Accord Financial Corp. (TSX – ACD) today released its financial results for the quarter ended March 31, 2024. 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 March 31 |
||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| $ | $ | |||
| Average funds employed (millions) | 460 | 451 | ||
| Revenue (000s) | 20,666 | 18,444 | ||
| Net earnings attributable to shareholders (000s) | 632 | 2,019 | ||
| Adjusted net earnings (000s) (note) | 1,532 | 2,158 | ||
| Earnings per common share (basic and diluted) | 0.07 | 0.24 | ||
| Adjusted earnings per common share (basic and diluted) | 0.18 | 0.25 | ||
| Book value per share (March 31) | $ 9.90 | $ 11.96 | ||
Commenting on the first quarter results, the Company’s President and CEO, Mr. Simon Hitzig, stated: “The end of 2023 through the first quarter brought significant changes to Accord’s balance sheet, as previously reported. Facing a fourth quarter non-recurring reduction in equity, we carefully reduced our leverage, strengthened the balance sheet, and negotiated important amendments to our primary banking facility. While these initiatives stabilized the Company’s financing environment, the ripple effects can be seen in the financial results.”
Accord’s finance receivables and loans closed at $457 million on March 31, 2024, up from $450 million at the end of the first quarter last year. The portfolio declined, however, from $477 million at the start of the year, as we chose to exit certain accounts to reduce leverage in the wake of the equity loss at the end of 2023. Average funds employed were up slightly in the first quarter to $460 million compared to $451 million in the same period last year. Driven by modest year-over-year portfolio growth and higher average yields, first quarter revenue reached $20.7 million compared to $18.4 million in the same quarter last year.
While the portfolio and revenue held up well through the first quarter, expenses grew owing to the lengthy negotiation to amend the primary banking facility. As a result, the Company’s first quarter performance was weighed down by $1.1 million of professional fees. First quarter net earnings were $632,000, or 7 cents per common share. Adjusted net earnings, adding back the professional fees and certain non-cash items, were a healthier $1.5 million, down from $2.2 million in the same quarter last year. Adjusted earnings per share (“EPS”) were 18 cents compared to 25 cents in the first quarter of 2023. The net positive quarter pushed book value up to $9.90 per share, from $9.80 to start the year.
Commenting further, Mr. Hitzig noted, “The uncertain economic environment is driving a steady flow of new applications, however, the challenging credit environment keeps us highly selective in onboarding new clients.” As highlighted in its 2023 Annual Report, the Company continues to evaluate a number of strategic initiatives, including the addition of new funding sources, a shift in overall product mix, and the potential to divest one or more non-core subsidiaries.
“The Company is making progress on a range of initiatives to generate additional capital to support portfolio growth and create shareholder value,” added Mr. Hitzig, “With the headwinds from 2023 subsiding, we have set our sights back on the opportunities ahead of us.”
About Accord Financial Corp.
Accord is North America’s most dynamic commercial finance company providing fast, versatile financing solutions for companies in transition including asset-based lending, factoring, equipment leasing, inventory finance, 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 45 years, Accord has helped businesses manage their cash flows and maximize opportunities.
For further information please visit www.accordfinancial.com or contact:
Irene Eddy
Senior Vice President, Chief Financial Officer
Accord Financial Corp.
40 Eglinton Avenue East, Suite 602
Toronto, ON M4P 3A2
(416) 961-0304
ieddy@accordfinancial.com
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:
- 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 goodwill impairment, net single account loss (in 2023), professional fees related to bank negotiations (2024), stock-based compensation, business acquisition expenses (primarily 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
March 312024 2023 $’000 $’000 Shareholders’ net earnings 632 2,019 Adjustments, net of tax: Costs associated with single account write-off 803 – Restructuring and other expenses 97 139 Adjusted net earnings 1,532 2,158 - 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 or shareholders’’ equity divided by the number of common shares outstanding as of a particular date.
- 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.
Forward-Looking Statements
This news release contains certain “forward-looking statements” and certain “forward-looking information” as defined under applicable Canadian securities laws. Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “continue”, “plans” or similar terminology. Forward-looking statements in this news release include, but are not limited to, statements, management’s beliefs, expectations or intentions regarding the financial position of the Company, and the duration of the suspension of the quarterly dividend announced in November 2023. Forward-looking statements are based on forecasts of future results, estimates of amounts not yet determinable and assumptions that while believed by management to be reasonable, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements are subject to various risks and uncertainties including the ability of the Company to reinstate dividends and those risks identified in the Accord’s periodic filings with Canadian securities regulators. See Accord’s most recent annual information form and most recent management’s discussion and analysis of results of operations and financial condition for a detailed discussion of the risk factors affecting Accord. Such forward-looking information represents management’s best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.