Red Deer, Alberta. November
13, 2013; Rifco Inc. (TSXV: RFC) is pleased to announce record
results for the quarter ended September 30, 2013 with the following
milestones being achieved.
-
- Record Revenues of $7.54M
in the quarter
- Record Finance Receivables
of $173.00M
- Record low Average Interest
Expense of 5.24% in the quarter
- Record six month Net Income
of $2.98M
- Record six month
Originations of $60.92M
Rifco reported earnings per
share in the quarter of $0.067, which is a 37% increase from the
$0.049 reported in the comparable quarter. The Company's EPS for
the first six months has reached $0.143 which is 48% of the
published target of $0.30 for the year.
Revenue was $7.54M, a 26%
increase over $5.97M for the comparable quarter. Rifco reported Net
Income of $1.41M, an improvement of 42% from $0.98M in the
comparative quarter.
The Company posted
Originations of $29.22M up from $23.10M, a 27% increase from the
comparable quarter in the prior year, and an 8% decrease over the
prior quarter of $31.69M. The Company is on target to achieve its
yearly objective of $120M of loan Originations. For the six months
period ended, the Company has posted record Originations of $60.91
which is 51% of the yearly target and an increase of 38% over the
comparable six month period of the prior year amounting to
$44.01M.
Originations contributed to a
34% growth rate in Finance Receivables to $173.00M from $129.10M in
the comparable quarter.
On August 1, 2013, the
Company's Bank Borrowing for $70M from Wells Fargo Financial
Corporation Canada increased to $95M through syndication that
includes ATB Corporate Financial Services. The facility retains its
November 2015 renewal date and all other credit facility terms and
conditions remain unchanged. This provides the Company access to
increased lower cost of funds and will result in lower Interest
Expense.
The loan delinquency rate
increased to 4.00% compared to 3.07% in the same quarter of the
prior year and 3.06% from the preceding quarter. The increase in
loan delinquency increased the provisioning for impairment which
negatively affected Net Income.
Delinquency increased
partially due to an unusually wet spring and summer in Ontario and
Alberta. The weather contributed to a delayed construction and
oilfield season that impacted a number of Rifco's borrowers'
employment and ability to meet their loan obligations. Employment
in these areas may be rebounding. Delinquency was also impacted by
some less experienced collection employees due to staff turnover
and new hires. Continued training and increased management
oversight is expected to contribute to improvement in collection
performance in the coming quarters.
The annualized ROE for the
quarter was 42%. Equity has increased by 84% and total assets have
grown by 34% over the comparable quarter. These favorable trends,
if continued, demonstrate the ability of Rifco to sustain its
growth.
The average (12 month
rolling) Credit Loss Rate increased in the quarter to 3.02% from
2.92% in the prior quarter and remains under the target for the
year of 3.25%.
Rifco had an increase in
operating expenses to $1.66M from $1.54M in the prior quarter but
the Operating Expense Ratio improved to 3.97% compared to 4.03% in
the prior quarter.
The Company has undertaken a
number of infrastructure and expansion projects this year.
Processes and systems have been evaluated in order to ensure that
they can be scaled up in order to support loan originations of
$500M per year. The following are the current areas of focus that
are at various stages of completion:
-
- Expand the sales force and
grow the Dealer base
- CRM software
upgrade
- Front end loan adjudicate
software upgrade
- Loan management software
upgrade
- Internal analytics
scorecard implementation/upgrade
- Electronic document
management (paperless file management)
- Company branding and
advertising messaging update
- Head office expansion to
accommodate additional staff as needed.
The infrastructure upgrades
will drive improvements in Operating Expenses and benefit
Efficiency Ratios. However these projects have a cost and in the
current year we expect to see the Operating Expense Ratio to
stabilize at the current level until they are completed.
Rifco second quarter comparative
results
The Company is reporting
earnings growth on increasing loan Originations, lower interest
rates on its funding facilities and acceptable Credit
Losses.
