Kingsway Financial Services Inc (KFS) (Q1 2024) Earnings Call Transcript Highlights: Stability ...

GuruFocus Research
4 min read

In This Article:

  • Consolidated Revenue: $26.2 million, consistent with the prior year.

  • Adjusted Consolidated EBITDA: $2.1 million, down from $2.4 million in the previous year.

  • Extended Warranty Segment Adjusted EBITDA: $3 million, decreased from $3.5 million year-over-year.

  • KSX Segment Revenue: Increased due to acquisitions of SPI and DDI in the second half of 2023.

  • DDI Revenue: Grew over 20% compared to the previous year.

  • Cash and Cash Equivalents: $12.1 million, up from $9.1 million at the end of 2023.

  • Total Outstanding Debt: $47.1 million, increased from $44.4 million at the end of 2023.

  • Net Debt: Decreased slightly to $34.9 million from $35.3 million at the end of 2023.

  • 12 Month Run Rate Adjusted EBITDA: Between $16 million to $17 million.

Release Date: May 08, 2024

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

Positive Points

  • Kingsway Financial Services Inc reported consolidated revenue of $26.2 million, maintaining stability compared to the previous year.

  • The company successfully sold more contracts in Q1 2024 at a higher average revenue per contract than in the previous year.

  • Recent acquisitions in the second half of 2023, such as SPI and DDI, have driven higher revenues and are performing ahead of initial expectations.

  • Kingsway Financial Services Inc has a robust deal pipeline with the potential to complete two to three deals over the next year, each expected to generate significant annualized EBITDA.

  • The company has a healthy balance sheet with cash and cash equivalents increasing to $12.1 million from $9.1 million at the end of 2023.

Negative Points

  • Adjusted consolidated EBITDA for Q1 2024 decreased to $2.1 million from $2.4 million in the same quarter the previous year.

  • The extended warranty segment faced challenges due to increased average claims expense and tighter credit conditions, impacting year-over-year performance.

  • Claims severity, which had moderated at the end of 2023, increased again in Q1 2024 due to rising labor costs.

  • The travel nurse segment experienced significantly lower revenue and adjusted EBITDA in Q1 2024 compared to a year ago, although there are signs of stabilization.

  • DDI's EBITDA trailed the previous year slightly as the company continues to invest heavily to support growth, impacting short-term profitability.

Q & A Highlights

Q: Can you provide more details about the robustness of your deal pipeline and the key performance indicators (KPIs) you focus on? A: John Fitzgerald, CEO: We focus on lead measures like industries identified and initial outreach to business owners, and lag measures like NDAs executed and deals closed. We track these metrics weekly, monthly, and quarterly. Our systems, including a CRM like HubSpot, help us manage and track all activities related to these KPIs.

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