KFS - Earnings call transcript Q2 2024 | Kingsway Financial Services Inc.

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Operator

Good day, and welcome to the Kingsway Second Quarter 2024 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. With me on the call are J.T. Fitzgerald, Chief Executive Officer; and Kent Hansen, Chief Financial Officer.

Before we begin, I want to remind everybody that today's conference may contain forward-looking statements.

regarding future including business statements margins, revenue, include and expenses outlook. statements the expected future, operating Forward-looking Actual results or contemplated by trends could materially forward-looking differ statements. those from those

that and actual and For XX-K company's implied also include non-GAAP or use and on and in the forward-looking with reconciliation Exchange the XX-Qs which in note such most the discussion comparable see the may Commission. Please differ today's Form utilizes press risks the the SEC. subsequent in most such recent please with factors of as call a our could those Form management of in the cause GAAP release that X-Ks Form periodic risk to of results available well statements, measures expressed metrics the company's to from filings non-GAAP performance. report metrics to analyze Securities uncertainties, is filed the detailed A annual as

CEO to like Now to would Fitzgerald, I J.T., call turn over please proceed. J.T. of the Kingsway.

John Fitzgerald

Paul. Warranty Kingsway expectations. second moderating earnings showed welcome We heading largely exited segment, our cash call sales back strong half and the into to improving in quarter with saw performance year. that claims Extended in we and our momentum Good We the line had was experience the which the of XXXX. with quarter nice and of for afternoon, the Thanks, solid a quarter everyone,

improving with performed EBITDA also year-over-year. segment KSX Our and well sequentially

positive activity. Additionally, has this by quarter marked deal-related been very

growth forward. have are to completed, that significantly working moving we couple on, high-quality our if promising would prospects We which, contribute a of trajectory

the million, while nice ago X% to quarter quarter. EBITDA $X.X consolidated of the the in XXXX, prior year a $XX.X a increase modest of quarter, second compared over million million, For adjusted was $X.X year improvement consolidated revenue the was

are segment, million the to year. In which was the the adjusted Warranty segment that were implemented in and our in pricing this increased the year last KSX second a Warranty $X.X offset and segment, the X.X% of prior For EBITDA of positive Extended beginning Extended expense, only in having quarter over impact XXXX both claims the combined adjustments second half year. helping

recall may driven focus X.X% year. at notably, than Sequentially, revenue, the by sales adjusted prior earned for on Also quarter cash our and XX.X% mix were current Warranty last QX higher controlling the revenue higher You quarter over from first XX% Extended of our EBITDA claims XXXX, of that increased ongoing a higher year. the Trinity costs. increased

earnings and the last the Warranty second businesses that As in have the by an we inflection Extended we our about challenges faced point talked quarter. in call, moderated, during we feel hit

in primarily continues Kingsway DDI to and ahead team XXXX. Xcelerator, of Revenues focused our the resulting SPI to in increased perform remains pricing nicely to cost and Ravix original optimizing thesis Search half a on XXXX. prior of The comparison of at utilization rates, over second due investment Turning both increasing KSX trending X% and management. acquisitions our segment. or disciplined is from year, favorable the Ravix

the and improvement prior headed the the quarter. At to in the year is team year. basis we conditions. and adjusted hold continue CSuite, second to in despite flat to is pipeline, margins quarter, down compared persistently a right period. solid Revenue were XX%, gross XXX were the the a over believe quarter year-over-year revenues While EBITDA business market in the point challenging continue building was essentially in around EBITDA prior direction lower

margin Travel and the charting of sequentially, the SNS expenses accelerating revenue down strong administrative gross were and second year. quarter, for revenue beyond. At for its the XXXX general pipeline flat half qualified and also sales adjusted from of of in was The and prior look on to is the improved new second travel business XXX cost over However, opportunities nurses the QX but TOA, XX.X% team nurse and both the number more assignment course basis in mix or higher better quarter year. points beginning travel of QX. has since than the and a in in increased EBITDA current doubled than Gross the due was margin shifts shifts of from quarter. first of

in For the at first last the while, quarter exits same time TOA a the long more point the than company with year.

