Kingsway Financial Posts Consistent Q2 Loss Amidst Flat Revenue

TL;DR

**KFS is stuck in neutral, showing no signs of breaking out of its consistent loss per share, so don't expect a turnaround soon.**

AI Summary

KINGSWAY FINANCIAL SERVICES INC reported a net loss from continuing operations attributable to common shareholders of $0.01 per share for both the three and six months ended June 30, 2025, consistent with the prior year's comparable periods. Total revenue for the three months ended June 30, 2025, was $38,069, a slight decrease from $38,117 in the same period of 2024. For the six months ended June 30, 2025, revenue increased to $37,834 from $34,442 in 2024. The company's diluted loss from continuing operations per share remained at $0.01 for the three and six months ended June 30, 2025, as all potentially dilutive securities were anti-dilutive due to the reported loss. General and administrative expenses and other revenue not allocated to segments, net, includes corporate and non-operating expenses, contingent consideration expense, and non-operating other revenue. The company's financial position shows redeemable Class B preferred stock at $1,025,927 as of June 30, 2025, up from $983,027 at December 31, 2024. Limited liability investments were $16,250 as of June 30, 2025, compared to $8,250 at December 31, 2024.

Why It Matters

For investors, the consistent net loss of $0.01 per share for both Q2 2025 and the first half of 2025 signals a lack of profitability, which could deter new investment and pressure existing shareholders. The slight revenue dip in Q2 2025, from $38,117 to $38,069, suggests a challenging operating environment, especially within the competitive fire, marine & casualty insurance sector. Employees might face uncertainty if the company continues to struggle with profitability, potentially impacting future growth opportunities. Customers, however, are unlikely to see immediate direct impact, though sustained losses could affect long-term service stability. The broader market will view this as a signal of ongoing challenges for smaller players in the insurance industry, where scale and efficiency are critical.

Risk Assessment

Risk Level: medium — The company reported a consistent loss from continuing operations attributable to common shareholders of $0.01 per share for both the three and six months ended June 30, 2025, and the prior year periods. This sustained unprofitability, coupled with potentially dilutive securities being excluded from diluted EPS calculations because they are anti-dilutive, indicates ongoing financial challenges and a lack of clear path to profitability.

Analyst Insight

Investors should exercise caution and conduct further due diligence into KINGSWAY FINANCIAL SERVICES INC's operational segments and strategies for achieving profitability. Given the consistent losses, a 'wait and see' approach is advisable before making significant investment decisions, focusing on future filings for signs of improved financial performance.

Financial Highlights

debt To Equity

N/A

revenue

$38,069

operating Margin

N/A

total Assets

N/A

total Debt

N/A

net Income

N/A

eps

-$0.01

gross Margin

N/A

cash Position

N/A

revenue Growth

-0.1%

Revenue Breakdown

Key Numbers

• $0.01 — Loss per share (Consistent for Q2 2025 and Q2 2024, indicating no improvement in profitability.)
• $38,069 — Q2 2025 Revenue (Slight decrease from $38,117 in Q2 2024, showing flat to declining top-line performance.)
• $37,834 — H1 2025 Revenue (Increase from $34,442 in H1 2024, suggesting some growth over a longer period despite Q2 dip.)
• $1,025,927 — Redeemable Class B Preferred Stock (Increased from $983,027 at year-end 2024, indicating potential financing activities or obligations.)
• $16,250 — Limited Liability Investments (Increased from $8,250 at year-end 2024, showing growth in this investment category.)

Key Players & Entities

• KINGSWAY FINANCIAL SERVICES INC (company) — filer of the 10-Q
• $0.01 (dollar_amount) — net loss per share for Q2 2025
• $38,069 (dollar_amount) — total revenue for Q2 2025
• $38,117 (dollar_amount) — total revenue for Q2 2024
• $37,834 (dollar_amount) — total revenue for six months ended June 30, 2025
• $34,442 (dollar_amount) — total revenue for six months ended June 30, 2024
• $1,025,927 (dollar_amount) — redeemable Class B preferred stock as of June 30, 2025
• $983,027 (dollar_amount) — redeemable Class B preferred stock as of December 31, 2024
• $16,250 (dollar_amount) — limited liability investments as of June 30, 2025
• $8,250 (dollar_amount) — limited liability investments as of December 31, 2024

FAQ

Risk Factors

• Redeemable Preferred Stock Obligation [medium — financial]: Redeemable Class B preferred stock increased to $1,025,927 as of June 30, 2025, from $983,027 at December 31, 2024. This represents a significant financial obligation that could impact liquidity and capital structure.
• Persistent Net Loss [medium — financial]: The company reported a net loss from continuing operations attributable to common shareholders of $0.01 per share for both the three and six months ended June 30, 2025. This indicates a lack of profitability and potential strain on financial resources.
• Anti-Dilutive Securities [low — operational]: All potentially dilutive securities were anti-dilutive for the reported periods due to the net loss. This means that while the company has securities that could dilute earnings per share, their impact is currently masked by the overall loss, suggesting underlying performance issues.
• Growth in Limited Liability Investments [low — financial]: Limited liability investments grew to $16,250 as of June 30, 2025, from $8,250 at December 31, 2024. While this shows investment activity, the nature and performance of these investments are not detailed, posing a potential risk if they underperform.

