- Q2 originations increased 35% over the same period in
2018 with continued strong credit quality and yield
- Major Canadian LifeCo securitization facility now
provides enhanced monthly cash flows, permanent funding for
Quebec originations and funding
for individual finance receivable contracts up to
$100,000
- Additional sales resources committed to drive
originations in British
Columbia
TORONTO, Aug. 13, 2019 /CNW/ - Dealnet Capital
Corp. ("Dealnet" or the "Company") (TSX VENTURE:
DLS), reported today its financial results for the three-month
and six-month periods ending June 30,
2019. All results are reported under International Financial
Reporting Standards ("IFRS") and in Canadian dollars, unless
otherwise specified.
"For the second straight quarter, we have achieved a 35%
increase in originations over the prior year," said Brent Houlden, Dealnet's Chief Executive
Officer. "Our securitization facility with our major Canadian
LifeCo funding partner has been expanded to include enhanced
monthly cash flows for each pool funded as well as a significantly
lower cost of funds for our Quebec
originations. These developments are continuing evidence of
our momentum on the path to profitability and scale" added Mr.
Houlden.
The following are highlights from the quarterly results:
Originations and Portfolio Growth
The Company's Consumer Finance segment posted second quarter
originations of $12.9 million, an
increase of 35% over originations of $9.5
million reported in the second quarter of 2018. The
average credit score and average yield for originations in the
second quarter of 2019 was 735 and 9.4%, respectively, versus 728
and 9.2% for the same period last year. The Company's net
portfolio of finance receivables has now increased to $188.7 million and 37,000 contracts from
$174.3 million and 33,000 contracts
as at June 30, 2018.
Net Interest Margin
Interest income increased to $4.2
million for the three-month period ended June 30, 2019 (9.1% yield) from $4.1 million (9.1% yield) for the previous
three-month period and $3.8 million
(8.7% yield) for the same period last year. Interest expense
increased to 5.2% of average earning assets in the second quarter
of 2019 from 4.9% in the previous quarter and 4.5% 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 was repaid in full in
May 2019 upon the establishment of a
permanent funding facility.
Management estimates that the additional incremental cost of the
interim funding solution for Quebec, over and above what would have been
paid if the permanent funding solution was in place in the second
quarter was $195 thousand and
$79 thousand in the first
quarter. With the permanent funding in place, these
additional financing costs are not expected to recur in the future
and the rate of growth of the Quebec portfolio can continue unimpeded.
Fee Revenue
Fee and ancillary revenue for the second quarter of 2019 was
$623 thousand, as compared to
$482 thousand in the first quarter
and $587 thousand in the second
quarter of 2018. In addition, management is also actively exploring
various partnership opportunities as additional sources of
revenue.
Call Centre Performance
Starting in the fourth quarter of 2018, the Company's Call
Centre segment has secured the renewal or re-awarding of all of its
major accounts, and has become a leading omnichannel solutions
provider. Over the last three years, non-voice work (e.g.,
email, SMS, chat-based support) has grown from 4% of revenue to
approximately 22%. In addition, the call centres have
continued to increase their service offerings to the Company's
Consumer Finance segment to include payment processing, generating
new dealer leads and first-party collections support.
Operating Expenses
Salaries, wages and benefits together with general and
administrative expenses totaled $3.2
million, an improvement of 4% relative to the $3.3 million recorded in the same period last
year. The current quarter was impacted by a higher level of
professional fees and other non-recurring items.
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:
|
Q2
2019
|
Q1
2019
|
Q2
2018
|
Finance
Receivables
|
$188.7M
|
$185.9M
|
$174.3M
|
Organic
Originations
|
$12.9M
|
$12.5M
|
$9.5M
|
Average Yield on
Earning Assets
|
9.1%
|
9.1%
|
8.7%
|
Weighted Average
Interest Expense *
|
5.2%
|
4.9%
|
4.5%
|
Net interest
margin *
|
3.9%
|
4.2%
|
4.2%
|
Call Centre Gross
Margin
|
36%
|
35%
|
36%
|
Tangible
Leverage
|
5.5
|
5.3
|
11.8
|
Tangible Net
Worth
|
$33.8M
|
$34.4M
|
$15.3M
|
Direct Operating
Expense Ratio
|
6.8%
|
6.1%
|
7.7%
|
|
|
|
|
*
|
The 2019 metrics were
impacted by the interim funding facility for Quebec
portfolio
|
For the three-month period ending June
30, 2019, the Company reported a net loss of $593 thousand or $(0.00) per share versus a net loss of
$614 thousand or $(0.00) per share in the previous three-month
period and a net loss of $51 thousand
or $(0.00) per share for the same
period last year.
The financial statements for the three-month and six-month
periods ending June 30, 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 August 14, 2019 commencing at
10:00 A.M. Eastern Time.
Conference Call
Details:
|
|
|
|
Date:
|
Wednesday August 14,
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:
|
18711094
|
|
|
Replay
Number:
|
Local /
International: 416-764-8677
|
|
North American Toll
Free: 1-888-390-0541
|
|
Replay Passcode:
711094#
|
|
|
Website:
|
http://www.dealnetcapital.com/investors/
|
About Dealnet Capital Corp.
Dealnet is the parent company of subsidiaries operating in two
market segments, consumer finance and call centre. The Company
operates in the consumer finance segment in Canada through EcoHome Financial Inc.
("EcoHome") and its call centre segment under the One Contact
banner ("One Contact").
EcoHome is a specialty finance company serving the $20 billion Canadian home improvement finance
market. EcoHome 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. Through a
dealer network, EcoHome 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.
One Contact offers customer support services to both EcoHome and
third-party institutions across Canada and the U.S.
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.