Kingsway Reports Full Year 2024 Financial Results

Rhea-AI Summary

Kingsway Financial Services (NYSE:KFS) reported its full year 2024 financial results, showing mixed performance. Consolidated revenue increased 5.9% to $109.4 million, with KSX revenue growing 15.7% to $40.5 million. However, the company posted a net loss of $8.3 million, compared to net income of $24.0 million in 2023.

The Extended Warranty segment revenue slightly increased to $68.9 million, while KSX growth was primarily driven by acquisitions of SPI, DDI, and Image Solutions. Adjusted consolidated EBITDA improved to $10.6 million from $9.1 million in the prior year.

The company completed several strategic moves, including the acquisition of Bud's Plumbing for $5 million plus additional considerations, and repurchased 355,750 shares for $2.8 million. Total net debt stood at $52.0 million as of December 31, 2024. In February 2025, KFS raised $6.0 million through a private placement of Class C Preferred Stock.

Positive

• Consolidated revenue increased 5.9% to $109.4 million
• KSX revenue grew 15.7% to $40.5 million
• Adjusted consolidated EBITDA improved to $10.6 million from $9.1 million
• Bud's Plumbing acquisition expected to add $6.0 million in annual revenue
• Successfully raised $6.0 million through Class C Preferred Stock placement

Negative

• Net loss of $8.3 million compared to prior year net income of $24.0 million
• Extended Warranty adjusted EBITDA declined to $7.6 million from $8.4 million
• Net debt increased to $52.0 million from $35.3 million year-over-year
• Higher claims expense in Extended Warranty segment

Insights

Financial Analyst

Kingsway Financial Services reported mixed financial results for FY2024 with consolidated revenue increasing 5.9% to $109.4 million, while posting a net loss of $8.3 million compared to net income of $24.0 million in 2023 (which included a one-time $31.6 million debt extinguishment gain).

The company showed improved profitability metrics with adjusted consolidated EBITDA rising to $10.6 million from $9.1 million in 2023, representing a 16.5% increase that outpaced revenue growth. This suggests operational improvements despite challenges.

Segment performance reveals divergent trends. The KSX segment demonstrated strong growth with revenue increasing 15.7% to $40.5 million and adjusted EBITDA rising 14.9% to $6.6 million, driven primarily by recent acquisitions. Meanwhile, the Extended Warranty segment faced margin pressure due to higher claims expense, with EBITDA declining to $7.6 million from $8.4 million, though management noted sequential quarterly improvements throughout 2024.

Kingsway's acquisition-driven growth strategy continues with the purchases of Image Solutions (September 2024) and Bud's Plumbing (early 2025), the latter expected to add $6.0 million in annual revenue and $0.8 million in EBITDA. The company's acquisition of Bud's at approximately 6.25x EBITDA appears consistent with their disciplined capital allocation approach.

Balance sheet considerations include increased leverage, with net debt rising to $52.0 million from $35.3 million at the end of 2023, a 47% increase. The company made $21.6 million in principal debt payments during 2024 and raised $6.0 million through preferred stock issuance in February 2025, suggesting ongoing capital management efforts.

Investment Strategist

Kingsway's 2024 results reveal a company executing a deliberate roll-up strategy while navigating operational challenges. The 16.5% improvement in adjusted consolidated EBITDA despite more modest revenue growth demonstrates that management is extracting value from acquisitions while actively addressing issues in the core warranty business.

The company's acquisition strategy shows promising results in the KSX segment, where acquired businesses are driving both top and bottom-line growth. The recent formation of a Skilled Trades Services platform and acquisition of Bud's Plumbing represents strategic diversification into a potentially less cyclical business line with steady cash flow characteristics.

Investors should note the significant gap between the run-rate adjusted EBITDA of $19-20 million and actual adjusted EBITDA of $10.6 million. This metric attempts to capture the full-year earnings potential of recent acquisitions but carries execution risk as integration efforts continue. The $6 million preferred stock issuance in February 2025 provides additional capital flexibility but will increase dividend obligations.

The company's share repurchase program, having bought back 355,750 shares for $2.8 million, signals management confidence but must be balanced against the increasing debt load. With net debt rising 47% year-over-year, the company's financial flexibility may be constrained if operational improvements don't accelerate.

