Welcome!

.NET Authors: Lori MacVittie, Yeshim Deniz, Ivan Antsipau, Liz McMillan, Michael Bushong

News Feed Item

Element Financial's Record Origination Volumes Drive Strong Revenue Growth and Profitability in Q3-2012

Operating income reaches $0.05 per share for the quarter

  • All three business units contribute to record origination volumes of $219.7 million
  • Volumes increased 177% over the immediately previous quarter (+ 113% excluding Element Fleet volumes)
  • Total revenue grew 141% over the immediately previous quarter to $19.6 million
  • Operating income grew by 178% over the immediately previous quarter to $5.4 million
  • Operating income was $0.05 per share on an after-tax basis versus $0.02 in the immediately previous quarter
  • Total assets increased by 10% over the immediately previous quarter to $1.1 billion
  • Contractual delinquencies were less than 0.2% of total finance receivables
  • TLS Fleet Management integration completed on schedule

TORONTO, Nov. 6, 2012 /CNW/ - Element Financial Corporation (TSX:EFN) ("Element" or "the Company"), Canada's leading independent equipment finance company, today reported that record origination levels of $219.7 million contributed to revenue of  $19.6 million, operating income of $5.4 million and operating income per share of $0.05 on an after-tax basis for the three month period ending September 30, 2012.

Of the $219.7 million of new originations booked in the third quarter, Element Finance contributed $86.7 million or 39.4%, Element Capital contributed $82.1 million or 37.4% and Element Fleet contributed $50.9 million or 23.2% During the period, Element completed the integration of the operations of TLS Fleet Management which the company acquired on June 29, 2012 adding more than $460 million of lease assets to Element's portfolio at the end of the previous quarter.

"With all three of Element's business verticals now contributing to origination volumes, and the seasonally slowest period for our fleet management business now behind us, these strong Q3 results offer a first look at the new base line from which we expect to continue to build Element's quality earnings growth," said Steven Hudson, Element's Chairman and CEO.

Average income yield for the period was 8.8% for Element Finance, 6.4% for Element Capital and 6.7% for Element Fleet with the portfolio as a whole delivering average income yield of 7.5%. Delinquencies at the end of the period were less than 0.2% of total finance receivables.

"We are extremely pleased with the overall returns and quality of our portfolio which continues to perform above expectations," said Mr. Hudson. "As the portfolio matures, I believe the disciplined approach we've taken to underwriting will continue to contribute to the portfolio's low delinquencies and strong yields," he added.

Operating expenses as a percentage of average portfolio assets decreased from 3.62% during the previous quarter, to 3.36% for the three month period ended September 30, 2012. Element's financial leverage ratio increased during the period from 2.0:1 at the end of the previous quarter to 2.28:1 at the end of the third quarter.

"What has yet to be reflected in these results is the added potential to generate high quality assets from Element's increased focus on developing comprehensive vendor finance programs for major North American equipment manufacturers," said Mr. Hudson. "As we continue to scale the business, we expect earnings growth to be supplemented as additional leverage is applied to our balance sheet and SG&A is spread over a broader base of net finance income," he added.

Financial Results Three-Month Period Ended September 30, 2012

Basis of presentation

The unaudited condensed consolidated financial statements for the three-month period ended September 30, 2012 have been prepared on the historical cost method in accordance with International Financial Reporting Standards ("IFRS") and are reported in Canadian dollars.

The selected financial information included in this press release is summary only and should be read in conjunction with the Company's unaudited condensed consolidated financial statements as at and for the three-month and nine-month periods ended September 30, 2012 and the audited consolidated financial statements as at and for the nine-month period ended December 31, 2011, and the notes thereto, and accompanying management discussion and analysis of such results that have been filed on SEDAR at www.sedar.com.

Highlights:

  • New originations reached an all-time high of $219.7 million during the three-month period ended September 30, 2012, versus new origination of $34.3 million for the same period of 2011. New originations on a year-to-date basis were $455.7 million, an increase of $378.8 million or 492% compared to new originations of $76.9 million for the comparative period of 2011.

  • Total revenue was $19.6 million for the three-month period ended September 30, 2012 versus $3.7 million for the same period last year. Total revenue was $34.3 million for the nine-month period ended September 30, 2012 versus $5.6 million for the same period last year.

  • Operating income before non-cash share-based compensation expense and business acquisition costs, was $5.4 million for the three-month period ended September 30, 2012 or $0.05 per share on an after tax basis, compared to $0.3 million or $0.01 per share for the same period last year. Operating income before non-cash share-based compensation expense and business acquisition costs was $8.2 million for the nine-month period ended September 30, 2012 or $0.08 per share, compared to a loss of $$1.0 million or $0.05 per share for the same period last year.

