Kingsway Announces Acquisition of Roundhouse Electric & Equipment Co., Inc.

Rhea-AI Summary

Kingsway Financial Services (KFS) has announced its acquisition of Roundhouse Electric & Equipment Co. for $22.4 million. The Odessa, Texas-based company provides industrial-scale electric motor maintenance, repair, testing, and sales solutions, primarily serving midstream natural gas pipeline operators and utilities across the Permian Basin.

Roundhouse demonstrates strong financial performance with trailing 12-month unaudited revenue of $16.0 million and adjusted EBITDA of $4.2 million. The company has more than 200 active customers with approximately 90% recurring or reoccurring revenue. The transaction was funded with $10.4 million in cash and $11.0 million from a senior credit facility.

Miles Mamon, Kingsway's Operator-in-Residence, will assume the CEO role, while current Vice President Lee Hudson will remain as President. The acquisition represents KFS's ninth addition to its Search Xcelerator platform.

Positive

• Revenue more than doubled over the last two years with EBITDA growing even faster
• 90% of revenues are recurring or reoccurring, indicating strong business stability
• Strong growth potential driven by increased natural gas pipeline flows and shift to electrical motors
• Asset-light business model with high customer retention
• Selling shareholders maintain economic interest, showing confidence in future prospects

Negative

• Additional debt burden from $11.0 million senior credit facility
• Significant management transition with new CEO appointment
• Geographic concentration risk in Permian Basin region

Insights

Private Equity & M&A Analyst

Kingsway's $22.4M Roundhouse acquisition at 5.3x EBITDA adds recurring revenue business with strong growth potential in expanding gas sector.

This acquisition represents Kingsway's 9th implementation of their Search Fund model, reflecting disciplined execution of their stated strategy. The $22.4 million purchase price for Roundhouse translates to a multiple of approximately 5.3x trailing adjusted EBITDA ($4.2 million), which appears attractive for a business with Roundhouse's growth profile and revenue quality.

The transaction structure is particularly noteworthy. Kingsway employed a balanced funding approach using $10.4M cash and $11.0M debt, while securing continued economic interest from selling shareholders - a structure that typically indicates seller confidence in future prospects.

Roundhouse embodies the high-quality acquisition criteria investors should look for in serial acquirers: 90% recurring or reoccurring revenue, asset-light operations, mission-critical services, and embedded customer relationships. The company's revenue has more than doubled over two years with EBITDA growing even faster, suggesting operational leverage and margin expansion.

The strategic rationale aligns with identifiable structural tailwinds in the Permian Basin: increased natural gas pipeline flows and the technological transition from gas-powered to more efficient electrical motors. These industry shifts provide a compelling backdrop for Roundhouse's specialized electric motor maintenance and repair services.

The leadership transition follows best practices for mid-market acquisitions, installing Kingsway's Operator-in-Residence as CEO while retaining key operational leadership (Lee Hudson) to preserve customer relationships and institutional knowledge - critical for service businesses where customer retention drives valuation.

KSX Search Xcelerator's 9^th Acquisition

• Asset-light industrial equipment services business with recurring revenues and strong growth prospects

• Purchase price of $22.4 million

• Trailing 12-month unaudited revenue of $16.0 million

• Trailing 12-month unaudited adjusted EBITDA of $4.2 million

CHICAGO, IL / ACCESS Newswire / July 2, 2025 / Kingsway Financial Services Inc. ("Kingsway" or the "Company"), the only publicly-traded US company employing the Search Fund model to acquire and build great businesses, today announced the acquisition of Roundhouse Electric & Equipment Co., Inc. ("Roundhouse"), a leading provider of industrial-scale electric motor maintenance, repair, testing, and sales solutions based in Odessa, Texas, for a purchase price of $22.4 million, plus transaction expenses and a working capital adjustment.

Roundhouse provides mission-critical services, including field maintenance and testing as well as in-shop motor repair, primarily to midstream natural gas pipeline operators and utilities across the Permian Basin. The company's operations are characterized by strong customer retention, excellent response times, and meaningful integration into client workflows.

Roundhouse has more than 200 active customers, and approximately 90% of revenues are either recurring or reoccurring. The company's unaudited revenue has more than doubled over the last two years, with unaudited adjusted EBITDA growing ahead of revenue over the same period.

Kingsway believes Roundhouse has considerable further growth potential in the years ahead, underpinned by the twin structural growth drivers of increased natural gas pipeline flows in the Permian Basin and the shift from legacy gas-powered motors to more-efficient electrical motors. Kingsway intends to support Roundhouse with strategic investments in people, systems, and regional expansion to meet accelerating customer demand and enhance service delivery.