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|Statements of income | | | | |
|-------------------------------------------------------------------------|
|For the period ended September 30 ($, 000’s, except per share |
|and share count) |
|-------------------------------------------------------------------------|
| |Three months ended | Six months ended |
|-------------------------------------------------------------------------|
| |2013 |2012 |2013 |2012 |
|-------------------------------------------------------------------------|
|Financial revenue | | | | |
|-------------------------------------------------------------------------|
|Interest income |7,414 |5,876 |14,295 |11,064 |
|-------------------------------------------------------------------------|
|Administration and |125 |90 |238 |161 |
|other fees | | | | |
|-------------------------------------------------------------------------|
| |7,539 |5,966 |14,533 |11,225 |
|-------------------------------------------------------------------------|
|Financial expenses | | | | |
|-------------------------------------------------------------------------|
|Interest expenses |2,146 |1,967 |4,181 |3,842 |
|-------------------------------------------------------------------------|
| | | | | |
|-------------------------------------------------------------------------|
|Net financial income |5,393 |3,999 |10,352 |7,382 |
|before provision for | | | | |
|impairment | | | | |
|-------------------------------------------------------------------------|
| | | | | |
|-------------------------------------------------------------------------|
|Provision for |1,818 |1,259 |3,106 |2,212 |
|impairment and credit| | | | |
|losses | | | | |
|-------------------------------------------------------------------------|
|Net financial income |3,575 |2,740 |7,246 |5,171 |
|before operating | | | | |
|expenses | | | | |
|-------------------------------------------------------------------------|
| | | | | |
|-------------------------------------------------------------------------|
|Operating expenses |1,663 |1,359 |3,202 |2,464 |
|-------------------------------------------------------------------------|
| | | | | |
|-------------------------------------------------------------------------|
|Income before taxes |1,912 |1,381 |4,044 |2,707 |
|-------------------------------------------------------------------------|
|Income tax expense |505 |393 |1,070 |744 |
|-------------------------------------------------------------------------|
|Net income |1,407 |988 |2,974 |1,963 |
|-------------------------------------------------------------------------|
|Weighted average |20,899,864 |20,228,768 | | |
|number of | | |20,842,032 |20,166,160 |
| outstanding shares | | | | |
|at period end | | | | |
|-------------------------------------------------------------------------|
|Fully Diluted Basis |21,596,840 |21,008,520 |21,558,181 |20,903,323 |
|-------------------------------------------------------------------------|
|Net earnings per |$0.067 |$0.049 |$0.143 |$0.097 |
|common share basic |$0.065 |$0.047 |$0.138 |$0.094 |
|diluted | | | | |
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Rifco has been granting
non-traditional loans in the automotive sector for over 11 years
and has granted over $400M in loans to date. The Company's
underwriting and operational systems have delivered solid credit
performance throughout the full economic cycle.
During the quarter to fund
its loan originations the Company used the $95M bank syndication
facility and Unsecured Debentures totaling $8.50M. In addition, the
Company has access to $120M through four Securitization Facilities.
The Company's credit facilities have remaining capacity of $88M at
quarter end. The Company securitized one tranche of loans totaling
$5.11M in loan principal during the quarter.