and a Product to its for to with acquisition, prior grow increasing in Lake QX year City. ARR believe in outlook is to diversify is second new revenue. or and or clients the Imaging Systems be delivered The the XX.X% market has strategy strong, EBITDA period. this strong number longer-term with over promising. At the support has company over International, DDI, recurring We prior XX%. At sequentially. grown its Since revenues on the operational continues revenue executing Salt the of XX.X% increasing year. center lease XX% Diagnostics year revenue nurse its the travel new adjusted improved for by team company SPI, growth signed contracted a DDI continue operation EBITDA by and a Digital recently strategy To risk, annual

and million operating We the expectations. run to rate continues million. on of performance to our the running at the company exceed expect $XX the EBITDA meet to have half businesses, Based of year. The $XX original adjusted our remains the in second and location up XX-month

adjusted intended own, acquisitions corporate through is our the XX returns in end and opportunities to central remains for on EBITDA we high run tangible that growing recently we those last rate including markets. of acquired. Growth strategy, targeting months reminder, to businesses predictably a capital the deliver have As currently large capture

targets. million acquisition potential annualized currently X can searching X highly transactions healthy challenging opportunities we activity a residence each are for who completing to to related seeing of potential generate OIR, currently of deals timing X $X are evaluating track and or have million of operators and that the transactions meet our to $X to on adjusted talented target in number year to of in EBITDA. We actively believe a level predict, is are we each attractive are While

progress actively strong Extended the backfill are of OIRs evolves. All Warranty as that can businesses against our drove to second to over businesses bench continued and for quarter. I'll for financial call commentary solid objectives we our talent now within in financials. addition, the in some results related recruiting our our execution grow new Kent turn additional flow KSX deal and In the all, strategic

Kent Hansen

Thanks, J.T.

is owns sell a of the sole a we U.S. to XXXX, As during fourth medical whose reminder, subsidiaries, plan Administration. VA of quarter clinic Lafayette, a began tenant our Veterans executing the one which

for in for the which capacity included debt to Taking loan our results As equivalents of to a $XXX,XXX reported we segments. In At million first businesses period. additional fees, year XXXX quarter look months related $X revolver, This end end are sales primarily all debt compared replaced loan of and the draw of maturity it now with today. Extended to to term gives Warranty discontinued delayed income assets for was included asset repurchases, its to in a operations results cash The of offset the Lafayette off date partially operations future acquisitions. at activities as due interest Cash $XX year-ago and our cash such, our operating X a was by not related reported VA sheet at $X of amended in and operations of provided Cash million continuing amendment second million current the cash operating and is Warranty May a the reported we in are by and held prior million us sale. million of balance of and loan used this May payment and cash the the compared expenses in outflows $X.X the to liabilities the million. flows. Extended operating XXXX, was XXXX. extended of of from had was to operating The pay and XXXX. of in year, fund $XX.X used $X.X and to activities of separately

our compared XXXX, we of the million. Also Year-to-date, $X.X of of shares minority subsidiary for note, previously as a owned XXX,XXX of we XX% over repurchased that have stock primarily turn the XXXX. million call for to $XX.X of As million X million Paul? amendment. In of common to now IWS July the 'XX, million to XX, the line own. extended comprised we year Paul year, approximately we to at the and purchase price wholly for to to completed June IWS interest the XXXX, March did aggregate loans compared repurchase not increased $XX.X debt was Extended of $XX.X as June this XXXX. end securities is at through which had of end Warranty of total any company. I'll March of in outstanding debt, debt an is XXXX, the of such, in $XX.X questions. of open subordinated purchase of Net XX, due the bank program now And back

Operator

[Operator Instructions] today from is coming The Capital. question first David Patinkin Adam from

Adam Patinkin

ask business, wanted about just quickly to warranty mind. don't I if the you

So I moderated color was it that the X.X% there I Can bit significantly. gave think you little kind has that you you pretty said in where trend the a **J.T. inflation of expect And cost those up think, relative bit how that of inflation? And to both little a provide you cost of of rates terms more year? going color duration over to the of forward there your trending are year-over-year.

