Kingsway Financial Services Inc. Reports Mixed Q1 2025 Financial Results

CHICAGO, ILLINOIS — Kingsway Financial Services Inc. (“Kingsway”), a unique publicly-traded company utilizing the Search Fund model to acquire and develop businesses, has announced its financial results for the first quarter of 2025. The company, listed on the New York Stock Exchange under the ticker KFS, reported a consolidated revenue increase of 8.4% to $28.3 million for the three months ending March 31, 2025, compared to $26.2 million in the same period the previous year.

The growth in revenue was primarily driven by the Kingsway Search Xcelerator (“KSX”) segment, which saw a significant 23.3% increase in revenue, reaching $11.7 million. This growth is largely attributed to strategic acquisitions, including Image Solutions and Bud’s Plumbing, the latter adding $6.0 million in annual revenue and $0.8 million in adjusted EBITDA. The KSX segment’s performance underscores Kingsway’s successful expansion strategy through targeted acquisitions.

However, the Extended Warranty segment faced challenges, with revenue remaining flat at $16.7 million compared to the previous year. Despite this, cash sales in the segment showed a positive trend, increasing by 3.7% year-over-year and 9.3% sequentially. This indicates a potential shift towards more immediate revenue recognition, which could bode well for future financial health.

On the profitability front, Kingsway’s financials present a more concerning picture. The company reported a net loss of $3.1 million for the quarter, a widening from the $2.3 million loss in Q1 2024. Adjusted consolidated EBITDA also saw a decline, dropping by $0.7 million to $1.4 million. The Extended Warranty segment’s adjusted EBITDA fell to $0.8 million from $1.4 million year-over-year, highlighting ongoing profitability challenges within this division.

Total net debt for Kingsway increased to $53.1 million as of March 31, 2025, up from $52.0 million in December 2024. This rise in debt levels, coupled with the widening net loss, raises questions about the company’s financial strategy and its ability to manage leverage effectively.

Despite these challenges, Kingsway’s management remains optimistic about the company’s strategic direction. The twelve-month run-rate adjusted EBITDA for operating companies is projected to be between $18.0 million and $19.0 million, suggesting confidence in the long-term profitability of its acquisitions and business model.

Kingsway’s management will host a conference call today at 5 p.m. ET to discuss the financial results in detail and provide further insights into the company’s strategic initiatives. The call will be accessible via a live webcast at https://bit.ly/3YykRi9 , with a replay available for those unable to attend the live session.

In summary, while Kingsway Financial Services Inc. has demonstrated revenue growth through strategic acquisitions, the company faces significant challenges in improving profitability and managing debt. Investors and stakeholders will be keenly watching the company’s next moves as it navigates these financial hurdles.