  • Net income for the three-month period ended September 30, 2012 was $3.0 million compared to a net loss of $1.9 million for the same period last year. Net loss for the nine-month period ended September 30, 2012 was $3.0 million again after deducting gross business acquisition costs of $9.4 million compared to a net loss of $3.8 million for the same period last year which included business acquisition costs of $3.0 million

Selected Financial Information and Financial Ratios

The following table summarizes key financial data to be read in conjunction with the consolidated financial statements of the Company as at and for the nine-month period ended September 30, 2012. Such financial statements are prepared in accordance with IFRS and are reported in Canadian dollars.

               
(in $000's for stated values, except ratios and per
share amounts)
      As at and for
the three-
month period
ended
September 30,
2012
As at and for
the three-
month period
ended
September 30,
2011
As at and for
the nine-
month period
ended
September 30,
2012
As at and for
the nine-month
period ended
September 30,
2011
        $ $ $ $
               
Total revenue       19,635 3,720 34,260 5,641
Operating income before share-based
compensation and business acquisition costs
      5,374 332 8,214 (1,073)
Earnings per share on after tax operating income
before share-based compensation and business
acquisition costs
      $0.05 $0.01 $0.08 ($0.05)
Income / (loss)  before taxes       4,349 (2,986) (3,353) (4,871)
Net income / (loss)       3,012 (1,904) (3,044) (3,789)
               
Total assets       1,109,653 268,051 1,109,653 268,051
               
Finance receivables, net       927,298 225,665 927,298 225,665
               
Loan originations
     New Originations
      219,690 34,281 455,702 76,948
     Business Acquisition       - - 457,085 158,474
        219,690 34,281 912,787 235,422
               
Total Shareholders' Equity       316,187 79,774 316,187 79,774
               
Average outstanding finance receivable       847,130 170,149 487,173 82,665
Average outstanding debt       651,717 130,792 337,123 64,571
               
Number of shares outstanding       83,014,978 24,286,517 83,014,978 24,286,517
Average number of shares outstanding       83,000,692 24,286,517 73,779,291 16,105,187
Average total shareholders' equity       314,222 136,490 272,583 70,006
Net income / (loss) per share (basic and diluted)       $0.04 ($0.09) ($0.04) ($0.24)

Results of Operations - Three Months Ended September 30, 2012

The following table sets forth a summary of the Company's unaudited results of operations for the three-month period ended September 30, 2012 and 2011:

           
(in 000's for stated values, except per share amounts)       Three-month
period ended
September 30,
2012
Three-month
period ended
September 30,
2011
        $ $
           
Financial revenue       18,124 3,404
Financial expenses       5,635 1,161
Net financial income       12,489 2,243
Operating expenses       7,115 1,911
Operating income       5,374 332
Share-based compensation       695 304
Operating income before business acquisition costs       4,679 28
Business acquisition costs       330 3,014
Net income / (loss) before taxes       4,349 (2,986)
Deferred income taxes       1,337 (1,082)
Net income / (loss) for the period       3,012 (1,904)
           
Basic and diluted income / (loss) per share       $0.04 ($0.09)

The Company continued to execute on its growth plan and strategy during the quarter ended September 30, 2012 and is reporting improved performances from operations over the quarter ended September 30, 2011.

Financial revenue grew to $18.1 million during this third quarter of 2012 compared to $3.4 million during the same quarter of 2011 compared to $7.3 million during the immediate quarter ended June 30, 2012. This growth reflects the continued strong growth in originations which reached $219.7 million during the current quarter which was achieved despite the results of TLS reflecting the seasonally slowest period for the industry. This performance also demonstrates the strength of TLS, and we expect this momentum to continue going forward.

Operating income was $5.4 million for the three-month period ended September 30, 2012 compared to $0.3 million for the same quarter of 2011.

Net income before income taxes for the quarter ended September 30, 2012 was $4.3 million compared to a loss of $3.0 million reported for the same period of the previous year. The loss in the quarter ended September 30, 2011 was negatively impacted by the one-time transaction cost associated with the purchase of the Alter Moneta portfolio which was expensed during the period under IFRS but would have been capitalized as part of the acquisition under Canadian GAAP.

