Kingsway(KFS) - 2025 Q1 - Quarterly Results

Q1 2025 Consolidated Financial Highlights Kingsway's Q1 2025 revenue grew 8.4% to $28.3 million, led by KSX, but net loss widened and adjusted EBITDA declined Q1 2025 Key Financial Metrics | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | Consolidated Revenue | $28.3 | $26.2 | +8.4% | | Consolidated Net Loss | ($3.1) | ($2.3) | +34.8% | | Adjusted Consolidated EBITDA | $1.4 | $2.1 | -33.3% | | Total Net Debt (as of period end) | $53.1 | N/A | N/A | Q1 2025 Revenue by Segment | Segment | Q1 2025 Revenue (in millions) | Q1 2024 Revenue (in millions) | Change | | :--- | :--- | :--- | :--- | | Kingsway Search Xcelerator (KSX) | $11.7 | $9.5 | +23.3% | | Extended Warranty | $16.7 | $16.7 | 0.0% | - The twelve-month run-rate adjusted EBITDA for operating companies is estimated to be between $18.0 million and $19.0 million, reflecting the trailing performance of currently owned and recently acquired businesses[4] Recent Business Highlights Kingsway executed strategic initiatives including two accretive acquisitions and a key leadership appointment during and after Q1 - On March 17, 2025, Kingsway acquired Bud's Plumbing Service for $5.0 million, expected to add $6.0 million in annual unaudited revenue and $0.8 million in annual unaudited adjusted EBITDA[4] - On April 30, 2025, Kingsway's subsidiary SPI Software acquired @Work International Pty Ltd (ViewPoint), a cloud-native timeshare software firm, to advance its leadership in the vacation ownership software market[4] - On April 2, 2025, Rob Humble was appointed President and CEO of Kingsway's dealer warranty businesses, PWI and Penn Warranty[4] Management Commentary CEO JT Fitzgerald highlighted strong KSX segment growth and signs of recovery in Extended Warranty, reaffirming the company's Search Fund acquisition model - The KSX segment demonstrated strong performance with revenue growing 23.3% and adjusted EBITDA growing 23.2% year-on-year[4] - Two acquisitions were completed in early 2025: Bud's Plumbing, establishing the new KSX Skilled Trade Services platform, and ViewPoint, accelerating SPI Software's product roadmap and geographic expansion[6] - The Extended Warranty segment is showing signs of recovery, with growth in cash sales and positive forward-looking profitability indicators, despite a year-over-year decline in adjusted EBITDA for the quarter[7] - The company maintains a robust deal pipeline and continues to focus on acquiring asset-light, profitable, recurring revenue service businesses through its Search Fund model[8] Financial Reconciliations (GAAP to Non-GAAP) This section provides detailed reconciliations from GAAP to Non-GAAP adjusted EBITDA for consolidated and segment results, offering a clearer view of core operational performance Consolidated GAAP Net Income to Non-GAAP Adjusted EBITDA Q1 2025 GAAP Net Loss of $3.1 million reconciled to Non-GAAP Adjusted Consolidated EBITDA of $1.4 million, indicating decreased adjusted profitability year-over-year Consolidated EBITDA Reconciliation (in thousands) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | GAAP Net Income (Loss) | $(3,092) | $(2,328) | | Total Non-GAAP Adjustments | $4,444 | $4,432 | | Non-GAAP Adjusted Consolidated EBITDA | $1,352 | $2,104 | Extended Warranty Segment GAAP Operating Income to Non-GAAP Adjusted EBITDA Extended Warranty segment's Q1 2025 GAAP Operating Income of $0.5 million reconciled to Non-GAAP adjusted EBITDA of $0.85 million, a notable decrease from Q1 2024 Extended Warranty EBITDA Reconciliation (in thousands) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | GAAP Operating Income | $515 | $1,076 | | Total Non-GAAP Adjustments | $335 | $372 | | Non-GAAP adjusted EBITDA | $850 | $1,448 | KSX Segment GAAP Operating Income to Non-GAAP Adjusted EBITDA KSX segment's Q1 2025 GAAP Operating Income of $1.7 million reconciled to Non-GAAP adjusted EBITDA of $1.9 million, reflecting healthy growth from Q1 2024 KSX Segment EBITDA Reconciliation (in thousands) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | GAAP Operating Income | $1,743 | $1,343 | | Total Non-GAAP Adjustments | $174 | $212 | | Non-GAAP adjusted EBITDA | $1,917 | $1,555 | Company Information and Disclosures Kingsway Financial Services Inc. is a publicly-traded U.S. company utilizing the Search Fund model to acquire asset-light service businesses, with the report including non-GAAP financial measure disclosures and forward-looking statement disclaimers - Kingsway is the only publicly-traded US company that utilizes the Search Fund model for acquisitions[9] - The company's strategy is to acquire and operate a collection of asset-light, growing, profitable B2B and B2C services companies with recurring revenue streams[10] - The report uses non-GAAP adjusted EBITDA to provide investors with a meaningful comparison of the company's core business operating results over different periods[11] - This press release contains forward-looking statements; investors are advised to consult the 'Risk Factors' section in the Company's SEC filings for a full understanding of potential risks[12]