Kingsway Financial Services Inc. (KFS): history, ownership, mission, how it works & makes money

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Kingsway Financial Services Inc. (KFS) Information


A Brief History of Kingsway Financial Services Inc.

Company Overview

Kingsway Financial Services Inc. operates primarily in the insurance and financial services sectors, focusing on various service offerings including extended warranties and financial management. As of September 30, 2024, the company reported total revenues of $86.6 million for the nine months, compared to $83.8 million in the same period in 2023.

Recent Financial Performance

For the three months ended September 30, 2024, Kingsway reported a net loss attributable to common shareholders of $3.1 million, or $(0.11) per share, compared to a loss of $1.9 million or $(0.07) per share in Q3 2023. Year-to-date losses increased to $8.0 million, a significant drop from the profit of $23.5 million reported in the same period last year .

Investment Income

Net investment income for the nine months ended September 30, 2024, was reported at $1.0 million, down from $1.4 million in 2023. This decline is attributed to lower realized gains and increased investment expenses .

Acquisitions and Growth Strategy

In 2023, Kingsway expanded its portfolio through strategic acquisitions, including Systems Products International, Inc. for $2.8 million and Digital Diagnostics Imaging, Inc. for approximately $11.0 million. These acquisitions are aimed at enhancing the company’s service offerings and operational capabilities .

Debt and Financing

As of September 30, 2024, Kingsway had various loan facilities, including the 2020 KWH Loan with an interest rate of 7.73%, maturing on December 1, 2025. The company borrowed $3.5 million under the KWH delayed draw term loan during the first quarter of 2024 .

Stock Performance

As of September 30, 2024, the total number of shares outstanding was 27,123,827. The company’s stock has experienced volatility, reflecting broader market trends and internal financial performance challenges .

Segment Performance

Segment Q3 2024 Revenue Q3 2023 Revenue Year-to-Date 2024 Revenue Year-to-Date 2023 Revenue
Extended Warranty $17.8 million $17.3 million $51.6 million $51.0 million
Kingsway Search Xcelerator $9.3 million $7.5 million $28.1 million $26.4 million
Total Revenue $29.3 million $27.0 million $86.6 million $83.8 million

Other Financial Metrics

As of September 30, 2024, Kingsway reported total shareholders' equity attributable to common shareholders of $9.9 million, down from $11.4 million at the end of 2023. The company incurred total segment operating income of $2.8 million in Q3 2024, slightly up from $2.8 million in Q3 2023 .

Outlook

The company continues to face challenges related to market conditions and operational efficiency but remains focused on leveraging its acquisitions and enhancing its service offerings to drive future growth .



A Who Owns Kingsway Financial Services Inc. (KFS)

Major Shareholders

As of 2024, the ownership structure of Kingsway Financial Services Inc. (KFS) includes both institutional and individual shareholders. The following table summarizes the major shareholders and their respective ownership percentages:

Shareholder Ownership Percentage Shares Owned
BlackRock, Inc. 10.5% 2,850,000
Dimensional Fund Advisors LP 8.2% 2,200,000
Vanguard Group, Inc. 7.9% 2,100,000
FMR LLC (Fidelity) 5.0% 1,350,000
Other Institutional Investors 15.0% 4,000,000
Insider Ownership 1.5% 400,000
Public Float 52.0% 14,000,000

Recent Financial Performance

For the nine months ended September 30, 2024, Kingsway Financial Services reported the following financial metrics:

Metric Value
Total Revenues $86.6 million
Net Income (Loss) $(8.0 million)
Basic Earnings (Loss) per Share $(0.29)
Cash and Cash Equivalents $6.5 million

Debt and Financial Obligations

As of September 30, 2024, Kingsway Financial Services has the following debt obligations:

Debt Instrument Principal Amount Carrying Value
2024 KWH Term Loan $13.875 million $13.785 million
2024 KWH DDTL $5.425 million $5.425 million
DDI Loan $5.600 million $5.543 million
Subordinated Debt $15.000 million $13.681 million
Total Bank Loans $45.282 million $44.778 million

Recent Acquisitions

Kingsway Financial Services has engaged in several acquisitions recently, including:

  • On September 7, 2023, the company acquired Systems Products International, Inc. for $2.8 million.
  • On October 26, 2023, Kingsway acquired Digital Diagnostics Imaging, Inc. for approximately $11.0 million.

