REGINA, Feb. 11, 2020 /CNW/ -
Input Capital Corp. ("Input", "Company", "we", "our") (TSX Venture:
INP) (US: INPCF) has released its results for the first quarter of
the 2020 fiscal year. All figures are presented in Canadian
dollars.
"Our continued focus is on the implementation of our strategic
plan: we have stopped deploying capital into new streams, we have
successfully reduced our operating expenses, we continue to serve
our ongoing clients, and we continue to buy back shares at a
significant discount to Book Value," said Doug Emsley, President & CEO. "It may sound
repetitive, but everything we do is oriented by our focus on
increasing Book Value per Share.
"As we do that, we will continue to strengthen our balance sheet
and maximize our flexibility so that as many options as possible
can be on the table going forward," said Emsley.
FY2020 Q1 HIGHLIGHTS
- Adjusted crop revenue* of $11.845
million on the delivery of 27,092 canola equivalent metric
tonnes ("MT" or "tonnes") at an average price of $437.21 per MT;
- Adjusted net loss* of $3.180
million, or $0.05 per share.
This is down from adjusted net income of $1.449 million, or $0.02 per share, over the same three-month period
last year. The decline is primarily due to a realized loss on a
mortgage, which is partially offset by an unrealized market value
gain on our canola interests and a significant reduction in our
corporate administration expenses. Without the realized mortgage
loss, we would have generated a profit of $2.115 million before income taxes;
- During the quarter, we paid a quarterly dividend of
$0.01 per share, or $0.04 per share annualized;
- In December 2019, we announced
the renewal of our Normal Course Issuer Bid ("NCIB"), allowing the
company to buy back up to 4,375,000 of its Class A common shares.
During the quarter, we bought back 1,832,000 shares at an average
price of $0.73 per share;
- Finished the fiscal year with:
-
- Cash and cash equivalents of $12.532
million;
- Total crop interests and other financial assets of $24.289 million;
- Loans and mortgages receivable of $48.548 million;
- Multi-year active streaming contracts with 120 farm
operators;
- Total shareholders' equity of $76.996
million;
- $nil drawn on our long-standing revolving credit facility;
and
- Long-term debt of $19.234
million.
KEY PERFORMANCE INDICATORS FOR THE COMPARABLE PERIODS ARE
SUMMARIZED BELOW:
|
Quarter
ended
Dec
31
|
Twelve months
ended
Dec
31
|
CAD millions,
unless otherwise noted
|
2019
|
2018
|
2019
|
2018
|
Revenue
|
|
|
|
|
Crop
|
11.625
|
24.058
|
26.967
|
35.387
|
Interest
|
1.174
|
1.183
|
4.563
|
3.322
|
Rental
|
0.011
|
0.013
|
0.043
|
0.212
|
Total
revenue
|
12.809
|
25.254
|
31.573
|
38.921
|
|
|
|
|
|
Adjusted crop
revenue
|
11.845
|
24.389
|
30.335
|
37.866
|
Adjusted total
revenue
|
13.030
|
25.584
|
34.941
|
41.400
|
|
|
|
|
|
Corporate admin
expense
|
0.932
|
1.827
|
4.464
|
6.607
|
|
|
|
|
|
Adjusted net income
(loss)
|
(3.180)
|
1.449
|
(0.950)
|
3.300
|
Adjusted net
income per share (basic)
|
$(0.05)
|
$0.02
|
$(0.02)
|
$0.04
|
Adjusted
EBITDA
|
(0.384)
|
6.010
|
4.544
|
9.283
|
Adjusted EBITDA
per share (basic)
|
$(0.01)
|
$0.07
|
$0.06
|
$0.11
|
|
|
|
|
|
Ending canola
reserves (MT)
|
95,000
|
291,000
|
95,000
|
291,000
|
Total capital
deployed in period
|
-
|
5.003
|
7.999
|
36.297
|
Active streaming
clients
|
120
|
397
|
120
|
397
|
REVENUE & NET INCOME
For the quarter ended December 31,
2019, we generated adjusted crop revenue of $11.845 million on adjusted crop volume of 27,092
MT.