The Extended Warranty segment's sequential quarterly improvement throughout 2024 suggests that pricing adjustments and expense management are beginning to offset claims pressure. This operational progress, combined with the CEO's comments about a robust acquisition pipeline, indicates the company remains committed to its long-term strategy despite short-term challenges.

Management to Host Conference Call Tuesday, March 18, 2025, at 5 p.m. ET

CHICAGO, IL / ACCESS Newswire / March 17, 2025 / Kingsway Financial Services Inc. (NYSE:KFS) ("Kingsway" or the "Company") today announced its operating results for the 12 months ended December 31, 2024.

Full Year 2024 Consolidated Financial Highlights

• Consolidated revenue increased 5.9% to $109.4 million for the 12 months ended December 31, 2024, compared to $103.2 million in the prior year

  • Extended Warranty revenue was $68.9 million in 2024, compared to $68.2 million in 2023; as both the number of contracts sold and the average price per contract increased slightly over prior year

  • KSX revenue increased by 15.7% to $40.5 million in 2024, compared to $35.0 million in 2023, primarily due to the acquisitions of SPI (September 2023), DDI (October 2023) and Image Solutions (September 2024)

• Consolidated net loss was $8.3 million for the 12 months ended December 31, 2024, compared to net income of $24.0 million, inclusive of a $31.6 million gain on extinguishment of debt related to the repurchase of trust preferred debt, in the prior year

• Twelve month run-rate adjusted EBITDA for the operating companies of $19.0 million to $20.0 million; run-rate is intended to capture the 12-month earnings of what the company currently owns or has recently acquired and is not intended to be forward-looking guidance

• Adjusted consolidated EBITDA was $10.6 million for the 12 months ended December 31, 2024, compared to $9.1 million in the prior year period

  • Combined adjusted EBITDA for the Extended Warranty segment and KSX segment was a total of $14.1 million for 2024 and 2023

  • Extended Warranty adjusted EBITDA was $7.6 million in 2024 compared to $8.4 million in the year ago. The decrease was due to higher claims expense, which was partially offset by disciplined management of general operating expenses.

  • KSX adjusted EBITDA increased by 14.9% to $6.6 million in 2024, compared to $5.7 million for 2023, primarily due to the inclusion of DDI and SPI, which were acquired in October and September of 2023, respectively, and Image Solutions, which was acquired in September 2024

Recent Business Highlights.

• Purchased M.L.C. Plumbing, LLC (dba Bud's Plumbing Service, "Bud's Plumbing"), for $5 million, plus transaction expenses and a working capital adjustment, in cash and a $1.25 million seller note. The transaction, expected to be immediately accretive, adds $6.0 million of annual unaudited revenue and $0.8 million of annual unaudited adjusted EBITDA. Established in 1920, Bud's Plumbing provides various plumbing installation and repair services throughout Indiana and northern Kentucky, serving a variety of customers ranging from homeowners, local businesses and commercial.

John T. Fitzgerald, President and Chief Executive Officer of Kingsway, said, "Our fourth quarter and full year 2024 financial results are in line with our expectations. Adjusted EBITDA improved consistently across both of our operating segments over the past several quarters, underscoring the strength of our strategy and the effectiveness of operational execution. The addition of Image Solutions in September further expanded our portfolio of profitable, asset-light businesses, providing an additional lever for long-term value creation. We are pleased to announce the formation of our Skilled Trades Services platform at KSX and the recent acquisition of Bud's Plumbing. As we move into 2025, we are encouraged by potential acquisition opportunities in our pipeline and remain confident in our ability to acquire and operate cash flow generating businesses that will deliver attractive returns for our shareholders.

"Extended Warranty is showing promising signs of improvement, with Adjusted EBITDA increasing sequentially each quarter in 2024. Our disciplined management of operating expenses, along with recent pricing adjustments, helped mitigate the year-over-year rise in claims paid. Notably, the increase in claims expense moderated in the second half of the year compared to the first half."

"Leadership of our KSX operating companies continues to refine operations and go-to-market strategies, adding industry expertise, aligning cost structures and building robust pipelines of new sales opportunities. Financial performance in KSX was solid in 2024, with 15% year-over-year increase in Adjusted EBITDA, and momentum continued to build in the second half of the year. Our corporate strategy remains unchanged, with a disciplined and thoughtful approach to capital allocation at its core. The improving performance in our KSX segment validates this approach and reinforces our confidence in our long-term value creation strategy."