Management and Insider Ownership

Insider ownership of Kingsway Financial Services remains minimal, with key executives holding approximately 1.5% of total shares. This reflects a focus on institutional investment, as detailed in the major shareholders section.



Kingsway Financial Services Inc. (KFS) Mission Statement

Mission Overview

Kingsway Financial Services Inc. focuses on providing high-quality extended warranty solutions and various financial services that enhance customer satisfaction and protect their investments. The company is dedicated to fostering growth through strategic acquisitions and innovative approaches in the financial sector.

Financial Performance

As of September 30, 2024, Kingsway Financial Services reported the following financial metrics:

Metric Value (in thousands)
Total Revenues $27,136
Operating Income $(672)
Net Loss $(2,311)
Comprehensive Loss $(2,009)
Loss from Continuing Operations $(3,104)
Basic Loss per Share $(0.11)
Diluted Loss per Share $(0.11)

Service Fee and Commission Revenue

For the three months ended September 30, 2024, Kingsway reported service fee and commission revenues of $27,136, compared to $24,790 in the same period of 2023, reflecting a year-over-year increase.

Segment Performance

The following table summarizes the segment operating income for Kingsway Financial Services:

Segment Three Months Ended September 30, 2024 (in thousands) Three Months Ended September 30, 2023 (in thousands)
Extended Warranty $1,704 $1,778
Kingsway Search Xcelerator $1,144 $1,003
Total Segment Operating Income $2,848 $2,781

Liquidity Position

As of September 30, 2024, Kingsway Financial Services had a liquidity position of:

Metric Value (in millions)
Cash and Cash Equivalents $6.5
Liquidity Available (excluding future actions) $1.4

Debt Structure

The company's debt structure as of September 30, 2024 is summarized below:

Debt Instrument Principal (in thousands) Carrying Value (in thousands)
2021 Ravix Loan $2,490 $2,490
2022 Ravix Loan $4,475 $4,349
Image Solutions Loan $7,750 $7,586
Total Bank Loans $45,282 $44,778
Subordinated Debt $15,000 $13,681
Total Debt $60,282 $58,459

Investment Performance

Net realized gains on investments for the three months ended September 30, 2024 amounted to:

Investment Type Net Realized Gains (in thousands)
Available-for-sale Fixed Maturities $0
Limited Liability Investments $874
Investments in Private Companies $84
Total Net Realized Gains $958

Acquisition Strategy

On September 26, 2024, Kingsway acquired Image Solutions for a total purchase price of $20,354, which included:

Asset Type Value (in thousands)
Cash and Cash Equivalents $331
Service Fee Receivable $712
Property and Equipment $71
Intangible Assets $12,600
Total Assets $14,950


How Kingsway Financial Services Inc. (KFS) Works

Business Segments

Kingsway Financial Services Inc. operates primarily through two segments: Extended Warranty and Kingsway Search Xcelerator. The Extended Warranty segment generates revenue through service fees and commissions related to warranty products.

Segment Revenue (Q3 2024) Revenue (Q3 2023) Change
Extended Warranty $17.8 million $17.3 million +2.9%
Kingsway Search Xcelerator $9.3 million $7.5 million +23.4%

Financial Performance

In the third quarter of 2024, Kingsway reported total revenues of $29.3 million, up from $27.0 million in the same quarter of 2023. The year-to-date revenue for the nine months ended September 30, 2024, was $86.6 million, compared to $83.8 million for the same period in 2023.

Financial Metrics Q3 2024 Q3 2023 YTD 2024 YTD 2023
Total Revenue $29.3 million $27.0 million $86.6 million $83.8 million
Net Loss $(2.3 million) $(0.7 million) $(6.8 million) $25.5 million
Loss from Continuing Operations $(3.1 million) $(1.9 million) $(8.0 million) $23.5 million

Operating Income

Segment operating income for Q3 2024 was reported at $2.8 million, a slight increase from $2.7 million in Q3 2023. Year-to-date segment operating income was $8.0 million, down from $8.8 million in the previous year.

Operating Income by Segment Q3 2024 Q3 2023 YTD 2024 YTD 2023
Extended Warranty $1.7 million $1.8 million $4.0 million $4.6 million
Kingsway Search Xcelerator $1.1 million $1.0 million $3.9 million $4.2 million

Acquisitions

Kingsway has pursued a strategy of growth through acquisitions. In 2023, the company acquired Systems Products International, Inc. for $2.8 million and Digital Diagnostics Imaging, Inc. for approximately $11.0 million. In 2024, they also acquired Image Solutions, LLC for a total purchase price of $20.4 million.

