• Consolidated Revenue: $109.4 million, up 6% from 2023.
• Consolidated Adjusted EBITDA: $10.6 million, up 17% from 2023.
• Extended Warranty Revenue: $68.9 million, up 1% from 2023.
• Extended Warranty Adjusted EBITDA: $7.6 million, down from $8.4 million in 2023.
• KSX Revenue: $40.5 million, up 16% from $35 million in 2023.
• KSX Adjusted EBITDA: $6.6 million, up 15% from $5.7 million in 2023.
• Cash and Cash Equivalents: $5.5 million as of December 31, 2024, down from $9.1 million at the end of 2023.
• Total Debt Outstanding: $57.5 million, up from $44.4 million at the end of 2023.
• Net Operating Losses (NOLs): Approximately $622 million as of December 31, 2024.
• Shares Repurchased: 355,750 shares for $2.8 million, including fees and commissions.

• Warning! GuruFocus has detected 3 Warning Signs with KFS.

Release Date: March 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Kingsway Financial Services Inc (NYSE:KFS) reported a 6% increase in consolidated revenue for 2024, reaching $109.4 million.
• The company's consolidated adjusted EBITDA rose by 17% compared to 2023, indicating improved profitability.
• The KSX segment saw a 16% increase in revenue, driven by strategic acquisitions and strong performance.
• Kingsway successfully completed the acquisition of Image Solutions and divested its VA Lafayette subsidiary, aligning with its strategic goals.
• The company has a strong pipeline of acquisition opportunities, with plans to expand its KSX business through 2 to 3 deals per year.

Negative Points

• The Extended Warranty segment experienced a decline in adjusted EBITDA due to increased claims costs from inflation in parts and labor expenses.
• Ravix, a subsidiary, saw a slight decline in EBITDA despite improvements in gross margin.
• C-suite's EBITDA decreased due to lower sales from reduced deal volume in the capital markets.
• The company faced challenges in talent acquisition, with some new hires not meeting expectations.
• Kingsway only completed one acquisition in 2024, falling short of its goal of two to three acquisitions per year.

Q & A Highlights

Q: Could you provide more color on the claims expense moderation you mentioned in the Extended Warranty segment during the second half of 2024? A: John Fitzgerald, CEO, explained that claims increased by 6.6% for the full year 2024, down from a 10% increase in 2023. The moderation was particularly noticeable from Q2 to Q4, where claims rose by just over 4%, indicating a decline in both frequency and severity.

Q: With the formation of your new skilled trade services platform, what's your vision for growing this vertical within KSX? A: John Fitzgerald, CEO, highlighted the significant opportunity in plumbing service and repair, focusing initially on organic growth through market penetration and service expansion. The strategy includes potential service line expansion into HVAC and leveraging the fragmented industry for inorganic growth through acquisitions.

Q: Are you targeting specific verticals within your existing segments for acquisition opportunities, or are you exploring new industries? A: John Fitzgerald, CEO, stated that the focus is on both existing verticals like B2B services, healthcare services, and vertical market software, as well as exploring new opportunities in skilled trades and field services.

Q: Can you refresh us on how long each existing OIR has been searching for acquisitions, and how many you still need to backfill? A: John Fitzgerald, CEO, mentioned that there are three current OIRs: Peter Hearn (nearly two years), Miles (18 months), and Paul Vidal (just over a year). With recent transitions, they plan to backfill to maintain their current pacing.

Q: Were there areas Kingsway did not do well in 2024, and what are your plans to improve them? A: John Fitzgerald, CEO, acknowledged areas for improvement, including pricing strategies in the warranty segment and talent acquisition processes. They aim to enhance pricing models and improve talent screening. Additionally, they plan to increase the velocity of acquisitions within KSX.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.