Kingsway Reports First Quarter 2025 Financial Results

Rhea-AI Summary

Kingsway Financial Services (NYSE:KFS) reported its Q1 2025 financial results, showing mixed performance. Consolidated revenue increased 8.4% to $28.3 million, driven by strong growth in its Kingsway Search Xcelerator (KSX) segment, which saw a 23.3% revenue increase to $11.7 million. Extended Warranty revenue remained flat at $16.7 million. The company reported a net loss of $3.1 million, wider than the $2.3 million loss in Q1 2024. Adjusted consolidated EBITDA decreased to $1.4 million from $2.1 million year-over-year. Notable acquisitions include Bud's Plumbing for $5.0 million and ViewPoint, a cloud-native timeshare software firm. The company's total net debt stood at $53.1 million as of March 31, 2025. Management expressed optimism about the Extended Warranty segment's recovery and highlighted a robust KSX deal pipeline.

Positive

• KSX revenue grew 23.3% year-over-year to $11.7 million
• Extended Warranty cash sales increased 3.7% YoY and 9.3% sequentially
• Strategic acquisition of Bud's Plumbing adding $6.0M in annual revenue and $0.8M in adjusted EBITDA
• Twelve month run-rate adjusted EBITDA for operating companies is $18.0-19.0 million

Negative

• Net loss widened to $3.1 million from $2.3 million in Q1 2024
• Adjusted consolidated EBITDA decreased by $0.7 million to $1.4 million
• Extended Warranty adjusted EBITDA declined to $0.8 million from $1.4 million YoY
• Total net debt increased to $53.1 million from $52.0 million in December 2024

Insights

Financial Analyst

Kingsway shows revenue growth but wider losses in Q1; acquisitions driving KSX expansion while Extended Warranty segment struggles with profitability.

Kingsway's Q1 2025 results present a mixed financial picture with revenue growth offset by deteriorating profitability metrics. The company reported an 8.4% increase in consolidated revenue to $28.3 million, primarily driven by its Kingsway Search Xcelerator (KSX) division, which grew an impressive 23.3% year-over-year to $11.7 million through strategic acquisitions.

However, this top-line expansion is overshadowed by a widening net loss of $3.1 million (compared to $2.3 million in Q1 2024) and a $0.7 million decline in adjusted consolidated EBITDA to $1.4 million. This disconnect between revenue growth and profitability raises questions about margin pressure and integration costs from recent acquisitions.

The company's Extended Warranty segment, representing nearly 60% of total revenue, shows concerning trends despite management's optimistic framing. While revenue remained flat at $16.7 million, this segment's adjusted EBITDA declined by 43% to $0.8 million. Management points to a 3.7% increase in cash sales and 9.3% sequential improvement as early indicators of potential recovery after what they describe as "two challenging years marked by industry headwinds."

Kingsway continues executing its acquisition strategy under the Search Fund model, completing two purchases in early 2025: Bud's Plumbing ($5.0 million, adding $6.0 million in annual revenue) and ViewPoint, a cloud-native timeshare software firm. These align with their focus on "asset-light, profitable, and recurring revenue services businesses."

The balance sheet shows marginally increased leverage, with total net debt rising to $53.1 million from $52.0 million at year-end 2024, likely reflecting acquisition funding. The company's twelve-month run-rate adjusted EBITDA for operating companies is estimated at $18.0-19.0 million, significantly higher than the current quarterly run-rate, suggesting management expects substantial improvement in coming quarters.

Management to Host Conference Call Today at 5 p.m. ET

CHICAGO, ILLINOIS / ACCESS Newswire / May 8, 2025 / (NYSE:KFS) 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 its operating results for the three months ended March 31, 2025.

First Quarter 2025 Consolidated Financial Highlights

• Consolidated revenue increased 8.4% to $28.3 million for the three months ended March 31, 2025, compared to $26.2 million in the prior year period

  • Kingsway Search Xcelerator ("KSX") revenue increased 23.3% to $11.7 million in the first quarter of 2025, compared to $9.5 million in the first quarter of 2024, primarily due to the Image Solutions and Bud's Plumbing acquisitions

  • Extended Warranty revenue remained flat at $16.7 million in the first quarter of 2025, unchanged compared to the first quarter of 2024; however, cash sales were up 3.7% over prior year and up 9.3% sequentially

• Consolidated net loss was $3.1 million for the three months ended March 31, 2025, compared to a net loss of $2.3 million in the prior year period

