A full year 2023 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. 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 everyone that today's 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 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 Form 10-Qs 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 our periodic filings with the SEC. Now, I'd 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 the full year 2023. Thank you for joining us. I'd also like to quickly apologize. I know that the earnings release just dropped. We had some technical difficulties with our service provider and then a fairly large queue to get those things out, so apologize on the short timing here. Let's get started. First, let me start by saying that 2023 was a year of significant accomplishments. We delivered financial results that are largely in line with our expectations, given the current market conditions, and we completed two great acquisitions, which is in line with our previously described internal target of 2-3 acquisitions per year. Also, during the year, we repurchased a substantial amount of our warrants and common stock, and we completed the repurchase of a substantial portion of our subordinated debt that resulted in a much more simplified and stronger balance sheet. All in all, 2023 was a great year here at Kingsway. Equally important, over the course of the year, we built a firm foundation to advance our strategy of growth through acquisitions and are really energized by the opportunities ahead of us. So we'll start with the financial results. Our first year—or rather, our full year financial results include consolidated revenue of $103.2 million, up 11% from a year ago, and consolidated Adjusted EBITDA of $9.1 million. Combined Adjusted EBITDA for the extended warranty segment and the KSX segment was $14.1 million for the year. We break this down. Our extended warranty segment reported $68.2 million of revenue in 2023, compared to pro forma revenue of $74 million in 2022. Adjusted EBITDA for 2023 was $8.4 million, compared to pro forma adjusted EBITDA of $10.7 million the year prior. As a reminder, pro forma results exclude those of PWSC, which was sold in July of 2022. Throughout most of the year, as we discussed on the quarterly earnings calls, our vehicle service agreement, or VSA companies, were impacted by an increase in average claims expense or severity and persistent macro-level revenue headwinds that impact consumers, primarily tighter credit conditions and high used cars prices - high used car prices. In the fourth quarter, claims severity began to moderate as the rate of inflation related to parts and labor began to recede compared to earlier quarters. We've been able to reduce the impact of these headwinds through our tight focus on managing operating expenses. We've implemented price increases to reflect the higher claims environment and expect those to begin rolling through the book this year. IWS, Geminus, and PWI have also been very active on the business development front. IWS added several new credit union partners during the year, and Geminus and PWI have executed a significant reboot of their sales teams and the corresponding goals and incentives, which are starting to yield results. At Trinity, maintenance support business revenues were negatively impacted by decreases in its equipment breakdown and maintenance support services due to both smaller average job sizes and generally mild weather condition, which resulted in fewer service calls. Equipment warranty sales were negatively impacted by softer demand and long lead times on equipment availability and installations, with some equipment lead times approaching as much as a year. As a reminder, our revenue from warranty equipment sales is not recognized until the underlying equipment is installed. Thankfully, these backlogs are starting to free up, and the Trinity team has also done a nice job adding new distribution partners over the past 12 months to offset these challenges. We expect positive momentum in 2024. In summary, for the extended warranty segment, while it's difficult to predict macroeconomic trends and the resulting impact to our business going forward, our companies remain focused on improving sales force production, strategically adjusting pricing, and managing our costs. We have seen significant positive progress thus far in 2024 and expect a better year ahead. Switching now to our Search Xcelerator or KSX segment, which reported revenue of $35 million in 2023, compared to revenue of $19.2 million in 2022. Adjusted EBITDA for 2023 was $5.7 million, compared to $3.8 million in 2022. These increases were driven by the acquisitions of C-Suite and SNS, which were completed in November 2022, as well as the acquisitions of SPI in September and DDI in October. Within the segment, Ravix performed better than expected from a profitability perspective, especially in Q4, as higher operating margins more than offset lower than expected revenues. Since our acquisition, Ravix has performed very well and ahead of our original underwriting thesis. C-Suite experienced fewer interim engagements and inconsistent search placements amidst a challenging private equity and M&A environment. The team has bolstered its pipeline and is advancing new business opportunities to reignite growth. While it is early in the year, we have begun to see the M&A environment thaw a bit, and both Ravix and C-Suite have added business development talent to accelerate revenue growth. For SNS, the per diem business is performing quite well, partially offsetting an industry-wide decline in the use of travel nurses, which are typically billable at a higher margin. To address the industry headwinds, the team recently added new recruiting talent and completed upgrades to its technology and operations to better support its clinician recruiting efforts. The team has done a nice job of building a tech-enabled platform to support its anticipated growth. Importantly, we believe long-term