Finance receivables have increased to $927.3 million at September 30, 2012 compared to $231.5 at December 31, 2011 an increase of 300% resulting from a combination of (i) the acquisition of TLS on June 29, 2012, (ii) the entry into the large ticket business with the deployment of Element Capital in January 2012 and, (iii) the continued organic growth in originations which has reached a total of $455.7 million during the nine-month period ended September 30, 2012 compared to $76.9 million during the comparative nine-month period of the previous year. As a result, financial revenue was $18.1 million during the third quarter of 2012, an increase of $14.7 million over the amount of $3.4 million reported for the third quarter of 2011. This increase is due to the increase in average finance receivables outstanding during the period as discussed above which grew from $170.1 million during the quarter ended September 30, 2011 to $847.1 million during the quarter ended September 30, 2012.

Financial expenses were $5.6 million for the third quarter of 2012 compared to $1.2 million for the third quarter of 2011, an increase of $4.4 million reflecting the increase in average outstanding debt between the periods which increased to $651.7 million during the quarter ended September 30, 2012 compared to $130.8 million for the same quarter of 2011. Financial expenses as a percent of financial revenue decreased to 31.1% during the third quarter of 2012 from the 34.1% reported for the same comparative quarter. This decrease reflects the lower debt cost of 3.46% during the third quarter of 2012 compared to a debt cost of 3.55% for the comparative quarter of 2011.

Additional financial revenues of $2.2 million increased the overall portfolio yield to 8.56% for the three-month period ended September 30, 2012 compared to 8.00% for the quarter ended September 30, 2011 resulting mainly from the addition of fleet management services from the TLS acquisition concluded on June 29, 2012.

The combination of increased gross yield and the improvement in the debt costs for the quarter ended September 30, 2012 resulted in an improvement of 64 basis points in the net financial income for the current quarter over the same quarter of the previous year.

Operating expenses were $7.1 million for the third quarter of 2012 compared to $1.9 million for the third quarter of 2011 reflecting the increased level of activities required to manage a portfolio that approaches $1.0 billion at September 30, 2012 resulting from the acquisition of TLS on June 29, 2012. However, margins continue to trend down and operating expenses as a percent of average finance receivable was 3.36% during the current quarter ended September 30, 2012 compared to 4.49% for the same quarter of the previous year.

Operating income before share-based compensation and business acquisition costs was $5.4 million during this third quarter compared to $0.3 million for the comparative quarter of 2011. Management believes that this metric is the true measure of the Company's performance as it excludes non-cash items that have not and will never require cash settlement and it excludes business acquisition costs that used to be capitalized as part of acquisition costs in the past under Canadian GAAP but that are now required to be expensed under IFRS. This translates to a yield to average outstanding finance receivables of 2.54% during the current quarter compared to a yield of 0.78% for the comparative quarter of 2011 reflecting the substantial improvement of the Company's performance over the last twelve months.

Shared-based compensation, which is a non-cash item reflecting the fair value of options granted, was $0.7 million during the quarter ended September 30, 2012 compared to $0.3 million during the same quarter of 2011. The increase is reflective of the increase in the level of options granted during the intervening periods.

Business acquisition costs, which consist of the amortization of certain intangibles acquired through those business acquisitions, integration costs and transaction costs associated with the TLS acquisition were $0.3 million during the current quarter of 2012. These costs would have been capitalized as part of the acquisition under Canadian GAAP but are required to be expensed under IFRS. As we have noted previously, these expenses will continue to negatively impact the Company's performance going forward as it continues on its growth plan and where such costs will continue to be expensed as incurred under IFRS.

Consolidated Interim Statements of Financial Position
[Unaudited, in thousands of Canadian dollars]

The following table sets forth the Company's consolidated financial position of the Company as at September 30, 2012 and December 31, 2011:

 
 
 
 
 
 
 
 
Unaudited
As at
September 30,
2012
 
 
 
 
Audited
As at
December 31,
2011
    $   $
         
ASSETS        
Cash   12,690   151,086
Restricted funds   35,393   19,678
Finance receivables   927,298   231,537
Accounts receivable and other assets   30,427   4,739
Notes receivable   7,228   5,422
Capital assets    6,024   214
Intangible assets   25,210   980
Deferred income taxes   -   1,473
Goodwill   65,383   1,586
    1,109,653   416,715
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
Liabilities        
Accounts payable and accrued liabilities   45,856   5,857
Derivative financial instruments   469   -
Secured borrowings   720,297   172,517
Deferred income taxes   26,844   -
Total liabilities   793,466   178,374
         
Shareholders' equity        
Share capital   322,761   243,637
Contributed surplus   4,792   2,625
Accumulated deficit   (10,965)   (7,921)
Accumulated other comprehensive loss   (401)   -
Total shareholders' equity   316,187   238,341
    1,109,653   416,715
           

About Element Financial Corporation

With total assets in excess of $1 billion, Element Financial Corporation is Canada's leading independent equipment finance company. Element operates nationally in three segments of the equipment finance market - Element Capital provides large ticket equipment leasing, Element Finance serves the mid-ticket equipment finance market and Element Fleet provides vehicle fleet leasing and management solutions through the Company's TLS Fleet Management division.

