The Westaim Corporation Reports Q1 2024 Results
Note: All dollar amounts in this press release are expressed in
The financial results are reported under International Financial Reporting Standards (“IFRS”), except as otherwise noted.
At
In Q1 2024,
1 The Company uses both IFRS and non-generally accepted accounting principles (“non-GAAP”) measures to assess performance. Book value per fully diluted share is a non-GAAP measure. Book value per share is computed as adjusted book value divided by the adjusted number of Common Shares. See “Non-GAAP Financial Measure” and the reconciliation of such measure to the most comparable IFRS figure below.
Key Results
Skyward Specialty
Westaim’s income from its investment in Skyward Specialty shares of common stock was
Arena FINCOs *
-
Q1 2024 net income from Arena FINCOs was
$1.3 million (+0.9% net return) compared to a net loss of$2.7 million (-1.7% net return) in Q1 2023. -
Arena FINCOs’ results reflect mark-to-market valuations within its portfolio which has a net value of
$148.5 million atMarch 31, 2024 compared to$147.2 million atDecember 31, 2023 , and with the use of its debt facilities, has invested assets of$199.3 million atMarch 31, 2024 compared to$192.0 million atDecember 31, 2023 .
Arena *
-
Arena Investors’ achieved total recurring revenue1 of
$11.5 million in Q1 2024 compared to$10.7 million in Q1 2023 from its fee-paying assets under management (“AUM”)2. Fee related earnings (“FRE”)1 in Q1 2024 was$0.8 million in Q1 2024 compared to$1.5 million in Q1 2023 and net incentive fees1 was$0.3 million in Q1 2024 compared to$1.4 million in Q1 2023. -
Arena Institutional Services (“AIS”) EBITDA1 was
$1.4 million in Q1 2024 compared to a loss of$0.1 million in Q1 2023. -
Total Arena EBITDA1 for Q1 2024 was
$1.8 million compared to$2.4 million in Q1 2023. -
Committed AUM was
$3.4 billion atMarch 31, 2024 ,$3.2 billion atDecember 31, 2023 , and$3.3 billion atMarch 31, 2023 . Fee-paying AUM was$2.5 billion atMarch 31, 2024 ,$2.5 billion atDecember 31, 2023 , and$2.4 billion atMarch 31, 2023 . -
Westaim recorded its share of net income from Arena of$0.6 million for Q1 2024 compared to$1.0 million for Q1 2023.
1 Total recurring revenue, FRE, AIS EBITDA, net incentive fees and total Arena EBITDA are non-GAAP measures. These measures are reconciled to the most comparable Arena US GAAP figures in the Arena supplementary financial measures below and are used in order to show an accurate recurring revenue and contributions to net income from the advisory and non-advisory businesses.
2 AUM refers to the assets for which
* Refer to the Supplementary Financial Measures sections of the MD&A (as defined herein): for Arena FINCOs see section 3.B.(ii), and for Arena see section 3.C.(iii).
Supplementary financial measures from Arena’s financial statements:
At 100% Share |
|
Three months ended |
||||
(millions of |
|
|
|
2024 |
|
20231 |
|
|
|
|
|
||
Management fees |
|
|
$ |
7.3 |
$ |
7.8 |
Asset servicing fees |
|
|
|
2.9 |
|
2.7 |
Other income |
|
|
|
1.3 |
|
0.2 |
Total recurring revenue |
|
|
|
11.5 |
|
10.7 |
Operating expenses allocated to recurring revenue |
|
|
|
(10.7) |
|
(9.2) |
Fee related earnings |
|
|
|
0.8 |
|
1.5 |
Incentive fees |
|
|
|
1.7 |
|
2.8 |
Incentive fees compensation expense |
|
|
|
(1.4) |
|
(1.4) |
Net incentive fees |
|
|
|
0.3 |
|
1.4 |
Arena Investors’ EBITDA |
|
|
|
1.1 |
|
2.9 |
Arena Institutional Services |
|
|
|
|
||
AIS revenue |
|
|
|
3.2 |
|
- |
AIS operating expenses |
|
|
|
(0.7) |
|
(0.1) |
Employee profit share |
|
|
|
(1.1) |
|
- |
AIS EBITDA |
|
|
|
1.4 |
|
(0.1) |
AIGH general and administrative costs |
|
|
|
(0.2) |
|
(0.2) |
AIGH other income and expenses |
|
|
|
(0.5) |
|
(0.2) |
Total Arena EBITDA |
|
|
|
1.8 |
|
2.4 |
Depreciation |
|
|
|
(0.1) |
|
(0.1) |
Revolving loan interest expense paid to the Company |
|
|
|
(0.4) |
|
(0.3) |
Taxes |
|
|
|
(0.1) |
|
- |
Net income attributable to Arena |
|
|
$ |
1.2 |
$ |
2.0 |
Company’s share of Arena’s comprehensive income (51%) |
|
|
$ |
0.6 |
$ |
1.0 |
1 Adjusted to conform to the presentation of the current period financial statements.
“Our first quarter results were strong and continue to build
This press release should be read in conjunction with Westaim’s unaudited interim consolidated financial statements (the “Financial Statements”) and management’s discussion and analysis for the three months ended
Non-GAAP Financial Measures
The Supplementary Financial Measures relating to Arena and Arena FINCOs contained in the MD&A are unaudited and have been derived from the financial statements of the related entities. Readers are cautioned that certain Arena and Arena FINCO financial information, including any US non-GAAP measures contained therein, has not been reconciled to IFRS and so may not be comparable to the financial information of issuers that present their financial information in accordance with IFRS.