demand for nurse staffing will be strong, with a projected persistent shortage of registered nurses over the next decade. Secular demand for per diem and travel nurses is expected to remain robust. Growth through acquisitions is central to our corporate strategy. We have developed and follow an underwriting framework that evaluates opportunities based on a predefined set of performance criteria that reinforce the thoughtful and disciplined allocation of capital, enable us to acquire high return, cash flow generating operating companies at reasonable valuations. In short, we are targeting opportunities that deliver predictably high returns on tangible capital in large and growing end markets. In September, we acquired Systems Products International or SPI, a privately held vertical market software company. It was the fourth acquisition completed under our Search Xcelerator and a great fit to our portfolio, with contractual recurring revenue, low customer churn, strong margins, and low capital demands. It operates in a growing industry and, as we expected, was immediately accretive upon consolidation into KSX. In October, we acquired Digital Diagnostics Imaging, or DDI, a provider of fully managed outsourced cardiac monitoring telemetry services. DDI is the industry standard bearer for outsourced cardiac monitoring in the long-term acute care and rehab hospital space, and has established itself as a trusted partner to its customers through its focus on dependable, high-quality service. This business has a high level of recurring revenue, with high customer retention and operates in a fast-growing and under-penetrated market. DDI has demonstrated an opportunity to grow at a very fast clip, with revenues growing in excess of 30% year-over-year in our first few months of ownership. The team at DDI is focused on building the internal infrastructure and processes to scale alongside this high level of demand while ensuring continued excellent levels of service and care. We held separate conference calls to discuss each of the SPI and DDI acquisitions. If you missed the original calls, I encourage you to listen to the replays for a more in-depth discussion of those transactions. We are eager to expand our KSX business, but we are also committed to disciplined decision-making. The M&A environment is more favorable than it was 12 months ago, and we continue to believe this will translate into the completion of 2-3 deals over the next year. With the addition of Paul Vidal at the start of 2024, we currently have 4 fantastic Operators-in-Residence who are actively scouring the market and evaluating potential target opportunities. We remain encouraged by the quality of our pipeline and hold a high degree of confidence in our OIRs. We continue to believe that the future is extremely bright for our Search Xcelerator platform, given the talent we have on our team, the quality of the opportunities they are pursuing, and the rigorous framework through which we evaluate acquisition candidates. Inclusive of our recent acquisitions, our trailing twelve-month Adjusted EBITDA run rate is $17 million-$18 million. This includes the extended warranty companies, the existing KSX companies, as well as pro forma results for SPI and DDI. As a reminder, this metric is intended to capture the twelve-month earnings businesses of the company that we currently own and is not intended to be forward-looking guidance. Looking ahead, our priorities for 2024 and beyond remain the same. Operational excellence at our companies, while strategically deploying the excess cash flows they generate to grow our portfolio of wonderful businesses. Our goal is to deliver sustainable long-term growth and cash flow from operations and provide an excellent return to our shareholders. We continue to target 2-3 new acquisitions per year that fit our clearly defined acquisition criteria and will generate annualized EBITDA in the range of $1 million-$3 million each. And as we build our acquisition, acquisition engine and our cash flows, we believe we are building the flywheel to scale our acquisition pace even further. I'll now turn the call over to Kent for a review of our financials. Kent? Thank you, J.T. As a reminder, during the fourth quarter of 2022, we began executing a plan to sell one of our subsidiaries, VA Lafayette, which owns a medical clinic whose sole tenant is the U.S. Veterans Administration. As part of our strategic shift away from the leased real estate segment, VA Lafayette is included in discontinued operations, and its assets and liabilities are reported as held for sale. The results of its operations are reported separately and not included in the results I'm about to discuss. Given that J.T. covered operating results, I would like to focus on holding company expenses, cash flows, and some balance sheet highlights. Our ongoing holding company expenses, which include our KSX Search expenses, consist mainly of employee costs of our 10 corporate employees and costs associated with being a publicly traded company. Total expense, excluding interest from our last remaining TruPS, was $7.7 million in 2023, compared to $7.3 million in 2022. However, 2023 includes the following items: $1 million of stock-based compensation expense, which is non-cash, $1.1 million of expense related to acquisitions and non-recurring items, and about $600,000 in IBNR expense, as our employee medical plan was self-insured in 2023, and we have since moved to a fully insured plan in 2024 and at a lower total cost. We continually challenge our holding company expenses, which has resulted in significant savings over the past few years. We believe our holding company will be able to scale as our underlying businesses expand and grow. Our ongoing KSX Search expenses consist of employee costs for our active searchers, as well as the tools to support their searches. Total expense was $1.3 million in 2023, compared to about $600,000 in 2022. The increase is mainly due to the average number of OIRs in 2023, increasing