The Westaim Corporation Reports Q3 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
For the nine months ended
Subsequent to
Pursuant to the Investment Agreement, the Parties have agreed that, among other things: (a) upon completion of the Private Placement, the Company, the Investor and Arena will enter into an investor rights agreement; (b) the Company will invest approximately
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 Measures” and the reconciliation of such measure to the most comparable IFRS figure below.
Key Results
Arena FINCOs *
-
Q3 2024 net loss from the Arena FINCOs was
$1.1 million (-0.7% net return) compared to net income of$0.9 million (+0.6% net return) in Q3 2023. -
For the nine months ended
September 30, 2024 , net income from the Arena FINCOs was$5.1 million (+3.6% net return) compared to a net loss of$5.1 (-3.2% net return) for the nine months endedSeptember 30, 2023 . -
Arena FINCOs’ results reflect mark-to-market valuations within its portfolio which has a net value of
$150.4 million atSeptember 30, 2024 compared to$147.2 million atDecember 31, 2023 , and with the use of its debt facilities, has invested assets of$182.9 million atSeptember 30, 2024 compared to$192.0 million atDecember 31, 2023 .
Arena *
-
Arena Investors’ achieved total recurring revenue1 of
$9.8 million in Q3 2024 compared to$10.7 million in Q3 2023 from its fee-paying assets under management (“AUM”)2. Fee related earnings (“FRE”)1 in Q3 2024 was a loss of$0.4 million in Q3 2024 compared to earnings of$0.2 million in Q3 2023 and net incentive fees1 was$0.5 million in Q3 2024 compared to$0.4 million in Q3 2023. -
Arena Institutional Services (“AIS”) EBITDA1 was
$0.6 million in Q3 2024 compared to$4.3 million in Q3 2023.Total Arena EBITDA1 for Q3 2024 was a loss of$2.7 million compared to earnings of$4.6 million in Q3 2023. Q3 2024 was impacted by costs incurred by Arena for the Proposed Transactions of$2.9 million . -
Committed AUM was
$3.3 billion at September, 30, 2024,$3.5 billion atJune 30, 2024 ,$3.2 billion atDecember 31, 2023 , and$3.3 billion atSeptember 30, 2023 . Fee-paying AUM was$2.5 billion atSeptember 30, 2024 ,$2.6 billion atJune 30, 2024 ,$2.5 billion atDecember 31, 2023 , and$2.5 billion atSeptember 30, 2023 . -
Committed AUM will cross
$4 billion assuming the close of Arena’s third drawdown fund (including parallel vehicles) at its stated target. -
Westaim recorded its share of net (loss) income from Arena of$(1.7) million for Q3 2024 compared to$2.1 million for Q3 2023. -
Refer to the chart below for the results over the three and nine months ended
September 30, 2024 and 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 |
|
Nine months ended |
|||||||||||||
|
(millions of |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
|
|
||||||||||||
|
Management fees |
$ |
7.1 |
|
$ |
7.7 |
|
$ |
21.5 |
|
$ |
23.2 |
|
||||
|
Asset servicing fees |
|
2.1 |
|
|
2.9 |
|
|
8.0 |
|
|
8.3 |
|
||||
|
Other income |
|
0.6 |
|
|
0.1 |
|
|
2.7 |
|
|
0.6 |
|
||||
|
Total recurring revenue |
|
9.8 |
|
|
10.7 |
|
|
32.2 |
|
|
32.1 |
|
||||
|
Operating expenses allocated to recurring revenue |
|
(10.2 |
) |
|
(10.5 |
) |
|
(31.5 |
) |
|
(30.4 |
) |
||||
|
Fee related earnings |
|
(0.4 |
) |
|
0.2 |
|
|
0.7 |
|
|
1.7 |
|
||||
|
