Executive Summary

Q1 2025 delivered 8.4% revenue growth to $28.3M, while GAAP net loss widened to $3.1M and diluted EPS to $(0.13), driven by warranty segment pressure and higher corporate/M&A costs; adjusted consolidated EBITDA fell to $1.4M as Extended Warranty profitability lagged despite improving leading indicators .
KSX execution remained strong: revenue +23.3% YoY to $11.7M and adjusted EBITDA +23.3% YoY to $1.9M, aided by contributions from Image Solutions and Bud’s Plumbing; SPI’s ViewPoint acquisition expands cloud-native capability and ARR footprint .
Extended Warranty returned to growth in cash sales (+3.7% YoY, +9.3% QoQ) and trailing-12-month modified cash EBITDA rose 11.7% YoY, signaling margin recovery ahead, even as segment adjusted EBITDA declined to $0.8M in the quarter .
Strategic catalysts: two KSX acquisitions closed YTD (Bud’s and ViewPoint), new dealer warranty leadership (CEO Robbie Humble), and two independent directors added (Adam Patinkin, Josh Horowitz); management highlighted the “most active” deal pipeline to date .
Balance sheet: net debt edged up to $53.1M with total debt $59.5M and cash $6.4M at quarter-end after preferred stock issuance and refinancing; run-rate adjusted EBITDA across operating companies estimated at $18–$19M (not guidance) .

What Went Well and What Went Wrong

What Went Well

KSX growth and mix: KSX revenue +23.3% YoY to $11.7M and adjusted EBITDA +23.3% YoY to $1.9M, with Image Solutions and Bud’s Plumbing strengthening the platform . “Our operator CEO’s are executing their strategic plans…position their businesses for accelerating growth on both the top and bottom lines.” — JT Fitzgerald .
Extended Warranty leading indicators improved: cash sales returned to growth (+3.7% YoY, +9.3% sequential) and trailing-12-month modified cash EBITDA +11.7% YoY, pointing to future earnings normalization as deferred revenue is recognized .
Strategic portfolio expansion: SPI acquired ViewPoint (cloud-native timeshare software), adding >$1M ARR and ~$0.2M EBITDA run-rate; Bud’s Plumbing adds ~$6.0M revenue and ~$0.8M EBITDA annually, immediately accretive to KSX .

What Went Wrong

Warranty profitability compressed: Extended Warranty adjusted EBITDA fell to $0.8M from $1.4M YoY as higher quarter claims and OpEx outweighed flat revenue; IWS and dealer channels faced mix/claims dynamics despite cash sales momentum .
Consolidated profit pressure: GAAP operating loss of $(0.7)M and GAAP net loss of $(3.1)M vs $(2.3)M YoY; adjusted consolidated EBITDA declined to $1.4M from $2.1M YoY on segment and holdco costs (including M&A) .
Debt and covenant watch: net debt rose to $53.1M; SNS remained in covenant default historically, with quarter waivers obtained and uncertainty noted about future compliance (no immediate P&L impact but risk flagged) .

Financial Results

Metric	Q1 2024	Q1 2025
Revenue ($USD Millions)	$26.160	$28.349
GAAP Net Loss ($USD Millions)	$(2.328)	$(3.092)
Diluted EPS ($)	$(0.09)	$(0.13)
Adjusted Consolidated EBITDA (Non-GAAP, $USD Millions)	$2.104	$1.352

Segment breakdown

Segment	Q1 2024 Revenue ($USD Millions)	Q1 2025 Revenue ($USD Millions)	Q1 2024 Adj EBITDA ($USD Millions)	Q1 2025 Adj EBITDA ($USD Millions)
Extended Warranty	$16.685	$16.670	$1.448	$0.850
KSX	$9.475	$11.679	$1.555	$1.917

KPIs and balance sheet indicators

KPI	Q1 2025
Extended Warranty Cash Sales Growth (YoY)	+3.7%
Extended Warranty Cash Sales Growth (QoQ)	+9.3%
TTM Modified Cash EBITDA (Extended Warranty, YoY change)	+11.7%
Net Debt ($USD Millions)	$53.1
Total Debt ($USD Millions)	$59.5
Cash & Equivalents ($USD Millions)	$6.4
Run-rate Adj EBITDA (Operating Cos., 12-month, not guidance)	$18–$19

Estimates vs Actuals (S&P Global consensus)

Metric	Q1 2025 Actual	Q1 2025 Consensus	Surprise
Revenue ($USD Millions)	$28.349	N/A*	N/A*
Primary EPS ($)	$(0.13)	N/A*	N/A*
Adjusted Consolidated EBITDA ($USD Millions)	$1.352	N/A*	N/A*

*Values retrieved from S&P Global; consensus data unavailable for KFS Q1 2025 (no published counts for estimates).

