Kingsway (KWY) Q3 2024 earnings summary

Executive summary

• Q3 2024 performance was solid, with consolidated revenue rising 9.5% year-over-year to $27.1 million, driven by growth in Extended Warranty and KSX segments.

• Adjusted consolidated EBITDA increased 27.8% to $2.9 million, while net loss widened to $2.3 million from $0.7 million in Q3 2023.

• Acquisition of Image Solutions, a high-margin IT managed service provider, for $19.5–$20.4 million expanded the KSX platform.

• Sale of VA Lafayette subsidiary completed, netting $1–$1.1 million in cash proceeds and finalizing exit from Leased Real Estate.

• Segment operating income for Q3 2024 was $2.8 million, up $0.1 million year-over-year.

Financial highlights

• Q3 2024 revenues were $27.1 million, up from $24.8 million in Q3 2023; YTD revenues were $79.7 million.

• Consolidated Adjusted EBITDA was $2.9 million, a 27.8% increase from $2.3 million in the prior year quarter.

• Net loss attributable to common shareholders was $2.8 million for Q3 2024 and $7.7 million YTD.

• Extended Warranty revenue grew 3.4% to $17.8 million, KSX revenue surged 23.3% to $9.3 million in Q3 2024.

• Basic and diluted EPS for Q3 2024 were $(0.10), compared to $(0.04) in Q3 2023.

Outlook and guidance

• Momentum in Extended Warranty and KSX segments expected to continue into Q4, with an active acquisition pipeline.

• Management expects existing cash, investments, and anticipated cash flows to be sufficient for working capital and operating needs over the next twelve months, but notes macroeconomic risks.

• Run rate adjusted EBITDA for the last 12 months is $18.5–$19.5 million, including Image Solutions.

• Expectation of operating leverage and improved profitability at DDI as investments in capacity and talent begin to pay off.