Kingsway(US:KFS)2025-03-19 02:13Financial Data and Key Metrics Changes - For the full year 2024, consolidated revenue was $109.4 million, up 6% from a year ago, and consolidated adjusted EBITDA was $10.6 million, up 17% compared to 2023 [7] - Consolidated adjusted EBITDA improved sequentially in each of the four quarters of the year [8] - Cash and cash equivalents as of December 31, 2024, were $5.5 million compared to $9.1 million at the end of 2023 [42] - Total debt outstanding increased to $57.5 million compared to $44.4 million at the end of 2023 [43] Business Line Data and Key Metrics Changes - In the Extended Warranty segment, revenue grew by 1% to $68.9 million from $68.2 million in 2023, with a 3.6% increase in cash sales [9] - KSX reported revenue of $40.5 million, an increase of 16% compared to $35 million in 2023, with adjusted EBITDA for KSX at $6.6 million, up 15% [15] - Extended Warranty adjusted EBITDA was $7.6 million versus $8.4 million in the prior year, primarily due to increased claims costs [10] Market Data and Key Metrics Changes - Claims increased roughly 6.6% year-over-year for 2024, down from a 10% increase in 2023, indicating moderation in claims expense [50] - Total shifts at SNS increased by 8.5% in the fourth quarter, while travel shifts were up 42% [21] Company Strategy and Development Direction - The company aims to grow its skilled trades platform through organic growth and future acquisitions, targeting two to three deals per year [32] - The strategy includes a disciplined framework to evaluate acquisition opportunities based on operational and financial metrics [32] - The company is focused on continuous improvement and addressing pricing strategies to offset claims inflation [66] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the Extended Warranty segment, noting that margin pressures are easing and the business remains solidly profitable [12] - The company is confident in its ability to capitalize on opportunities in 2025 and beyond, having built a stronger, more diversified company [36] - Management acknowledged areas for improvement, particularly in pricing and talent acquisition, and emphasized a culture of continuous improvement [66] Other Important Information - The company completed the acquisition of Image Solutions and divested its VA Lafayette subsidiary in 2024 [6] - The acquisition of Buds Plumbing was completed for $5 million, with plans for growth through organic and inorganic means [31] Q&A Session Summary Question: Could you provide more color on the claims expense moderation in the Extended Warranty segment? - Claims increased roughly 6.6% year-over-year for 2024, down from 10% in 2023, with moderation observed in the second half of 2024 [50] Question: What's the vision for growing the skilled trade services platform? - The focus is on organic growth and penetration of existing markets, with potential for cross-selling and expansion into HVAC services [54][56] Question: Are you targeting specific verticals within existing segments for acquisition opportunities? - The pipeline includes both existing segments and new industries, focusing on B2B services, healthcare services, vertical market software, and skilled trades [60] Question: How long have existing OIRs been searching for acquisitions? - Current OIRs have been with the company for varying lengths, with a need to backfill positions as new leadership transitions occur [62] Question: Were there areas Kingsway did not perform well in 2024? - Management identified pricing and talent acquisition as areas for improvement, particularly in the warranty segment [66]