Welcome!

Microsoft Cloud Authors: John Basso, Liz McMillan, Pat Romanski, Elizabeth White, Mihai Corbuleac

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
"We've discovered that after shows 80% if leads that people get, 80% of the conversations end up on the show floor, meaning people forget about it, people forget who they talk to, people forget that there are actual business opportunities to be had here so we try to help out and keep the conversations going," explained Jeff Mesnik, Founder and President of ContentMX, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
“delaPlex Software provides software outsourcing services. We have a hybrid model where we have onshore developers and project managers that we can place anywhere in the U.S. or in Europe,” explained Manish Sachdeva, CEO at delaPlex Software, in this SYS-CON.tv interview at @ThingsExpo, held June 7-9, 2016, at the Javits Center in New York City, NY.
From wearable activity trackers to fantasy e-sports, data and technology are transforming the way athletes train for the game and fans engage with their teams. In his session at @ThingsExpo, will present key data findings from leading sports organizations San Francisco 49ers, Orlando Magic NBA team. By utilizing data analytics these sports orgs have recognized new revenue streams, doubled its fan base and streamlined costs at its stadiums. John Paul is the CEO and Founder of VenueNext. Prior ...
IoT is rapidly changing the way enterprises are using data to improve business decision-making. In order to derive business value, organizations must unlock insights from the data gathered and then act on these. In their session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, and Peter Shashkin, Head of Development Department at EastBanc Technologies, discussed how one organization leveraged IoT, cloud technology and data analysis to improve customer experiences and effi...
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform and how we integrate our thinking to solve complicated problems. In his session at 19th Cloud Expo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm ...
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 19th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo Silicon Valley Call for Papers is now open.
Big Data engines are powering a lot of service businesses right now. Data is collected from users from wearable technologies, web behaviors, purchase behavior as well as several arbitrary data points we’d never think of. The demand for faster and bigger engines to crunch and serve up the data to services is growing exponentially. You see a LOT of correlation between “Cloud” and “Big Data” but on Big Data and “Hybrid,” where hybrid hosting is the sanest approach to the Big Data Infrastructure pro...
"My role is working with customers, helping them go through this digital transformation. I spend a lot of time talking to banks, big industries, manufacturers working through how they are integrating and transforming their IT platforms and moving them forward," explained William Morrish, General Manager Product Sales at Interoute, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
A critical component of any IoT project is what to do with all the data being generated. This data needs to be captured, processed, structured, and stored in a way to facilitate different kinds of queries. Traditional data warehouse and analytical systems are mature technologies that can be used to handle certain kinds of queries, but they are not always well suited to many problems, particularly when there is a need for real-time insights.
With 15% of enterprises adopting a hybrid IT strategy, you need to set a plan to integrate hybrid cloud throughout your infrastructure. In his session at 18th Cloud Expo, Steven Dreher, Director of Solutions Architecture at Green House Data, discussed how to plan for shifting resource requirements, overcome challenges, and implement hybrid IT alongside your existing data center assets. Highlights included anticipating workload, cost and resource calculations, integrating services on both sides...
"We are a well-established player in the application life cycle management market and we also have a very strong version control product," stated Flint Brenton, CEO of CollabNet,, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Unless your company can spend a lot of money on new technology, re-engineering your environment and hiring a comprehensive cybersecurity team, you will most likely move to the cloud or seek external service partnerships. In his session at 18th Cloud Expo, Darren Guccione, CEO of Keeper Security, revealed what you need to know when it comes to encryption in the cloud.
We're entering the post-smartphone era, where wearable gadgets from watches and fitness bands to glasses and health aids will power the next technological revolution. With mass adoption of wearable devices comes a new data ecosystem that must be protected. Wearables open new pathways that facilitate the tracking, sharing and storing of consumers’ personal health, location and daily activity data. Consumers have some idea of the data these devices capture, but most don’t realize how revealing and...
What are the successful IoT innovations from emerging markets? What are the unique challenges and opportunities from these markets? How did the constraints in connectivity among others lead to groundbreaking insights? In her session at @ThingsExpo, Carmen Feliciano, a Principal at AMDG, will answer all these questions and share how you can apply IoT best practices and frameworks from the emerging markets to your own business.
Ask someone to architect an Internet of Things (IoT) solution and you are guaranteed to see a reference to the cloud. This would lead you to believe that IoT requires the cloud to exist. However, there are many IoT use cases where the cloud is not feasible or desirable. In his session at @ThingsExpo, Dave McCarthy, Director of Products at Bsquare Corporation, will discuss the strategies that exist to extend intelligence directly to IoT devices and sensors, freeing them from the constraints of ...
You think you know what’s in your data. But do you? Most organizations are now aware of the business intelligence represented by their data. Data science stands to take this to a level you never thought of – literally. The techniques of data science, when used with the capabilities of Big Data technologies, can make connections you had not yet imagined, helping you discover new insights and ask new questions of your data. In his session at @ThingsExpo, Sarbjit Sarkaria, data science team lead ...
Extracting business value from Internet of Things (IoT) data doesn’t happen overnight. There are several requirements that must be satisfied, including IoT device enablement, data analysis, real-time detection of complex events and automated orchestration of actions. Unfortunately, too many companies fall short in achieving their business goals by implementing incomplete solutions or not focusing on tangible use cases. In his general session at @ThingsExpo, Dave McCarthy, Director of Products...
Traditional IT, great for stable systems of record, is struggling to cope with newer, agile systems of engagement requirements coming straight from the business. In his session at 18th Cloud Expo, William Morrish, General Manager of Product Sales at Interoute, outlined ways of exploiting new architectures to enable both systems and building them to support your existing platforms, with an eye for the future. Technologies such as Docker and the hyper-convergence of computing, networking and sto...
WebRTC is bringing significant change to the communications landscape that will bridge the worlds of web and telephony, making the Internet the new standard for communications. Cloud9 took the road less traveled and used WebRTC to create a downloadable enterprise-grade communications platform that is changing the communication dynamic in the financial sector. In his session at @ThingsExpo, Leo Papadopoulos, CTO of Cloud9, discussed the importance of WebRTC and how it enables companies to focus...