TSX: CFN
EDMONTON, Aug. 9, 2012 /CNW/ - Carfinco Financial Group Inc. ("Carfinco"
or the "Company") announces financial results for the second quarter
ended June 30, 2012.
We are pleased to report net earnings of $5.4 million for the quarter,
up from $4.6 million in the first quarter of 2012, an increase of
16.9%. Year-to-date earnings are $10.0 million, an increase of 19.4%
over the first half of 2011 of $8.4 million. Record loan originations
of $36.8 million were achieved in the quarter, a 13.6% increase from
$32.4 million in the first quarter of 2012 and, on a year-to-date
basis, were up to $69.1 million, or 32.0%, from $52.4 million in the
first half of 2011.
As mentioned in our news release dated March 9, 2012, Carfinco entered
into an interest rate swap agreement, with a notional amount of $100
million, a fixed bankers' acceptance rate of 1.55% and a three year
term that ends March 9, 2015 during the first quarter of 2012. This is
in addition to Carfinco's pre-existing interest rate swap agreement
with a notional amount of $10 million due to expire in August of this
year. For the six months ended June 30, 2012, Carfinco recorded a
$710,232 non-cash expense related to adjustments on the fair market
value of the interest rate swap agreements. This is in comparison to a
non-cash gain of $140,726 in the comparable prior year period.
Normalizing the impact of these entries and other significant non-cash
and non-recurring expenses, Carfinco's pre-tax earnings for the six
months ended were $14.3 million, up 28.0% from $11.2 million in the
prior year comparative period.
HIGHLIGHTS
-
During the second quarter of 2012 Carfinco distributed 10.5 cents per
share to its shareholders equating to a payout ratio of 45.1% on
distributable cash;
-
Revenues of $17.7 million for the second quarter of 2012 represent an
increase of 5.3% from the $16.8 million for the first quarter of 2012
and 22.9% from the $14.4 million for the second quarter of 2011;
-
Earnings before taxes for the quarter were $7.2 million, up 14.3% from
$6.3 million for the first quarter of 2012 and 25.2% from $5.8 million
for the second quarter of 2011;
-
Normalized earnings before taxes for the quarter were $7.7 million, up
15.9% from the $6.6 million in the first quarter of 2012 and 33.5% from
the $5.7 million for the second quarter of 2011;
-
Earnings per share for the quarter were 22 cents, up 15.8% from the 19
cents per share recorded for the first quarter of 2012 and 29.4% from
the 17 cents per unit recorded for the second quarter of 2011;
-
Return on shareholder's equity (ROE) for the quarter on an annualized,
after tax, basis was 55.8% versus 56.3% for the second quarter of 2011;
-
Shareholder's equity increased 7.6% to $40.2 million during the quarter;
-
Loan originations for the quarter were $36.8 million, a 13.6% increase
from the $32.4 million for the first quarter of 2012 and an increase of
31.4% from the $28.0 million for the second quarter of 2011;
-
Principal balance of finance receivables was $181.1 million, increasing
5.0% in the quarter;
-
31+ days delinquent accounts for the quarter were 2.2%, a decrease from
2.5% at the end of the first quarter of 2012.
Management continues to target monthly loan originations at a level that
will achieve approximately 20% growth in finance receivables for the
year. The majority of our current loan originations continue to come
from Carfinco's pre-existing underwriting programs that have been in
place for a number of years. Even though we have developed tiered,
risk-based pricing programs, they continue to remain a minimal portion
of our loan portfolio as we have been able to achieve our growth
targets with our pre-existing underwriting programs. The development
of tiered, risk based pricing programs provides a substantial
opportunity for future growth. We have seen positive results in loan
originations with the addition of new dealer representatives in
strategic areas, and we continue to focus on cultivating our existing
dealership relationships and adding new dealerships to provide
Carfinco's finance programs.
During the quarter, the board of directors of Carfinco announced an
increase in the monthly dividend of 0.5 cents, bringing the monthly
cash dividend to 3.5 cents per share. For the quarter, the payout
ratio was 45.1% of distributable cash.
About Carfinco Financial Group Inc.
