 9/30/24 2023 2022 2021 2020 2019 2018 GAAP Operating Income for Extended $6,405 $6,983 $9,879 $12,636 $6,605 $4,611 $4,215 Warranty segment (1) Non-GAAP Adjustments: Investment income, ga
Slide 37: Reconciliation of GAAP Operating Income for KSX Segment
Reconciliation of GAAP Operating Income for | 37 KSX Segment (in thousands) TTM For the Year Ended 9/30/24 2023 2022 2021 GAAP Operating Income for KSX segment (1) $4,984 $5,252 $3,548 $484 Non-GAAP Adjustments: Employee costs (2) 525 380 235 71 Investment Income (3) 117 55 -- -- Depreciation (4) 29
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