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|Q2 Financial Highlights:| | | |
|--------------------------------------------------------------|
| | | |
|--------------------------------------------------------------|
|($,000's except ratios |Q2-14 |Q2-13 | |
|and per share) | | | |
|--------------------------------------------------------------|
| | | | |
|--------------------------------------------------------------|
|Net Income |1,407 |988 |Increased 42% |
|--------------------------------------------------------------|
|Revenue |7,539 |5,967 |Increased 26% |
|--------------------------------------------------------------|
|Finance Receivables |173,000|129,092 |Increased 34% |
|--------------------------------------------------------------|
|Loan Originations |29,224 |23,102 |Increased 27% |
|--------------------------------------------------------------|
|Operating Expenses |1,662 |1,360 |Increased 22% |
|--------------------------------------------------------------|
|Credit Losses |1,365 |917 |Increased by $448K |
|--------------------------------------------------------------|
|Operating Expense Ratio |3.97% |4.44% |Decreased (Improved)|
|--------------------------------------------------------------|
|Average Interest Expense|5.24% |6.64% |Decreased (Improved)|
|--------------------------------------------------------------|
|Delinquency Ratio |4.00% |3.07% |Increased (Worsened)|
|--------------------------------------------------------------|
|Average (rolling 12 |3.02% |2.49% |Increased (Worsened)|
|month) Credit Loss Rate | | | |
|--------------------------------------------------------------|
|Basic EPS |$0.067 |$0.049 |Increased 37% |
----------------------------------------------------------------
---------------------------------------------------------------
|Sequential Quarters: | | |
|-------------------------------------------------------------|
| | | |
|-------------------------------------------------------------|
|($,000's except ratios |Q2-14 |Q1-14 | |
|and per share) | | | |
|-------------------------------------------------------------|
| | | | |
|-------------------------------------------------------------|
|Net Income |1,407 |1,567 |Decreased 10% |
|-------------------------------------------------------------|
|Revenue |7,539 |6,995 |Increased 8% |
|-------------------------------------------------------------|
|Finance Receivables |173,000|162,342|Increased 7% |
|-------------------------------------------------------------|
|Loan Originations |29,224 |31,694 |Decreased by 8% |
|-------------------------------------------------------------|
|Operating Expenses |1,662 |1,540 |Increased 8% |
|-------------------------------------------------------------|
|Credit Losses |1,365 |1,171 |Increased by $194K |
|-------------------------------------------------------------|
|Operating Expense Ratio |3.97% |4.03% |Decreased (Improved)|
|-------------------------------------------------------------|
|Average Interest Expense|5.24% |5.40% |Decreased (Improved)|
|-------------------------------------------------------------|
|Delinquency Ratio |4.00% |3.06% |Increased (Worsened)|
|-------------------------------------------------------------|
|Average (rolling 12 |3.02% |2.92% |Increased (Worsened)|
|month) Credit Loss Rate | | | |
|-------------------------------------------------------------|
|Basic EPS |$0.067 |$0.075 |Decreased 11% |
---------------------------------------------------------------
Key
Year-to-Date Performance Measurement
Please note the Company
results as reported against the specific objectives
released in our annual objectives press release on June 13,
2013.
-
1.Achieve record Loan Originations of over $120
million
Loan Originations for the
first six months are $60.92M, a new record. Progress to target 51%.
-
2.Achieve record Finance Receivables of over
$192 million
Finance Receivables for the
first six months grew to $173.00M from $147.53M, a new
record. Progress to target
57%.
-
3.Achieve record revenue of over $30
million
Revenue for the first six
month totalled $14.53M, a new record. Progress to target 48%.
-
4.Achieve an annualized write off rate below
3.25%
Year to date Annualized
Credit Loss Rate of 3.12%. On target
-
5.Achieve record earnings per share of
$0.300.
Earnings per share for the
six months are $0.143, a new record. Progress to target 48%.
About
Rifco
Rifco Inc. operates through
its wholly owned subsidiary Rifco National Auto Finance Corporation
to provide automobile loans through its dealership network across
Canada.
Rifco National Auto Finance
provides consumers with financing options on new and used vehicles.
Rifco specializes in building long-term partnerships with dealers
by investing time in personalized services through dedicated
account representatives. Rifco's quick credit decisions, common
sense lending, and expedited funding processes give its dealers
better financing options and more closed deals. Rifco's most
successful partnerships result in graduated recognition programs
for its loyal dealerships.
Rifco is committed to
continuing growth. Key strategies for achieving this growth include
the expansion of its automobile dealer base, excellence in credit
and collections processes.
The common shares of Rifco Inc. are traded on the TSX Venture Exchange
under the symbol "RFC". There are 20.95 million shares (basic)
outstanding and 22.21 million (fully diluted) shares.
CONTACT:
Rifco Inc.
Lance A. Kadatz
Vice President and Chief
Financial Officer
Telephone: 1-403-314-1288 Ext
7007
Fax:
1-403-314-1132
Email:
kadatz@rifco.net
Website:
www.rifco.net
Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
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