Kingsway Reports Second Quarter 2025 Financial Results

Rhea-AI Summary

Kingsway Financial Services (NYSE:KFS), a public company utilizing the Search Fund model, reported Q2 2025 financial results with consolidated revenue growth of 16.9% to $30.9 million. The company's KSX segment showed strong performance with 42.1% revenue growth to $13.3 million, while Extended Warranty revenue increased 3.1% to $17.6 million.

The company reported a net loss of $3.2 million and reduced total net debt to $46.2 million. In June 2025, KFS completed a $15.7 million private placement at $11.75 per share. The company also announced three strategic acquisitions: Roundhouse Electric ($22.4M), Advanced Plumbing and Drain (up to $5.0M), and The HR Team, collectively adding approximately $23 million in annual revenue and $5.1 million in adjusted EBITDA.

Positive

• Revenue growth of 16.9% to $30.9 million in Q2 2025
• KSX segment showed strong 42.1% revenue growth to $13.3 million
• Successful completion of $15.7 million private placement
• Three strategic acquisitions adding $23 million in annual revenue
• Reduction in total net debt from $52.0M to $46.2M
• Extended Warranty segment shows six consecutive quarters of increased cash sales

Negative

• Net loss increased to $3.2 million from $2.2 million year-over-year
• Adjusted consolidated EBITDA decreased by $0.8M to $1.7M
• Extended Warranty adjusted EBITDA declined to $0.6M from $1.6M
• Potential shareholder dilution from private placement of 1,336,264 shares

Insights

Financial Analyst

Kingsway shows strong 16.9% revenue growth but widening losses, with KSX segment thriving while Extended Warranty underperforms.

Kingsway's Q2 2025 results reveal a 16.9% revenue increase to $30.9 million, driven primarily by their KSX (Kingsway Search Xcelerator) segment which grew an impressive 42.1% to $13.3 million. The Extended Warranty segment showed modest 3.1% growth to $17.6 million. Despite the revenue gains, the company's net loss widened to $3.2 million from $2.2 million in the prior year period.

The divergence between segments is striking. KSX's adjusted EBITDA improved by 33.3% to $2.4 million, while Extended Warranty's adjusted EBITDA declined significantly by 62.5% to $0.6 million from $1.6 million. This segment-level performance disparity is driving the overall adjusted consolidated EBITDA decrease of $0.8 million to $1.7 million.

Strategically, Kingsway has accelerated its acquisition strategy after completing a $15.7 million private placement at $11.75 per share. The company has increased its annual acquisition target from 2-3 to 3-5 companies per year. Recent acquisitions include Roundhouse Electric ($22.4 million), which adds $16 million in annual revenue and $4.2 million in adjusted EBITDA, and Advanced Plumbing and Drain ($3.5 million plus potential $1.5 million earn-out), adding $7 million in annual revenue and $0.7 million in adjusted EBITDA. They also acquired The HR Team, contributing $0.2 million in adjusted EBITDA.

The company's deleveraging progress is noteworthy, reducing total net debt to $46.2 million from $52.0 million at year-end 2024. This $5.8 million debt reduction, combined with the private placement, strengthens Kingsway's financial position to support their accelerated acquisition strategy.

The contrast between KSX's strong performance and Extended Warranty's weakening results raises questions about the long-term balance of these business segments. However, management notes Extended Warranty has shown six consecutive quarters of increased cash sales, which they consider a leading indicator of future performance, suggesting potential improvement ahead for this underperforming segment.

Management to Host Conference Call Today, August 7, 2025, at 5 p.m. ET

CHICAGO, ILLINOIS / ACCESS Newswire / August 7, 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 and six months ended June 30, 2025.

Second Quarter 2025 Consolidated Financial Highlights

• Consolidated revenue increased 16.9% to $30.9 million for the three months ended June 30, 2025, compared to $26.4 million in the prior year period.

  • Kingsway Search Xcelerator ("KSX") revenue increased 42.1% to $13.3 million in the second quarter of 2025, compared to $9.3 million in the second quarter of 2024.

  • Extended Warranty revenue increased 3.1% to $17.6 million in the second quarter of 2025, compared to $17.1 million in the second quarter of 2024.

• Consolidated net loss was $3.2 million for the three months ended June 30, 2025, compared to a net loss of $2.2 million in the prior year period.

• Twelve month trailing run-rate adjusted EBITDA for the operating companies of $22.0 million to $23.0 million; this metric is intended to capture the 12-month trailing adjusted EBITDA of businesses the Company currently owns or has recently acquired, and is not intended to be forward-looking guidance.

