Kingsway’s Search-Fund Unit Delivered Record Quarterly Adjusted EBITDA
Kingsway’s Search-Fund business generated $4.3 million in adjusted EBITDA, while a subsidiary-sale gain helped the company return to profit.
Kingsway Corporation (KWY), which owned and operated services companies and used the Search Fund model to acquire and build businesses, returned to profit in the second quarter while its Kingsway Search Xcelerator business posted record quarterly adjusted EBITDA, the company said. Net income was $0.2 million against a $3.2 million loss a year earlier, although the latest result included a $1.3 million gain from selling Trinity Warranty Solutions.
The Search Xcelerator business, known as KSX, accounted for more than half of consolidated revenue. Its revenue rose 68.3% year over year to $22.3 million, while companywide revenue increased 27.6% to $39.4 million for the three months ended June 30. Extended Warranty, Kingsway’s other reportable segment, contributed $17.1 million. KSX was the larger of the two businesses by revenue and adjusted EBITDA.
KSX’s adjusted EBITDA reached $4.3 million against $2.4 million a year earlier. Chief Executive JT Fitzgerald said performance was broad across the portfolio, singling out Ravix and SPI for results supported by customer wins and client retention. The segment also recorded $3.5 million in operating income. Fitzgerald said both KSX and Extended Warranty had performed significantly ahead of internal expectations during the quarter.
At the consolidated level, adjusted EBITDA was $5.2 million against $1.7 million a year earlier. That measure excluded the Trinity disposal gain, separating the sale’s contribution to net income from the adjusted operating result. The reconciliation also included adjustments for employee-related expenses, other items, fair-value changes, and depreciation, amortization, taxes, and interest. The small reported profit and the larger adjusted result therefore measured different aspects of the quarter.
Extended Warranty’s results required a separate reading because Kingsway sold Trinity during the quarter. Excluding Trinity on a pro forma basis, the segment’s revenue increased to $16.1 million from $15.1 million a year earlier. That comparison showed growth in the remaining businesses beneath the reported segment total. Fitzgerald attributed the warranty business’s performance to results at both IWS and Penn/PWI.
The warranty segment generated $1.1 million in adjusted EBITDA and $0.7 million in operating income. Its lender-defined Modified Cash adjusted EBITDA was $2.9 million. The company used that cash-based measure for financial covenant calculations; the measure deferred only the portion of contract premium needed to pay claims over the life of the underlying contract and did not defer any commission expense. The measure therefore provided a distinct view of the business rather than another statement of quarterly operating profit.
The Trinity sale brought gross proceeds of $8.0 million, comprising $5.0 million in cash at closing and $3.0 million in seller notes. The notes could be repaid early at a discount if specified conditions were met, the company said. Kingsway ended June with total net debt of $59.9 million. The transaction left part of the sale consideration payable after closing.
Kingsway subsequently added another business through Image Solutions, which acquired Michigan-based managed IT and cybersecurity provider Romeo Computer Company on August 1 for $2.4 million. The acquired business contributed $2.5 million in unaudited pro forma annual revenue and $0.5 million in annual adjusted EBITDA. Those annual figures described the acquisition’s contribution and were separate from Kingsway’s reported second-quarter results.
For the twelve months ended June 30, management estimated pro forma Portfolio LTM EBITDA at $22.0 million to $23.0 million. That estimate included a positive contribution of $0.5 million related to the acquisition of Romeo Computer Company and a negative contribution of $0.9 million related to the sale of Trinity. It also combined adjusted EBITDA for KSX businesses with Modified Cash adjusted EBITDA for Extended Warranty, giving it a different basis from consolidated quarterly adjusted EBITDA.
For 2026, Kingsway continues to target three to five acquisitions and expects double-digit organic growth in both operating segments. Fitzgerald also said easier year-over-year comparisons in the third and fourth quarters supported his confidence in a positive second-half trajectory for Portfolio LTM EBITDA.
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