TORONTO, May 27, 2020 /CNW/ - Accord Financial Corp. (TSX
– ACD) today released its financial results for the quarter ended
March 31, 2020. The financial
figures presented in this release are reported in Canadian dollars
and have been prepared in accordance with International Financial
Reporting Standards.
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SUMMARY OF
FINANCIAL RESULTS
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Three Months Ended
March 31
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2020
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2019
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$
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$
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Average funds
employed (millions)
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362
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347
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Revenue
(000's)
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12,015
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12,588
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Net (loss)
earnings attributable to shareholders (000's)
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(5,876)
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1,643
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Adjusted net
(loss) earnings (000's) (note)
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(5,414)
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1,816
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(Loss) earnings
per common share (basic and diluted)
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(0.69)
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0.19
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Adjusted (loss)
earnings per common share (basic and diluted)
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(0.63)
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0.22
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Book value per
share (March 31)
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$
10.27
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$
10.65
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Net loss attributable to shareholders ("shareholders' net loss")
was $5,876,000 in the first quarter
of 2020 compared to the shareholders' net earnings of $1,643,000 last year. Shareholders' net loss
primarily resulted from an $8.8
million provision for losses due to the economic impact of
COVID-19 on the Company's portfolios, as well as a $897,000 impairment charge against assets held
for sale. The provision for credit and loan losses in the current
quarter comprised a $4.1 million
charge for write-offs of specific accounts and a $4.7 million increase in the Company's allowances
for losses. Revenue declined by 5% to $12,015,000 in the first quarter compared to
$12,588,000 last year as a result of
declining yields, mainly due to lower Canadian and U.S. prime rates
of interest, which impact interest earned on the Company's floating
rate loans to clients, as well as a number of non-earning
accounts.
Loss per Common Share ("LPS") was 69
cents compared to Earnings per Common Share ("EPS") of
19 cents in the first quarter of
2019. Adjusted net loss was $5,414,000 compared to adjusted net earnings of
$1,816,000 in the first quarter of
2019. Adjusted LPS was 63 cents
compared to adjusted EPS of 22 cents
in last year's first quarter. Average funds employed were 4% higher
at $362 million this year compared to
$347 million last year. At
March 31, 2020, the Company's
portfolio represented a cross-section of North America's most dynamic industries. With
hundreds of small and medium-sized clients representing almost
every industry sector, its loan portfolio by funds employed is
broadly diversified as follows:
- By geography: 59% US, 41% Canada
- By product: 51% asset-based lending, 42% equipment finance, 7%
media finance
- By industry: widely diversified portfolio, with manufacturing
the highest industry sector at 25%
Commenting on the first quarter's results, Mr. Simon Hitzig, CEO, noted: "We entered 2020
firing on all cylinders, and were looking forward to accelerating
Accord's growth trajectory. Then, as the world knows, the United States and Canada chose to suspend economic activity in
the battle to tame Covid-19. We've been through many economic
cycles, but none that descended so quickly and completely. Accord
has never traded credit quality for growth, and so we entered the
downturn with a strong portfolio. As you would expect, we combed
through the portfolio, analyzing the pandemic's operational and
financial impact on each borrower, their customers, suppliers and
the collateral we've funded against and set up the provisions and
allowances we felt were necessary." Mr. Hitzig further added "We
know from experience that an economic dislocation creates
tremendous growth opportunities in commercial finance. These are
the kinds of markets in which we earn our stripes."
At a recent meeting of the Company's Board of Directors, a
quarterly dividend of $0.05 per
common share was declared, payable June 1,
2020 to shareholders of record at the close of business
May 15, 2020.
About Accord Financial Corp.
Accord Financial Corp.
is a leading North American finance company providing distinctive
working capital solutions to companies from coast-to-coast.
Accord's flexible finance programs cover the full spectrum of
asset-based lending, from factoring and inventory finance, to
equipment leasing and trade finance, to film and media finance. For
42 years, Accord has helped businesses manage their cash flows and
maximize financial opportunities.
Note: Non-IFRS measures
The Company's financial
statements have been prepared in accordance with IFRS. The Company
uses a number of other financial measures to monitor its
performance and believes that these measures may be useful to
investors in evaluating the Company's operating performance and
financial position. These measures may not have standardized
meanings or computations as prescribed by IFRS that would ensure
consistency between companies using these measures and are,
therefore, considered to be non-IFRS measures. The non-IFRS
measures presented in this press release are as follows:
1) Adjusted net earnings and adjusted EPS. The Company
derives these measures from amounts presented in its IFRS prepared
financial statements. Adjusted net earnings comprise shareholders'
net earnings before stock-based compensation, business acquisition
expenses (transaction and integration costs and amortization of
intangible assets) and restructuring expenses. Adjusted EPS (basic
and diluted) is adjusted net earnings divided by the weighted
average number of common shares outstanding (basic and diluted) in
the period. Management believes adjusted net earnings is a more
appropriate measure of operating performance as it excludes items
which do not relate to ongoing operating activities. The following
table provides a reconciliation of the Company's net earnings to
adjusted net earnings:
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Three
Months Ended March 31
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2020
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2019
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$'000
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$'000
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Shareholders' net
(loss) earnings
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(5,876)
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1,643
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Adjustments, net of
tax:
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Restructuring
cost
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407
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-
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Business
acquisition expenses
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55
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131
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Stock-based
compensation
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-
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42
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Adjusted net (loss)
earnings
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(5,414)
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1,816
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2) Book value per share – book value is shareholders' equity and
is the same as the net asset value (calculated as total assets
minus total liabilities) of the Company less non-controlling
interests. Book value per share is the book value divided by the
number of common shares outstanding as of a particular date.
3) Funds employed are the Company's finance receivables and
loans, an IFRS measure. Average funds employed are the average
finance receivables and loans calculated over a particular
period.
SOURCE Accord Financial Corp.