(NYSE: KFS) Kingsway Financial Services Inc. (“Kingsway”) today
announced the acquisition of the privately-held company Ravix
Financial Inc. (“Ravix”), the first such acquisition completed
under Kingsway’s unique CEO Accelerator Program. Ravix, based in
San Jose, California (www.ravixgroup.com) provides outsourced
financial services and HR consulting for short or long duration
engagements.
“I am excited to welcome the Ravix team to the Kingsway family
of companies,” said Kingsway President and CEO, J.T. Fitzgerald.
“Dan Saccani and team have built a leading company that has a solid
reputation and loyal customer base. This is Kingsway’s first
acquisition under its CEO Accelerator Program and I look forward to
Timi Okah, our first CEO-in-Residence, transitioning into the role
of Ravix CEO over the next twelve months.”
“While Ravix won’t be part of our successful Extended Warranty
group of companies, we believe it exhibits many of the same
characteristics that makes it an attractive long-term part of our
portfolio,” J.T. continued, “which includes low working capital
demands, recurring revenue, an impeccable reputation in its
industry and a loyal customer base.”
“We are excited to join the team at Kingsway,” said Dan Saccani,
Founder and Executive Director of Ravix. “This acquisition presents
an excellent opportunity for Ravix to partner with an organization
that shares our ideals of sustainable growth and reinvestment in
people as we look to expand our presence both within Silicon Valley
and beyond.”
“Over the past twenty years, Ravix has developed a reputation as
one of the premiere providers of outsourced financial and human
resource services for venture-backed companies in the Silicon
Valley,” said Timi Okah, President & CEO of Ravix. “I look
forward to working with Dan, and the talented team of finance and
HR professionals at Ravix, to continue to deliver the highest level
of service to our clients.”
For the twelve month period ending June 30, 2021, Ravix had
$12.5 million of unaudited revenue, $1.9 million U.S. GAAP income
before income taxes and $2.8 million of unaudited non-GAAP adjusted
EBITDA. A reconciliation of U.S. GAAP income before income taxes to
non-GAAP adjusted EBITDA is presented on the attached schedule.
Even after taking into consideration the anticipated effects of
purchase accounting, Kingsway expects the acquisition to be
immediately accretive.
The purchase price was $11 million (subject to customary
adjustments) at close, with an additional $4.5 million that could
be paid over the next three years depending upon achievement of
certain financial metrics. The closing purchase price was financed
with a combination of debt financing provided by Avidbank, and cash
on hand. Ravix Acquisition LLC, a wholly-owned subsidiary of
Kingsway, together with Ravix, borrowed a total of $6 million, in
the form of a term loan, and established a $1 million revolver
(together, the “Loan”) that was undrawn at close. The Loan has a
variable interest rate, with the initial annual interest rate equal
to 3.75%. The Loan requires monthly principal and interest payments
and the term loan matures on October 1, 2027.
For more information regarding the Raxix transaction, please
join our Investor Day presentation on October 6, 2021, to be held
at the New York Stock Exchange and broadcast for virtual
participation (https://kingsway-financial.com/investor-day/).
Ice Miller LLP served as legal counsel to Kingsway and M&H
LLP served as legal counsel to the sellers in connection with the
transaction.
About Kingsway
Kingsway is a holding company that owns or controls subsidiaries
primarily in the extended warranty, asset management and real
estate industries. The common shares of Kingsway are listed on the
New York Stock Exchange under the trading symbol “KFS.”
Forward-Looking Statements
This press release 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. 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 Kingsway’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2020 (the “2020
Annual Report”). Except as expressly required by applicable
securities law, Kingsway 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 the
2020 Annual Report and filings on Forms 10- Q and 8-K, 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 Kingsway’s
website at www.kingsway-financial.com.
Kingsway Financial Services
Inc.
Reconciliation of Ravix U.S. GAAP
income before income taxes to Non-GAAP Adjusted EBITDA
For the Twelve Months Ended June
30, 2021
(in thousands)
(UNAUDITED)
Ravix GAAP Income before Income
Taxes
$1,877
Non-GAAP Adjustments:
Depreciation
-
Amortization
-
Interest
-
Non core revenue (1)
(142)
Wages and benefits (2)
1,021
Total Non-GAAP Adjustments
879
Non-GAAP Adjusted EBITDA (3)
$2,756
(1)
Revenue associated with services not
expected to be delivered in the future.
(2)
Includes wages and benefits related to
former executives.
(3)
Includes PPP Loan forgiveness of $0.5
million in the quarter ended December 31, 2021.
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version on businesswire.com: https://www.businesswire.com/news/home/20211004005515/en/
Adam Prior aprior@equityny.com 212-836-9606
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