Recent Financing Highlights

• During 2024 and through January 2025, the Company repurchased 355,750 shares of its common stock for an aggregate purchase price of $2.8 million, including fees and commissions. With the January purchases, the Company fully utilized the amount of the security repurchase program authorized by the Board of Directors.

• Principal debt payments of $21.6 million in 2024; the Company had total net debt of $52.0 million as of December 31, 2024, compared with $35.3 million as of December 31, 2023

• Subsequent to year end, in February 2025, the Company issued and sold in a private placement to accredited investors in the aggregate 240,000 shares of a newly created class of preferred stock designated Class C Preferred Stock, with a liquidation preference of $25.00 per share for aggregate proceeds of $6.0 million.

Conference Call and Webcast

Management will host a conference call at 5 p.m. Eastern Time on Tuesday, March 18, 2025, to discuss the results and host a live Q&A session. Additionally, investors may also submit questions via email to: James@HaydenIR.com .

Conference Call Information

Date: Tuesday, March 18, 2025
Time: 5 p.m. Eastern Time
Toll Free: 888-506-0062; Code: 734555
International: 973-528-0011; Code: 734555
Live Webcast Link: https://www.webcaster4.com/Webcast/Page/2928/52199

Conference Call Replay Information

Toll Free: 877-481-4010
International: 919-882-2331
Replay Passcode: 52199
Replay Webcast Link: https://www.webcaster4.com/Webcast/Page/2928/52199

About the Company

Kingsway is a holding company that owns or controls subsidiaries primarily in the business services and extended warranty industries. The common shares of Kingsway are listed on the New York Stock Exchange under the trading symbol "KFS."

The company serves the business services industry through its operating subsidiaries within its Kingsway Search Xcelerator ("KSX") segment:

B2B Services

• Ravix Group (ravixgroup.com), CSuite Financial (Csuitefinancialpartners.com)

• Image Solutions (istechology.com)

Healthcare Services

• Digital Diagnostic Imaging (ddimagingusa.com)

• Secure Nursing Services (securenursing.com)

Vertical Market Software

• Systems Products International (spisoftware.com)

Skilled Trade Services

• Bud's Plumbing (budsplumbing.com)

The company serves the extended warranty industry through its operating subsidiaries within its Extended Warranty segment:

Auto Warranty

• IWS (iwsgroup.com)

• Penn Warranty (pennwarranty.com)

• Preferred Warranties (preferredwarranties.com)

HVAC/Facility Warranty

• Trinity Warranty Solutions (trinitywarranty.com)

Non U.S. GAAP Financial Measure

Management believes that non-GAAP adjusted EBITDA, when presented in conjunction with comparable GAAP measures, provides useful information about the Company's operating results and enhances the overall ability to assess the Company's financial performance. Management uses non-GAAP adjusted EBITDA, together with other measures of performance under GAAP, to compare the relative performance of operations in planning, budgeting and reviewing the performance of its business. Non-GAAP adjusted EBITDA allows investors to make a more meaningful comparison between the Company's core business operating results over different periods of time. Management believes that non-GAAP adjusted EBITDA, when viewed with the Company's results under GAAP and the accompanying reconciliations, provides useful information about the Company's business without regard to potential distortions. By eliminating potential differences in results of operations between periods caused by the factors listed in the attached schedules, Management believes that non-GAAP adjusted EBITDA can provide useful additional basis for comparing the current performance of the underlying operations being evaluated. Investors should consider this non-GAAP measure in addition to, not as a substitute for or as superior to, financial reporting measures prepared in accordance with GAAP. Investors are encouraged to review the Company's financial results prepared in accordance with GAAP to understand the Company's performance taking into account all relevant factors.

Forward-Looking Statements

This press release may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. Words such as "expects," "believes," "anticipates," "intends," "estimates," "seeks" and variations and similar words and expressions are intended to identify such forward-looking statements; however, the absence of any such words does not mean that a statement is a not a forward-looking statement. Such forward-looking statements relate to future events or future performance, but reflect Kingsway management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the section entitled "Risk Factors" in the Company's 2024 Annual Report on Form 10-K and subsequent Form 10-Qs and Form 8-Ks filed with the Securities and Exchange Commission. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Additional Information

Additional information about Kingsway, including a copy of its Annual Reports can be accessed on the EDGAR section of the U.S. Securities and Exchange Commission's website at www.sec.gov , on the Canadian Securities Administrators' website at www.sedar.com , or through the Company's website at www.kingsway-financial.com .

