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Kingsway Announces Acquisition of Roundhouse Electric & Equipment Co., Inc.

1. Kingsway acquired Roundhouse for $22.4 million, enhancing growth metrics. 2. Roundhouse has doubled revenue, with 90% recurring revenue from key clients. 3. Kingsway sees growth in natural gas pipeline flows and electric motor efficiency. 4. Roundhouse's management will remain, indicating confidence in future prospects. 5. Kingsway plans to invest strategically in Roundhouse for regional expansion.

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FAQ

Why Bullish?

The acquisition supports Kingsway’s growth strategy, leveraging recurring revenue streams and strong customer retention, which historically correlate with stock price increases in similar asset-light businesses.

How important is it?

The strong financial metrics and strategic fit of the acquisition indicate potential for enhanced shareholder value.

Why Long Term?

Investments in Roundhouse will likely take time to mature, aligning with Kingsway's focus on sustainable growth and adaptation to market demands.

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KFSNGLNATR
KSX Search Xcelerator's 9th AcquisitionAsset-light industrial equipment services business with recurring revenues and strong growth prospectsPurchase price of $22.4 millionTrailing 12-month unaudited revenue of $16.0 millionTrailing 12-month unaudited adjusted EBITDA of $4.2 million Kingsway Financial Services Inc. ("Kingsway" or the "Company"), the only publicly-traded US company employing the Search Fund model to acquire and build great businesses, today announced the acquisition of Roundhouse Electric & Equipment Co., Inc. ("Roundhouse"), a leading provider of industrial-scale electric motor maintenance, repair, testing, and sales solutions based in Odessa, Texas, for a purchase price of $22.4 million, plus transaction expenses and a working capital adjustment.Roundhouse provides mission-critical services, including field maintenance and testing as well as in-shop motor repair, primarily to midstream natural gas pipeline operators and utilities across the Permian Basin. The company's operations are characterized by strong customer retention, excellent response times, and meaningful integration into client workflows.Roundhouse has more than 200 active customers, and approximately 90% of revenues are either recurring or reoccurring. The company's unaudited revenue has more than doubled over the last two years, with unaudited adjusted EBITDA growing ahead of revenue over the same period.Kingsway believes Roundhouse has considerable further growth potential in the years ahead, underpinned by the twin structural growth drivers of increased natural gas pipeline flows in the Permian Basin and the shift from legacy gas-powered motors to more-efficient electrical motors. Kingsway intends to support Roundhouse with strategic investments in people, systems, and regional expansion to meet accelerating customer demand and enhance service delivery.The transaction closed on July 1, 2025, and was funded with $10.4 million in cash on hand and $11.0 million from a senior credit facility. As part of the transaction, the selling shareholders are maintaining an economic interest in the go-forward entity, reflecting their continued belief in the company's long-term prospects and their alignment with Kingsway's growth vision.Management will provide additional details about the transaction during the company's second quarter 2025 earnings call. Miles Mamon, Kingsway's Operator-in-Residence who sourced and led the transaction for Kingsway, will assume the CEO role at Roundhouse.Management Commentary"Roundhouse is a perfect fit for the Kingsway Search Xcelerator platform," said JT Fitzgerald, Kingsway's President and CEO. "Roundhouse is a growing, capital-light, high-recurring revenue business with a seasoned team, a strong culture, and deep customer relationships. Kingsway is thrilled to partner with the entire Roundhouse organization to continue building on their legacy of service and growth.""I am honored to join the Roundhouse team," said Miles Mamon, incoming CEO of Roundhouse. "Lee and Armando have built an extraordinary business with unmatched field service capabilities, rapid response times, and long-standing customer trust. I am excited to work with Lee and everyone at Roundhouse to expand our reach and impact across the Permian Basin and beyond.""Joining forces with Kingsway and Miles marks a new chapter for Roundhouse," said Lee Hudson, current Vice President and co-owner of Roundhouse, who will remain with Roundhouse as President. "Kingsway's commitment to people and long-term growth aligns perfectly with the culture we have built here. I am proud to continue leading our team and thrilled about the opportunities ahead.""Roundhouse has been a labor of love for me for over four decades," said Armando Gonzales, co-founder and former majority owner of Roundhouse. "I am confident that Miles, Lee, and Kingsway are the right partners to carry this company forward with the same care and attention to quality and relationships that got us here."About Roundhouse Electric & Equipment Co., Inc.Founded in Odessa, Texas in 1976, Roundhouse provides electric motor maintenance, repair, testing, and sales services to midstream natural gas and utility companies across the Permian Basin. Roundhouse's mission-critical field services and shop repair capabilities make it the vendor of choice for leading natural gas infrastructure providers.About Kingsway Financial Services Inc.Kingsway Financial Services Inc. ("Kingsway") (NYSE:KFS) is the only publicly-traded US company employing the Search Fund model to acquire and build great businesses.Kingsway owns and operates a collection of high-quality B2B and B2C services companies that are asset-light, growing, profitable, and that have recurring revenues. Kingsway seeks to compound long-term shareholder value on a per share basis via its decentralized management model, its talented team of operators, and its tax-advantaged corporate structure.Forward-Looking StatementsThis 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 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 the Company's 2024 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 InformationAdditional 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.For Investor Inquiries:Hayden IRJames Carbonara(646) 755-7412[email protected]For Company Inquiries:Kingsway Financial Services Inc.Kent Hansen, CFO(312) 766-2163[email protected]SOURCE: Kingsway Financial Services, Inc.

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