Carfinco focuses on providing consumer vehicle loans to borrowers unable
to obtain financing through traditional lending sources. A network of
select independent and franchise dealerships offer Carfinco's payment
plan to their customers who must, along with the vehicle, meet
Carfinco's underwriting guidelines. The shares of the company trade on
The Toronto Stock Exchange under the symbol "CFN".
Caution Regarding Forward-Looking Statements - This news release
contains certain forward-looking statements, including statements
regarding the business and anticipated financial performance of the
company. These statements are subject to a number of risks and
uncertainties. Actual results may differ materially from results
contemplated by the forward-looking statements. When relying on
forward-looking statements to make decisions, investors and others
should carefully consider the foregoing factors and other uncertainties
and should not place undue reliance on such forward-looking statements.
|
Selected Quarterly Information and Key Financial Ratios (unaudited)
|
|
|
|
($000's for stated values, except percentages, shares/units outstanding
and per share/unit amounts)
|
|
|
June 30, 2012
|
|
December 31, 2011
|
|
June 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
$
|
17,660
|
|
$
|
16,514
|
|
$
|
14,371
|
|
Net earnings
|
$
|
5,410
|
|
$
|
4,393
|
|
$
|
4,284
|
|
Normalized earnings before taxes
|
$
|
7,669
|
|
$
|
6,263
|
|
$
|
5,746
|
|
Earnings per share/unit - basic and diluted
|
$
|
0.22
|
|
$
|
0.18
|
|
$
|
0.17
|
|
Loan originations
|
$
|
36,774
|
|
$
|
32,217
|
|
$
|
27,984
|
|
Shareholders'/unitholders' equity
|
$
|
40,195
|
|
$
|
34,960
|
|
$
|
31,665
|
|
Shares/units outstanding
|
|
24,645,230
|
|
|
24,645,230
|
|
|
24,611,896
|
|
Book value per share/unit
|
$
|
1.63
|
|
$
|
1.42
|
|
$
|
1.29
|
|
Cash dividend/distribution per share/unit 1 |
$
|
0.105
|
|
$
|
0.140
|
|
$
|
0.075
|
|
Financial leverage ratio
|
|
2.84:1
|
|
|
3.15:1
|
|
|
3.13:1
|
|
Return on shareholders'/unitholders' equity
|
|
55.8%
|
|
|
51.0%
|
|
|
56.3%
|
|
Average portfolio yield
|
|
44.4%
|
|
|
45.0%
|
|
|
43.4%
|
|
Annualized loss rate
|
|
11.2%
|
|
|
13.2%
|
|
|
12.4%
|
|
Return on portfolio assets
|
|
13.6%
|
|
|
12.0%
|
|
|
12.9%
|
|
Pre-tax return on portfolio assets
|
|
18.1%
|
|
|
16.1%
|
|
|
17.4%
|
|
Average cost of borrowing
|
|
5.3%
|
|
|
5.2%
|
|
|
5.3%
|
|
Operating and other expense ratio
|
|
|
|
|
|
|
|
|
|
on portfolio assets
|
|
9.0%
|
|
|
10.4%
|
|
|
8.4%
|
|
(1) Cash distributions for the period ended December 31, 2011 include a
special cash distribution of $0.05 per unit.