over 2022, the addition of our VP of Business Development in 2023, and due to having a full year of the Strategic Advisory Board in 2023, as well as expanding it by one member this year. We would expect KSX Search expenses to fluctuate as we hire new OIRs and existing OIRs, close deals, and move into the newly acquired businesses. We view these expenses as a long-term investment that will fuel the growth of the entire Kingsway organization. Turning to our balance sheet and cash flows. At the end of 2023, we had cash and cash equivalents of $9.1 million, compared to $64.2 million at the end of 2022. Cash used in operating activities from continuing operations was $26.8 million for the twelve months ended December 31, 2023, compared to $2.6 million a year ago. Our cash balance was impacted by the following significant items in 2023. First, the repurchase of the majority of our trust preferred debt for $56.5 million, which retired $96.7 million in principal and deferred interest. That was done in the first quarter. $5 million payment of TruPS deferred interest in, also in the first quarter, $2 million for the release of the Mendota escrow in Q1, $1.8 million of management fees paid in Q1 and Q2 related to the final sale of commercial real estate investments, $7.2 million paid for the repurchase of our warrants in common stock, principal debt payments of $9.1 million in 2023, excluding the TruPS repurchase. We had $16.7 million of cash received from holders exercising our warrants and $3.3 million from the sale of Limbach stock. We had total outstanding debt, which is comprised of bank loans and TruPS debt of $44.4 million at the end of 2023, compared to $102.1 million at the end of 2022. Net debt decreased to $35.3 million as of December 31, 2023, compared to $37.9 million at the end of 2022. As we've mentioned before, in March 2023, the Board approved a one-year securities repurchase program. Through February 29, 2024, we repurchased nearly 1.1 million of our warrants and repurchased just over 400,000 shares of our common stock under this plan. The repurchase of common stock is being held as treasury stock at cost and has been removed from our common shares outstanding. In summary, we continue to make progress reducing our net debt. We have shed most of the remaining nine core assets, and we're able to repurchase a meaningful amount of our securities, all of which we believe will provide more flexibility in pursuing our strategic objectives. I'll now turn the call back over to John, the operator, to open the line for questions. John? Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you'd 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. One moment please, while we poll for questions. Once again, please press star one if you have a question or a comment. The first question comes from Adam Patinkin with David Capital. Please proceed. Hey, guys. Congratulations on the good year and on the continued progress. Thanks, Adam. Thanks, Adam. So let's see, I've got a few questions that I wanted to go into, and as—granted, I didn't have a ton of time to read through the results. But first, I wanted to ask just about the VA Lafayette process. I know that that asset has been for sale for a little bit and has been held as a under discontinued operations. Can you maybe provide an update on where things stand there? Yeah, Adam, this is Kent. We currently have the VA under an LOI, and so we're progressing through the process at this point. Okay, great. That's really helpful. The second question I had is, just I'm trying to understand the run rate EBITDA metric. So I guess my question on that is, when you do the calculation for run rate EBITDA for the operating businesses, are you taking the 12 months trailing operating profit? In other words, does the $17 million-$18 million, is that essentially including the depressed warranty results from 2023? Or are you normalizing that to say, "Hey, in a normal year, once we, you know, put through some of the, you know, different things that you mentioned on the call already to improve the profitability of that business," are you taking those into account, that the improvements you're making, or is it literally just, "Hey, here's the 12 months trailing," so you're including kind of a depressed warranty EBITDA number? Yeah, great question, Adam. This is J.T. So run rate EBITDA, the way we define it, is probably a little bit of a misnomer, right? It is truly the last 12 months of earnings power of the businesses we currently own. So it is the trailing 12 months of all of the warranty businesses, plus the trailing 12 months of C-Suite, Ravix, and SNS, and then the last 12 months of operating performance of DDI and SPI, as if we had owned them for the whole 12 months. The only normalizing adjustment, Adam, we make is to make an estimate of the increase in investment income we would receive on the warranty float if we reinvest all of that at current market yields. That normalizing adjustment has compressed over time as we have rolled over a lot of those securities. Got it. That makes sense. So if I'm trying to think about it, and I think the way that most investors think about the companies that they invest in, is thinking about what are the prospective cash flows of the business. In other words, what's the earnings power today and going forward? So if I'm gonna think about what kind of a normalized earnings power is here, it actually should be a good bit higher than that number that you've provided, just because I think the hope or expectation would be that the warranty business is gonna recover from kind of this depressed year for all the reasons you outlined. And then, obviously, each of your businesses, you're continuing to grow them and improve them. You just got SPI and DDI under your umbrella, et cetera. Is that a, is that a fair comment to make? I think that's a very fair comment. I think that you heard in my prepared remarks that we, you know, feel pretty good about the where we stand today, certainly