• Adjusted consolidated EBITDA decreased $0.8 million to $1.7 million for the three months ended June 30, 2025, compared to $2.5 million in the prior year period.

  • KSX adjusted EBITDA was $2.4 million in the second quarter of 2025 compared to $1.8 million in the year ago period.

  • Extended Warranty adjusted EBITDA was $0.6 million in the second quarter of 2025 compared to $1.6 million in the year ago period.

• The Company had total net debt of $46.2 million as of June 30, 2025, compared with $52.0 million as of December 31, 2024.

Recent Business Highlights

●

On June 24, 2025, the Company closed a $15.7 million private placement (a "PIPE") of 1,336,264 shares of its common stock at a price of $11.75 per share. Concurrent with the announcement of the PIPE, Kingsway also increased its target range for the number of KSX acquisitions the Company expects to complete each year from 2-3 per year to 3-5 per year. Funds received from the PIPE, in combination with operating cash flow and capital from other non-dilutive sources, provide Kingsway with the financial resources to deliver the Company's multi-year growth ambitions.

●

On July 1, 2025, the Company acquired 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 $22.4 million. The business adds $16.0 million in annual unaudited revenue and $4.2 million in annual unaudited adjusted EBITDA to Kingsway.

●

On August 1, 2025, the Company acquired AAA Flexible Pipe Cleaning Corp ("Advanced Plumbing and Drain"), a leading provider of commercial and residential plumbing services based in Cleveland, Ohio, for $3.5 million, plus a potential earn-out of up to $1.5 million, for a total maximum purchase price of $5.0 million. The business is expected to add $7.0 million in unaudited pro-forma annual revenue and $0.7 million in unaudited pro-forma annual adjusted EBITDA to Kingsway.

●

On August 1, 2025, the Company's wholly-owned subsidiary Ravix Group, Inc. completed the strategic acquisition of The HR Team, Inc., a specialized firm of human resources professionals based in the state of Maryland. The business is expected to add unaudited pro-forma annual adjusted EBITDA of $0.2 million to Kingsway.

Management Commentary

"The second quarter of 2025 marked a major inflection point for Kingsway," said JT Fitzgerald, Kingsway's President and CEO. "The Company raised $15.7 million via a PIPE transaction that provided the Company with the financial resources to accelerate growth and to deliver our multi-year business plan. We subsequently completed three attractive acquisitions via our KSX platform, bringing the year-to-date total to five KSX transactions - at the top end of our recently-increased target range. Importantly, our KSX acquisition pipeline remains robust. Kingsway has established itself as an attractive home for high-quality B2B and B2C services companies, and I believe we have a compelling opportunity to build a much larger and far more profitable business by following our public Search Fund strategy.

"Our momentum also continued operationally. KSX revenue grew 42% and KSX adjusted EBITDA grew 31% year-over-year. Extended Warranty delivered improved results and is clearly back on the path to growth, with revenue increasing 3% and cash sales increasing 9% against the prior year. Notably, this marks the sixth consecutive quarter of increased cash sales within Extended Warranty, a key leading indicator of future financial performance.

"After years of investment in our KSX platform, we're now executing our strategy with precision," concluded Mr. Fitzgerald. "Each of our recent acquisitions aligns with our vision to build an exceptional portfolio of growing, profitable, and recurring revenue services businesses led by our talented Operator CEO's. Kingsway is committed to driving significant long-term value for the Company's shareholders, and I am confident these transactions demonstrate our public Search Fund strategy is delivering as promised."

 

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, August 7, 2025
Time: 5 p.m. Eastern Time
Toll Free: 877-545-0320
International: 973-528-0002
Access Code: 594735
Live Webcast Link: https://www.webcaster4.com/Webcast/Page/2928/52798

Conference Call Replay Information

Toll Free: 877-481-4010
International: 919-882-2331
Replay Passcode: 52798
Replay Webcast Link: https://www.webcaster4.com/Webcast/Page/2928/52798

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 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

 

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
	6/30/2025			6/30/2025			3/31/2025			12/31/2024			9/30/2024
GAAP Net Income (Loss)	$	(10,038	)	$	(3,165	)	$	(3,092	)	$	(1,470	)	$	(2,311	)
Non-GAAP Adjustments:
Discontinued operations		136			-			-			1			135
Changes in fair value; realized gains/losses (1)		(6	)		(36	)		(22	)		133			(81	)
Employee related expenses (2)		2,606			731			495			390			990
Other items (3)		3,258			982			1,095			225			956
Depreciation, amortization, tax and interest expense		13,477			3,141			2,876			4,117			3,343
Total Non-GAAP Adjustments		19,471			4,818			4,444			4,866			5,343
Non-GAAP Adjusted Consolidated EBITDA	$	9,433		$	1,653		$	1,352		$	3,396		$	3,032

