- Expected to be immediately accretive, adds $9.4 million of unaudited revenue, $0.9 million U.S. GAAP income before income taxes
and $1.8 million of unaudited
non-GAAP adjusted EBITDA
- Second acquisition under the Kingsway Search Xcelerator
Program
- Capital light, re-occurring revenue business
- Will be run alongside Ravix, providing a one-stop shop to Ravix
and CSuite Clients
CHICAGO, Nov. 1, 2022
/CNW/ - (NYSE: KFS) Kingsway Financial Services Inc.
("Kingsway") today announced the acquisition of the privately-held
company CSuite Financial Partners ("CSuite"), the second such
acquisition completed under the Kingsway Search Xcelerator
Program. CSuite, based in Manhattan
Beach,
California (www.csuitefinancialpartners.com), is a
national, financial executive services firm providing financial
management leadership to companies in every industry, regardless of
size, throughout the United
States.
"This is Kingsway's second acquisition under the Kingsway Search
Xcelerator Program and will be run alongside Ravix, which we
acquired in October 2021. It fits our
model of low capital demands, re-occurring revenue, and strong
margins in a growing industry" said Kingsway President and CEO, J.T. Fitzgerald. "Arthur
Cohen and team have built a leading company that has a solid
reputation and loyal customer base. I am excited
to welcome the CSuite team to the Kingsway family
of companies."
"This acquisition presents
an excellent opportunity for CSuite to partner with an organization that
shares our ideals of sustainable growth and reinvestment in people,"
said Arthur Cohen, Founder and
National Managing Partner of CSuite. "We are excited to join the
team at Kingsway and Ravix."
"We believe that the addition of CSuite is a nice complement to
the offerings provided by Ravix – both CSuite and Ravix will be
able to go to market as a one-stop shop of services for our
clients," said Timi Okah,
President & CEO of Ravix. "I look forward to working with
Arthur and the talented team of professionals at CSuite to continue
to deliver the highest level of service to our clients."
For the twelve-month period ending July
31, 2022, CSuite
had $9.4 million of unaudited revenue,
$0.9 million U.S. GAAP income before
income taxes and $1.8 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 $8.5 million (subject
to customary adjustments) at close, inclusive
of $0.9 million paid for cash on hand
at close, with up to an additional $3.55 million that could be paid over the next
three years depending upon achievement of certain
financial metrics. The closing purchase
price was paid in cash; however, the Company expects to
complete a recapitalization of the loan currently in place at Ravix
in the near future.
For more information regarding the CSuite transaction, please
join Kingsway's third quarter results call on November 10, 2022
(https://kingsway-financial.com/press-releases/).
Eversheds Sutherland (US) LLP served as legal counsel to
Kingsway and Jeffer Mangles Butler & Mitchell LLP served as
legal counsel to the sellers, and JD Merit & Company served as
financial advisors 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, 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."
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, 2021 (the "2021 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 2021 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 CSuite
U.S. GAAP income before income taxes
to Non-GAAP Adjusted EBITDA
For the Twelve Months Ended July 31,
2022
(in thousands) (UNAUDITED)
CSuite
GAAP Income before Income Taxes
|
$933
|
|
|
Non-GAAP Adjustments: Depreciation
|
-
|
Amortization
|
-
|
Interest
|
-
|
Wages and benefits
1
|
454
|
Transaction expenses
2
|
178
|
Pass through taxes
3
|
175
|
Other
|
26
|
Total Non-GAAP Adjustments
|
833
|
Non-GAAP Adjusted EBITDA
|
$1,766
|
1
|
Wages and benefits not
expected to be incurred post-close.
|
2
|
One-time expenses
incurred by CSuite related to the sale.
|
3
|
Pass-through taxes
related to the former owner.
|
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SOURCE Kingsway Financial Services Inc.