About
Financial Highlights
(millions of
Highlights |
|
Three months ended |
||||
|
|
|
|
2024 |
|
2023 |
|
|
|
|
|
||
Revenue and net change in value of investments |
|
|
$ |
28.8 |
$ |
98.8 |
Net expenses |
|
|
|
(1.8) |
|
(4.0) |
Income taxes expense |
|
|
|
(3.7) |
|
(0.3) |
Profit and comprehensive income |
|
|
$ |
23.3 |
$ |
94.5 |
|
|
|
|
|
||
Earnings per share – basic |
|
|
$ |
0.18 |
$ |
0.67 |
Earnings per share – diluted |
|
|
$ |
0.17 |
$ |
0.66 |
|
|
|
|
|
|
|
|
||
Assets |
|
|
||
Cash |
$ |
115.5 |
$ |
135.0 |
Income taxes receivable |
|
0.5 |
|
0.5 |
Other assets |
|
0.9 |
|
1.0 |
Investments |
|
439.8 |
|
414.3 |
Deferred tax asset |
|
1.1 |
|
1.0 |
Total assets |
|
557.8 |
|
551.8 |
|
|
|
||
Liabilities |
|
|
||
Accounts payable and accrued liabilities |
|
21.0 |
|
31.3 |
Income taxes payable |
|
0.5 |
|
1.0 |
Deferred tax liability |
|
4.4 |
|
1.2 |
|
|
25.9 |
|
33.5 |
|
|
|
||
Shareholders’ equity |
|
531.9 |
|
518.3 |
Total liabilities and shareholders’ equity |
$ |
557.8 |
$ |
551.8 |
|
|
|
||
|
|
|
||
Number of common shares outstanding1 |
|
129,181,585 |
|
131,757,285 |
Book value per fully diluted share - in US$2 |
$ |
4.02 |
$ |
3.83 |
Book value per fully diluted share - in C$3 |
$ |
5.44 |
$ |
5.08 |
|
|
|
1 At each of
2 Non-GAAP measure. See the reconciliation of Westaim’s non-GAAP measures below or Section 14, Non-GAAP Measures of the MD&A for a reconciliation to the most comparable IFRS figures.
3 Period end exchange rates of US$ to C$: 1.35400 at
Reconciliation of Westaim’s non-GAAP measure
Book value per share
|
|
|
|
|||
Book value: |
|
|
|
|||
Shareholders’ equity per IFRS |
$ |
531.9 |
$ |
518.3 |
$ |
457.7 |
Adjustments: |
|
|
|
|||
RSU liability 1 |
|
9.1 |
|
9.3 |
|
6.6 |
ASPP liability 2 |
|
5.0 |
|
2.4 |
|
- |
Derivative warrant liability 3 |
|
- |
|
- |
|
0.1 |
Assumed proceeds of exercised in-the-money options 4 |
|
17.1 |
|
17.5 |
|
- |
|
$ |
563.1 |
$ |
547.5 |
$ |
464.4 |
Number of Common Shares: |
|
|
|
|||
Number of Common Shares outstanding |
|
129,181,585 |
|
131,757,285 |
|
141,386,718 |
Adjustments for assumed exercise of: |
|
|
|
|||
Outstanding RSUs 1 |
|
3,455,198 |
|
3,455,198 |
|
3,455,198 |
In-the-money options 4 |
|
7,597,513 |
|
7,597,513 |
|
- |
Adjusted number of Common Shares |
|
140,234,296 |
|
142,809,996 |
|
144,841,916 |
|
|
|
|
|||
Book value per share - in US$ |
$ |
4.02 |
$ |
3.83 |
$ |
3.21 |
Book value per share - in C$ 5 |
$ |
5.44 |
$ |
5.08 |
$ |
4.34 |
1 See Note 11, Share-based Compensation in the Notes to the Financial Statements. Liability related to RSUs converted from C$ to US$ at period end exchange rates. RSUs are exercisable for Common Shares or cash at no cost to the holders. Adjustment made to reflect a reclassification of the RSU liability to shareholders’ equity assuming all outstanding RSUs were exercised for Common Shares.
2 See Note 5, Accounts Payable and Other Accrued Liabilities in the Notes to the Financial Statements. Shareholders’ equity per IFRS was reduced by the liability required for the maximum amount that would be required to settle the ASPP.
3 See Note 8, Derivative Warrant Liability in the Notes to the Financial Statements. Derivative warrant liability converted from C$ to US$ at period end exchange rates. Adjustment made as the non-cash fair value change in the derivative warrant liability from period to period is not indicative of the change in the intrinsic value of the Company. There were no outstanding Vested Warrants at
4 See Note 11, Share-based Compensation in the Notes to the Financial Statements. Adjustments were made for all of the options outstanding at
5 Book value per share converted from US$ to C$ at period end exchange rates. Period end exchange rates: 1.35400 at
Cautionary Note and Forward-Looking Statements
This news release contains certain statements and information that may constitute forward-looking information within the meaning of applicable Canadian securities laws. All statements in this news release, other than statements of historical facts, including statements regarding future estimates, plans, objectives, timing, assumptions or expectations of future performance, including the statements that Arena AUM increased to
The Company does not undertake to update any forward-looking statement, forward-looking information or financial out-look that are incorporated by reference herein, except in accordance with applicable securities laws.
The information provided herein does not constitute an offer or solicitation regarding any investment products offered by
Neither
View source version on businesswire.com: https://www.businesswire.com/news/home/20240514072821/en/
info@westaim.com
(416) 969-3333
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