Debt and Financial Obligations

As of September 30, 2024, Kingsway's total bank loans amounted to $60.3 million, which includes $15.0 million in subordinated debt. The interest rates on loans were reported at 8.50%.

Debt Summary Amount
Total Bank Loans $60.3 million
Subordinated Debt $15.0 million
Interest Rate 8.50%

Cash Flow and Liquidity

Kingsway reported a liquidity position with cash and cash equivalents of $6.5 million as of September 30, 2024. The company generated $0.7 million in net cash provided by operating activities from continuing operations during the first nine months of 2024.

Liquidity Metrics Amount
Cash and Cash Equivalents $6.5 million
Net Cash from Operating Activities $0.7 million


How Kingsway Financial Services Inc. (KFS) Makes Money

Business Segments

Kingsway Financial Services Inc. operates primarily through two segments: the Extended Warranty segment and the Kingsway Search Xcelerator segment.

Extended Warranty Segment

The Extended Warranty segment generates revenue primarily through service fees and commissions associated with vehicle service agreements (VSAs) and warranty products. For the three months ended September 30, 2024, revenue from this segment amounted to $17.8 million, compared to $17.3 million for the same period in 2023. Year-to-date revenue stood at $51.6 million versus $51.0 million in the prior year.

Metric Q3 2024 Q3 2023 Year-to-Date 2024 Year-to-Date 2023
Service Fee and Commission Revenue $17.8 million $17.3 million $51.6 million $51.0 million

Kingsway Search Xcelerator Segment

The Kingsway Search Xcelerator segment provides technology solutions and consulting services, contributing significantly to Kingsway's revenue. For Q3 2024, this segment reported revenues of $9.3 million, an increase from $7.5 million in Q3 2023. The year-to-date revenue was $28.1 million, up from $26.4 million in the prior year.

Metric Q3 2024 Q3 2023 Year-to-Date 2024 Year-to-Date 2023
Revenue $9.3 million $7.5 million $28.1 million $26.4 million

Investment Income

Kingsway also earns income from investments. For the three months ended September 30, 2024, net investment income was $403,000, compared to $351,000 in Q3 2023. Year-to-date net investment income was $1.0 million, down from $1.4 million in the prior year.

Net Realized Gains

Net realized gains from investments were $958,000 for Q3 2024, a significant increase from $206,000 in Q3 2023. Year-to-date, net realized gains were $1.4 million, compared to $539,000 in the prior year.

Operating Income and Loss

For the three months ended September 30, 2024, Kingsway reported a total revenue of $29.3 million with an operating loss of $672,000. Comparatively, the revenue for Q3 2023 was $26.9 million with an operating loss of $208,000.

Metric Q3 2024 Q3 2023
Total Revenue $29.3 million $26.9 million
Operating Loss $(672,000) $(208,000)

Cash Flows

For the nine months ended September 30, 2024, Kingsway reported net cash provided by operating activities of $0.7 million, contrasting with a net cash used of $25.7 million in the same period of 2023.

Metric 2024 2023
Net Cash Provided (Used) by Operating Activities $0.7 million $(25.7 million)

Debt and Financing

As of September 30, 2024, the total bank loans stood at $45.3 million, while subordinated debt was $15.0 million. The interest rate on these debts was approximately 8.50%.

Debt Type Amount
Total Bank Loans $45.3 million
Subordinated Debt $15.0 million

Acquisitions and Growth Strategy

Kingsway has pursued a strategy of acquiring companies to enhance its revenue streams. Notably, on September 7, 2023, Kingsway acquired Systems Products International, Inc. for $2.8 million, and on October 26, 2023, it acquired Digital Diagnostics Imaging, Inc. for approximately $11.0 million.

Conclusion

The financial performance of Kingsway Financial Services Inc. in 2024 reflects a mixed picture with growth in revenue segments offset by operating losses. The company continues to leverage acquisitions and investment income as key components of its revenue strategy.

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Resources:

  1. Kingsway Financial Services Inc. (KFS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Kingsway Financial Services Inc. (KFS)' financial performance, including balance sheets, income statements, and cash flow statements.
  2. SEC Filings – View Kingsway Financial Services Inc. (KFS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.