Kingsway Financial Services NYSE: KWY, now operating as Kingsway Corporation, reported second-quarter results that management described as its strongest operating performance since Chief Executive Officer JT Fitzgerald took the role. Consolidated revenue rose 27.6% year over year to $39.4 million, while the company recorded net income of $200,000, compared with a $3.2 million net loss in the prior-year quarter.
Consolidated adjusted EBITDA increased to $5.2 million from $1.7 million a year earlier. Fitzgerald said the company’s portfolio EBITDA, a management metric combining KSX adjusted EBITDA with modified cash adjusted EBITDA from the extended-warranty segment, reached a quarterly record of $7.2 million.
KSX Segment Leads Revenue and EBITDA Growth
Kingsway’s Search Xcelerator, or KSX, segment generated revenue of $22.3 million, up 68.3% from $13.3 million in the second quarter of 2025. KSX adjusted EBITDA rose 77.9% to a quarterly record of $4.3 million from $2.4 million a year earlier.
Fitzgerald said performance was broad-based across the KSX portfolio, highlighting Ravix and SPI for customer wins and client retention. He said KSX adjusted EBITDA has more than tripled during the past eight quarters.
The extended-warranty segment reported revenue of $17.1 million, down 3.1% from the prior-year period. On a pro forma basis excluding Trinity Warranty Solutions, which Kingsway sold in May, extended-warranty revenue rose 6.5% to $16.1 million and cash sales increased 6.9%.
Extended-warranty adjusted EBITDA was $1.1 million, compared with $600,000 a year earlier. On a pro forma basis for Trinity’s sale, segment adjusted EBITDA was $1 million, up from $300,000 in the prior-year period.
Fitzgerald said both IWS and Penn/PWI had strong quarters. He said Penn/PWI, led by operator CEO Robbie Humble, has prioritized profitable growth in 2026 and delivered results ahead of internal expectations.
Operating Businesses Face Uneven Performance
Management said several portfolio companies continued to face business-specific issues despite the overall results. Roundhouse and Kingsway Skilled Trades typically benefit from second-quarter seasonality, but both reported flat adjusted EBITDA sequentially from the first quarter.
At Roundhouse, Fitzgerald attributed the second-quarter performance primarily to timing issues, including an electric motor shipment that moved from the end of June to July 1 and deferred several hundred thousand dollars of revenue into the third quarter. He said the company continues to add customers and make operational progress.
Within Kingsway Skilled Trades, Bud’s Plumbing had what Fitzgerald called a great quarter, while AAA improved. Southside, however, recorded a low six-figure write-down tied to a legacy construction project. Management expects that project to be completed in coming weeks and said its resolution could provide a financial tailwind beginning in the third quarter.
DDI is in what management has described as a financial transition year following investments in a second control center, detection rates, response times, service availability and its sales organization. Fitzgerald said those sales investments have contributed to a record customer pipeline, though expenses are recognized before customer wins are realized.
SNS continued to contend with a difficult post-pandemic nurse-staffing environment. Charles Mokuau stepped down as operator CEO at the end of May by mutual agreement, and Kingsway Operator-in-Residence Paul Vidal took over leadership of the business. Fitzgerald said the nurse-staffing market appears to have stabilized in recent months and may be growing again, though he characterized the outlook as cautious.
Trinity Sale and RCC Acquisition Reshape Portfolio
During the quarter, Kingsway completed the sale of Trinity Warranty Solutions in a management buyout valued at $8 million, including $5 million paid upfront and $3 million payable over time, subject to discounts for early payment. The transaction represented 9.2 times Trinity’s 2025 adjusted EBITDA, according to management.
The company recorded a one-time $1.3 million gain on the sale. Fitzgerald said the proceeds are available for redeployment within KSX.
Separately, Image Solutions acquired Romeo Computer Company, or RCC, effective Aug. 1. RCC is a Michigan-based provider of managed IT and cybersecurity services. Kingsway said RCC produced approximately $2.5 million in unaudited pro forma revenue and approximately $500,000 in unaudited pro forma adjusted EBITDA during the 12 months ended April 30. The purchase price was $2.4 million.
Fitzgerald said RCC has more than 80% recurring revenue, strong margins and a history of organic growth. He added that the acquisition expands Image Solutions’ presence into Michigan and the upper Midwest. Chief Financial Officer Kent Hansen said the transaction was funded at the operating-company level and that Kingsway’s consolidated leverage was approximately 2.7 times.
Balance Sheet, Covenant Matters and Outlook
Total net debt was $59.9 million as of June 30, down from $62.4 million at the end of 2025. Kingsway also received approximately $1.1 million of cash distributions during the quarter from active Argo search-fund investments. Hansen said the distributions were included in interest and investment income, while management includes Argo gains in consolidated adjusted EBITDA at the holding-company level because search is central to its strategy.
The company incurred $1.4 million of non-cash expense tied to long-term stock-based awards and a one-time expense of about $600,000 to resolve a legacy legal liability related to the 2022 sale of a Texas rail yard to BNSF.
Hansen said three operating subsidiaries representing less than 10% of trailing-12-month portfolio EBITDA were out of covenant compliance during the quarter. The company has obtained or is obtaining waivers for the violations, he said. The loans are non-recourse to Kingsway and its other subsidiaries and do not cross-default.
Portfolio trailing-12-month EBITDA was $22 million to $23 million as of June 30, excluding Trinity’s contribution but not yet including RCC’s estimated contribution. Kingsway reaffirmed its 2026 targets of three to five acquisitions and double-digit organic growth in both KSX and extended warranty.
About Kingsway Financial Services (NYSE:KWY)
Kingsway Financial Services Inc is a holding company that operates through a group of subsidiaries focused on extended warranty and specialty insurance-related services. The company's businesses primarily provide administration, underwriting, and related support services for protection products offered through automotive, consumer, and other markets.
Kingsway has historically operated in the insurance and service contract space, with activities centered on helping businesses and consumers manage risk and protection coverage needs.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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