For Media Inquiries: Hayden IR James Carbonara (646) 755-7412 james@haydenir.com

For Company Inquiries: Kingsway Financial Services Inc. Kent Hansen, CFO (312) 766-2163 khansen@kingsway-financial.com

Kingsway Financial Services Inc.
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted Consolidated EBITDA
(in thousands)
(UNAUDITED)

		Twelve Months Ended				For the Three Months Ended
		12/31/2024				12/31/2024				9/30/2024				6/30/2024				3/31/2024
GAAP Net Income (Loss)		$	(8,295	)		$	(1,470	)		$	(2,311	)		$	(2,186	)		$	(2,328	)
Non-GAAP Adjustments:
Discontinued operations			182				1				135				(167	)			213
Changes in fair value; realized gains/losses (1)			260				(35	)			(176	)			60				411
Employee related expenses (2)			2,259				390				990				412				467
Other items (3)			1,832				225				956				590				61
Depreciation, amortization, tax and interest expense			14,399				4,117				3,343				3,659				3,280
Total Non-GAAP Adjustments			18,932				4,698				5,248				4,554				4,432
Non-GAAP Adjusted Consolidated EBITDA		$	10,637			$	3,228			$	2,937			$	2,368			$	2,104

		Twelve Months Ended				For the Three Months Ended
		12/31/2023				12/31/2023				9/30/2023				6/30/2023				3/31/2023
GAAP Net Income (Loss)		$	24,012			$	(1,485	)		$	(675	)		$	(1,667	)		$	27,839
Non-GAAP Adjustments:
Discontinued operations			1,538				1,877				(122	)			(110	)			(107	)
Changes in fair value; realized gains/losses (1)			(689	)			217				174				(1,225	)			145
Employee related expenses (2)			1,985				755				479				368				383
Other items (3)			3,639				1,081				334				1,633				591
Gain on extinguishment of debt (4)			(31,616	)			-				-				-				(31,616	)
Gain on sale of PWSC (5)			(342	)			-				(342	)			-				-
Depreciation, amortization, tax and interest expense			10,571				177				2,450				2,780				5,164
Total Non-GAAP Adjustments			(14,914	)			4,107				2,973				3,446				(25,440	)
Non-GAAP Adjusted Consolidated EBITDA		$	9,098			$	2,622			$	2,298			$	1,779			$	2,399

(1) Includes realized and unrealized gains and losses on non-core investments; change in the fair value of subordinated debt (net of the portion of the change attributable to instrument-specific credit risk); unrealized gain on the change in fair value of the trust preferred security options; and change in the fair value of the Ravix earn-out (changes in fair value recorded as other income or expense).

(2) Employee related expenses includes non-cash expense arising from the grant and modification of stock-based awards to employees; and costs associated with employees assisting during a transition period and are not expected to be replaced once transition period has ended (approximately one year from acquisition date).

(3) Other items include: legal expenses associated with the Company's defense against significant litigation matters; acquisition and disposition-related expenses; and other non-recurring items.

(4) Gain on extinguishment of debt consists of a $31.6 million gain related to the repurchase of TruPs debt having a principal amount of $75.5 million and results from removing the fair value of the debt ($56.1 million), deferred interest payable ($23.0 million) and accumulated other comprehensive income ($27.2 million) liabilities; the trust preferred debt repurchase options ($17.7 million) and accrued income receivable ($0.6 million) assets. See Note 11 "Debt," to the unaudited consolidated interim financial statements, for further discussion.

(5) Gain on sale of PWSC, net of transaction expenses that are included in consolidated operating expenses, as well as income taxes associated with the sale.

