KFS Kingsway Financial Services Inc New

ITASCA, ILL., Feb. 28, 2022 /PRNewswire/ - (NYSE: KFS) Kingsway Financial Services Inc. ("Kingsway" or the "Company") today announced its operating results for the twelve months ended December 31, 2021, which include the following highlights:

• Net income improved to $1.9 million for the twelve months ended December 31, 2021, from a net loss of ($5.4) million for the same period in 2020, despite the fact the Company recorded a non-cash, cumulative adjustment to net income of $0.5 million in the September 2021 quarter relating to its finalization of the purchase accounting for PWI (see further discussion in the annual shareholder letter)
• Non-GAAP adjusted income grew to $11.7 million for the twelve months ended December 31, 2021, compared to a non-GAAP adjusted loss of ($0.6) million for the same period in 2020
• The Company acquired Ravix Financial Inc. ("Ravix") on October 1, 2021. For the fourth quarter of 2021 the net income and non-GAAP adjusted income results above include those of Ravix, which is included in the Company's newly-formed Kingsway Search Xcelerator segment
• Extended Warranty segment operating income increased to $12.6 million for the twelve months ended December 31, 2021 compared to $6.6 million for the same period in 2020, despite the fact the Company recorded a non-cash, cumulative reduction to revenue of $1.9 million – which had a corresponding reduction to operating income – in the September 2021 quarter relating to its finalization of the purchase accounting for PWI (see further discussion in the annual shareholder letter)
• Extended Warranty segment non-GAAP adjusted EBITDA improved to $13.0 million for the twelve months ended December 31, 2021, from $7.5 million for the same period in 2020, despite the fact the Company recorded a non-cash, cumulative reduction to service fee and commission revenue of $1.9 million – which had a corresponding reduction to non-GAAP adjusted EBITDA – in the September 2021 quarter relating to its finalization of the purchase accounting for PWI (see further discussion in the annual shareholder letter)
• The 2020 results above include only one month of PWI results given it was acquired on December 1, 2020

"This was a great year for Kingsway", said John T. Fitzgerald, Chief Executive Officer.  "We saw significant operating improvements within our extended warranty businesses.  We added another high-quality, asset-light business with the acquisition of Ravix Financial Inc. through our Kingsway Search Xcelerator program, and at year-end we finalized the acquisition of RoeCo Lafayette, LLC demonstrating our continued focus on tax advantaged credit-tenant real estate investments.  Throughout the year we made considerable progress in growing our business while simultaneously monetizing legacy assets and keeping non-strategic expenses in-check."

The Company has published its annual shareholder letter ("Shareholder Letter"), which can be found on the Company's website at http://bit.ly/kfs2021.

Refer to the Shareholder Letter for a complete reconciliation of GAAP to non-GAAP measures.

The Company today also filed its 2021 Annual Report on Form 10-K.

About the Company

Kingsway is a holding company that owns or controls subsidiaries primarily in the extended warranty, business services, asset management and real estate industries. The common shares of Kingsway are listed on the New York Stock Exchange under the trading symbol "KFS."

Non U.S. GAAP Financial Measure

The Company believes that non-GAAP adjusted net income (loss) and non-GAAP adjusted EBITDA, when presented in conjunction with comparable GAAP measures, provide useful information about the Company's operating results and enhances the overall ability to assess the Company's financial performance. The Company uses non-GAAP adjusted net income (loss) and non-GAAP adjusted EBITDA, together with other measures of performance under GAAP, to compare the relative performance of operations in planning, budgeting and reviewing the performance of its business. Non-GAAP adjusted net income (loss) and non-GAAP adjusted EBITDA allow investors to make a more meaningful comparison between the Company's core business operating results over different periods of time. The Company believes that non-GAAP adjusted net income (loss) and non-GAAP adjusted EBITDA, when viewed with the Company's results under GAAP and the accompanying reconciliations, provide useful information about the Company's business without regard to potential distortions. By eliminating potential differences in results of operations between periods caused by the factors listed in the attached schedules, the Company believes that non-GAAP adjusted net income (loss) and non-GAAP adjusted EBITDA can provide useful additional basis for comparing the current performance of the underlying operations being evaluated. Investors should consider these non GAAP measures in addition to, not as a substitute for or as superior to, financial reporting measures prepared in accordance with GAAP. Investors are encouraged to review the Company's financial results prepared in accordance with GAAP to understand the Company's performance taking into account all relevant factors.

Forward-Looking Statements

This press release and/or Shareholder Letter may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. Words such as "expects," "believes," "anticipates," "intends," "estimates," "seeks" and variations and similar words and expressions are intended to identify such forward-looking statements; however, the absence of any such words does not mean that a statement is a not a forward-looking statement. Such forward-looking statements relate to future events or future performance, but reflect Kingsway management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, including as a result of the COVID 19 pandemic. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the section entitled "Risk Factors" in the Company's 2021 Annual Report on Form 10-K and subsequent Form 10-Qs and Form 8-Ks filed with the Securities and Exchange Commission. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Additional Information

Additional information about Kingsway, including a copy of its Annual Reports can be accessed on the EDGAR section of the U.S. Securities and Exchange Commission's website at www.sec.gov, on the Canadian Securities Administrators' website at www.sedar.com, or through the Company's website at www.kingsway-financial.com.

Kingsway Financial Services Inc.
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted Income (Loss)
(in thousands)
(UNAUDITED)

Kingsway Financial Services Inc.
Reconciliation of Extended Warranty Segment Operating Income to Non-GAAP Adjusted EBITDA
and Pro Forma Non-GAAP Adjusted EBITDA
(in thousands)
(UNAUDITED)

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SOURCE Kingsway Financial Services Inc.