• Twelve month run-rate adjusted EBITDA for the operating companies is $18.0 million to $19.0 million; this number is intended to capture the 12-month trailing adjusted EBITDA of what the company currently owns or has recently acquired and is not intended to be forward-looking guidance

• Adjusted consolidated EBITDA decreased $0.7 million to $1.4 million for the three months ended March 31, 2025, compared to $2.1 million in the prior year period

  • KSX adjusted EBITDA was $1.9 million in the first quarter of 2025 compared to $1.6 million in the year ago period. The prior year period excludes Image Solutions and Bud's Plumbing

  • Extended Warranty adjusted EBITDA was $0.8 million in the first quarter of 2025 compared to $1.4 million in the year ago period

• The Company had total net debt of $53.1 million as of March 31, 2025, compared with $52.0 million as of December 31, 2024

Recent Business Highlights

• On March 17, 2025, Kingsway announced the acquisition of M.L.C. Plumbing, LLC (d/b/a Bud's Plumbing Service, "Bud's Plumbing") for $5.0 million. The business is immediately accretive, adding $6.0 million in annual unaudited revenue and $0.8 million in annual unaudited adjusted EBITDA to Kingsway

• On April 2, 2025, Kingsway announced the appointment of Rob Humble to be President and CEO of Kingsway's dealer warranty businesses, PWI and Penn Warranty. Mr. Humble's background and compensation structure are both more closely aligned with that of Kingsway's Search Xcelerator CEO's

• On April 30, 2025, Kingsway announced the acquisition of @Work International Pty Ltd ("ViewPoint"), a cloud native timeshare software firm headquartered in Australia, by Kingsway's subsidiary Systems Products International Inc. ("SPI Software"), to advance SPI Software's leadership in the vacation ownership software market

Management Commentary

"Kingsway made solid progress in the first quarter of 2025, both financially and strategically," said JT Fitzgerald, Kingsway's President and CEO. "KSX revenue grew 23.3% year-on-year and KSX adjusted EBITDA grew 23.2% year-on-year. Under the surface, our operator CEO's are executing their strategic plans to position their businesses for accelerating growth on both the top and bottom lines.

"Importantly, Kingsway has already completed two acquisitions this year under the KSX umbrella. In March, Kingsway acquired Bud's Plumbing and established KSX Skilled Trade Services, our third KSX operating platform. In April, SPI Software acquired ViewPoint to accelerate its product roadmap and to open up exciting opportunities for geographic and market expansion. I'm thrilled to welcome Rob Casper, who leads the KSX Skilled Trades Services platform, as our newest operator CEO, and to continue supporting Drew Richard, President of SPI Software, who leads the KSX Vertical Market Solutions platform.

"I'm also encouraged by the momentum building in Kingsway's Extended Warranty segment. Although adjusted EBITDA declined year-over-year in the first quarter, the business has returned to growth in cash sales, and key forward-looking indicators of profitability are now solidly positive. After two challenging years marked by industry headwinds and cyclical pressures, Extended Warranty appears to be entering a more favorable phase of recovery, with early signs pointing to both healthy top-line growth and renewed operating leverage.

"Kingsway is well-positioned for the months and years ahead, and the first quarter was another step in the right direction," concluded Mr. Fitzgerald. "Our KSX deal pipeline is robust, and we remain committed to employing the Search Fund model to acquire and grow asset-light, profitable, and recurring revenue services businesses that can deliver compelling returns for our shareholders."

Conference Call and Webcast

Management will host a conference call at 5 p.m. Eastern Time today to discuss the results and host a live Q&A session. Additionally, investors may also submit questions via email to: James@HaydenIR.com.

Conference Call Information

Date: Thursday, May 8, 2025
Time: 5 p.m. Eastern Time
Toll Free: 877-545-0523; Code: 131755
International: 973-528-0016; Code: 131755
Live Webcast Link: https://bit.ly/3YykRi9

Conference Call Replay Information

Toll Free: 877-481-4010
International: 919-882-2331
Replay Passcode: 52464
Replay Webcast Link: https://bit.ly/3YykRi9

About the Company

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.