vis-a-vis with, you know, several months ago, and that there are nice things happening. So we, we believe we have momentum, and therefore, I think that's a fair comment. Okay, great. I appreciate that, and the clarity around that. Just one last question, which is, in your press release, in your commentary, you noted that the transition has gone smoothly for SPI and DDI, and you said some positive things about those businesses. Would you mind just providing a little extra color on SPI and DDI, how those transitions have gone with the new OIRs taking over, and you know, how those deals have been performing so far? Just a little bit more granularity so we can get a feel for those two kind of new businesses under the KSX umbrella. Yeah, great. We'll start with SPI. That is led by Drew Richard, really talented young guy. If you recall, this was sort of a family-owned, small software business. We really liked the fundamentals of it. The business, as is often the case in these small founder-led businesses, probably had a lot of unlocked opportunity, and particularly around organic growth. And so, you know, obviously, first 100 days, Drew has to transition in, establish sort of the new regime and get to know all of the folks there and build rapport, and then, you know, talk to customers. And based on that, sort of start to begin articulating a vision for the business and the strategy to achieve that vision. You know, Drew's thesis is that there's an ample opportunity to grow this company organically through new customer acquisition in its existing market segment. And so we've got a wonderful new head of sales there that had only been on Board at the company for a couple of months prior to our closing, and they've been building out their sales process sort of top of the funnel all the way down through and have, you know, had some early success on adding new customers onto the software platform. So, that will probably take some time as they've kind of starting from scratch to build this sales team and processes, but so far, things are going really well, and we're very pleased with the company we bought. Turning to DDI, again, founder-led business. The founder has largely transitioned out. Peter Dousman is our president there, and this is sort of a unique situation where, DDI has been growing pretty, pretty rapidly. As I mentioned in the prepared remarks, in our first couple of months of ownership in 2023, year-over-year revenues were up over 30%. And, that's through inbound existing customers trying to expand their business in new, rehab and LTAC hospitals, and more recently, some inbound interest from other hospital systems. So, Peter is very busy, creating the internal processes, structure, and, and, team to be able to support, really wonderful opportunity to grow, but do it in a very thoughtful way so that we most importantly ensure a very high quality, level of service and quality of care for the patients that we're monitoring. So that's the dynamic he's balancing, but I think that he's got a really nice growth runway ahead of him. Great. I really appreciate the color, guys. I'll step off. Thanks, Adam. But operator, before you take the next question, I just wanted to point out to people on the call that we do get a lot of questions about run rate, and we published an investor deck in January of this year, and in the appendix, we did add a slide giving a little bit more color on that. So I encourage people to take a look at that, and hopefully it will help digest you know what we're trying to communicate with that. If there are any remaining questions, please indicate so by pressing star one on your touch-tone phone. Okay, it looks like we have no further questions in queue from the lines. I'd like to turn it back to James Carbonara for any questions he may have via email. Thank you, operator. Hi, J.T. and Kent. Yeah, we had a few come in on email. Many were already answered. I'll start with this one that I know you touched on in the prepared remarks, but we'll go ahead and ask anyway. It says, "Now that we are in March, are you still hoping to close 2-3 new acquisitions by the end of 2023? Yeah, that's certainly the goal, right? Four OIRs out, pounding the pavement every day, and we have a set of sort of what I would call leading measures that we think are both predictive, and influencable by our guys, and predictive of the lag metric, which is, you know, getting these acquisitions done. And so, you know, the activity is great. We've been engaged in a lot of conversations with business owners, and so standing here today, that's still certainly our hope. Again, you know, these things, there is some serendipity to them, and so it's hard to make a hard target, but based on the level of activity we're seeing, that's definitely our hope. Great. You did touch on this before with Adam, but it talks about the warranty business and how do you see it performing in 2024, if you just wanted to reiterate your outlook? Yeah, look, 2023 was a tough year in the warranty businesses from a revenue standpoint and on the claim severity. Claim severity seems to have receded a bit, certainly in terms of the inflation, kind of year-over-year inflation, we're starting to see that moderate. And, you know, all of those businesses have done a really nice job in spite of some of the revenue headwinds, adding new distribution partners, new distribution channels, increasing the activity with existing customers, getting higher conversion and attachment rates. And so we feel pretty sanguine about how they're gonna do this year. You know, without giving guidance, obviously, but, you know, fairly optimistic. Great. Another question was: If you buy businesses for 5-7x EBITDA, why should Kingsway trade at a higher multiple than those acquisition multiples? Okay, that's a good question. That's one we get from time to time. First, I would say, I'm not gonna say why something should or shouldn't. Probably not my role to say what someone should or shouldn't do, but I can give