	Twelve Months Ended			For the Three Months Ended
	6/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
GAAP Net Income (Loss)	$	(6,674	)	$	(2,186	)	$	(2,328	)	$	(1,485	)	$	(675	)
Non-GAAP Adjustments:
Discontinued operations		1,801			(167	)		213			1,877			(122	)
Changes in fair value; realized gains/losses (1)		1,081			145			408			240			288
Employee related expenses (2)		2,113			412			467			755			479
Other items (3)		2,066			590			61			1,081			334
Gain on sale of PWSC (4)		(342	)		-			-			-			(342	)
Depreciation, amortization, tax and interest expense		9,566			3,659			3,280			177			2,450
Total Non-GAAP Adjustments		16,285			4,639			4,429			4,130			3,087
Non-GAAP Adjusted Consolidated EBITDA	$	9,611		$	2,453		$	2,101		$	2,645		$	2,412

	(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
	6/30/2025			6/30/2025			3/31/2025			12/31/2024			9/30/2024
GAAP Operating Income for Extended Warranty segment	$	4,074		$	(63	)	$	515		$	1,918		$	1,704
Non-GAAP Adjustments:
Investment income (1)		1,309			341			247			394			327
Employee costs		352			302			50			-			-
Depreciation		157			39			38			39			41
Total Non-GAAP Adjustments		1,818			682			335			433			368
Non-GAAP adjusted EBITDA for Extended Warranty segment	$	5,892		$	619		$	850		$	2,351		$	2,072

	Twelve Months Ended			For the Three Months Ended
	6/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
GAAP Operating Income for Extended Warranty segment	$	6,479		$	1,244		$	1,076		$	2,381		$	1,778
Non-GAAP Adjustments:
Investment income (1)		1,242			321			320			314			287
Depreciation		227			56			52			62			57
Total Non-GAAP Adjustments		1,469			377			372			376			344
Non-GAAP adjusted EBITDA for Extended Warranty segment	$	7,948		$	1,621		$	1,448		$	2,757		$	2,122

(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
	6/30/2025			6/30/2025			3/31/2025			12/31/2024			9/30/2024
GAAP Operating Income for KSX segment	$	6,670		$	2,049		$	1,743		$	1,734		$	1,144
Non-GAAP Adjustments:
Acquisition and employee costs (1)		441			204			52			65			120
Investment income (2)		114			29			25			33			27
Depreciation		421			113			97			101			110
Total Non-GAAP Adjustments		976			346			174			199			257
Non-GAAP adjusted EBITDA for KSX segment	$	7,646		$	2,395		$	1,917		$	1,933		$	1,401

	Twelve Months Ended			For the Three Months Ended
	6/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
GAAP Operating Income for KSX segment	$	4,843		$	1,441		$	1,343		$	1,056		$	1,003
Non-GAAP Adjustments:
Acquisition and employee costs (1)		492			139			138			128			87
Investment income (2)		105			68			10			12			15
Depreciation (3)		268			180			64			24			-
Total Non-GAAP Adjustments		865			387			212			164			102
Non-GAAP adjusted EBITDA for KSX segment	$	5,708		$	1,828		$	1,555		$	1,220		$	1,105

(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) Q2 2025 earnings results?

KFS reported Q2 2025 consolidated revenue of $30.9 million, up 16.9% year-over-year, but recorded a net loss of $3.2 million. The company's KSX segment grew 42.1% to $13.3 million, while Extended Warranty revenue increased 3.1% to $17.6 million.

How much did Kingsway Financial (KFS) raise in their June 2025 private placement?

KFS raised $15.7 million through a private placement of 1,336,264 shares at $11.75 per share on June 24, 2025.

What acquisitions did Kingsway Financial (KFS) announce in Q2 2025?

KFS announced three acquisitions: Roundhouse Electric for $22.4M, Advanced Plumbing and Drain for up to $5.0M, and The HR Team, collectively adding approximately $23M in annual revenue and $5.1M in adjusted EBITDA.

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

As of June 30, 2025, KFS had total net debt of $46.2 million, reduced from $52.0 million as of December 31, 2024.

What is Kingsway Financial's (KFS) new acquisition target range?

KFS increased its target range for KSX acquisitions from 2-3 per year to 3-5 per year, with five KSX transactions completed year-to-date in 2025.