Non U.S. GAAP Financial Measure

Management believes that non-GAAP adjusted EBITDA, when presented in conjunction with comparable GAAP measures, provides useful information about the Company's operating results and enhances the overall ability to assess the Company's financial performance. Management uses non-GAAP adjusted EBITDA, together with other measures of performance under GAAP, to compare the relative performance of operations in planning, budgeting and reviewing the performance of its business. Non-GAAP adjusted EBITDA allows investors to make a more meaningful comparison between the Company's core business operating results over different periods of time. Management believes that non-GAAP adjusted EBITDA, when viewed with the Company's results under GAAP and the accompanying reconciliations, provides useful information about the Company's business without regard to potential distortions. By eliminating potential differences in results of operations between periods caused by the factors listed in the attached schedules, Management believes that non-GAAP adjusted EBITDA can provide useful additional basis for comparing the current performance of the underlying operations being evaluated. Investors should consider this non-GAAP measure in addition to, not as a substitute for or as superior to, financial reporting measures prepared in accordance with GAAP. Investors are encouraged to review the Company's financial results prepared in accordance with GAAP to understand the Company's performance taking into account all relevant factors.

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 a 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 Media 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

 

Kingsway Financial Services Inc.
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted Consolidated EBITDA
(in thousands)
(UNAUDITED)

		Twelve Months Ended				For the Three Months Ended
		3/31/2025				3/31/2025				12/31/2024				9/30/2024				6/30/2024
GAAP Net Income (Loss)		$	(9,059	)		$	(3,092	)		$	(1,470	)		$	(2,311	)		$	(2,186	)
Non-GAAP Adjustments:
Discontinued operations			(31	)			-				1				135				(167	)
Changes in fair value; realized gains/losses (1)			(173	)			(22	)			(35	)			(176	)			60
Employee related expenses (2)			2,287				495				390				990				412
Other items (3)			2,866				1,095				225				956				590
Depreciation, amortization, tax and interest expense			13,995				2,876				4,117				3,343				3,659
Total Non-GAAP Adjustments			18,944				4,444				4,698				5,248				4,554
Non-GAAP Adjusted Consolidated EBITDA		$	9,885			$	1,352			$	3,228			$	2,937			$	2,368

		Twelve Months Ended				For the Three Months Ended
		3/31/2024				3/31/2024				12/31/2023				9/30/2023				6/30/2023
GAAP Net Income (Loss)		$	(6,155	)		$	(2,328	)		$	(1,485	)		$	(675	)		$	(1,667	)
Non-GAAP Adjustments:
Discontinued operations			1,858				213				1,877				(122	)			(110	)
Changes in fair value; realized gains/losses (1)			(423	)			411				217				174				(1,225	)
Employee related expenses (2)			2,069				467				755				479				368
Other items (3)			3,109				61				1,081				334				1,633
Gain on sale of PWSC (4)			(342	)			-				-				(342	)			-
Depreciation, amortization, tax and interest expense			8,687				3,280				177				2,450				2,780
Total Non-GAAP Adjustments			14,958				4,432				4,107				2,973				3,446
Non-GAAP Adjusted Consolidated EBITDA		$	8,803			$	2,104			$	2,622			$	2,298			$	1,779

(1)		Includes realized and unrealized gains and losses on non-core investments; change in the fair value of subordinated debt (net of the portion of the change attributable to instrument-specific credit risk); unrealized gain on the change in fair value of the trust preferred security options; and change in the fair value of the Ravix earn-out (changes in fair value recorded as other income or expense).
(2)		Employee related expenses includes non-cash expense arising from the grant and modification of stock-based awards to employees; and costs associated with employees assisting during a transition period and are not expected to be replaced once transition period has ended (approximately one year from acquisition date).
(3)		Other items include: legal expenses associated with the Company's defense against significant litigation matters; acquisition and disposition-related expenses; and other non-recurring items.
(4)		Gain on sale of PWSC, net of transaction expenses that are included in consolidated operating expenses, as well as income taxes associated with the sale.

