Accord Announces First Quarter Financial Results and Declares Quarterly Dividend
Accord Financial Corp. (TSX – ACD) today released its financial results for the quarter ended March 31, 2023. 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)||451||457|
|Net earnings attributable to shareholders (000’s)||2,017||3,138|
|Adjusted net earnings (000’s) (note)||2,156||3,195|
|Earnings per common share (basic and diluted)||0.24||0.37|
|Adjusted earnings per common share (basic and diluted)||0.25||0.37|
|Book value per share (March 31)||$11.96||$11.75|
Commenting on the financial results, the Company’s President and CEO, Mr. Simon Hitzig, stated: “Turning the page from a challenging 2022 we are laser-focused on building back to the record performance in 2021. The first quarter reflected a strong earnings rebound from fiscal 2022, with earnings per common share (“EPS”) coming in at 24 cents, eclipsing EPS of 17 cents for all of 2022. While not back to where Accord was prior to 2022, it’s a firm step in the right direction.”
Accord’s finance receivables and loans declined slightly over the quarter to $450 million at March 31, 2023. Revenue remained steady to start the year, at $18.4 million for the quarter, flat to the fourth quarter and up 14% compared to $16.2 million in the first quarter last year. Net earnings attributable to shareholders were $2.0 million in the quarter, down from $3.1 million in the same quarter last year, and up from the $3.7 million loss in the fourth quarter of 2022. Book value per common share rose to $11.96, up from $11.75 on March 31, 2022, and $11.80 at the start of this year.
Mr. Hitzig noted, “The rapid change in business conditions through 2022 created challenges within our core markets and headwinds to growth and earnings. We now see signs that the tide is turning; the economic environment is beginning to provide the ingredients for increasing growth and earnings. Economic uncertainty often leads the major banks to narrow their lending appetite, which opens the door for Accord to step in. While the portfolio remained flat in the first quarter, new business activity across all of our operating companies is building.”
While the uncertain economic environment is beginning to spur new business activity, it can also create challenges for certain businesses in the portfolio. In this context the Company continues to carry a significant allowance for expected credit losses on the balance sheet: $7.4 million at March 31, 2023, compared to $5.1 million a year earlier.
Looking ahead, Mr. Hitzig added “Our team’s deep experience, through multiple economic cycles, gives us valuable perspective as the current environment unfolds. With the strength of our past, now focused on the future, Accord is poised to unlock potential for our investors in the year ahead.”
On May 3rd the Company’s Board of Directors declared a quarterly dividend of 7.5 cents per common share, payable June 1, 2023 to shareholders of record at the close of business May 15, 2023.
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 45 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 March 31|
|Shareholders’ net earnings||2,017||3,138|
|Adjustments, net of tax:|
|Business acquisition expenses||25||21|
|Adjusted net earnings||2,156||3,195|
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 or shareholders’ equity 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.