Industry Context

Kingsway Financial Services Inc. operates within the fire, marine, and casualty insurance sector. This industry is characterized by intense competition, regulatory oversight, and sensitivity to economic cycles and catastrophic events. Insurers must manage underwriting risk, investment risk, and operational efficiency to remain profitable.

Regulatory Implications

As an insurance provider, Kingsway is subject to stringent regulatory requirements from state and federal bodies. Compliance with capital adequacy, solvency, and consumer protection laws is critical. Any failure to meet these standards could result in fines, sanctions, or operational restrictions.

What Investors Should Do

1. Monitor revenue trends closely.
2. Investigate the increase in redeemable preferred stock.
3. Analyze the drivers of the net loss.

Key Dates

• 2025-06-30: End of Q2 2025 reporting period — Key period for financial performance review, showing flat revenue and continued net loss per share.
• 2025-08-07: 10-Q Filing Date — Public disclosure of the company's financial performance and position for the period ending June 30, 2025.

Glossary

Continuing Operations

The revenues, expenses, gains, and losses that are related to a company's ongoing business activities and are expected to continue into the future. (The net loss is specifically attributed to continuing operations, indicating the core business is not profitable.)

Potentially Dilutive Securities

Securities such as stock options, warrants, or convertible bonds that could increase the total number of outstanding shares, thereby diluting earnings per share. (These securities were anti-dilutive, meaning their inclusion would have worsened the reported loss per share, highlighting the company's current loss-making status.)

Anti-dilutive

In earnings per share calculations, a security is anti-dilutive if its inclusion would increase earnings per share or decrease loss per share. (Indicates that the company's reported loss per share is not being masked by the potential issuance of new shares from these securities.)

Redeemable Class B Preferred Stock

A class of preferred stock that the holder or the issuer has the right to redeem (buy back) at a specified future date or upon the occurrence of certain events. (The increase in this liability suggests potential future cash outflows or financing activities that could impact the company's financial flexibility.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, Kingsway Financial Services Inc. reported a consistent net loss per share of $0.01 for both Q2 and H1 2025. Total revenue for Q2 2025 saw a slight decrease to $38,069 from $38,117 in Q2 2024, indicating flat top-line performance. However, H1 2025 revenue increased to $37,834 from $34,442 in H1 2024, suggesting some underlying growth over the six-month period despite the Q2 dip. The company also saw an increase in redeemable Class B preferred stock and limited liability investments.

Key Financial Figures

• $0.01 — ch registered Common Stock, par value $0.01 per share KFS New York Stock Exchange
• $0 — Net of income tax (benefit) expense of $0 for the three and six months ended June

Filing Documents

• kfs20250630_10q.htm (10-Q) — 3084KB
• ex_822082.htm (EX-31.1) — 8KB
• ex_822083.htm (EX-31.2) — 8KB
• ex_822084.htm (EX-32.1) — 5KB
• ex_822085.htm (EX-32.2) — 5KB
• 0001437749-25-025403.txt ( ) — 15888KB
• kfs-20250630.xsd (EX-101.SCH) — 98KB
• kfs-20250630_cal.xml (EX-101.CAL) — 101KB
• kfs-20250630_def.xml (EX-101.DEF) — 753KB
• kfs-20250630_lab.xml (EX-101.LAB) — 618KB
• kfs-20250630_pre.xml (EX-101.PRE) — 802KB
• kfs20250630_10q_htm.xml (XML) — 3655KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION 3

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS 3 Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024 3 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited) 4 Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited) 5 Consolidated Statements of Shareholders' Equity for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited) 6 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (unaudited) 8

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 9

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 36

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 43

CONTROLS AND PROCEDURES

ITEM 4. CONTROLS AND PROCEDURES 43

- OTHER INFORMATION

PART II - OTHER INFORMATION 43

LEGAL PROCEEDINGS

ITEM 1. LEGAL PROCEEDINGS 43

RISK FACTORS

ITEM 1A. RISK FACTORS 44

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 44

DEFAULTS UPON SENIOR SECURITIES

ITEM 3. DEFAULTS UPON SENIOR SECURITIES 44

MINE SAFETY DISCLOSURES

ITEM 4. MINE SAFETY DISCLOSURES 44

OTHER INFORMATION

ITEM 5. OTHER INFORMATION 44

EXHIBITS

ITEM 6. EXHIBITS 45

SIGNATURES

SIGNATURES 46 2 Table of Contents KINGSWAY FINANCIAL SERVICES INC.

