Operating Income of $9.4
million in the Quarter
Portfolio Exceeds $850 Million
with More Than 32,000 Finance Contracts
TORONTO, Nov. 12, 2018 /CNW/ - Chesswood Group Limited
("Chesswood" or "the Company") (TSX: CHW), a North American
commercial equipment finance provider for small and medium-sized
businesses, today reported its record third quarter results for the
periods ended September 30, 2018.
"Our third quarter operating income of $9.4 million helped deliver strong
quarterly net income of $6.1 million,
up significantly from $3.2 million in
the third quarter of 2017" said Barry
Shafran, Chesswood's President and CEO. "Our results this
quarter were helped by a small recovery in our allowance for
doubtful accounts, stemming from improved delinquency, while in the
third quarter of last year we added $2.4
million to our allowance" added Shafran. For the nine months
ended September 30, the Company
generated $17.6 million of net
income, an increase of 51% or $6.0
million compared to net income of $11.6 million in the same period last year.
Chesswood's gross finance receivables grew to a record
$854 million in the quarter driven by
excellent quarterly originations of $98.6
million, a 21% increase from $81.1
million in the third quarter of last year.
|
Financial
Highlights
|
For the Three Mths
Ended
|
|
For the Nine Mths
Ended
|
|
(in CDN $000's,
except EPS)
|
September
30,
|
|
September
30,
|
|
2018
|
2017
|
|
2018
|
2017
|
|
Operating
Income(1)
|
$9,415
|
$6,718
|
|
$25,800
|
$24,057
|
|
|
|
|
|
|
|
Net
Income
|
$6,092
|
$3,188
|
|
$17,608
|
$11,633
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
$9,224
|
$9,088
|
|
$26,733
|
$25,369
|
|
|
|
|
|
|
|
Earnings Per Share
- basic
|
$0.34
|
$0.18
|
|
$0.98
|
$0.65
|
|
|
|
|
|
|
|
(1) - See
"Non-GAAP Measures" below.
|
"We continue to see the benefits of our long-term growth in
strong earnings, while this quarter was also helped by the
seasonally lower delinquencies we usually experience at this time
of year" added Shafran. The Company generally experiences higher
delinquencies and provision for credit losses in the final quarter
of the year due primarily to reduced collection time in
December.
Between the adoption of IFRS 9 in 2018, the repayment of the
Company's convertible debenture in early January 2018, and the changing foreign exchange
rates compared to last year, there are a number of meaningful
adjustments required in order to compare Chesswood's third quarter
and nine month operating income this year with the same periods in
2017. These adjustments are provided for in the chart below.
|
Financial
Highlights
|
|
|
|
|
|
|
(in CDN $000's,
except fx rate)
|
For the Three Mths
Ended
|
|
For the Nine Mths
Ended
|
|
September
30,
|
|
September
30,
|
|
2018
|
2017
|
|
2018
|
2017
|
|
Average FX
Rate
|
1.3070
|
1.2528
|
|
1.2876
|
1.3074
|
|
|
|
|
|
|
|
Operating
income(a)
|
$9,415
|
$6,718
|
|
$25,800
|
$24,057
|
|
IFRS 9 impact
(b)
|
(278)
|
-
|
|
919
|
-
|
|
Impact of exchange
rate difference
|
(416)
|
-
|
|
519
|
-
|
|
Interest expense on
conv deb (c)
|
-
|
(328)
|
|
-
|
(978)
|
|
Normalized
operating income
|
$8,721
|
$6,390
|
|
$27,238
|
$23,079
|
|
|
|
|
|
|
|
(a)
|
See "Non-GAAP
Measures", below
|
|
(b)
|
The provision for
credit losses for the three and nine months ended September 30,
2018 was calculated in accordance with
IFRS 9. Prior period comparatives were prepared in accordance with
IAS 39, and have not been restated. The Company's
provision for credit losses would have been $919,000 lower in the
nine months ended September 30, 2018 if the same
accounting guidelines, used in the prior year, had been used in
2018.
|
|
(c)
|
Prior to redemption
in January 2018, convertible debenture interest expense was not
part of operating income whereas the
interest expense on the funds used to repay the debenture (from the
corporate credit facility) is deducted as an expense in
calculating operating income in 2018.
|
Non-GAAP Measures
Operating Income is not a recognized measure under International
Financial Reporting Standards and does not have a standard meaning.
Accordingly, this measure may not be comparable to similar measures
presented by other issuers. Please refer to the Company's
Management Discussion and Analysis in Chesswood's 2017 Annual
Report and 2018 Third Quarter Report for additional information
concerning these measures and a reconciliation of these measures to
the Company's consolidated net income.
About Chesswood
Through two wholly-owned subsidiaries in the U.S. and Canada, Chesswood Group Limited is
North America's only
publicly-traded commercial equipment finance company focused on
small and medium-sized businesses. Our Colorado-based Pawnee Leasing Corporation,
founded in 1982, finances a highly diversified portfolio of
commercial equipment leases and loans through established
relationships with over 600 independent brokers in U.S. In
Canada, Blue Chip Leasing
Corporation has been originating and servicing commercial equipment
leases and loans since 1996, and today operates through a
nationwide network of more than 50 independent brokers. Based in
Toronto, Canada, Chesswood's
shares trade on the Toronto Stock Exchange under the symbol
CHW.
Learn more at www.chesswoodgroup.com, www.PawneeLeasing.com and
www.BlueChipLeasing.com.
This press release contains forward-looking statements that
involve a number of risks and uncertainties because they relate to
events and depend on circumstances that will occur in the future.
Many factors could cause actual results and developments to differ
materially from those expressed or implied by these forward-looking
statements. By its nature, this information is subject to inherent
risks and uncertainties that may be general or specific and which
give rise to the possibility that expectations, forecasts,
predictions, projections or conclusions will not prove to be
accurate, that assumptions may not be correct and that objectives,
strategic goals and priorities will not be achieved. Additional
information about the risks and uncertainties of the Company's
businesses and material factors or assumptions on which information
contained in forward-looking statements is based is provided in its
publicly filed documents, including the Company's annual
information form and management's discussion and analysis of the
financial condition and performance, which are available
electronically through the System for Electronic Document Analysis
and Retrieval at www.sedar.com.
NO STOCK EXCHANGE, SECURITIES COMMISSION OR OTHER REGULATORY
AUTHORITY HAS APPROVED OR DISAPPROVED THE INFORMATION CONTAINED
HEREIN.
SOURCE Chesswood Group Limited