Adjusted crop revenue for the quarter represents a 45% decrease
in quarterly volume over the comparable quarter one year ago, when
we sold 49,621 MT of canola
equivalent for adjusted crop revenue of $24.389 million. Crop margin for the quarter was
$1.672 million, compared to
$2.769 million in the same quarter
last year. The decline in crop revenue in the quarter compared to
last year is a result of two factors: a long and drawn out harvest
this year delayed some deliveries from Q1 into Q2, and a
significant number of marketing stream clients took us up on our
offer to end their marketing stream contract early, greatly
reducing the number of low margin tonnes we handled from the 2019
harvest. This is in line with our previously described expectation
that total revenue and adjusted crop revenue would decline
significantly as a result of this portfolio optimisation.
For the twelve months ended December 31,
2019, we generated adjusted crop revenue of $30.335 million on adjusted crop volume of
65,957 MT.
Adjusted crop revenue for the twelve-month period ending
December 31, 2019, represents a 15%
decline in volume compared to the previous twelve-month period,
when we sold 77,486 MT of canola equivalent for adjusted crop
revenue of $37.886 million. This
translates into a crop margin of $1.991
million for the most recent year compared to $3.584 million for the previous year. The
decrease in volume is due to the change in the mix of our business
in favour of mortgage streams, and a significant reduction in the
number of marketing streams which remain in place. Mortgage streams
require fewer canola tonnes to service them than do capital
streams, and marketing streams represented a lot of tonnes and
revenue, but very small margins.
CAPITAL DEPLOYMENT AND STREAMING CONTRACT PORTFOLIO
Quarter Ended December 31,
2019
We have not deployed new capital for several quarters and do not
plan to do so unless we acquire a scalable source of mortgage
financing.
Last year, we offered existing clients who have a marketing
stream with us the opportunity to end their marketing stream
contracts early due to market instability and uncertainty. As
a result of this offer, most of our outstanding marketing stream
contracts were cancelled or bought back, significantly reducing our
client count, as well as the number of tonnes in our canola
reserves and our annual canola revenue. However, marketing streams
have always generated very small margins for us, and this has not
resulted in a material impact on our gross margin or our
bottom-line earnings. We also gained some operational efficiencies
by reducing the number of loads of canola to organize for marketing
and payment processing during a short period of time.
As of December 31, 2019, our
active streaming portfolio consisted of 120 geographically
diversified streams, distributed as follows:
Active
Streams
|
Dec 31,
2019
|
Sept 30,
2019
|
Quarterly Net
Change
|
Dec 31,
2018
|
Year Over Year
Net Change
|
Manitoba
|
4
|
5
|
(1)
|
8
|
(4)
|
Saskatchewan
|
97
|
96
|
1
|
292
|
(195)
|
Alberta
|
19
|
25
|
(6)
|
97
|
(78)
|
Total
|
120
|
126
|
(6)
|
397
|
(277)
|
BALANCE SHEET
KEY BALANCE SHEET ITEMS ARE SUMMARIZED BELOW:
Statements of
Financial Position
CAD millions,
unless otherwise noted
|
As
at
Dec 31,
2019
|
As
at
Dec 31,
2018
|
Cash
|
12.532
|
20.025
|
Crop interests and
other financial assets (liabilities)
|
24.289
|
34.426
|
Loans and mortgages
receivable
|
48.548
|
59.061
|
Total
assets
|
99.394
|
123.052
|
Total
liabilities
|
22.397
|
23.615
|
Total shareholders'
equity
|
76.996
|
99.436
|
Common shares
outstanding
|
61.920
|
82.542
|
Book value per
share
|
$1.24
|
$1.20
|
Working
capital
|
24.983
|
28.988
|
Revolving credit
facility
|
-
|
1.578
|
Long-term
debt
|
19.234
|
16.166
|
RENEWAL OF NORMAL COURSE ISSUER BID
In December 2019, we announced the
renewal of our Normal Course Issuer Bid ("NCIB"), allowing the
company to buy back up to 4,375,000 of its Class A common shares.
