TORONTO, July 30, 2020 /CNW/ - Accord Financial Corp.
(TSX: ACD) today released its financial results for the three and
six months ended June 30, 2020. The
financial figures presented in this release are reported in
Canadian dollars and have been prepared in accordance with
International Financial Reporting Standards.
SUMMARY OF
FINANCIAL RESULTS
|
Three
Months Ended June
30
|
Six
Months Ended June
30
|
|
2020
|
2019
|
2020
|
2019
|
|
$
|
$
|
$
|
$
|
Average funds
employed (millions)
|
341
|
388
|
352
|
367
|
Revenue
(000's)
|
11,270
|
13,991
|
23,285
|
26,579
|
Earnings before
income tax (000's)
|
3,822
|
2,912
|
(5,089)
|
4,848
|
Net earnings
(loss) attributable to shareholders (000's)
|
4,343
|
2,222
|
(1,534)
|
3,865
|
Adjusted net
earnings (loss) (000's) (note)
|
4,730
|
2,397
|
(684)
|
4,213
|
Earnings (loss)
per common share (basic and diluted)
|
0.51
|
0.26
|
(0.18)
|
0.46
|
Adjusted earnings
(loss) per common share (basic and diluted)
|
0.55
|
0.28
|
(0.08)
|
0.50
|
Book value per
share (June 30)
|
|
|
$
10.61
|
$
10.70
|
Net earnings attributable to shareholders ("shareholders' net
earnings") rose by $2,121,000 to a
quarterly record $4,343,000 in the
second quarter of 2020 compared to the $2,222,000 earned last year. Shareholders' net
earnings rose mainly as a result of a $2,955,000 recovery of credit and loan losses, a
one-time $881,000 income tax recovery
and lower interest expense in the quarter. Earnings per common
share ("EPS") were a quarterly record 51
cents compared to 26 cents
last year. Adjusted net earnings rose to a quarterly record
$4,730,000 from the $2,397,000 earned in the second quarter of 2019.
Adjusted EPS increased to 55 cents
compared to 28 cents in last year's
second quarter.
Revenue decreased to $11,270,000
in the second quarter compared to $13,991,000 last year primarily driven by a 12%
decline in average funds employed and lower yields on the Company's
floating rate loans to clients, which declined somewhat due to
lower Canadian and U.S. rates of interest. Average funds employed
were $341 million in the current
quarter compared to $388 million last
year. Funds employed at June 30, 2020
were $317 million. Funds employed and
revenue were impacted by the economic effects of COVID-19 on the
Company's clients, including government relief efforts.
Shareholders' net loss in the first half of 2020 was
$1,534,000 compared to shareholders'
net earnings of $3,865,000 in 2019.
The net loss primarily resulted from a $6.8
million provision for losses and impairment expense, lower
revenue, higher general and administrative expenses and
non-recurring restructuring expenses of $996,000. The provision for losses, which
comprised net write-offs of $2.1
million and a $3.8 million
increase in the Company's allowances for losses, were in large part
driven by the potential economic impact of COVID-19 on the
Company's portfolio of loans and managed receivables. Loss per
common share was 18 cents compared to
EPS of 46 cents last year. First half
adjusted net loss was $684,000
(8 cents per share) compared to the
adjusted net earnings of $4,213,000
(50 cents per share) in the first
half of 2019.
Revenue declined to $23,285,000 in
the first half of 2020 compared to $26,579,000 last year as a result of declining
yields, for reasons noted above, and a 4% decline in average funds
employed. Average funds employed in the first half of 2020 were
$352 million compared to $367 million last year.
Commenting on the results, the Company's President and CEO, Mr.
Simon Hitzig, stated: "Accord's
second quarter net earnings marked an all-time record quarterly
high. But a look below the surface reveals some contributing
factors that will likely not be repeated. One of our U.S.
subsidiaries successfully worked out of a troubled account,
notching a multi-million dollar loan loss recovery. We also took
advantage of Covid-relief changes to U.S. tax rules, which led to a
significant income tax recovery. These positive developments
bolstered Accord's net earnings and equity. As anticipated,
Accord's total funds employed shrank during the quarter. We took a
cautious approach to new business, while, many of our existing
factoring and ABL clients recorded dramatically lower sales, which
translated into fewer receivables available for Accord to finance.
While very few clients have left us in recent months, many are
borrowing less than they were earlier in the year. We view these
factors to be temporary and expect a steady increase in funds
employed over the second half of the year."
Mr. Hitzig added: "Accord also recently launched its
participation in the Export Development Canada (EDC) Business
Credit Availability Program (BCAP) Guarantee. The EDC BCAP
Guarantee provides eligible small and medium sized Canadian
companies with loans of up to $6.25
million. This partnership with EDC supports Accord's
commitment to entrepreneurs from coast to coast, and bolsters the
Company's growth path as the economy reopens. This program is a
terrific tool to help companies weather the storm, and keep our
economy moving forward. We're proud to offer it."
The Company's Board of Directors has declared a quarterly
dividend of 5 cents per common share,
payable September 1, 2020 to
shareholders of record August 14,
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:
|
Three Months Ended
June 30
|
Six Months
Ended June 30
|
|
2020
|
2019
|
2020
|
2019
|
|
$'000
|
$'000
|
$'000
|
$'000
|
Shareholders' net
earnings:
|
4,343
|
2,222
|
(1,534)
|
3,865
|
Adjustments, net of
tax:
|
|
|
|
|
Restructuring
expenses
|
331
|
-
|
739
|
-
|
Business acquisition
expenses
|
56
|
133
|
111
|
264
|
Stock-based
compensation
|
-
|
42
|
-
|
84
|
Adjusted net
earnings
|
4,730
|
2,397
|
(684)
|
4,213
|
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.