you my perspective. And so I think first, kinda unpack it from like, why are these high-quality businesses available to acquire for 5-7x EBITDA? And, you know, I would say first, you know, every one of these, you know, small companies probably has some amount of what I would call hair on them. You know, cash basis, financials, filed in QuickBooks, et cetera. In essentially every case, you've got a founder, operator, leader who's looking to retire. For that reason, and these processes take a very long time, and we're sourcing them more often than not proprietarily, and that's just really hard to do. And so, as a result, there's a, you know, relatively small universe of buyers out there, relative to the number of companies in that size range, that because of the demographics we've discussed in the past, are coming available for sale. And, you know, on the flip side, why I think that they should trade at higher multiple, and think about what happens to those businesses when they come into Kingsway and onto the KSX platform. First, they get cleaned up, right? We put them through what we call the Kingsway car wash, right? So, consistent, accrual-based, audited financials, internal control environments, risk mitigation, et cetera. And then we install really great leadership to unlock that latent growth that often is there, certainly what we're targeting. We shield those cash flows from taxes because of our NOL, our tax attributes. And, you know, each one of these small companies also has some risk. You know, often there's customer concentration or something like that. I would say that, you know, a portfolio of those businesses is probably less risky than buying one individually. And that it would be hard to reconstruct that portfolio. And then I think my final thought would be that, you know, the highest multiples for companies get afforded to those that can reinvest their free cash flow at very high rates of return for a long time. I think that we're building that with the KSX platform. This demographic silver tsunami of opportunities to buy great businesses, combined with our pipeline of talent and the cash flow to redeploy, I think creates a really nice flywheel that will give us a very long and wide runway. Great. And then the last one, just on the software business, it says, it's a two-parter. It says: "Do you think you will be able to organically grow the software business? And do you have any concrete examples you are able to offer regarding growth? Yeah, I touched on this briefly with Adam. I do think, more importantly, Drew thinks, you know, he's the president of the company. We run a very decentralized operation here. You know, I fundamentally believe in the power of decentralization, both in the ability to attract, and more importantly, retain really great people. And Drew absolutely believes that he has the ability to grow that organically. This is mission-critical software for its customers, and so the sales cycle is a little longer. But yeah, I think in terms of concrete examples, I think that we have some early successes with some new client adds that they're onboarding now. Yeah, I'm very sanguine about his opportunity to grow that organically. Great. I see no further questions coming in on the email. Operator, I'll turn it back to you to close out the. Oh, you know what? I apologize, J.T. and Kent, if you guys are still there, there is one question on the email that say, "Due to the shortage of nursing staff available, how does the demand for nurses, how does the demand for nurses that benefits SNS compare with the challenge SNS faces in hiring travel nurses? Yeah. So I would say the demand challenge in 2023 was sort of a post-pandemic hangover. You know, during the pandemic, hospital systems had to be very reliant on contingent labor, which is obviously a lot more expensive. And they pushed back very hard to eliminate contingent labor in those hospitals, maybe overly so. And that impacted, in the near term, the demand for travel nurses. For SNS, they have contracts with several, like 70 or so, hospitals in the state of California, and there is demand that is unmet. And so hiring recruiters to bring more nurses onto our platform to satisfy the requirements and criteria for those open positions is Charles' strategy to rebuild the travel business. In the meantime, the per diem business, which is harder to fill, is something that the company has done very effectively for a very long time, and he's done a nice job of continuing to grow that per diem business. So I don't know if that fully answers the question, but. Good. Appreciate that, and I'll, you know, Ron sent that in, so I'll reply to him and see if it does. Yeah, there was one that kind of was hanging over from the email questions, that you may have answered with Adam, but it asks about the cardiac monitoring business. It says, "How are you working towards managing the potential strong growth of the business? Yeah. So I think it's just sort of, crawl, walk, run there, right? New manager, new company, get in, understand your team, your people, your customers, their needs and desires, and we talk a lot about glass balls and rubber balls, and just make sure you don't drop any glass balls. And he is building, and professionalize, you know, his background in as a nuclear engineer, and he is building all kinds of processes and protocols around safety. And so as he builds that foundation, I think that he will be able to lean into that growth. The demand is there, and it's about sort of being very deliberate about how quickly you want to onboard new hospital locations while still delivering, you know, a very high standard of care, given that, you know, patients' lives are being monitored. Great. That does conclude- Peter, Peter's background, he's gonna do a great job. Perfect. Thank you so much, J.T.. And that does conclude the email questions. Operator, I'll turn it back to you to close out the call. Thank you. Absolutely. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.