During the quarter, we bought back 1,832,000 shares at an average
price of $0.73 per share. The new
NCIB commenced on December 18, 2019
and continues until the earlier of December
17, 2020 and the date by which we have acquired the maximum
shares which may be purchased under the Bid.
OUTLOOK
Canola prices have been soft over the last year due in large
part to trade disruptions with China, Canada's traditionally largest canola
customer, as well as general softness in the price of US soybeans,
to which canola prices have a strong correlation. Net elevator
prices are down about 10% from one year ago.
It is impossible to know when or to what degree canola prices
will rise, or if these trade tensions will be resolved. While lower
canola prices do have an impact on the profitability of our
business, the effect is moderate, and we have a significant margin
of safety. Every one of our contracts remains profitable at today's
prevailing canola prices. In fact, the price of canola could
fall below the marginal cost of production of our farm clients, and
our canola margins would remain positive.
Our operational focus is on profitably managing the contracts
that we currently have with existing clients. We plan to continue
to distribute capital to shareholders via the dividend and through
NCIB activity at appropriate price levels, reduce our debt while
maintaining solid liquidity, and focus on maximizing Book Value per
Share.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE
EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF
THIS RELEASE.
ABOUT INPUT
Input is an agriculture commodity streaming company with a focus
on canola, the largest and most profitable crop in Canadian
agriculture. The Company has developed several flexible and
competitive forms of financing which help western Canadian canola
farmers solve working capital, mortgage finance and canola
marketing challenges and improve the financial position of their
farms. Under a streaming contract, Input has provided capital in
exchange for a stream of canola via multi-year fixed-volume canola
purchase contracts. As of May 2019,
Input has postponed capital deployment operations in light of
canola trade uncertainties with China and the effect of this uncertainty on
capital availability.
Forward Looking Statements
This release includes forward-looking statements regarding
Input and its business. Such statements are based on the current
expectations and views of future events of Input's management. In
some cases the forward-looking statements can be identified by
words or phrases such as "may", "will", "expect", "plan",
"anticipate", "intend", "potential", "estimate", "believe" or the
negative of these terms, or other similar expressions intended to
identify forward-looking statements. The forward-looking events and
circumstances discussed in this release may not occur and could
differ materially as a result of known and unknown risk factors and
uncertainties affecting Input, including risks regarding the
agricultural industry, economic factors and the equity markets
generally and many other factors beyond the control of Input. No
forward-looking statement can be guaranteed. Forward-looking
statements and information by their nature are based on assumptions
and involve known and unknown risks, uncertainties and other
factors which may cause our actual results, performance or
achievements, or industry results, to be materially different from
any future results, performance or achievements expressed or
implied by such forward-looking statement or information.
Accordingly, readers should not place undue reliance on any
forward-looking statements or information. Except as required by
applicable securities laws, forward-looking statements speak only
as of the date on which they are made and Input undertakes no
obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events,
or otherwise.
*Non-IFRS Measures
Input measures key performance metrics established by management
as being key indicators of the Company's strength, using certain
non-IFRS performance measures, including:
- Adjusted Crop Revenue, Adjusted Crop Volume and Adjusted Crop
Margin;
- Adjusted Total Revenue;
- Adjusted Net Income, Adjusted Net Income per share, Adjusted
EBITDA, Adjusted EBITDA per share, and;
- Book Value per share.
The Company uses these non-IFRS measures for its own internal
purposes. These non-IFRS measures do not have any standardized
meaning prescribed by IFRS, and these measures may be calculated
differently by other companies. The presentation of these non-IFRS
measures is intended to provide additional information and should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. The Company provides
these non-IFRS measures to enable investors and analysts to
understand the underlying operating and financial performance of
the Company in the same way as it is frequently evaluated by
Management. Management will periodically assess these non-IFRS
measures and the components thereof to ensure their continued use
is beneficial to the evaluation of the underlying operating and
financial performance of the Company, and to confirm that these
measures remain useful for comparison purposes to other
royalty/streaming companies. For more detailed information,
please refer to Input's Management Discussion and Analysis
available on the Company's website
at investor.inputcapital.com and on SEDAR at
www.sedar.com.
SOURCE Input Capital Corp.