Kingsway Financial Reports Earnings: Revenue Up but Losses Rise
Shares of Kingsway Financial Services Inc. (KFS) saw a modest gain of 0.6% following the announcement of its earnings for the quarter ended March 31, 2025. In comparison, the S&P 500 Index experienced a stronger increase of 3.8% during the same period. Over the past month, KFS outperformed, rising 13.8% while the S&P 500 grew by 7.7%.
Revenue Growth and Segment Performance
In the first quarter of 2025, Kingsway Financial reported a consolidated revenue increase of 8.4%, bringing in $28.3 million compared to $26.2 million a year earlier. However, the company also reported a net loss of $3.1 million, compared to a loss of $2.3 million in the same quarter last year. Consequently, KFS posted a loss of $0.13 per share, widening from a loss of $0.09 per share a year ago. Adjusted consolidated EBITDA fell to $1.4 million from $2.1 million, marking a decline of 35.7%.
Segment performance varied, with the Kingsway Search Xcelerator (KSX) revenues increasing by 23.3% to $11.7 million, largely due to acquisitions. Adjusted EBITDA for KSX similarly rose by 23.3% to $1.9 million. In contrast, revenues from the Extended Warranty segment remained unchanged at $16.7 million. Though cash sales in this segment grew by 3.7% year-over-year and 9.3% sequentially, adjusted EBITDA fell by 41.3% to $0.9 million, driven by higher claims and operational costs.
Kingsway Financial Services, Inc. Price, Consensus and EPS Surprise
Kingsway Financial Services, Inc. price-consensus-eps-surprise-chart
Other Key Business Metrics
Even with the decline in EBITDA, management highlighted that the trailing twelve-month run-rate adjusted EBITDA for its operating companies remained between $18 million and $19 million, reflecting the impact of recent acquisitions. The KSX segment showed promising growth driven by new acquisitions including Bud’s Plumbing and Image Solutions. Additionally, SPI Software and ViewPoint, both part of Kingsway Financial’s Vertical Market Solutions, are nearing $5 million in annual recurring revenue (ARR), boasting double-digit EBITDA margins and achieving Rule-of-40 status, indicating strong growth and profitability.
Several subsidiaries under KSX also demonstrated resilience. Ravix and CSuite managed slight EBITDA gains despite flat revenues, while SNS grew revenues by 7.5%, and DDI achieved a noteworthy 10.9% revenue increase through new customer acquisitions. Despite a drop in adjusted EBITDA for the Extended Warranty segment, trailing twelve-month modified cash EBITDA—a crucial industry benchmark—rose by 11.7% year-over-year, hinting at potential for earnings recovery.
As of March 31, 2025, KFS had a net debt of $53.1 million, a slight increase from $52 million at the end of 2024.
Management Commentary
CEO JT Fitzgerald described the quarter as a mix of strategic and financial advancements. He pointed to the company’s active mergers and acquisitions strategy, particularly mentioning the acquisitions of Bud’s Plumbing and ViewPoint, which enhance Kingsway Financial’s Skilled Trades and Vertical Market Solutions platforms, respectively. Additionally, he noted signs of improvement in the Extended Warranty segment after a challenging period of two years. CFO Kent Hansen echoed this positive sentiment, indicating that while the first quarter is typically KFS’s weakest, there are indicators of growing strength in the core segments.
Factors Influencing Headline Numbers
The revenue growth was primarily driven by acquisitions within KSX. Notably, Bud’s Plumbing added around $800,000 in annual run-rate adjusted EBITDA, while ViewPoint contributed over $1 million in ARR and $200,000 in EBITDA. These additions diversified Kingsway Financial’s revenue streams and reinforced its platform model. Conversely, the decrease in consolidated adjusted EBITDA was linked to lower profitability in the Extended Warranty segment and increased corporate overhead costs related to M&A activities.
In the Extended Warranty area, IWS experienced over a 20% rise in cash sales, despite adjusted EBITDA shrinking due to elevated claims and costs. PWI and Penn faced declines in both revenue and adjusted EBITDA but registered improvements in modified cash EBITDA. Meanwhile, Trinity’s mechanical warranty business reported higher revenue, which was offset by increased seasonal costs.
Guidance
Kingsway Financial did not provide formal forward-looking financial guidance. Nevertheless, management expressed confidence in the company’s earning capacity, referencing the $18–$19 million run-rate adjusted EBITDA as an illustrative figure of recent performance rather than as an official guidance.
Other Developments
In early 2025, Kingsway Financial completed two significant acquisitions. In March, it acquired Bud’s Plumbing for $5 million, partly financed through a $1.25 million seller note. This acquisition serves as the cornerstone for the new Kingsway Skilled Trades platform. Following that, in April, its SPI Software unit acquired the Australian company ViewPoint, enhancing its SaaS capabilities and international reach.
On the leadership side, Rob Humble has been appointed as president and CEO of PWI and Penn Warranty, aligning executive incentives with the Kingsway Financial KSX business model.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
