Kingsway Financial Services ((KFS)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for Kingsway Financial Services Inc. presented a balanced perspective on the company’s performance. While strategic acquisitions and growth in segments like KSX and extended warranty cash sales were highlighted, there were also notable declines in adjusted EBITDA and challenges within the extended warranty segment. This led to a mixed sentiment regarding the company’s overall financial health.
Acquisition of MLC Plumbing
Kingsway Financial Services Inc. made a significant move by acquiring MLC Plumbing, a business with over a century of history, for $5 million. This acquisition is expected to contribute approximately $800,000 to the company’s annual adjusted EBITDA, marking a strategic expansion in its portfolio.
Acquisition of Viewpoint
The company also acquired Viewpoint, a leading cloud-native timeshare software provider. This acquisition is poised to add over $1 million in unaudited annual recurring revenue and $200,000 in unaudited EBITDA, enhancing Kingsway’s technological capabilities and market reach.
Revenue and EBITDA Growth in KSX
The KSX segment of Kingsway saw impressive growth, with both revenue and adjusted EBITDA increasing by 23% year on year. This growth underscores the segment’s strong performance and strategic importance to the company.
Extended Warranty Cash Sales Increase
In the extended warranty segment, cash sales grew by 3.7% year over year and 9.3% sequentially. This increase signals a positive trend in this segment, despite the challenges faced in other areas.
New Board Appointments
To strengthen its leadership and corporate governance, Kingsway appointed two new independent directors, Adam Patinkin and Joshua Horowitz. These appointments are expected to bring fresh perspectives and expertise to the board.
Decline in Consolidated Adjusted EBITDA
Despite some positive developments, the company experienced a decline in consolidated adjusted EBITDA by $800,000 compared to the previous year. This was attributed to lower profitability in the extended warranty segment and increased holdcoat costs.
Decrease in Extended Warranty EBITDA
The extended warranty segment reported a decrease in adjusted EBITDA for the first quarter of 2025, dropping to $800,000 from $1.4 million in the previous year. This decline highlights ongoing challenges in this area.
SNS Revenue Growth with EBITDA Decline
SNS reported a 7.5% increase in revenue, but this was accompanied by a slight decline in adjusted EBITDA year over year, indicating mixed results within this segment.
PWI and Penn Revenue and EBITDA Down
Both PWI and Penn experienced declines in revenue and adjusted EBITDA year over year in the first quarter, reflecting broader challenges faced by the company.
Forward-Looking Guidance
During the earnings call, CEO JT Fitzgerald and CFO Kent Hansen provided forward-looking guidance that emphasized significant growth metrics and strategic acquisitions. The KSX segment showed strong performance with a 23% increase in revenue and adjusted EBITDA, bolstered by acquisitions like Bud’s Plumbing and Viewpoint. The extended warranty segment also showed recovery signs, with cash sales and modified cash EBITDA increasing. Overall, Kingsway’s consolidated revenue rose by 8.4% to $28.3 million, despite challenges in adjusted EBITDA.
In conclusion, the earnings call for Kingsway Financial Services Inc. painted a picture of strategic growth tempered by certain financial challenges. While acquisitions and segment growth were positive highlights, declines in adjusted EBITDA and specific segment struggles presented a balanced view of the company’s current standing. Investors and stakeholders will be keenly watching how Kingsway navigates these challenges while capitalizing on its growth opportunities.