Forward Looking Statements

This release includes forward-looking statements regarding Element and its business. Such statements are based on the current expectations and views of future events of Element'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 the company. 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 Element undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

 

 

SOURCE Element Financial Corporation

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
Software AG helps organizations transform into Digital Enterprises, so they can differentiate from competitors and better engage customers, partners and employees. Using the Software AG Suite, companies can close the gap between business and IT to create digital systems of differentiation that drive front-line agility. We offer four on-ramps to the Digital Enterprise: alignment through collaborative process analysis; transformation through portfolio management; agility through process automation and integration; and visibility through intelligent business operations and big data.
There will be 50 billion Internet connected devices by 2020. Today, every manufacturer has a propriety protocol and an app. How do we securely integrate these "things" into our lives and businesses in a way that we can easily control and manage? Even better, how do we integrate these "things" so that they control and manage each other so our lives become more convenient or our businesses become more profitable and/or safe? We have heard that the best interface is no interface. In his session at Internet of @ThingsExpo, Chris Matthieu, Co-Founder & CTO at Octoblu, Inc., will discuss how these devices generate enough data to learn our behaviors and simplify/improve our lives. What if we could connect everything to everything? I'm not only talking about connecting things to things but also systems, cloud services, and people. Add in a little machine learning and artificial intelligence and now we have something interesting...
Last week, while in San Francisco, I used the Uber app and service four times. All four experiences were great, although one of the drivers stopped for 30 seconds and then left as I was walking up to the car. He must have realized I was a blogger. None the less, the next car was just a minute away and I suffered no pain. In this article, my colleague, Ved Sen, Global Head, Advisory Services Social, Mobile and Sensors at Cognizant shares his experiences and insights.
We are reaching the end of the beginning with WebRTC and real systems using this technology have begun to appear. One challenge that faces every WebRTC deployment (in some form or another) is identity management. For example, if you have an existing service – possibly built on a variety of different PaaS/SaaS offerings – and you want to add real-time communications you are faced with a challenge relating to user management, authentication, authorization, and validation. Service providers will want to use their existing identities, but these will have credentials already that are (hopefully) irreversibly encoded. In his session at Internet of @ThingsExpo, Peter Dunkley, Technical Director at Acision, will look at how this identity problem can be solved and discuss ways to use existing web identities for real-time communication.
Can call centers hang up the phones for good? Intuitive Solutions did. WebRTC enabled this contact center provider to eliminate antiquated telephony and desktop phone infrastructure with a pure web-based solution, allowing them to expand beyond brick-and-mortar confines to a home-based agent model. It also ensured scalability and better service for customers, including MUY! Companies, one of the country's largest franchise restaurant companies with 232 Pizza Hut locations. This is one example of WebRTC adoption today, but the potential is limitless when powered by IoT. Attendees will learn real-world benefits of WebRTC and explore future possibilities, as WebRTC and IoT intersect to improve customer service.
From telemedicine to smart cars, digital homes and industrial monitoring, the explosive growth of IoT has created exciting new business opportunities for real time calls and messaging. In his session at Internet of @ThingsExpo, Ivelin Ivanov, CEO and Co-Founder of Telestax, will share some of the new revenue sources that IoT created for Restcomm – the open source telephony platform from Telestax. Ivelin Ivanov is a technology entrepreneur who founded Mobicents, an Open Source VoIP Platform, to help create, deploy, and manage applications integrating voice, video and data. He is the co-founder of TeleStax, an Open Source Cloud Communications company that helps the shift from legacy IN/SS7 telco networks to IP-based cloud comms. An early investor in multiple start-ups, he still finds time to code for his companies and contribute to open source projects.
The Internet of Things (IoT) promises to create new business models as significant as those that were inspired by the Internet and the smartphone 20 and 10 years ago. What business, social and practical implications will this phenomenon bring? That's the subject of "Monetizing the Internet of Things: Perspectives from the Front Lines," an e-book released today and available free of charge from Aria Systems, the leading innovator in recurring revenue management.
The Internet of Things will put IT to its ultimate test by creating infinite new opportunities to digitize products and services, generate and analyze new data to improve customer satisfaction, and discover new ways to gain a competitive advantage across nearly every industry. In order to help corporate business units to capitalize on the rapidly evolving IoT opportunities, IT must stand up to a new set of challenges.
There’s Big Data, then there’s really Big Data from the Internet of Things. IoT is evolving to include many data possibilities like new types of event, log and network data. The volumes are enormous, generating tens of billions of logs per day, which raise data challenges. Early IoT deployments are relying heavily on both the cloud and managed service providers to navigate these challenges. In her session at 6th Big Data Expo®, Hannah Smalltree, Director at Treasure Data, to discuss how IoT, Big Data and deployments are processing massive data volumes from wearables, utilities and other machines.