|
|
Consolidated Statements of Financial Position
|
|
|
|
|
June 30,
2012
|
|
December 31,
2011
|
|
|
(unaudited)
|
|
(audited)
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Finance receivables
|
$
|
163,283,754
|
|
$
|
150,463,909
|
|
|
Allowance for credit losses
|
|
(7,950,000)
|
|
|
(7,150,000)
|
|
Finance receivables - net
|
|
155,333,754
|
|
|
143,313,909
|
|
|
|
|
|
|
|
|
Cash
|
|
958,074
|
|
|
937,994
|
|
Inventories
|
|
118,019
|
|
|
239,453
|
|
Other assets
|
|
958,482
|
|
|
1,167,268
|
|
Equipment
|
|
468,276
|
|
|
344,736
|
|
Deferred tax assets
|
|
331,509
|
|
|
264,702
|
|
|
|
2,834,360
|
|
|
2,954,153
|
|
|
$
|
158,168,114
|
|
$
|
146,268,062
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Bank credit facility
|
$
|
112,698,272
|
|
$
|
102,675,941
|
|
Accounts payable and accrued liabilities
|
|
902,455
|
|
|
1,205,892
|
|
Taxes payable
|
|
1,129,022
|
|
|
5,106,667
|
|
Provision for deferred dealer obligation
|
|
2,102,618
|
|
|
2,068,762
|
|
Derivative financial instruments
|
|
960,550
|
|
|
250,317
|
|
Deferred lease inducement
|
|
179,949
|
|
|
-
|
|
|
|
117,972,866
|
|
|
111,307,579
|
|
|
|
|
|
|
|
|
Shareholders'/Unitholders' Equity
|
|
|
|
|
|
|
Share capital/fund unit equity
|
|
35,119,425
|
|
|
35,119,425
|
|
Retained earnings (deficit)
|
|
5,075,823
|
|
|
(158,942)
|
|
|
|
40,195,248
|
|
|
34,960,483
|
|
|
$
|
158,168,114
|
|
$
|
146,268,062
|
|
Consolidated Statements of Earnings, and Comprehensive Income
|
|
|
|
|
Three months ended
|
Six months ended
|
(unaudited)
|
June 30,
2012
|
June 30,
2011
|
June 30,
2012
|
June 30,
2011
|
|
|
|
|
|
|
|
|
|
|
|
Financial revenue
|
|
|
|
|
|
|
|
|
|
|
Interest revenue
|
$
|
16,179,672
|
$
|
13,680,950
|
$
|
31,448,361
|
$
|
26,433,798
|
|
|
Fee and servicing income
|
|
1,480,099
|
|
689,586
|
|
2,977,653
|
|
1,447,604
|
|
|
|
17,659,771
|
|
14,370,536
|
|
34,426,014
|
|
27,881,402
|
|
Financial expenses
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
1,465,347
|
|
1,255,168
|
|
2,813,561
|
|
2,444,549
|
|
|
Provision for credit losses
|
|
4,923,313
|
|
4,635,948
|
|
10,181,366
|
|
8,950,957
|
|
|
Loss (gain) on derivative financial instruments
|
|
450,038
|
|
(58,817)
|
|
710,232
|
|
(140,726)
|
|
|
|
6,838,698
|
|
5,832,299
|
|
13,705,159
|
|
11,254,780
|
|
|
|
|
|
|
|
|
|
|
|
Net financial income before operating and other expenses and taxes
|
|
10,821,073
|
|
8,538,237
|
|
20,720,855
|
|
16,626,622
|
|
|
|
|
|
|
|
|
|
|
|
Operating and other expenses
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
3,549,681
|
|
2,687,090
|
|
7,048,145
|
|
5,222,753
|
|
|
Depreciation of equipment
|
|
52,350
|
|
45,970
|
|
98,831
|
|
102,186
|
|
|
Conversion costs (recovery)
|
|
(1,780)
|
|
-
|
|
35,789
|
|
-
|
|
|
Loss on unit based payment obligation
|
|
-
|
|
35,860
|
|
-
|
|
37,640
|
|
|
|
3,600,251
|
|
2,768,920
|
|
7,182,765
|
|
5,362,579
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before taxes
|
|
7,220,822
|
|
5,769,317
|
|
13,538,090
|
|
11,264,043
|
|
|
|
|
|
|
|
|
|
|
|
Taxes
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
1,844,236
|
|
941,943
|
|
3,564,312
|
|
2,518,408
|
|
|
Deferred (recovery)
|
|
(33,830)
|
|
543,463
|
|
(66,807)
|
|
337,608
|
|
|
|
1,810,406
|
|
1,485,406
|
|
