- Net loss of $386 thousand,
an improvement of 35% over the second quarter and 89% over the same
quarter in 2018
- Originations increased 39% over the same period in 2018
with continued strong credit quality and yield
- Renewal of two primary funding facilities, with
enhancements to cash flow, eligibility criteria and support for
pilot programs for non-prime lending
- Record fee revenue of $842
thousand in the quarter, 35% and 41% above the second
quarter of 2019 and the third quarter of 2018,
respectively
- Sufficient liquidity and capital to fund the current
growth rate for the foreseeable future
TORONTO, Nov. 7, 2019 /CNW/ - Dealnet Capital Corp.
("Dealnet" or the "Company") (TSX VENTURE: DLS), reported
today its financial results for the three-month and nine-month
periods ending September 30, 2019.
All results are reported under International Financial Reporting
Standards ("IFRS") and in Canadian dollars, unless otherwise
specified.
For the three-month period ending September 30, 2019, the Company reported a net
loss from continuing operations of $386
thousand or $(0.00) per share
versus a net loss of $593 thousand or
$(0.00) per share in the previous
three-month period and a net loss of $3.4
million or $(0.01) per share
for the same period last year. The current period loss
represents an improvement of 35% and 89% over the second quarter of
2019 and third quarter of 2018, respectively.
On November 7, 2019, the Board
increased the portion of share-based compensation for Management's
2019 and 2020 performance bonuses. Part of the 2019 bonuses
will be taken via stock options while in 2020 a significant portion
of management's bonuses will be paid in deferred share units
("DSUs"). By increasing the portion of share-based
compensation and by decreasing the amount of cash paid, management
and shareholder interests continue to be aligned.
"Over the last two years, management has demonstrated its
ability to perform. The turnaround was completed without
dilution, growth was reignited and we have built a solid
springboard to capitalize on game-changing opportunities," said
Brent Houlden, Dealnet's Chief
Executive Officer. "Upcoming cash inflows starting in 2022 provide
Dealnet with value-enhancing options for shareholders," added Mr.
Houlden.
The following are highlights from the quarterly results:
Liquidity
Cash and cash equivalents increased $528
thousand to $7.3 million at
September 30, 2019 from $6.8 million as at June
30, 2019.
Originations and Portfolio Growth
The Company's Consumer Finance segment posted third quarter
originations of $16.1 million, an
increase of 39% over originations of $11.5
million reported in the third quarter of 2018. The
average credit score and average yield for originations in the
third quarter of 2019 was 732 and 9.3%, respectively, versus 706
and 9.4% for the same period last year. The Company's net
portfolio of finance receivables has now increased to $193.9 million and over 37,000 contracts from
$177.6 million and 34,000 contracts
as at September 30, 2018.
Net Interest Margin
Net interest margin increased to $2.0
million (4.1% yield) for the quarter ended September 30, 2019 from $1.8 million (3.9% yield) for the quarter ended
June 30, 2019 and $1.9 million (4.3% yield) from the same period in
2018. Interest income increased to $4.3 million for the three-month period ended
September 30, 2019 (9.0% yield) from
$4.2 million (9.1% yield) for the
previous three-month period and $3.9
million (8.8% yield) for the same period last year.
Interest expense decreased to 4.9% of average earning assets
in the third quarter of 2019 from 5.2% in the previous quarter and
4.5% for the same period last year. The increased interest
expense as compared to the prior year is attributable to the change
in mix of secured borrowings associated with the repayment of
historical tranches funded at lower rates and the addition of newer
tranches funded at higher rates.
Fee Revenue
Fee and ancillary revenue was a record $842 thousand for the third quarter of 2019
driven by higher origination volumes, as compared to $623 thousand in the second quarter and
$598 thousand in the third quarter of
2018.
Portfolio Performance
The aging profile of the finance receivable portfolio improved
meaningfully over comparative periods. Overall delinquency
rates dropped to 4.6% as at September 30,
2019 as compared to 5.8% in both the prior quarter and the
same quarter in 2018. The primary driver of this decline was
in the less than 90 days bucket which fell to 1.0% as compared to
2.0% as at December 31, 2018 and 2.1%
as at September 30, 2018.
Call Centre Performance
Call Centre gross margin was $816
thousand (34%) for the current quarter, as compared to
$861 thousand (36%) in the second
quarter of 2019 and $762 thousand
(37%) in the third quarter of 2018.
Operating Expenses
Salaries, wages and benefits together with general and
administrative expenses totaled $3.1
million, an improvement of 5% relative to the $3.2 million recorded in the prior quarter and a
17% improvement over the $3.7 million
recorded in same period last year. The third quarter of 2018
was impacted by $565 thousand of
severance costs.
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:
|
Q3
2019
|
Q2
2019
|
Q3
2018
|
|
|
|
|
Finance
Receivables
|
$193.9M
|
$188.7M
|
$177.6M
|
Organic
Originations1
|
$16.1M
|
$12.9M
|
$11.5M
|
Average Yield on
Earning Assets1
|
9.0%
|
9.1%
|
8.8%
|
Weighted Average
Interest Expense1
|
4.9%
|
5.2%
|
4.5%
|
Net Interest
Margin1
|
4.1%
|
3.9%
|
4.3%
|
Call Centre Gross
Margin
|
34%
|
36%
|
37%
|
Corporate Tangible
Leverage Ratio1
|
5.5
|
5.5
|
4.7
|
Tangible Net
Worth1
|
$33.5M
|
$33.8M
|
$35.2M
|
Direct Operating
Expense Ratio1
|
6.3%
|
6.8%
|
8.3%
|
|
|
(1)
|
Non-GAAP
Measures
|
|
|
|
The Company uses a
number of financial measures to assess its performance. Some
of these measures are not calculated in accordance with GAAP, are
not defined by GAAP, and do not have standardized meanings that
would ensure consistency and comparability between companies using
these measures. Please refer to the Company's third quarter
Management Discussion and Analysis for additional information
concerning these measures.
|
The financial statements for the three-month and nine-month
periods ending September 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.
Q3 Video Broadcast:
A video broadcast summarizing the third quarter financial
results will be posted to the Dealnet corporate website at
www.dealnetcapital.com.
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.