The transaction closed on July 1, 2025, and was funded with $10.4 million in cash on hand and $11.0 million from a senior credit facility. As part of the transaction, the selling shareholders are maintaining an economic interest in the go-forward entity, reflecting their continued belief in the company's long-term prospects and their alignment with Kingsway's growth vision.

Management will provide additional details about the transaction during the company's second quarter 2025 earnings call. Miles Mamon, Kingsway's Operator-in-Residence who sourced and led the transaction for Kingsway, will assume the CEO role at Roundhouse.

Management Commentary
"Roundhouse is a perfect fit for the Kingsway Search Xcelerator platform," said JT Fitzgerald, Kingsway's President and CEO. "Roundhouse is a growing, capital-light, high-recurring revenue business with a seasoned team, a strong culture, and deep customer relationships. Kingsway is thrilled to partner with the entire Roundhouse organization to continue building on their legacy of service and growth."

"I am honored to join the Roundhouse team," said Miles Mamon, incoming CEO of Roundhouse. "Lee and Armando have built an extraordinary business with unmatched field service capabilities, rapid response times, and long-standing customer trust. I am excited to work with Lee and everyone at Roundhouse to expand our reach and impact across the Permian Basin and beyond."

"Joining forces with Kingsway and Miles marks a new chapter for Roundhouse," said Lee Hudson, current Vice President and co-owner of Roundhouse, who will remain with Roundhouse as President. "Kingsway's commitment to people and long-term growth aligns perfectly with the culture we have built here. I am proud to continue leading our team and thrilled about the opportunities ahead."

"Roundhouse has been a labor of love for me for over four decades," said Armando Gonzales, co-founder and former majority owner of Roundhouse. "I am confident that Miles, Lee, and Kingsway are the right partners to carry this company forward with the same care and attention to quality and relationships that got us here."

About Roundhouse Electric & Equipment Co., Inc.
Founded in Odessa, Texas in 1976, Roundhouse provides electric motor maintenance, repair, testing, and sales services to midstream natural gas and utility companies across the Permian Basin. Roundhouse's mission-critical field services and shop repair capabilities make it the vendor of choice for leading natural gas infrastructure providers.

About Kingsway Financial Services Inc.
Kingsway Financial Services Inc. ("Kingsway") (NYSE:KFS) is the only publicly-traded US company employing the Search Fund model to acquire and build great businesses.

Kingsway owns and operates a collection of high-quality B2B and B2C services companies that are asset-light, growing, profitable, and that have recurring revenues. Kingsway seeks to compound long-term shareholder value on a per share basis via its decentralized management model, its talented team of operators, and its tax-advantaged corporate structure.

Forward-Looking Statements
This press release may include "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 results to differ materially from those expected and projected. Words such as "expects," "believes," "anticipates," "intends," "estimates," "seeks," and variations and similar words and expressions are intended to identify such forward-looking statements; however, the absence of any such words does not mean that a statement is not a forward-looking statement. Such forward-looking statements relate to future events or future performance, but reflect Kingsway management's current beliefs, based on information currently available. A number of factors could cause actual events, performance, or results to differ materially from the events, performance, and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the section entitled "Risk Factors" in the Company's 2024 Annual Report on Form 10-K and subsequent Form 10-Qs and Form 8-Ks filed with the Securities and Exchange Commission. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

Additional Information
Additional information about Kingsway, including a copy of its Annual Reports, can be accessed on the EDGAR section of the U.S. Securities and Exchange Commission's website at www.sec.gov, on the Canadian Securities Administrators' website at www.sedar.com, or through the Company's website at www.kingsway-financial.com.

For Investor Inquiries:
Hayden IR
James Carbonara
(646) 755-7412
james@haydenir.com

For Company Inquiries:
Kingsway Financial Services Inc.
Kent Hansen, CFO
(312) 766-2163
khansen@kingsway-financial.com

SOURCE: Kingsway Financial Services, Inc.

View the original press release on ACCESS Newswire

FAQ

What is the purchase price for KFS's acquisition of Roundhouse Electric?

Kingsway Financial Services (KFS) acquired Roundhouse Electric for $22.4 million, plus transaction expenses and a working capital adjustment.

What are Roundhouse Electric's key financial metrics?

Roundhouse reported trailing 12-month unaudited revenue of $16.0 million and adjusted EBITDA of $4.2 million, with revenue more than doubling over the past two years.

How did KFS finance the Roundhouse Electric acquisition?

The acquisition was funded with $10.4 million in cash on hand and $11.0 million from a senior credit facility.

Who will lead Roundhouse Electric after the KFS acquisition?

Miles Mamon, previously Kingsway's Operator-in-Residence, will become CEO, while Lee Hudson will remain as President.

What percentage of Roundhouse Electric's revenue is recurring?

Approximately 90% of Roundhouse's revenues are either recurring or reoccurring, with a customer base of over 200 active clients.