CHESSWOOD ANNOUNCES FIRST QUARTER 2024 RESULTS
First Quarter Highlights
-
The Company continued entering into new agreements with mutual funds or partnerships managed by its affiliates for the non-recourse sale of leases and loans in exchange for fees. During the three months ended
March 31, 2024 ,$341.9 million of U.S. and Canadian finance receivables were sold under such arrangements (three months endedMarch 31, 2023 -$106.0 million ). -
On
January 31, 2024 , the U.S. Financing Segment closed the first sale of finance receivables toBishop Holdings LLC , an entity owned by certain funds managed byWafra Inc. ("Wafra Funds") and the Company's subsidiary,Pawnee Leasing Corporation .
"
"The highlight of the quarter was certainly the initial success of our joint venture with Wafra through
"Our team continues to make progress in resizing our
A larger volume of off balance sheet sales occurred in Q1 2024, further progressing
Average debt outstanding decreased by
The
During the three months ended
The Canadian Consumer Financing Segment generated revenue of
During the three months ended
First quarter macroeconomic data has impacted the timing of expectations for interest rate reductions in
In contrast, the Canadian market appears to be under pressure from the increase in front end rates. This is evident in several indicators around economic activity, inflation, and employment gauges. The Canadian dollar has been reflecting this potential policy differential, having depreciated versus the
A reduction in interest rates would have a meaningful impact on
With a more stable macro environment, we expect results to improve in the back half of the year, albeit slowly given liquidity constraints.
|
Consolidated Operating and Financial Results |
Financial Highlights |
For the Three Months |
|
(in CDN |
Ended |
|
|
2024 |
2023 |
Revenue |
|
|
Interest expense |
(28,964) |
(30,957) |
Net charge-offs |
(28,861) |
(12,874) |
|
10,974 |
37,312 |
Expenses: |
|
|
Personnel |
(13,568) |
(16,743) |
Other expenses |
(14,318) |
(13,030) |
Depreciation |
(396) |
(460) |
Adjusted Operating Income (Loss)(1) |
(17,308) |
7,079 |
Decrease/(Increase) in allowance for ECL |
13,318 |
(5,108) |
Unrealized loss on warrant liability |
(1,669) |
— |
Amortization – intangible assets |
(475) |
(659) |
Operating income (loss) |
(6,134) |
1,312 |
Unrealized gain (loss) on foreign exchange |
(170) |
256 |
Income (loss) before taxes |
|
|
|
|
|
Net income (loss) |
|
|
Earnings (loss) Per Share – Basic |
|
|
Earnings (loss) Per Share – Diluted |
|
|
|
|
|
Free Cash Flow (1) |
|
|
Free Cash Flow Per Share – Diluted |
|
|
(1) - See Note (1) below related to NON- |
|
|
|
|
|
(1) "Adjusted Operating Income (Loss)" and "Free Cash Flow" and other non-GAAP measures as defined below, are not recognized measures under International Financial Reporting Standards and do not have standardized meanings. Therefore, these measures may be different from similarly labelled measures presented by other companies. Furthermore, these measures are based primarily on the significant banking and lending agreements of the Company and its subsidiaries to determine compliance with financial covenants and calculate permitted dividends and cash available for purchases of shares under the Company's normal course issuer bid.
"EBITDA" is net income (loss) as presented in the audited consolidated statements of income (loss), adjusted to exclude interest expense, income taxes, depreciation and amortization and goodwill and intangible asset impairment. EBITDA is included in one of the Company's significant bank agreements where it is used for financial covenant purposes.
"Adjusted EBITDA" is EBITDA as further adjusted for inclusion of interest on debt facilities as a deduction from net income (loss), and the removal of other non-cash or non-recurring items such as (i) non-cash gain (loss) on financial instruments and investments, (ii) non-cash unrealized gain (loss) on foreign exchange, (iii) non-cash share-based compensation expense, (iv) non-cash change in finance receivable allowance for ECL, (v) restructuring and other transaction costs, and (vi) any unusual and material one-time gains or expenses. Adjusted EBITDA is a measure of performance defined in one of the Company's significant bank agreements and is the basis for the Company's Free Cash Flow calculation. Adjusted EBITDA is therefore included as a non-GAAP measure relevant for a wider audience of the Company's financial reporting users.
"Adjusted Net Income (Loss)" is net income (loss) as presented in the consolidated statements of income adjusted for one time non-recurring items and non-cash unrealized loss on the revaluation of warrant instruments. See the "Consolidated results of operations for the three months ended
"Adjusted Operating Income (Loss)" is operating income (loss) as presented in the audited consolidated statements of income (loss), adjusted to exclude the amortization of intangible assets and the change in allowance for ECL. Adjusted Operating Income (Loss) is intended to reflect the recurring income from the Company's businesses. Amortization of intangible assets, which includes the expense related to broker relationships and software, is a function of acquisitions. Once these acquisition-related intangibles have been fully amortized they are not replenished, and the amortization expense will cease. The change in the allowance for ECL can be calculated from the continuity of the allowance for ECL in Note 6(c) - Finance Receivables in the unaudited interim condensed consolidated financial statements for the three months ended
"Free Cash Flow" or "FCF" is Adjusted EBITDA less maintenance capital expenditures, the tax effect of the non-cash change in the allowance for ECL and tax expense. Cash receives significant attention from primary users of financial reporting. Free Cash Flow provides an indication of the cash the Company generates that is available for servicing and repaying debt, investing for future growth and providing dividends to our shareholders. The FCF measure provides information relevant to assessing the Company's resilience to shocks and the ability to act on opportunities. Free Cash Flow is a calculation that reflects the agreement with one of the Company's significant lenders as a measure of the cash flow produced by the Company's businesses in a period. It is also management's view that the measure reduces the impact of significant non-cash charges and recoveries that do not reflect the actual cash flows of the businesses, and can vary considerably in amount from period to period.
"Free Cash Flow per share - Diluted" is FCF divided by the weighted average number of shares outstanding (including
For information on
www.ChesswoodGroup.com
www.PawneeLeasing.com www.TandemFinance.com
www.VaultPay.ca www.VaultCredit.com
www.Rifco.net www.WaypointInvestmentPartners.com
www.EasyLegal.ca
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.sedarplus.com.
NO STOCK EXCHANGE, SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE INFORMATION CONTAINED HEREIN.
SOURCE