Accord Announces Fourth Quarter and Fiscal 2019 Results
Accord Financial Corp. (TSX – ACD) today released its financial results for the fourth quarter and year ended December 31, 2019. 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 Dec. 31||Year Ended Dec. 31|
|Average funds employed (millions)||395||317||378||271|
|Net (loss) earnings attributable to shareholders (000’s)||(658)||4,161||6,444||10,356|
|Adjusted net (loss) earnings (000’s) (note)||(2,136)||3,883||4,939||10,840|
|(Loss) earnings per common share (basic and diluted)||(0.08)||0.50||0.76||1.24|
|Adjusted (loss) earnings per common share (basic and diluted)||(0.25)||0.46||0.58||1.30|
|Book value per share (December 31)||$10.77||$10.66|
The Company reported record average funds employed and revenue in 2019. “Average funds employed over the year reached an all-time high of $378 million. As a result, revenue also hit an all-time high of $56 million” said President and CEO Simon Hitzig. “However, we booked a significant account write-down in the fourth quarter, which brought full year earnings lower compared to 2018,” added Mr. Hitzig.
Revenue rose by 20% to a record $56,175,000 this year compared to $46,927,000 last year as a result of higher funds employed. Average funds employed rose by 39% in 2019 to an annual record of $378 million compared to $271 million in 2018.
Net earnings attributable to shareholders (“shareholders’ net earnings”) in 2019 declined to $6,444,000 compared with $10,356,000 in 2018 mainly as a result of an increased provision for losses, general & administrative expenses and income tax expenses. Earnings per common share (“EPS”) were $0.76 compared to $1.24 last year. Adjusted net earnings were $4,939,000 in 2019 compared to $10,840,000 in 2018. Adjusted EPS declined to $0.58 compared to $1.30 in the previous year. Book value per share was $10.77 at year-end.
Revenue rose by 10% to $14,297,000 in the fourth quarter of 2019 compared to $12,951,000 last year.
Shareholders’ net loss for the fourth quarter of 2019 was $658,000 compared to net earnings of $4,161,000 in 2018. Net loss was mainly as a result of a $6,928,000 increase in the provision for losses as a result of the above noted account write-off. Loss per share (“LPS”) was 8 cents compared to EPS of 50 cents last year. Adjusted net loss was $2,136,000 compared to adjusted net earnings of $3,883,000 earned in the fourth quarter of 2018. Adjusted LPS was 25 cents compared to adjusted EPS of 46 cents earned in last year’s fourth quarter.
Commenting further on 2019’s results Mr. Hitzig, stated: “The portfolio and revenue growth in 2019 was strong proof that our strategic plan is working. Our operating efficiency (general and administrative expenses as a percentage of total revenues) also improved this year, from 62% three years ago to 48%. Unfortunately, Accord’s loss provision, at 1.9% of average portfolio, was disappointing. We’re working hard to mitigate the loss and maximize our recovery from this challenging account in 2020. These metrics tell a story about the past and future. With the loss provisions behind us, we enter 2020 with a strong pipeline set to drive revenue and earnings in the right direction.”
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 Dec. 31||Year Ended Dec. 31|
|Shareholders’ net earnings:||(658)||4,161||6,444||10,356|
|Adjustments, net of tax:|
|Business acquisition expenses||(1,222)||(342)||(1,381)||251|
|Adjusted net earnings||(2,136)||3,883||4,939||10,840|
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.