Kingsway Financial Services Q1 Earnings Call Highlights

Key Points

• Kingsway posted a strong Q1 2026, with consolidated revenue up 37.4% to $39 million and adjusted EBITDA rising to $2.4 million as results came in ahead of internal expectations.
• The KSX segment drove the quarter, with revenue up 80.7% and adjusted EBITDA up 82% to a record $3.5 million, helped by broad-based strength at businesses like Roundhouse.
• Management remains optimistic about 2026 growth and acquisitions, reiterating double-digit organic growth targets for KSX and Extended Warranty while targeting three to five acquisitions this year and moving ahead with a proposed name change to Kingsway Corporation.

Kingsway Financial Services NYSE: KFS reported stronger first-quarter 2026 results, with management saying performance exceeded internal expectations across both its KSX and Extended Warranty segments as the company enters seasonally stronger months for several of its businesses.

Chief Executive Officer J.T. Fitzgerald said Kingsway is benefiting from momentum across its portfolio and reiterated the company’s expectation for double-digit organic growth in revenue and profit at both KSX and Extended Warranty. He also said the acquisition pipeline remains “robust,” with Kingsway still targeting three to five acquisitions in 2026. The company has already completed one deal this year, a tuck-in acquisition of Ledgers by its Ravix Group subsidiary.

“Overall, the first quarter came in ahead of our internal expectations, and we’re encouraged by our business momentum as we enter the seasonally strong summer months,” Fitzgerald said.

Revenue Rises 37% as KSX Posts Record EBITDA

Chief Financial Officer Kent Hansen said consolidated revenue increased 37.4% to $39 million in the first quarter, compared with $28.3 million in the prior-year period. Kingsway reported a consolidated net loss of $2.2 million, compared with a net loss of $3.1 million in the first quarter of 2025.

Consolidated adjusted EBITDA rose to $2.4 million from $1.4 million a year earlier. Total net debt was $63.9 million as of March 31, 2026, compared with $62.4 million at the end of 2025.

The KSX segment was the main driver of growth. Hansen said KSX revenue increased 80.7% to $21.1 million, compared with $11.7 million a year ago. KSX adjusted EBITDA increased 82% to $3.5 million, up from $1.9 million in the first quarter of 2025. Fitzgerald said the segment achieved record quarterly adjusted EBITDA and described the results as broad-based rather than dependent on one or two businesses.

Fitzgerald highlighted several operating companies within KSX. Roundhouse had what he called another strong quarter, supported by robust demand from natural gas infrastructure customers. He said March was a record month for Roundhouse, with monthly revenue above $2 million for the first time under Kingsway’s ownership.

In response to an investor question, Fitzgerald said Roundhouse’s momentum reflects increased natural gas activity in the Permian Basin, ongoing infrastructure buildout for midstream gas transmission and a shift from legacy gas-powered motors to electric motors. He also cited strength in the company’s field service line.

Extended Warranty Cash Sales Grow, Though EBITDA Declines

Kingsway’s Extended Warranty segment generated revenue of $17.9 million, up 7.2% from $16.7 million a year earlier. Hansen said cash sales increased 11.8%, positioning the segment for continued double-digit organic top-line growth in 2026.

Fitzgerald said growth was driven by both volume and price. Vehicle service contract sales increased in the low single digits, while revenue per contract rose in the high single digits year over year. He said the combination of top-line growth and moderating claims growth supports management’s view that Extended Warranty is on track for “an excellent year.”

However, Extended Warranty adjusted EBITDA declined to $0.4 million from $0.9 million in the prior-year quarter. In the question-and-answer portion of the call, Fitzgerald said higher general and administrative spending in the segment primarily reflected sales and marketing investment, as well as a “fairly large” ERP conversion at PWI that should be complete by the end of the second quarter or early in the third quarter. He said the company will manage costs with a focus on generating operating leverage as the businesses grow.

Management Details Portfolio Momentum

Fitzgerald said IS Technology posted substantial top-line and bottom-line gains relative to the year-ago quarter, with all three service lines growing year over year. He attributed the improvement to a fully staffed sales team and stronger commercial footing.

Within Kingsway Skilled Trades, Fitzgerald said Bud’s Plumbing had an excellent quarter, while Southside and Triple A remain in an investment phase but are expected to benefit from seasonally stronger second and third quarters. Asked about the Skilled Trades platform, Fitzgerald described the market as a roughly $120 billion total addressable market that is highly fragmented and provides mission-critical services. He said Kingsway aims to operate those businesses well, grow them organically and pursue a measured acquisition strategy, targeting two or three acquisitions a year on the platform.

Fitzgerald also said SPI was up significantly from the prior-year quarter, supported by execution and healthy market demand. Annual recurring revenue increased more than 45% from the prior-year period, with gross revenue retention of 97% and net revenue retention well above 100%.

DDI came in ahead of budget and is expected to have a stronger second half, Fitzgerald said. In the Q&A, he said DDI has built a sales process after previously having no outbound sales function and is beginning to onboard new hospital customers, though the company’s integration with hospitals can create longer sales cycles.

Ravix Group also came in well ahead of budget, according to Fitzgerald. He said 2025 was challenging for Ravix, but a more diversified customer base and refreshed commercial strategy give management confidence that the business can return to growth in the second quarter and beyond.

Name Change, Financial Statement Updates and Governance

Kingsway’s board has proposed changing the company’s name to Kingsway Corporation and changing its stock ticker to KWY, subject to shareholder approval at the annual general meeting scheduled for May 18. Fitzgerald said the change is intended to better reflect the company’s business evolution and strategy, noting that investors have said the current name no longer accurately describes operations following Kingsway’s exit from the insurance business nearly a decade ago.

Fitzgerald said the company also plans to work with financial data and index providers to clarify how Kingsway is categorized. In the Q&A, he said various data providers currently list the company in categories such as property and casualty insurance, leased real estate and, in one case, auto and truck dealership. He said Kingsway aims to provide a unified description of the business and move away from a property-casualty classification.

Hansen said Kingsway updated its financial statement presentation in its quarterly filing to better reflect a business services operation, including adding gross profit, breaking out depreciation and simplifying other line items. The balance sheet has also been updated to a classified format separating short-term and long-term assets and liabilities.

The company also announced governance changes. Fitzgerald said Adam Patinkin was recently elected chairman of the board, while Terry Kavanagh, who served as chairman for 12 years, will continue as vice chairman.

Kingsway plans to host its annual Investor Day on May 18 at the New York Stock Exchange, with the theme “from theory to action.” Fitzgerald said the event will connect the company’s search fund model and Kingsway business system to operating company results, with Roundhouse CEO Miles Mamon and Image Solutions LLC CEO Davide Zanchi scheduled to participate.

About Kingsway Financial Services NYSE: KFS

Kingsway Financial Services, Inc NYSE: KFS is a specialty finance company focused on the acquisition, origination and servicing of residential mortgage loans and related assets in the United States. Through strategic portfolio purchases and direct origination channels, Kingsway builds a diversified mix of mortgage assets, including prime, non-QM and other specialty loan products.

The company's principal activities include investing in and managing mortgage servicing rights (MSRs), holding mortgage loans for investment, and acquiring residential mortgage-backed securities (RMBS).

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