Kingsway's Big Bet: $5.0 Million Acquisition of M.L.C. Plumbing LLC

Ladies and gentlemen, buckle up! Kingsway Financial Services Inc. is at it again, and this time, they're diving headfirst into the plumbing industry with a $5.0 million acquisition of M.L.C. Plumbing LLC. This isn't just any acquisition; it's a strategic move that aligns perfectly with Kingsway's existing business strategy and portfolio, particularly in the context of their previous acquisition of Image Solutions LLC. Let's break it down!



First things first, let's talk about the financial benefits and risks associated with this acquisition. Kingsway's acquisition of Image Solutions LLC was a game-changer, adding $9.8 million of annual unaudited revenue and $3.1 million of annual unaudited adjusted EBITDA. This acquisition was expected to be immediately accretive, meaning it would positively impact Kingsway's earnings per share from the start. The transaction was structured as an all-cash deal, funded with $11.75 million in cash on hand and $7.75 million in debt financing. This capital-light acquisition is expected to generate highly recurring revenue in a stable and growing market, which aligns with Kingsway's strategy of acquiring businesses with strong financial performance and growth potential.

Now, let's talk about the potential risks. Any acquisition comes with its own set of challenges, including integration issues, cultural differences, and the possibility that the acquired company may not perform as expected. However, Kingsway has a track record of successfully integrating acquired companies and achieving financial synergies. For example, the acquisition of Digital Diagnostics added $10.5 million in revenue and $3.5 million in EBITDA, while the acquisition of SPI Software added $8.2 million in revenue and $2.8 million in EBITDA. These acquisitions have contributed to Kingsway's overall growth and financial performance, and the Image Solutions acquisition is expected to follow a similar trajectory.



So, how does the acquisition of M.L.C. Plumbing LLC fit into Kingsway's broader strategy for growth and diversification? This acquisition is a strategic move that aligns perfectly with Kingsway's existing business strategy and portfolio. Kingsway's acquisition of Image Solutions LLC was a game-changer, adding a business with strong recurring revenue and low churn to their portfolio. The acquisition of M.L.C. Plumbing LLC would likely follow a similar strategy, adding a business with strong recurring revenue and low churn to Kingsway's portfolio. This would further enhance Kingsway's position in the business services industry and provide additional opportunities for growth and expansion.

But wait, there's more! The acquisition of M.L.C. Plumbing LLC is expected to bring several financial benefits. According to the announcement, the acquisition is expected to be "immediately accretive," meaning it will positively impact Kingsway's earnings per share from the start. Specifically, M.L.C. Plumbing LLC is projected to add $2.5 million of annual unaudited revenue and $1.0 million of annual unaudited adjusted EBITDA to Kingsway's financials. This indicates a significant boost to the company's top and bottom lines.

The transaction is structured as an all-cash deal, funded with $3.0 million in cash on hand and $2.0 million in debt financing. This capital-light acquisition is expected to generate highly recurring revenue in a stable and growing market, which aligns with Kingsway's strategy of acquiring businesses with strong financial performance and growth potential.

However, there are potential risks associated with any acquisition, including integration challenges, cultural differences, and the possibility that the acquired company may not perform as expected. In this case, the transition period, during which the founder, Garrett Williams, will remain as an advisor, is designed to mitigate some of these risks by ensuring a smooth handover of operations.

Comparing this acquisition to the financial impact of previous acquisitions, such as Digital Diagnostics and SPI Software, Kingsway has a track record of successfully integrating acquired companies and achieving financial synergies. For example, the acquisition of Digital Diagnostics added $10.5 million in revenue and $3.5 million in EBITDA, while the acquisition of SPI Software added $8.2 million in revenue and $2.8 million in EBITDA. These acquisitions have contributed to Kingsway's overall growth and financial performance, and the Image Solutions acquisition is expected to follow a similar trajectory.

So, what does this all mean for Kingsway Financial Services Inc.? This acquisition is a strategic move that aligns perfectly with Kingsway's existing business strategy and portfolio. Kingsway's acquisition of Image Solutions LLC was a game-changer, adding a business with strong recurring revenue and low churn to their portfolio. The acquisition of M.L.C. Plumbing LLC would likely follow a similar strategy, adding a business with strong recurring revenue and low churn to Kingsway's portfolio. This would further enhance Kingsway's position in the business services industry and provide additional opportunities for growth and expansion.

So, what are you waiting for? Get in on the action and invest in Kingsway Financial Services Inc. today! This is a no-brainer!