Accord Announces Strong First Quarter Revenue and Earnings
Accord Financial Corp. (TSX – ACD) today released its financial results for the quarter ended March 31, 2021. 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|
|Average funds employed (millions)||358||362|
|Net earnings (loss) attributable to shareholders (000’s)||2,585||(5,876)|
|Adjusted net earnings (loss) (000’s) (note)||2,683||(5,414)|
|Earnings (loss) per common share (basic and diluted)||0.30||(0.69)|
|Adjusted earnings (loss) per common share (basic and diluted)||0.31||(0.63)|
|Book value per share (Mar. 31)||$10.70||$10.27|
Net earnings attributable to shareholders (“shareholders’ net earnings”) in the first quarter of 2021 was a strong $2,585,000 compared to the Covid-19 impacted shareholders’ net loss of $5,876,000 in the same period last year. The increase in shareholders’ net earnings mainly reflects a combination of higher revenue and a substantially lower provision for credit and loan losses. While average funds employed remained steady year-over-year, improving yields helped push revenue up by $1,465,000, or 12%, to $13,480,000 in 2021 compared to $12,015,000 last year. The current quarter also saw a recovery of credit and loan losses of $0.9 million as the economy, and the Company’s client base, has shown significant improvement. The provision for credit and loan losses in the first quarter of 2020 was $8.8 million; this incorporated the Company’s estimate of potential losses from the economic fallout of Covid-19.
Earnings per common share (“EPS”) were 30 cents compared to a loss per common share (“LPS”) of 69 cents in the first quarter of 2020. Adjusted net earnings were $2,683,000 compared to an adjusted net loss of $5,414,000 in the first quarter of 2020. Adjusted EPS were 31 cents compared to an adjusted LPS of 63 cents in last year’s first quarter. Average funds employed in the first quarter of 2021 were $358 million slightly below the $362 million last year.
Commenting on the results, Mr. Simon Hitzig, CEO, noted: “With revenue up 12% over the same quarter last year, bottom-line financial performance began to reflect the earnings power we can deliver as the economic cycle gathers steam. In fact, Accord’s thirty cents of earnings per share reflected the strongest first quarter in our history. Solid earnings in the quarter were reflective of a shift in product mix towards higher yielding segments, including our Canadian small business division and US-based media finance division – both positioned squarely at the center of key trends. In Canada, we’re enjoying the successful launch of AccordExpress, our unique solution designed to bridge small businesses through to the economic recovery, while, in the U.S., BondIt Media Capital is perfectly positioned to finance the long-term secular growth of video on demand.”
Continuing, Mr. Hitzig added: “During the quarter, Accord also reduced our overall allowance for loan losses to a position more reflective of economic reopening and near-term economic stability. The allowance now stands at $5.7 million, down from $7.4 million at the end of the first quarter of 2020 (with a similar size portfolio). These are the kinds of markets in which we earn our stripes. With the deepest and most experienced management team we’ve ever had, and a streamlined platform designed for growth, Accord is positioned to perform as the economy rebuilds.”
The Company’s Board of Directors recently declared a quarterly dividend of $0.05 per common share, payable June 1, 2021 to shareholders of record at the close of business May 14, 2021.
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 43 years, Accord has helped businesses manage their cash flows and maximize financial opportunities.
For further information please visit www.accordfinancial.com or contact:
Senior Vice President, Chief Financial Officer
Accord Financial Corp.
40 Eglinton Avenue East, Suite 602
Toronto, ON M4P 3A2
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) 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 stock-based compensation, business acquisition expenses (transaction and integration costs and 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 31|
|Shareholders’ net earnings (loss)||2,585||(5,876)|
|Adjustments, net of tax:|
|Business acquisition expenses||51||55|
|Adjusted net earnings (loss)||2,683||(5,414)|
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.