Accord Financial Announces Record First Half Revenue, Net Earnings and Funds Employed
Accord Financial Corp. (TSX – ACD) today released its financial results for the three and six months ended June 30, 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 June 30||Six Months Ended June 30|
|Average funds employed (millions)||385||341||371||352|
|Earnings before income tax (000’s)||4,017||3,822||6,951||(5,089)|
|Net earnings (loss) attributable to shareholders (000’s)||3,085||4,343||5,670||(1,534)|
|Adjusted net earnings (loss) (000’s) (note)||3,161||4,730||5,844||(684)|
|Earnings (loss) per common share (basic and diluted)||0.36||0.51||0.66||(0.18)|
|Adjusted earnings (loss) per common share (basic and diluted)||0.37||0.55||0.68||(0.08)|
|Book value per share (June 30)||$10.96||$10.61|
Revenue increased by 37% to a quarterly record $15,416,000 in the second quarter of 2021 compared to $11,270,000 last year primarily driven by a 13% increase in average funds employed and improved average yields and other income, principally origination and set up fees. Average funds employed were $385 million in the current quarter compared to $341 million last year. Funds employed at June 30, 2021 were a record $406 million.
Net earnings attributable to shareholders (“shareholders’ net earnings”) declined by $1,258,000 to $3,085,000 in the second quarter of 2021 compared to the quarterly record of $4,343,000 earned last year. Shareholders’ net earnings were 19% ahead of the first quarter of 2021 and 39% higher than 2019’s second quarter and represented Accord’s fourth best ever quarterly earnings as it continues to recover from the adverse economic impacts of Covid-19. Last year’s shareholders’ net earnings were boosted by the recovery of a loan loss of $2,615,000, net of tax, and a one-time income tax recovery of $881,000. Earnings per common share (“EPS”) were 36 cents compared to 51 cents last year. Adjusted net earnings were $3,161,000 compared to the $4,730,000 earned in the second quarter of 2020. Adjusted EPS were 37 cents compared to 55 cents last year.
Shareholders’ net earnings in the first six months of 2021 were a first half record $5,670,000 compared to a shareholders’ net loss of $1,534,000 in 2020. The increase in net earnings primarily resulted from higher revenue and a lower provision for losses. EPS were also a first half record 66 cents compared to a loss per common share (“LPS”) of 18 cents last year. First half adjusted net earnings were a record $5,844,000 (Adjusted EPS of 68 cents per share) compared to the adjusted net loss of $684,000 (Adjusted LPS of 8 cents per share) in the first half of 2020.
Revenue rose by 24% to a first six-month record $28,897,000 in 2021 compared to $23,285,000 last year mainly as a result of a 5% rise in average funds employed, improved average yields and higher other income. Average funds employed in the first half of 2021 were $371 million compared to $352 million last year.
Commenting on the financial results, the Company’s President and CEO, Mr. Simon Hitzig, stated: “Accord’s record funds employed, revenue and first half earnings validated our strategy, and is consistent with the growth trajectory Accord had been on in the three years leading up to the pandemic. Growth in the first half of 2021 reflects the steady acquisition of new clients, in part driven by new products, and in part by the accelerating economy. Revenue and earnings are also benefiting from a shift in Accord’s portfolio mix, which in the past several quarters is skewing towards higher yielding segments, especially at our Canadian small business division and US-based media finance division.”
Mr. Hitzig added: “While our record financial performance is gratifying, we continue to embrace the hard work defined in our strategic plan, which aims to bring all divisions of Accord onto a unified platform, stronger together, with a singular commitment to simplify access to capital so our clients can thrive. With four strong quarters in a row, we also now have a taste of the success we can achieve as our strategic plan unfolds.”
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.
602 – 40 Eglinton Avenue East
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 June 30||Six Months Ended June 30|
|Shareholders’ net earnings||3,085||4,343||5,670||(1,534)|
|Adjustments, net of tax|
|Business acquisition expenses||76||56||127||111|
|Adjusted net earnings||3,161||4,730||5,844||(684)|
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.