Kingsway Financial Services Inc.
Reconciliation of Extended Warranty Segment Operating Income to
Non-GAAP Adjusted EBITDA and Pro Forma Non-GAAP Adjusted EBITDA
(in thousands)
(UNAUDITED)

		Twelve Months Ended				For the Three Months Ended
		3/31/2025				3/31/2025				12/31/2024				9/30/2024				6/30/2024
GAAP Operating Income for Extended Warranty segment		$	5,381			$	515			$	1,918			$	1,704			$	1,244
Non-GAAP Adjustments:
Investment income (1)			1,289				247				394				327				321
Employee costs			50				50				-				-				-
Depreciation			174				38				39				41				56
Total Non-GAAP Adjustments			1,513				335				433				368				377
Non-GAAP adjusted EBITDA for Extended Warranty segment		$	6,894			$	850			$	2,351			$	2,072			$	1,621

		Twelve Months Ended				For the Three Months Ended
		3/31/2024				3/31/2024				12/31/2023				9/30/2023				6/30/2023
GAAP Operating Income for Extended Warranty segment		$	6,627			$	1,076			$	2,381			$	1,778			$	1,392
Non-GAAP Adjustments:
Investment income (1)		1,189					320				314				287				268
Depreciation		233					52				62				57				62
Total Non-GAAP Adjustments		1,422					372				376				344				330
Non-GAAP adjusted EBITDA for Extended Warranty segment		$	8,049			$	1,448			$	2,757			$	2,122			$	1,722

(1) Investment income arising as part of Extended Warranty segment's minimum holding requirements, as well as realized gains and losses resulting from investments either held in trust as part of Extended Warranty segment's minimum holding requirements or from the deployment of excess cash.

Kingsway Financial Services Inc.
Reconciliation of KSX Segment Operating Income to Non-GAAP Adjusted EBITDA
(in thousands)
(UNAUDITED)

		Twelve Months Ended				For the Three Months Ended
		3/31/2025				3/31/2025				12/31/2024				9/30/2024				6/30/2024
GAAP Operating Income for KSX segment		$	6,062			$	1,743			$	1,734			$	1,144			$	1,441
Non-GAAP Adjustments:
Acquisition and employee costs (1)			376				52				65				120				139
Investment income (2)			153				25				33				27				68
Depreciation			488				97				101				110				180
Total Non-GAAP Adjustments			1,017				174				199				257				387
Non-GAAP adjusted EBITDA for KSX segment		$	7,079			$	1,917			$	1,933			$	1,401			$	1,828

		Twelve Months Ended				For the Three Months Ended
		3/31/2024				3/31/2024				12/31/2023				9/30/2023				6/30/2023
GAAP Operating Income for KSX segment		$	5,018			$	1,343			$	1,056			$	1,003			$	1,616
Non-GAAP Adjustments:
Acquisition and employee costs (1)			431				138				128				87				78
Investment income (2)			54				10				12				15				17
Depreciation (3)			88				64				24				-				-
Total Non-GAAP Adjustments			573				212				164				102				95
Non-GAAP adjusted EBITDA for KSX segment		$	5,591			$	1,555			$	1,220			$	1,105			$	1,711

(1)		Costs associated with acquisitions and employees assisting during a transition period and are not expected to be replaced once transition period has ended (approximately one year from acquisition date).
(2)		Investment income from interest on client deposits (Ravix, CSuite), as well as imputed interest on long-term software contracts (SPI)
(3)		The June 30, 2024 quarter includes a one-time catch-up for depreciation associated with the finalization of the DDI purchase accounting

SOURCE: Kingsway Financial Services, Inc.

View the original press release on ACCESS Newswire

FAQ

What were Kingsway Financial's (KFS) key financial results for Q1 2025?

In Q1 2025, Kingsway reported consolidated revenue of $28.3M (+8.4% YoY), a net loss of $3.1M, and adjusted EBITDA of $1.4M. KSX revenue grew 23.3% to $11.7M, while Extended Warranty revenue remained flat at $16.7M.

What acquisitions did Kingsway Financial (KFS) make in early 2025?

Kingsway acquired Bud's Plumbing for $5.0M in March 2025, adding $6.0M in annual revenue and $0.8M in adjusted EBITDA. In April 2025, they acquired ViewPoint, a cloud-native timeshare software firm, through their SPI Software subsidiary.

How did Kingsway's (KFS) Extended Warranty segment perform in Q1 2025?

The Extended Warranty segment revenue remained flat at $16.7M, but showed positive signs with cash sales up 3.7% YoY and 9.3% sequentially. However, adjusted EBITDA decreased to $0.8M from $1.4M in the prior year.

What is Kingsway Financial's (KFS) current debt position?

As of March 31, 2025, Kingsway's total net debt was $53.1M, an increase from $52.0M as of December 31, 2024.

What is Kingsway's (KFS) projected EBITDA run-rate for its operating companies?

The twelve-month run-rate adjusted EBITDA for Kingsway's operating companies is projected at $18.0-19.0M, reflecting current ownership and recent acquisitions.