Kingsway(KFS)2025-03-17 21:11Acquisitions - Kingsway Financial Services Inc. acquired Image Solutions, LLC for 7.75 million in debt and cash on hand[21][22][23]. - The company completed the acquisition of a business for 13,633,000 in 2023[323]. - The company acquired Systems Products International, Inc. for an aggregate cash consideration of 11.0 million, further expanding the company's portfolio of businesses with recurring revenue[409]. - The preliminary allocation of the Image Solutions purchase price was 13.868 million, resulting in goodwill of 2.5 million and incurred a net loss of 4.9 million, reflecting the premium paid over the fair value of net tangible and intangible assets acquired[413]. - The company recorded a measurement period adjustment that increased goodwill by 100 million, qualifying it as an accelerated filer[20]. - Total revenues for 2024 increased to 103,244 thousand in 2023, representing a growth of 5.2%[315]. - Operating income rose to 954 thousand in 2023, marking a significant increase of 126.3%[315]. - The net loss for 2024 was 24,012 thousand in 2023, indicating a negative shift of 134.5%[318]. - Basic loss per share attributable to common shareholders for continuing operations was 0.97 in 2023[315]. - Total operating expenses increased to 102,290 thousand in 2023, reflecting a rise of 4.8%[315]. - Comprehensive loss attributable to common shareholders was 4,586 thousand in 2023, representing an increase of 83.5%[318]. - The company reported an accumulated deficit of 346.9 million in 2023, indicating an increase in the deficit of approximately 4.2%[313]. - The company experienced a loss from continuing operations attributable to common shareholders of 22.942 million in 2023[417]. Assets and Liabilities - Total assets decreased from 186.6 million in 2024, reflecting a decline of approximately 5.6%[313]. - Cash and cash equivalents decreased from 5.5 million in 2024, a reduction of about 39.5%[313]. - Goodwill increased from 56.5 million in 2024, representing an increase of approximately 12.5%[313]. - Total liabilities decreased from 168.3 million in 2024, a decline of about 2.8%[313]. - The company's additional paid-in capital decreased from 376.8 million in 2024, a decrease of about 0.8%[313]. - The total shareholders' equity attributable to common shareholders decreased from 8.4 million in 2024, a decline of approximately 69.6%[313]. - The company has a lease liability of 1.2 million in 2023, reflecting an increase of approximately 124.6%[313]. - The company’s service fee receivable net of allowance for credit losses decreased from 9.4 million in 2024, a decline of about 6.9%[313]. Revenue Recognition and Business Segments - The Extended Warranty segment includes subsidiaries that provide vehicle service agreements across all 50 states, with IWS serving credit unions in 26 states[27][28]. - IWS, Geminus, and PWI focus on the automotive finance market, offering vehicle service agreements and related products[32][40]. - Trinity markets HVAC warranty products and provides maintenance support services across the United States[31][35]. - The average term of vehicle service agreements ranges from 24 to 36 months, with coverage options varying by vehicle type[34]. - No single customer accounts for 10% or more of Kingsway's consolidated revenues, indicating a diversified customer base[36]. - Kingsway's strategic initiatives include expanding its product offerings and enhancing market competitiveness in the automotive finance sector[42]. - The company recognizes service fee and commission revenue based on various agreements with credit unions, consumers, and businesses[380]. - Vehicle service agreement fees are earned over the duration of the contracts, with revenues recognized based on expected claims[381]. - The company estimates refunds based on historical refund rates, which have averaged between 5.83% to 12.00% of the original vehicle service agreement fee[382][383]. Cash Flow and Investment Activities - Cash provided by operating activities from continuing operations was (26,849,000) in 2023[323]. - Total cash and cash equivalents and restricted cash decreased to 17,498,000 at the end of 2023[324]. - The company incurred an impairment of goodwill and intangible assets amounting to 160,000 in 2024, contrasting with a gain of (16,846,000) in 2024, compared to cash provided of 4,659,000 in 2024, down from $24,581,000 in 2023[324]. Internal Controls and Reporting - The company maintains effective internal control over financial reporting as of December 31, 2024, according to independent auditors[292]. - The company accounts for all financial instruments using trade date accounting and conducts quarterly reviews for possible impairment[349]. - The company recognizes credit losses based on a forward-looking current expected credit losses model, estimating expected credit losses from various factors[359]. - The company reports investments in private companies at cost, adjusted for observable price changes and impairments, with changes included in net change in unrealized gain on private company investments[345]. - Investments in fixed maturities are classified as available-for-sale and reported at fair value, with unrealized gains and losses included in accumulated other comprehensive loss[342]. - The company’s subordinated debt is measured and reported at fair value, with changes in fair value related to credit risk recognized in other comprehensive income[371]. - Contingent consideration liabilities for acquisitions are measured at fair value at the date of acquisition, with changes reported as non-operating other revenue or expense[372]. - Deferred contract costs are amortized over the expected customer relationship period, with costs deferred and recorded in commissions and cost of services sold[360]. Employee and Operational Information - As of December 31, 2024, the company employed 433 full-time personnel, with no collective bargaining agreements in place[73]. - The company actively markets its services through industry events and networking, particularly for its business services and healthcare staffing[56][58]. - The company has a dedicated team of Searchers to identify and acquire businesses, enhancing its competitive advantage in the lower middle market[63]. - Claims management is fundamental to operating results, with a focus on settling claims fairly for policyholders[45]. - The company utilizes proprietary databases for real-time pricing adjustments and strategic decision-making in claims management[46].