All major researchers estimate there will be tens of billions devices – computers, smartphones, tablets, and sensors – connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades. With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo in Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be!
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at Internet of @ThingsExpo, Erik Lagerway, Co-founder of Hookflash, will walk through the shifting landscape of traditional telephone and voice services to the modern P2P RTC era of OTT cloud assisted services.
While great strides have been made relative to the video aspects of remote collaboration, audio technology has basically stagnated. Typically all audio is mixed to a single monaural stream and emanates from a single point, such as a speakerphone or a speaker associated with a video monitor. This leads to confusion and lack of understanding among participants especially regarding who is actually speaking. Spatial teleconferencing introduces the concept of acoustic spatial separation between conference participants in three dimensional space. This has been shown to significantly improve comprehension and conference efficiency.
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, will discuss single-value, geo-spatial, and log time series data. By focusing on enterprise applications and the data center, he will use OpenTSDB as an example to explain some of these concepts including when to use different storage models.
SYS-CON Events announced today that Gridstore™, the leader in software-defined storage (SDS) purpose-built for Windows Servers and Hyper-V, will exhibit at SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Gridstore™ is the leader in software-defined storage purpose built for virtualization that is designed to accelerate applications in virtualized environments. Using its patented Server-Side Virtual Controller™ Technology (SVCT) to eliminate the I/O blender effect and accelerate applications Gridstore delivers vmOptimized™ Storage that self-optimizes to each application or VM across both virtual and physical environments. Leveraging a grid architecture, Gridstore delivers the first end-to-end storage QoS to ensure the most important App or VM performance is never compromised. The storage grid, that uses Gridstore’s performance optimized nodes or capacity optimized nodes, starts with as few a...
The Transparent Cloud-computing Consortium (abbreviation: T-Cloud Consortium) will conduct research activities into changes in the computing model as a result of collaboration between "device" and "cloud" and the creation of new value and markets through organic data processing High speed and high quality networks, and dramatic improvements in computer processing capabilities, have greatly changed the nature of applications and made the storing and processing of data on the network commonplace. These technological reforms have not only changed computers and smartphones, but are also changing the data processing model for all information devices. In particular, in the area known as M2M (Machine-To-Machine), there are great expectations that information with a new type of value can be produced using a variety of devices and sensors saving/sharing data via the network and through large-scale cloud-type data processing. This consortium believes that attaching a huge number of devic...
Innodisk is a service-driven provider of industrial embedded flash and DRAM storage products and technologies, with a focus on the enterprise, industrial, aerospace, and defense industries. Innodisk is dedicated to serving their customers and business partners. Quality is vitally important when it comes to industrial embedded flash and DRAM storage products. That’s why Innodisk manufactures all of their products in their own purpose-built memory production facility. In fact, they designed and built their production center to maximize manufacturing efficiency and guarantee the highest quality of our products.
Can call centers hang up the phones for good? Intuitive Solutions did. WebRTC enabled this contact center provider to eliminate antiquated telephony and desktop phone infrastructure with a pure web-based solution, allowing them to expand beyond brick-and-mortar confines to a home-based agent model. Download Slide Deck: ▸ Here
All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades. Over the summer Gartner released its much anticipated annual Hype Cycle report and the big news is that Internet of Things has now replaced Big Data as the most hyped technology. Indeed, we're hearing more and more about this fascinating new technological paradigm. Every other IT news item seems to be about IoT and its implications on the future of digital business.
BSQUARE is a global leader of embedded software solutions. We enable smart connected systems at the device level and beyond that millions use every day and provide actionable data solutions for the growing Internet of Things (IoT) market. We empower our world-class customers with our products, services and solutions to achieve innovation and success. For more information, visit www.bsquare.com.
With the iCloud scandal seemingly in its past, Apple announced new iPhones, updates to iPad and MacBook as well as news on OSX Yosemite. Although consumers will have to wait to get their hands on some of that new stuff, what they can get is the latest release of iOS 8 that Apple made available for most in-market iPhones and iPads. Originally announced at WWDC (Apple’s annual developers conference) in June, iOS 8 seems to spearhead Apple’s newfound focus upon greater integration of their products into everyday tasks, cross-platform mobility and self-monitoring. Before you update your device, here is a look at some of the new features and things you may want to consider from a mobile security perspective.