John Fitzgerald

the Yes. Yes. question. for Adam, thanks

driven by so quarter, were warranty mostly X.X% So frequency. up or claims in the not severity,

year. bit we're seeing And -- mix how rate X% back year in X% single much I rate. last businesses, of kind in and come that across that how shifting through the half high or and know, of sticks always of but but little comes this you the As the taking think to hard, through price much in in started is sort into of the and probably stuff about we increases determine, were of aggregate a that digits, of we're

in labor. accelerating year, inflation, predominantly the inflation, as last And of quarter late we severity and so beginning saw third parts and really you also, know, quarter second in claims

of coming And easier comps half against up in so much the the second for year claims dollars. we're

I so that much will to that still inflation be that mentioned and come expect will continue And I would lower rate year-over-year through.

Operator

like were from James Instructions] I'd [Operator there call some for questions lines. now questions. no the And e-mail pass to other to the

James Carbonara

Thank on did questions come have e-mail. you, Operator. Yes, in X we

that performance. were the J.T., Investor most and X like still although Day, talk yet Can The financials? demonstrate very acquisitions, businesses the first these numbers before happy attributes businesses recent show superior up about their reported recent one long said with the starts is, at are these to there it you why says; and performance you You you both how doesn't in the

John Fitzgerald

onboarding. of ownership we Yes. since XX%. vertical clients serving I bit the industry the by They've business market in new which of acquired ARR software property roughly little prepared the that fractional acquisition September mentioned SPI, several in also remarks. has process in it they're vacation last a year, grown added

would the so of by will by roughly grown have And expect the since that I ARR end XX% we inception. year

think investing I Drew is customers So new growth. and on job the number great there done in growing that's has in of really their a platform. on software strong transitioning focused

so recurring revenue, share little the I over XX% in market prior think near-term in And that capture a mentioned, of DDI, in and ownership roughly very bit go revenue our revenue as high I then be the little addressable market. more EBITDA dramatically. profitability to his to prior bit out of sacrificing improved And growth even more year recurring and quarter a increased for would margin

techs; doing that to growing is it's facilities a sending just that pool customers he a through mentioned, really here. that growth also new opening financial currently I who a him in those -- we're to really the Lake. of and incredible opportunity so for operationally new onboard. has And statements. the And with redundancy tap is in and job labor great support starting a more facility EKG as create in financial Peter come And to Salt high-quality performance are

both about of excited So those businesses. of I really we're yes, think the trajectory

James Carbonara

you in any And X something these last touched of to for are nursing and businesses? you turnaround again, better or believe reiterate. in something to you may but question, on business, CSuite a what either ahead are lead the signs Excellent. The days that might seeing reinforce opening facts the maybe is, remarks, have question

John Fitzgerald

Yes. nurse SNS, the we'll start staffing business. there,

For point the more quarter first on last with time, time assignment the same than travelers year. we at the we in exited had

of And that's first in over great XX% quarter a ships So year. fact. the TOA increased quarter the the our

onto so And nurses getting is recruiting TOA the of job doing more and platform Charles shifts. great a

progress been And so that's nice really there.

diem gross nurses demand And there's and seeing we're more year, is to per I think and start kind like the and during broadly, of settling abate industry feels as season. increases margin travel for of always the a into seasonally, cold second steady compression hospital in half it flu the state. census

demand of position recruiting a are their in the portfolio lot So that A CSuite, the bit I equity -- it's business a half at growing mentioned good private of of year. staff permanent to that challenges I back in persistent. placement the companies. capture accounting we're is for think

have I huge a people think optimism, business interim with as well close been searches of and pull and It's backlog some those trigger slow the retained getting to people We've challenges got around work. hire. deals. CFO as to

as really I think Timi pipeline of But along that to he strong half and seen we've deals hard hopeful tell. it. trying has the push backlog Still he's sentiment of that the -- been to been in has the or we're improves as those the year. is second

James Carbonara

Great. questions that's all e-mail. the And Operator, from on

Operator

at time. from the questions other were There lines no this

now? the would call like So to you conclude

John Fitzgerald

evening. on everyone. call. Have great participating the you Thanks, a Yes. Appreciate

Operator

conclude does today's conference. This

your your you may at time. You this participation. disconnect for lines Thank

Kingsway Financial Services (KFS) 6 Aug 242024 Q2 Earnings call transcript