Kingsway Financial Services Inc.
Reconciliation of Extended Warranty Segment Operating Income to
Non-GAAP Adjusted EBITDA and Pro Forma Non-GAAP Adjusted EBITDA
(in thousands)
(UNAUDITED)

		Twelve Months Ended				For the Three Months Ended
		12/31/2024				12/31/2024				9/30/2024				6/30/2024				3/31/2024
GAAP Operating Income for Extended Warranty segment		$	5,942			$	1,918			$	1,704			$	1,244			$	1,076
Non-GAAP Adjustments:
Investment income (1)			1,276				323				327				315				311
Gain (loss) on sale of investments (2)			86				71				-				6				9
Depreciation			265				116				41				56				52
Total Non-GAAP Adjustments			1,627				510				368				377				372
Non-GAAP adjusted EBITDA for Extended Warranty segment		$	7,569			$	2,428			$	2,072			$	1,621			$	1,448

		Twelve Months Ended				For the Three Months Ended
		12/31/2023				12/31/2023				9/30/2023				6/30/2023				3/31/2023
GAAP Operating Income for Extended Warranty segment		$	6,983			$	2,381			$	1,778			$	1,392			$	1,432
Non-GAAP Adjustments:
Investment income (1)			1,061				301				273				256				231
Gain (loss) on sale of investments (2)			137				13				14				12				98
Depreciation			245				62				57				62				64
Total Non-GAAP Adjustments			1,443				376				344				330				393
Non-GAAP adjusted EBITDA for Extended Warranty segment		$	8,426			$	2,757			$	2,122			$	1,722			$	1,825

(1) Investment income arising as part of Extended Warranty segment's minimum holding requirements.

(2) Realized Gains (losses) resulting from investments either held in trust as part of Extended Warranty segment's minimum holding requirements or from the deployment of excess cash.

Kingsway Financial Services Inc.
Reconciliation of KSX Segment Operating Income to Non-GAAP Adjusted EBITDA
(in thousands)
(UNAUDITED)

		Twelve Months Ended				For the Three Months Ended
		12/31/2024				12/31/2024				9/30/2024				6/30/2024				3/31/2024
GAAP Operating Income for KSX segment		$	5,662			$	1,734			$	1,144			$	1,441			$	1,343
Non-GAAP Adjustments:
Acquisition and employee costs (1)			462				65				120				139				138
Investment income (2)			138				33				27				68				10
Depreciation (3)			301				35				22				180				64
Total Non-GAAP Adjustments			901				133				169				387				212
Non-GAAP adjusted EBITDA for KSX segment		$	6,563			$	1,867			$	1,313			$	1,828			$	1,555

		Twelve Months Ended				For the Three Months Ended
		12/31/2023				12/31/2023				9/30/2023				6/30/2023				3/31/2023
GAAP Operating Income for KSX segment		$	5,252			$	1,056			$	1,003			$	1,616			$	1,577
Non-GAAP Adjustments:
Acquisition and employee costs (1)			380				128				87				78				87
Investment income (2)			55				12				15				17				11
Depreciation			24				24				-				-				-
Total Non-GAAP Adjustments			459				164				102				95				98
Non-GAAP adjusted EBITDA for KSX segment		$	5,711			$	1,220			$	1,105			$	1,711			$	1,675

(1) Costs associated with acquisitions and employees assisting during a transition period and are not expected to be replaced once transition period has ended (approximately one year from acquisition date).

(2) Investment income from interest on client deposits (Ravix, CSuite), as well as imputed interest on long-term software contracts (SPI)

(3) The June 30, 2024 quarter includes a one-time catch-up for depreciation associated with the finalization of the DDI purchase accounting

SOURCE: Kingsway Financial Services, Inc.

View the original press release on ACCESS Newswire

FAQ

What was Kingsway Financial Services (KFS) revenue growth in 2024?

KFS reported a 5.9% increase in consolidated revenue to $109.4 million in 2024, up from $103.2 million in 2023.

How much did KFS spend on share repurchases in 2024?

KFS repurchased 355,750 shares for $2.8 million, fully utilizing their authorized repurchase program.

What was the performance of KFS's Extended Warranty segment in 2024?

Extended Warranty revenue increased slightly to $68.9 million, but adjusted EBITDA decreased to $7.6 million from $8.4 million due to higher claims expense.

How much did KFS pay for the Bud's Plumbing acquisition?

KFS acquired Bud's Plumbing for $5 million plus transaction expenses and working capital adjustment, including a $1.25 million seller note.

What was KFS's net debt position at the end of 2024?

KFS reported total net debt of $52.0 million as of December 31, 2024, up from $35.3 million at the end of 2023.