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Consolidated Balance Sheets (in thousands, except share data) June 30, 2025 December 31, 2024 (unaudited) Assets Investments: Fixed maturities, at fair value (amortized cost of $ 38,069 and $ 38,117 , respectively) $ 37,530 $ 36,963 Limited liability investments 650 650 Limited liability investment, at fair value 3,037 2,859 Investments in private companies, at adjusted cost 628 696 Short-term investments, at cost which approximates fair value 173 169 Total investments 42,018 41,337 Cash and cash equivalents 12,079 5,493 Restricted cash 7,378 7,643 Accrued investment income 895 841 Service fee receivable, net of allowance for credit losses of $ 758 and $ 626 , respectively 10,940 9,361 Other receivables, net of allowance of $ 5 and $ 5 , respectively 2,904 1,000 Deferred contract costs 14,570 13,889 Income taxes receivable 605 574 Property and equipment, net of accumulated depreciation of $ 2,006 and $ 1,720 , respectively 1,679 1,567 Right-of-use asset 2,561 2,390 Goodwill 57,547 56,524 Intangible assets, net of accumulated amortization of $ 37,834 and $ 34,442 , respectively 40,134 40,049 Other assets 14,387 5,948 Total Assets $ 207,697 $ 186,616 Liabilities and Shareholders' Equity Liabilities: Accrued expenses and other liabilities $ 20,701 $ 20,616 Deferred service fees 86,430 83,108 Bank loans 43,351 44,128 Note payable 1,053 — Subordinated debt, at fair value 13,928 13,409 Lease liability 2,826 2,682 Net deferred income tax liabilities 3,800 4,371 Total Liabilities 172,089 168,314 Redeemable preferred stock, $ 0.01 par value; 650,000 and 330,000 authorized, issued and outstanding at June 30, 2025 and December 31, 2024, respectively; redemption amount of $ 16,250 and $ 8,250 at June 30, 2025 and December 31, 2024, respectively 16,250 8,250 Shareholders' Equity: Common stock, $ 0.01 par value; 50,000,000 authorized; 29,456,040 and 2

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) June 30, 2025 NOTE 1 BUSINESS Kingsway Financial Services Inc. (the "Company" or "Kingsway") was incorporated under the Business Corporations Act (Ontario) on September 19, 1989. Effective December 31, 2018, the Company changed its jurisdiction of incorporation from the province of Ontario, Canada, to the State of Delaware. Kingsway is a holding company with operating subsidiaries located in the United States. The Company owns or controls subsidiaries primarily in the business services and extended warranty industries. NOTE 2 BASIS OF PRESENTATION The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10 -Q and Article 10 of Regulation S- X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements of the Company. In the opinion of management, all adjustments necessary for a fair presentation have been included and are of a normal recurring nature. Interim results are not necessarily indicative of the results that may be expected for the year. The accompanying unaudited consolidated interim financial statements and footnotes should be read in conjunction with the audited consolidated financial statements and footnotes included within our Annual Report on Form 10 -K (" 2024 Annual Report") for the year ended December 31, 2024 . The unaudited consolidated interim financial statements include the accounts of the Company and its subsidiaries, as well as certain variable interest entities as further described in Note 6, "Variable Interest Entities," to the consolidated financial statements in the 2024 Annual Report. All material intercompany transactions and balances have been eliminated in consolidation. The preparation of consolidated fina

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) June 30, 2025 In November 2024, the FASB issued ASU 2024 - 03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures ("ASU 2024 - 03" ). ASU 2024 - 03 requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense caption. Qualitative disclosures about any remaining amounts in relevant expense line items must be provided. Separate disclosures of total selling expenses and an entity's definition of those expenses are also required. ASU 2024 - 03 is effective for public companies with annual periods beginning after December 15, 2026, and interim periods within annual period beginning after December 15, 2027, with early adoption permitted. The Company expects the adoption of the standard to result in additional disaggregation of expense captions within its footnote disclosures. NOTE 5 ACQUISITIONS A ND DISCONTINUED OPERATIONS (a) Business Combinations M.L.C. Plumbing, LLC (d/b/a Bud's Plumbing) On March 14, 2025, the Company acquired 100 % of the outstanding membership interests of M.L.C. Plumbing, LLC (d/b/a Bud's Plumbing Service, "Bud's Plumbing") for aggregate consideration consisting of cash and a seller note, of approximately $ 5.0 million, less certain escrowed amounts for purposes of indemnification claims. The final purchase price was subject to a working capital true-up of less than $ 0.1 million that was paid during the second quarter of 2025. Bud's Plumbing, based in Evansville, Indiana, is a provider of various plumbing installation, service and repair services to residential and commercial customers. As further discussed in Note 19 , "Segmented Information," Bud's Plumbing is included in the Kingsway Search Xcelerator segment. This acquisition was the Company's seventh acquisition under its novel CEO Accelerator program and further expands the Company's

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View this 10-Q filing on SEC EDGAR