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Kingsway Financial Shares Dip on Mixed Q2 Earnings and Revenue Growth
KingswayKingsway(US:KFS) ZACKSยท2025-08-13 17:56

Core Insights - Kingsway Financial Services Inc. (KFS) reported a consolidated revenue increase of 16.9% year over year to $30.9 million for Q2 2025, primarily driven by a 42.1% surge in the Kingsway Search Xcelerator (KSX) segment [2][3] - Despite revenue growth, the company experienced a widening net loss of $3.2 million compared to $2.2 million a year ago, and adjusted consolidated EBITDA fell by 32.6% to $1.7 million [2][3] Financial Performance - The KSX segment's revenue rose to $13.3 million from $9.3 million, while the Extended Warranty segment saw a modest increase to $17.6 million from $17.1 million, reflecting a 3.1% growth [2] - KSX adjusted EBITDA climbed 31% to $2.4 million, while Extended Warranty adjusted EBITDA dropped 61.8% to $0.6 million [3] - Total net debt decreased to $46.2 million from $52 million, supported by a $15.7 million private placement [4] Management Commentary - CEO JT Fitzgerald described the quarter as a "major inflection point," highlighting the capital infusion from the PIPE transaction and an increased acquisition target for KSX [5][11] - CFO Kent Hansen emphasized that the Extended Warranty segment remains cash generative despite near-term EBITDA pressure [6] Growth Drivers - The strong revenue growth was attributed to KSX's expansion and improved performance in portfolio companies, alongside a one-time legal expense of $0.6 million that will not recur [7] - Management expressed confidence in sustaining growth momentum through the KSX platform and plans to remain active in the M&A market [8] Recent Acquisitions - In Q2 2025, Kingsway Financial closed three acquisitions, including Roundhouse Electric & Equipment Co. for $22.4 million and AAA Flexible Pipe Cleaning Corp. for up to $5 million [10]