3,497,505
|
|
2,856,016
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings and comprehensive income
|
$
|
5,410,416
|
$
|
4,283,911
|
$
|
10,040,585
|
$
|
8,408,027
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share/unit
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
$
|
0.22
|
$
|
0.17
|
$
|
0.41
|
$
|
0.34
|
|
Consolidated Statements of Changes in Equity
|
|
|
(unaudited)
|
Share capital/
Fund unit equity
|
Retained
earnings
(deficit)
|
Total
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2010
|
$
|
35,119,425
|
$
|
(8,416,613)
|
$
|
26,702,812
|
|
|
Net earnings
|
|
-
|
|
17,121,620
|
|
17,121,620
|
|
|
Cash distributions on fund unit equity
|
|
-
|
|
(8,863,949)
|
|
(8,863,949)
|
|
Balance, December 31, 2011
|
|
35,119,425
|
|
(158,942)
|
|
34,960,483
|
|
|
Net earnings
|
|
-
|
|
10,040,585
|
|
10,040,585
|
|
|
Cash dividends on shares
|
|
-
|
|
(4,805,820)
|
|
(4,805,820)
|
|
Balance, June 30, 2012
|
$
|
35,119,425
|
$
|
5,075,823
|
$
|
40,195,248
|
|
Consolidated Statements of Cash Flows
|
|
|
|
|
Three months ended
|
Six months ended
|
(unaudited)
|
June 30,
2012
|
June 30,
2011
|
June 30,
2012
|
June 30,
2011
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
$
|
5,410,416
|
$
|
4,283,911
|
$
|
10,040,585
|
$
|
8,408,027
|
|
|
Non-cash items included in net earnings
|
|
(7,478,218)
|
|
(6,281,415)
|
|
(14,146,866)
|
|
(12,183,176)
|
|
|
Changes in operating assets and liabilities
|
|
(7,460,366)
|
|
(6,447,746)
|
|
(12,498,641)
|
|
(11,305,612)
|
|
|
Interest received
|
|
11,247,492
|
|
9,522,845
|
|
21,971,844
|
|
18,821,659
|
|
|
Interest paid
|
|
(1,424,042)
|
|
(1,208,755)
|
|
(2,729,994)
|
|
(2,365,944)
|
|
|
Income taxes paid
|
|
(1,230,304)
|
|
-
|
|
(7,541,957)
|
|
-
|
|
|
Net cash (used in) provided by operating activities
|
|
(935,022)
|
|
(131,160)
|
|
(4,905,029)
|
|
1,374,954
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
Purchase of equipment
|
|
(109,926)
|
|
(37,800)
|
|
(222,371)
|
|
(45,457)
|
|
Net cash used in investing activities
|
|
(109,926)
|
|
(37,800)
|
|
(222,371)
|
|
(45,457)
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
Advances on bank credit facility
|
|
3,982,791
|
|
4,757,224
|
|
12,753,300
|
|
6,581,470
|
|
|
Repayments on bank credit facility
|
|
-
|
|
(2,600,000)
|
|
(2,800,000)
|
|
(4,650,000)
|
|
|
Deferred transaction costs
|
|
-
|
|
(131,274)
|
|
-
|
|
(131,274)
|
|
|
Share/fund unit cash dividend/distributions
|
|
(2,587,749)
|
|
(1,845,892)
|
|
(4,805,820)
|
|
(3,445,665)
|
|
Net cash provided by (used in) financing activities
|
|
1,395,042
|
|
180,058
|
|
5,147,480
|
|
(1,645,469)
|
|
Net increase (decrease) in cash
|
|
350,094
|
|
11,098
|
|
20,080
|
|
(315,972)
|
|
Cash, beginning of period
|
|
607,980
|
|
512,550
|
|
937,994
|
|
839,620
|
|
Cash, end of period
|
$
|
958,074
|
$
|
523,648
|
$
|
958,074
|
$
|
523,648
|
SOURCE: Carfinco Financial Group Inc.
Mr. Tracy A. Graf
CEO & Director of Carfinco Financial Group Inc.
Telephone: 1-888-486-4356
Facsimile: 1-888-486-7456
E-mail: tracy.graf@carfinco.com
Web site: www.carfinco.com
The Howard Group Inc.
Jeff Walker / Dave Burwell
Investor Relations
Telephone: 1-888-221-0915
E-mail: Info@howardgroupinc.com
Web site: www.howardgroupinc.com