Shares of Kingsway Financial Services Inc. KFS have gained 1.7% since the company reported its earnings for the quarter ended Dec. 31, 2024. This compares favorably with the S&P 500 Index, which rose 0.4% during the same period. However, over the past month, KFS stock declined 5.6%, in line with the S&P 500’s 5.6% loss.
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Revenue and Profitability Metrics
For the 12 months ended Dec. 31, 2024, Kingsway Financial reported consolidated revenues of $109.4 million, a 5.9% increase from $103.2 million in 2023. Adjusted consolidated EBITDA rose 16.9% to $10.6 million in 2024 from $9.1 million in 2023. Despite the operational gains, KFS reported a net loss of $8.3 million, or $0.30 per share, against net income of $24 million, or $0.87 per share, in 2023.
Kingsway Financial Services, Inc. Price, Consensus and EPS Surprise
Kingsway Financial Services, Inc. price-consensus-eps-surprise-chart | Kingsway Financial Services, Inc. Quote
Segment Performance and Operational Trends
Segmentally, Extended Warranty revenues grew slightly to $68.9 million, up 0.9% from $68.2 million, while KSX revenues rose 15.7% to $40.5 million from $35 million. Combined adjusted EBITDA for both segments remained flat at $14.1 million.
In the Extended Warranty segment, Kingsway Financial reported $7.6 million in adjusted EBITDA, down 10.2% from $8.4 million in 2023. The decline was primarily driven by higher claims costs attributed to inflation in auto parts and labor. However, claims expense increases moderated significantly in the second half of the year — rising just 4.1% in the fourth quarter compared with 13% in the first quarter. Management noted that sequential quarterly improvements in adjusted EBITDA indicate stabilizing cost pressures and underlying demand strength, evidenced by a 3.6% increase in cash sales for the year.
In the KSX segment, adjusted EBITDA rose 14.9% to $6.6 million from $5.7 million in 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. The SPI business showed strong ARR growth and retention metrics, exceeding the Rule of 40 benchmark. DDI revenues grew nearly 20% compared with 2023, while SNS increased total nurse staffing shifts by 8.5% in the fourth quarter. Some KSX businesses faced softer demand tied to M&A market headwinds, but management highlighted margin discipline and year-end momentum.
Management Commentary
CEO John Fitzgerald characterized 2024 as a year of important progress, emphasizing that Kingsway Financial’s sequential EBITDA growth and diversification through acquisitions aligned with its long-term strategic plan. He stated that the company’s results were in line with the company’s expectations and pointed to the formation of the Skilled Trades Services platform as a new growth lever. Management underscored confidence in the KSX model and noted that Image Solutions was immediately accretive, even after being impacted by a hurricane shortly after acquisition.
CFO Kent Hansen underscored prudent capital allocation, including debt management and the use of preferred equity to fund acquisitions without overleveraging the balance sheet.
Factors Influencing Performance
The decline in Extended Warranty profitability stemmed mainly from cost inflation in claims, particularly in the GAP (Guaranteed Asset Protection) product, which was significantly impacted by falling used car prices and high loan-to-value ratios. KFS has implemented approximately 50% price increases in that product to protect future earnings, though management expects some impact on volume.
Across KSX, management cited talent acquisition and retention as challenges in 2024, as some new hires did not meet expectations. Nevertheless, the company is refining its hiring practices using top-grading methodologies to improve future outcomes.
Guidance
While Kingsway Financial did not issue formal forward-looking guidance, management cited a trailing 12-month adjusted EBITDA run rate of $19 million to $20 million for its operating businesses, inclusive of recent acquisitions. This figure is meant to reflect the earnings potential of the current portfolio rather than serve as an earnings forecast. Leadership expressed optimism in executing two to three acquisitions per year, supported by a growing pipeline of opportunities.
Other Developments
Kingsway Financial continued its acquisition strategy in 2024, completing the purchase of Image Solutions in September and acquiring Bud’s Plumbing in early 2025 through its new Skilled Trades platform. The Bud’s Plumbing deal, valued at $5 million plus adjustments, adds $6 million in annual revenues and $0.8 million in EBITDA. The company also sold its VA Lafayette subsidiary during the third quarter, generating $1.1 million in net cash proceeds, and increased its stake in IWS to 100%, a move described as immediately accretive.
To fund acquisitions, KFS completed multiple equity placements, including $8.3 million from Class B preferred shares in September and $6 million from Class C preferred shares in February 2025. Total net debt rose to $52 million at year-end from $35.3 million in 2023, primarily due to the Image Solutions acquisition.
Management reiterated its commitment to prudent capital allocation, having repurchased 355,750 shares in 2024 and January 2025, fully utilizing its board-authorized buyback program.
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