- Record Q1 originations increased 35% over the same period
in 2018 with improved credit quality and yield
- Almost 60% of last year's One Contact's revenue has been
renewed in multi-year contracts, at increased rates
- In May 2019, $5.5 million of Quebec originations were securitized at
substantially lower cost of funds
TORONTO, May 21, 2019 /CNW/ - Dealnet Capital Corp.
("Dealnet" or the "Company") (TSX VENTURE: DLS), reported
today its financial results for the three-month period ending
March 31, 2019. All results are
reported under International Financial Reporting Standards ("IFRS")
and in Canadian dollars, unless otherwise specified.
"With a record level of first quarter originations, the
financial results were as expected," said Brent Houlden, Dealnet's Chief Executive
Officer. "A key strategic achievement subsequent to the end of the
quarter was the securitization of $5.5
million of Quebec
originations at a significantly lower cost of funds. We're
off to a great start for 2019 and the management team is very
excited for the remainder of the year as we grow to scale," added
Mr. Houlden.
The following are highlights from the quarterly results:
Originations
The Company's Consumer Finance segment posted first quarter
originations of $12.5 million, an
increase of 35% over originations of $9.3
million reported in the first quarter of 2018. The
Company typically experiences a seasonal decline in originations
between the fourth quarter of one year and the first quarter of the
next year. The 11% decline in originations in the first
quarter of 2019 from the $14.0
million originated in the fourth quarter of 2018 was
significantly lower than the 21% seasonal decline experienced over
the comparable period last year. It is important to
note that the year-over-year increase in origination volume in the
first quarter of 2019 was not achieved at the expense of either
credit quality or yield. The average credit score and average
yield for originations in the first quarter of 2019 was 734 and
9.6% respectively versus 726 and 8.9% for the same period last
year.
Net Interest Margin
Interest income increased to $4.1
million for the three-month period ended March 31, 2019 (9.1% yield) from $3.9 million (8.7% yield) for the previous
three-month period and $3.8 million
(8.9% yield) for the same period last year. Interest expense
increased to 4.7% of average earning assets in the first quarter of
2019 from 4.5% of average earning assets in the previous quarter
and 4.5% of average earning assets for the same period last year.
The increased interest expense is attributable to the higher
funding costs of the interim funding facility that was put in place
to fund Quebec originations. This
interim Quebec facility will be
repaid in full when $5.5 million of
receivables are securitized with our LifeCo. funding partner. Net
interest margin for the first quarter was $1.9 million (4.2% yield), in line with the
fourth quarter of 2018 (4.3% yield) and an increase from the
$1.8 million (4.4% yield) in the
first quarter of the prior year.
Call Centre Gross Margin
Gross margin for the Company's call centre operations was
$0.7 million (35% margin), an
improvement over the $0.6 million
(27% margin) in the fourth quarter of 2018 and the $0.6 million (18% margin) in the first quarter of
2018, which included the results of Gemma. The Company's call
centre business has secured the renewal or re-awarding of accounts
that together represent almost 60% of last year's annual revenues
of One Contact. All of these awards represent multi-year contracts
and include increased billing rates and margin forecasts.
Operating Expenses
Salaries, wages and benefits together with general and
administrative expenses were held constant at $2.8 million in the first quarter of 2019
relative to the previous three-month period but declined by 33%
from the same period last year. Consolidated operating expenses
were $3.2 million in the first
quarter as compared to $3.0 million
in the previous quarter and $6.3
million for the first quarter of 2018. Both
comparative quarters were impacted by the results of Gemma.
After adjusting for Gemma, operating expenses would have been
$3.1 million for the previous
three-month period and $4.6 million
for the same period last year.
Key Performance Indicators
The following table summarizes some of the Key Performance
Indicators that the Company uses to measure the achievement of its
business plan objectives:
|
|
Q1
2019
|
Q4
2018
|
Q1
2018
|
Finance
Receivables
|
|
$185.9M
|
$182.8M
|
$172.9M
|
Organic
Originations
|
|
$12.5M
|
$14.0M
|
$9.3M
|
Average Yield on
Earning Assets
|
|
9.1%
|
8.7%
|
8.9%
|
Weighted Average
Interest Expense
|
|
4.9%
|
4.4%
|
4.5%
|
Net interest
margin
|
|
4.2%
|
4.3%
|
4.4%
|
Call Centre Gross
Margin
|
|
35%
|
27%
|
18%
|
Tangible
Leverage
|
|
5.3
|
4.9
|
11.9
|
Tangible Net
Worth
|
|
$34.4M
|
$34.9M
|
$15.1M
|
Direct Operating
Expense Ratio
|
|
6.1%
|
6.3%
|
9.7%
|
For the three-month period ending March
31, 2019, the Company reported a net loss of $614 thousand or $(0.00) per share versus a net loss of
$382 thousand or $(0.00) per share in the previous three-month
period and a net loss of $2.4 million
or $(0.01) per share for the same
period last year.
The financial statements for the three-month period ending
March 31, 2019 together with
management's discussion and analysis of these results have been
filed on SEDAR and are available on the Company's website at
www.dealnetcapital.com.
The Company will host a conference call to discuss these results
on May 22, 2019 commencing at
10:00 A.M. Eastern Time.
Conference Call Details:
Date:
|
Wednesday May 22,
2019
|
Time:
|
10:00 A.M. Eastern
Time
|
|
|
Dial-in
Number:
|
Local /
International: 416-764-8688
|
|
North American Toll
Free: 1-888-390-0546
|
|
|
Conference
ID:
|
20462461
|
|
|
Replay
Number:
|
Local /
International: 416-764-8677
|
|
North American Toll
Free: 1-888-390-0541
|
|
Replay Passcode:
462461#
|
|
|
Website:
|
http://www.dealnetcapital.com/investors/
|
About Dealnet Capital Corp.
Dealnet is a specialty finance company serving the $20 billion Canadian home improvement finance
market. The Company develops and supports consumer sales financing
programs for approved dealers and distributors under agreements
with original equipment manufacturers (OEMs) that supply a wide
range of home improvement products to the retail market. The
Company runs its Consumer Finance segment through the operating
business, EcoHome Financial Inc. Through a dealer network, the
Company underwrites, originates, funds and services the prime
quality loans and leases that homeowners need to finance the
acquisition and installation of capital assets that improve the
quality, comfort and safety of their homes.
In addition, the Company operates its call center segment in the
business communications industry in Canada and the U.S. under the One Contact
banner, offering customer support services on a contract basis to
the Company's Consumer Finance segment and to third party
institutions.
For additional information please visit www.sedar.com.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Forward-looking Statements
This news release contains certain "forward-looking information"
within the meaning of applicable securities law. Forward looking
information is frequently characterized by words such as "plan",
"expect", "project", "intend", "believe", "anticipate", "estimate",
"may", "will", "would", "potential", "proposed" and other similar
words, or statements that certain events or conditions "may" or
"will" occur. These statements are only predictions.
Forward-looking information is based on the opinions and estimates
of management at the date the information is provided, and is
subject to a variety of risks and uncertainties and other factors
that could cause actual events or results to differ materially from
those projected in the forward-looking information. For a
description of the risks and uncertainties facing the Company and
its business and affairs, readers should refer to the Company's
Management's Discussion and Analysis. The Company undertakes no
obligation to update forward-looking information if circumstances
or management's estimates or opinions should change, unless
required by law. The reader is cautioned not to place undue
reliance on forward-looking information.
SOURCE Dealnet Capital Corp.