TORONTO, Aug. 3, 2022
/CNW/ - Accord Financial Corp. (TSX: ACD) today released its
financial results for the three and six months ended June 30, 2022. 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
|
|
2022
|
2021
|
2022
|
2021
|
|
$
|
$
|
$
|
$
|
Average funds
employed (millions)
|
454
|
376
|
456
|
367
|
Revenue
(000's)
|
16,490
|
15,416
|
32,668
|
28,897
|
Pre-provision
operating income (000's)
|
3,490
|
4,237
|
7,197
|
6,274
|
Provision for credit
and loan losses
|
4,008
|
220
|
4,101
|
(677)
|
(Loss) earnings
before income tax (000's)
|
(518)
|
4,017
|
3,096
|
6,951
|
Net earnings
attributable to shareholders (000's)
|
122
|
3,085
|
3,260
|
5,670
|
Earnings per common
share (basic and diluted)
|
0.01
|
0.36
|
0.38
|
0.66
|
Book value per share
(June 30)
|
|
|
$11.78
|
$10.96
|
Despite an otherwise strong quarter, the Company's net earnings
were impacted by the recording of a provision for credit and loan
losses of $4.0 million in the
quarter, reflecting the economic headwinds and the current and
potential impact on payment patterns of certain businesses within
the portfolio. Pre-provision operating income remained healthy,
reflecting strong cash generation of the loan portfolio through the
quarter and first half of 2022.
Commenting on the financial results, the Company's President and
CEO, Mr. Simon Hitzig, stated:
"While funds employed remained flat over the second quarter,
significant year-over-year growth for both the second quarter and
the first half of the year, has resulted in record first half
revenue and pre-provision operating income."
Average funds employed were $454
million in the second quarter, up 21% over the same quarter
last year, and averaged $456 million
for the first six months, up 24% over the same period last year.
Funds employed at June 30, 2022 were
$453 million. Driven by this growth,
second quarter revenue increased 7% to $16,490,000 compared to $15,416,000 in the second quarter of 2021.
Revenue for the first six months of 2022 rose 13% to a first half
record of $32,668,000 compared to
$28,897,000 last year.
"Accord's record revenue in the first half of 2022 validates our
growth strategy. But caution remains the watchword in our key
markets, as Accord and the small and middle market companies we
serve are taking a more conservative view of leverage, given the
quickly changing economic backdrop," added Mr. Hitzig.
Book value per common share continues to climb, closing the
quarter at $11.78, up from
$10.96 at June
30, 2021 and $11.68 at the
start of the year.
While key growth metrics, and the balance sheet, remain strong,
net earnings in the second quarter were impacted by the Company's
provision for credit and loan losses, reflecting the potential
impact of a worsening business environment on the companies in its
portfolio. The Company anticipates that ongoing supply chain
issues, inflation and rising interest rates are likely to weaken
the payment performance of some of its existing clients. To measure
credit quality against this backdrop, the Company employs a
best-in-class process, incorporating third-party economic
forecasts, quantitative credit evaluation of each company in the
portfolio, and expert judgment refined over multiple economic
cycles.
Within the second quarter provision, $1.9
million represents a non-cash increase to the Company's
allowance for expected future losses. Driven by the increased
provision, the allowance for losses on the balance sheet at
June 30, 2022 was $7.1 million compared to $5.8 million a year earlier.
Owing primarily to the provision for losses, net earnings
attributable to shareholders declined to $122,000 in the second quarter of 2022 compared
to $3,085,000 in the same quarter
last year. Earnings per common share ("EPS") were 1 cent compared to 36
cents last year. Net earnings in the first six months of
2022 were $3,260,000 compared to
$5,670,000 in 2021. First half EPS
were 38 cents compared to
66 cents last year.
Looking ahead, Mr. Hitzig said "While businesses are
navigating a challenging economic environment, Accord is
well-positioned to perform through the next stages of the economic
cycle. Over the past two years we've successfully reorganized and
strengthened the management team, built a world class sales and
marketing platform, rejuvenated the product lineup, and diversified
our funding sources to support the next stage of growth."
To facilitate continued growth, the Company's primary loan
facility, provided by a syndicate of six major banks, was recently
increased to $437 million and the
term extended for three years to July
2025.
Reflecting continued strong cash flow, the Company's Board of
Directors declared a quarterly dividend of 7.5 cents per common share, payable September 1, 2022 to shareholders of record
August 15, 2022.
About Accord Financial Corp.
Accord Financial is
North America's most dynamic
commercial finance company providing fast, versatile financing
solutions for companies in transition including factoring,
inventory finance, equipment leasing, trade finance and film/media
finance. By leveraging our unique combination of financial
strength, deep experience, and independent thinking, we craft
winning financial solutions for small and medium-sized businesses,
simply delivered, so our clients can thrive. For 44 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) Pre-provision operating income: the Company derives this
measure from amounts presented in its IFRS prepared financial
statements. Operating income is earnings before income tax, adding
back the provision for credit and loan losses.
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.