Kingsway Financial Reports Wider Loss in Q3 FY2024 Despite Revenue Growth
Kingsway Financial Services Inc. (KFS) reported a loss per share of 10 cents for the third quarter of fiscal 2024, which is greater than the loss of 4 cents per share in the same quarter last year.
Revenue Growth Across Segments
Kingsway Financial achieved revenues of $27.1 million in the fiscal third quarter, marking a 9.5% increase compared to the previous year.
Both business segments contributed to this upward trend in revenues.
However, shares of KFS fell by nearly 2.3% as of the last trading session.
Breakdown of Kingsway Financial’s Segments
The company’s revenue comes from two main segments: Extended Warranty and Kingsway Search Xcelerator.
For the quarter in question, revenues from the Extended Warranty service fees and commissions were $17.8 million, a 3.4% increase year over year.
KFS’s Kingsway Search Xcelerator segment saw more significant growth, with revenues of $9.3 million, up 23.3% from last year.
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Analysis of Operating Expenses
In the third quarter of fiscal 2024, general and administrative expenses rose by 15% year over year, amounting to $11.9 million. The cost of services sold also grew by 9.5%, reaching $6.8 million.
At the end of the third quarter, claims authorized on vehicle service agreements increased by 7.5% to $6.3 million, while commissions rose by 8.9% to $2.8 million.
Profitability Overview of Kingsway Financial
The operating loss for the third quarter of fiscal 2024 was $0.7 million, compared to an operating loss of $0.2 million in the same quarter last year.
Net loss for Kingsway Financial was $2.3 million for the quarter, an increase from the $0.7 million loss reported a year earlier. Nevertheless, adjusted EBITDA grew by 27.8% year over year, reaching $2.9 million.
Liquidity and Debt Management
At the end of the third quarter of fiscal 2024, Kingsway Financial had cash and cash equivalents, along with short-term investments of $6.7 million, down from $9.8 million at the end of the previous quarter.
Cumulative net cash from operating activities was $1.2 million, a considerable improvement from the $25.3 million used in operating activities last year.
Conclusion
Kingsway Financial ended the third quarter of fiscal 2024 with impressive top-line results, showing strong revenues from both segments. During this quarter, the company acquired Image Solutions LLC, an information technology managed services provider, and sold its VA Lafayette subsidiary, which adds to a positive outlook for the stock.
On the downside, the disappointing bottom-line results this quarter raise concerns.
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