Incentive fees |
|
2.3 |
|
|
1.5 |
|
|
10.8 |
|
|
5.7 |
|
||||
|
Incentive fees compensation expense |
|
(1.8 |
) |
|
(1.1 |
) |
|
(6.2 |
) |
|
(3.9 |
) |
||||
|
Net incentive fees |
|
0.5 |
|
|
0.4 |
|
|
4.6 |
|
|
1.8 |
|
||||
|
Arena Investors’ EBITDA |
|
0.1 |
|
|
0.6 |
|
|
5.3 |
|
|
3.5 |
|
||||
|
Arena Institutional Services |
|
|
|
|
||||||||||||
|
AIS revenue |
|
1.6 |
|
|
8.1 |
|
|
10.2 |
|
|
13.1 |
|
||||
|
AIS operating expenses |
|
(0.6 |
) |
|
(0.9 |
) |
|
(1.7 |
) |
|
(1.4 |
) |
||||
|
Employee profit share |
|
(0.4 |
) |
|
(2.9 |
) |
|
(3.5 |
) |
|
(4.7 |
) |
||||
|
AIS EBITDA |
|
0.6 |
|
|
4.3 |
|
|
5.0 |
|
|
7.0 |
|
||||
|
AIGH general and administrative costs |
|
(0.2 |
) |
|
(0.1 |
) |
|
(0.7 |
) |
|
(0.5 |
) |
||||
|
AIGH other income, and expenses |
|
(0.3 |
) |
|
(0.2 |
) |
|
(1.0 |
) |
|
(0.9 |
) |
||||
|
AIGH costs for Proposed Transactions |
|
(2.9 |
) |
|
- |
|
|
(2.9 |
) |
|
- |
|
||||
|
Total Arena EBITDA |
|
(2.7 |
) |
|
4.6 |
|
|
5.7 |
|
|
9.1 |
|
||||
|
Depreciation |
|
(0.1 |
) |
|
(0.1 |
) |
|
(0.3 |
) |
|
(0.3 |
) |
||||
|
Revolving loan interest expense paid to the Company |
|
(0.4 |
) |
|
(0.4 |
) |
|
(1.3 |
) |
|
(1.2 |
) |
||||
|
Taxes |
|
(0.2 |
) |
|
- |
|
|
(0.3 |
) |
|
- |
|
||||
|
Net (loss) income attributable to Arena |
$ |
(3.4 |
) |
|
4.1 |
|
$ |
3.8 |
|
|
7.6 |
|
||||
|
Company’s share of Arena’s comprehensive (loss) income (51%) |
$ |
(1.7 |
) |
$ |
2.1 |
|
$ |
2.0 |
|
$ |
3.9 |
|
||||
Skyward Specialty
In September, 2024,
This press release should be read in conjunction with Westaim’s unaudited interim consolidated financial statements for the three and nine months ended
Non-GAAP Financial Measures
The Supplementary Financial Measures relating to Arena and the 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 the 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
For more information, contact:
info@westaim.com
(416) 969-3333
|
Financial Highlights
(millions of |
||||||||||||||||
|
Highlights |
Three months ended |
Nine months ended |
||||||||||||||
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
||||||||||||
|
Revenue and net change in value of investments |
$ |
11.4 |
|
$ |
24.8 |
|
$ |
37.5 |
|
$ |
159.5 |
|
||||
|
Net expenses |
|
(12.5 |
) |
|
(1.8 |
) |
|
(32.5 |
) |
|
(10.5 |
) |
||||
|
Income taxes recovery (expense) |
|
- |
|
|
- |
|
|
0.1 |
|
|
(0.2 |
) |
||||
|
(Loss) profit and comprehensive (loss) income |
$ |
(1.1 |
) |
$ |
23.0 |
|
$ |
5.1 |
|
$ |
148.8 |
|
||||
|
|
|
|
|
|
||||||||||||
|
(Loss) earnings per share – basic |
$ |
(0.01 |
) |
$ |
0.17 |
|
$ |
0.04 |
|
$ |
1.06 |
|
||||
|
(Loss) earnings per share – diluted |
$ |
(0.01 |
) |
$ |
0.16 |
|
$ |
0.04 |
|
$ |
1.05 |
|
||||
|
|
|
|
|
|
||||||||||||
|
|
|
|
||||
|
Assets |
|
|
||||
|
Cash |
$ |
351.7 |
$ |
135.0 |
||
|
Income taxes receivable |
|
0.1 |
|
0.5 |
||
|
Other assets |
|
1.7 |
|
1.0 |
||
|
Investments |
|
182.1 |
|
414.3 |
||
|
Deferred tax asset |
|
5.5 |
|
1.0 |
||
|
Total assets |
|
541.1 |
|
551.8 |
||
|
|
|
|
||||
|
Liabilities |
|
|
||||
|
Accounts payable and accrued liabilities |
|
27.3 |
|
31.3 |
||
|
Income taxes payable |
|
2.6 |
|
1.0 |
||
|
Deferred tax liability |
|
- |
|
1.2 |
||
|
|
|
29.9 |
|
33.5 |
||
|
|
|
|
||||
|
Shareholders’ equity |
|
511.2 |
|
518.3 |
||
|
Total liabilities and shareholders’ equity |