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Run-rate Adjusted EBITDA (Operating Companies)	Trailing 12 months	N/A	$18.0–$19.0M (illustrative, not forward guidance)	Not formal guidance

Management did not issue formal revenue, margin, OpEx, OI&E, or tax guidance; commentary emphasized robust KSX pipeline and extended warranty recovery indicators .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024 and Q4 2024)	Current Period (Q1 2025)	Trend
KSX M&A pipeline	Active pipeline; added Image Solutions; 4 OIRs searching; aiming 2–3 deals/yr	“Most active ever”; 2 deals closed YTD (Bud’s, ViewPoint)	Accelerating
Extended Warranty claims/moderation	Claims inflation moderation to ~7% YoY; sequential improvement in adj EBITDA	Cash sales +3.7% YoY, +9.3% QoQ; TTM modified cash EBITDA +11.7% YoY	Improving
Nurse staffing (SNS) recovery	Travel shifts +73% YoY; rebuild underway	Revenue +7.5% YoY; EBITDA slightly down amid investments; sustainable travel shift growth	Gradual recovery
SPI software performance	ARR +16%, Rule of 40 >40%	ViewPoint acquisition adds cloud-native product, ARR >$1M; combined ARR ~$5M	Expanding capabilities
Capital structure/leverage	Net debt $52.0M at YE; buybacks; pref issuance	Cash $6.4M; debt $59.5M; net debt $53.1M; Ravix refinancing, earn-out paid	Stable with refinancing
Regulatory/legal	VA Lafayette sale impact in discontinued ops	Aegis settlement payments $0.2M in Q1	Ongoing managed exposure

Management Commentary

“KSX revenue grew 23.3% year-on-year and KSX adjusted EBITDA grew 23.2% year-on-year… Under the surface, our operator CEO’s are executing their strategic plans to position their businesses for accelerating growth” — JT Fitzgerald .
“Extended Warranty appears to be entering a more favorable phase of recovery… cash sales have returned to growth… trailing 12‑month modified cash EBITDA… 11.7% higher at the end of Q1 2025” — Kent Hansen and JT Fitzgerald .
On ViewPoint: “Combination… gives a cloud-native solution for North American SMB resort operators and access to new geography for SPI’s enterprise solution… makes a lot of sense.” — JT Fitzgerald .
On “search” J‑curve: “Investing in talent and systems initially depresses profitability; curves cross ~2–3 years as high-attribute operators outperform over time.” — JT Fitzgerald .

Q&A Highlights

Strategic rationale for SPI’s ViewPoint: accelerates cloud-native roadmap for SMBs and opens Asia-Pacific/Australia enterprise geography; funded with SPI cash; adds >$1M ARR and ~$0.2M EBITDA run-rate .
“Search J‑curve” explained: initial profitability dip from investments and operator learning, with inflection typically in years 2–3 .
Deal pipeline: three OIRs at “full stride” with platforms seeking bolt-ons; expectation of continued 2–3 acquisitions per 12 months subject to diligence .
Owner transition model: keeping prior owner as President for ~1 year enhances relationship transfer and execution quality — “really a win‑win” .
Platform targets: prefer “Rule of 10” industries (fragmented, recurring revenue) like insurance brokerage, wealth management/RIA, accounting services; operator fit drives selection .

Estimates Context

S&P Global consensus for Q1 2025 EPS and revenue was unavailable (no published estimate counts); therefore, estimate comparisons and surprise calculations could not be determined. Actuals: Revenue $28.349M, diluted EPS $(0.13), adjusted consolidated EBITDA $1.352M . Values retrieved from S&P Global; consensus data unavailable.*

Key Takeaways for Investors

Near-term: KSX momentum and acquisitions should support consolidated growth while warranty leading indicators suggest earnings recovery ahead; watch Extended Warranty margin normalization as deferred revenue converts and claims inflation moderates .
Mix shift: Portfolio tilting toward asset-light, recurring-revenue services (IT MSP, software, healthcare monitoring, skilled trades) with improving scalability; SPI+ViewPoint broadens TAM and ARR base .
Execution focus: New leadership at dealer warranty (PWI/Penn) and strong OIR cohort underpin M&A cadence; pipeline described as most active ever, a catalyst for re‑rating if deals are accretive and well-financed .
Balance sheet: Net debt $53.1M, cash $6.4M, and preferred equity issuances provide growth capital; monitor covenant compliance (SNS waivers) and refinancing progress (Ravix) for risk management .
Valuation drivers: Trajectory of Extended Warranty EBITDA, KSX organic growth (SNS travel shifts, DDI scale, SPI ARR), and bolt-on pace likely steer estimate revisions once coverage matures .
Risk watch: Claims inflation and operating expenses in warranty, covenant uncertainty at SNS, and integration of recent acquisitions (execution vs planned synergies) .
Actionable: Track Q2/Q3 trends in cash sales and modified cash EBITDA for warranty, SPI/ViewPoint ARR growth, and announced M&A; absence of formal guidance increases importance of quarterly leading indicators and segment disclosures .

KINGSWAY FINANCIAL SERVICES INC (KFS)·Q1 2025 Earnings Summary