$ |
541.1 |
$ |
551.8 |
||
|
|
|
|
||||
|
|
|
|
||||
|
Number of common shares outstanding1 |
|
128,172,385 |
|
131,757,285 |
||
|
Book value per fully diluted share - in US$2 |
$ |
3.90 |
$ |
3.83 |
||
|
Book value per fully diluted share - in C$3 |
$ |
5.28 |
$ |
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$: 1.35265 at |
|
Reconciliation of Westaim’s non-GAAP measure |
|||||||||
|
Book value per share |
|||||||||
|
|
|
|
|
||||||
|
Book value: |
|
|
|
||||||
|
Shareholders’ equity per IFRS |
$ |
511.2 |
$ |
518.3 |
$ |
495.7 |
|||
|
Adjustments: |
|
|
|
||||||
|
RSU liability 1 |
|
10.0 |
|
9.3 |
|
8.3 |
|||
|
ASPP liability 2 |
|
- |
|
2.4 |
|
- |
|||
|
Stock options liability 3 |
|
5.3 |
|
- |
|
- |
|||
|
Assumed proceeds of exercised in-the-money options 3 |
|
17.1 |
|
17.5 |
|
17.2 |
|||
|
|
$ |
543.6 |
$ |
547.5 |
$ |
521.2 |
|||
|
Number of Common Shares: |
|
|
|
||||||
|
Number of Common Shares outstanding |
|
128,172,385 |
|
131,757,285 |
|
135,491,943 |
|||
|
Adjustments for assumed exercise of: |
|
|
|
||||||
|
Outstanding RSUs 1 |
|
3,455,198 |
|
3,455,198 |
|
3,455,198 |
|||
|
In-the-money options 3 |
|
7,597,513 |
|
7,597,513 |
|
7,623,955 |
|||
|
Adjusted number of Common Shares |
|
139,225,096 |
|
142,809,996 |
|
146,571,096 |
|||
|
|
|
|
|
||||||
|
Book value per share - in US$ |
$ |
3.90 |
$ |
3.83 |
$ |
3.56 |
|||
|
Book value per share - in C$ 4 |
$ |
5.28 |
$ |
5.08 |
$ |
4.82 |
|||
|
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 11, Share-based Compensation in the Notes to the Financial Statements. Adjustments were made for all of the Options outstanding at |
|
4 |
|
Book value per share converted from US$ to C$ at period end exchange rates. Period end exchange rates: 1.35265 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 fact, including statements related to committed AUM following a close of Arena’s third drawdown fund (including parallel vehicles), are forward-looking statements and contain forward-looking information. Generally, forward-looking statements and information can be identified by the use of forward-looking terminology such as "intends" or "anticipates", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would" or "occur". Forward-looking statements are based on certain material assumptions and analysis made by the Company and the opinions and estimates of management as of the date of this news release, including Arena’s ability to close on its third draw down fund (including parallel vehicles) at its stated target. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Additional information regarding risks and uncertainties relating to the Company's business are contained under the heading “Risk Factors” in its annual information form for its fiscal year ended
The Company does not undertake to update any forward-looking information, except in accordance with applicable laws.
The information provided herein does not constitute an offer or solicitation regarding any investment products offered by
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
View source version on businesswire.com: https://www.businesswire.com/news/home/20241112741975/en/
For more information, contact:
info@westaim.com
(416) 969-3333
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