Red Deer, Alberta.
February 10, 2014; Rifco Inc. (TSXV: RFC) is pleased to announce
record results for its wholly owned subsidiary Rifco National Auto
Finance for the quarter ended December 31, 2013 with the following
milestones being achieved.
-Record EPS of
$0.080
-Record Revenues of
$7.69M in the quarter
-Record Finance
Receivables of $179.09M
-Record low Average
Interest Expense of 5.03% in the quarter
-Record Net Income of
$1.67M
-Record nine month
Originations of $86.20M
Rifco reported
earnings per share in the quarter of $0.080, a 31% increase from
the $0.061 reported in the comparable quarter. The Company's EPS
for the first nine months has reached $0.223, a 41% increase over
the comparable nine month period.
Revenue was $7.69M, a
20% increase over $6.42M for the comparable quarter. Rifco reported
net income of $1.67M, an improvement of 36% from $1.23M in the
comparative quarter.
The Company posted
originations of $25.28M up from $23.20M, a 9% increase from the
comparable quarter. For the nine months period ended, the Company
has posted record originations of $86.20M, an increase of 28% over
the comparable period.
Originations
contributed to a 30% growth rate in finance receivables to $179.09M
from $137.64M in the comparable quarter.
The average interest
expense has decreased to 5.03% in the current quarter when compared
to 6.16% in the same quarter of the prior year. The Company is
benefiting from lower cost of funding from its bank line and
securitization facilities.
The loan delinquency
rate increased to 3.63% compared to 3.27% in the same quarter of
the prior year but decreased from 4.00% in the preceding
quarter. The average (12 month rolling)
credit loss rate increased in the quarter to 3.17% from 3.02% in
the prior quarter. The year to date credit loss rate is currently
3.25%.
The annualized ROE
for the quarter was 44%. Shareholders equity has increased by 77%
and total assets have grown by 28% over the comparable quarter.
These favorable trends, if continued, demonstrate the ability of
Rifco to sustain its growth.
Rifco's operating
expenses increased to $1.76M from $1.66M in the prior quarter.
Increases in the quarter were allocated to wages and benefits for
an increased staff count and dealer marketing events.
Loan originations
reduced from $29.22M in the prior quarter, a 13% decrease. Loan
volume in the quarter was adversely affected by an aggressive
competitive environment, harsh weather conditions in many regions
and typical seasonality.
Rifco intends to
maintain the integrity of its credit underwriting. Rifco is
focusing on enhancing its competitive service advantage through
improved ease of funding, dealer reward programs, and improved
payment option plans for individual loans.
Rifco currently has
less than a 5% share of the national non-traditional auto finance
market. Rifco is actively growing its sales force and has increased
the rate that new dealer partners are being enrolled. Rifco expects
to grow its market share in the coming years.
Historically, the
fourth quarter is a strong loan origination period. Management
remains optimistic that its loan origination target of $120M is
achievable.
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
$500M per year. The infrastructure upgrades will drive improvements
in operating expenses and benefit efficiency ratios.
Rifco third quarter comparative
results
The Company is
reporting earnings growth on increasing finance receivables, lower
interest rates, acceptable loan losses, and stable operating
expenses.
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|Statements of income | | | | |
|------------------------------------------------------------------------------------------------|
|For the period ended December 31 |
|($, 000’s, except share count and per share) |
|------------------------------------------------------------------------------------------------|
| |Three months ended | |
| | |Nine months ended |
|------------------------------------------------------------------------------------------------|
| |2013 |2012 |2013 |2012 |
|------------------------------------------------------------------------------------------------|
|Financial revenue | | | | |
|------------------------------------------------------------------------------------------------|
|Interest income |7,567 |6,325 |21,861 |17,390 |
|------------------------------------------------------------------------------------------------|
|Administration and other fees |127 |92 |366 |252 |
|------------------------------------------------------------------------------------------------|
| |7,694 |6,417 |22,227 |17,642 |
|------------------------------------------------------------------------------------------------|
|Financial expenses | | | | |
|------------------------------------------------------------------------------------------------|
|Interest expenses |2,107 |2,098 |6,288 |5,941 |
|------------------------------------------------------------------------------------------------|
| | | | | |
|------------------------------------------------------------------------------------------------|
|Net financial income before provision for impairment|5,587 |4,319 |15,939 |11,701 |
|------------------------------------------------------------------------------------------------|
| | | | | |
|------------------------------------------------------------------------------------------------|
|Provision for impairment and credit losses |1,513 |1,169 |4,619 |3,380 |
|------------------------------------------------------------------------------------------------|
|Net financial income before operating expenses |4,074 |3,150 |11,320 |8,321 |
|------------------------------------------------------------------------------------------------|
| | | | | |
|------------------------------------------------------------------------------------------------|
|Operating expenses |1,761 |1,491 |4,963 |3,955 |
|------------------------------------------------------------------------------------------------|
| | | | | |
|------------------------------------------------------------------------------------------------|
|Income before taxes |2,313 |1,659 |6,357 |4,366 |
|------------------------------------------------------------------------------------------------|
|Income tax expense |641 |430 |1,711 |1,174 |
|------------------------------------------------------------------------------------------------|
|Net income |1,672 |1,229 |4,646 |3,192 |
|------------------------------------------------------------------------------------------------|
|Weighted average number |20,950,817|20,254,309| | |
|of outstanding shares at | | |20,878,426|20,195,648|
|period end | | | | |
|------------------------------------------------------------------------------------------------|
|Fully Diluted Basis |21,697,034|21,198,379|21,593,420|21,059,763|
|------------------------------------------------------------------------------------------------|
|Net earnings per common share basic |$0.080 |$0.061 |$0.223 |$0.158 |
|diluted |$0.077 |$0.058 |$0.215 |$0.152 |
| | | | | |
--------------------------------------------------------------------------------------------------
Rifco has been
granting non-traditional loans in the automotive sector for over 11
years and has granted over $425M in loans to date. The Company's
underwriting and operational systems have delivered solid credit
performance throughout the full economic cycle.
In order to fund its
loan originations, the Company used the $95M bank syndication
facility and its $8.5M Unsecured Debentures. In addition, the
Company has access to $120M through four securitization facilities.
The Company's credit facilities have remaining capacity of $86M at
quarter end. The Company securitized two tranches of loans totaling
$5.02M in loan principal during the quarter.
On January 20, 2014,
the Company signed an amended agreement with
Mountain View Credit Union (MVCU) to increase its securitization
facility from $20M to $50M, which replaces the agreement signed on
June 25, 2010. The amended securitization facility will include
three additional Alberta credit unions, with MVCU acting as the
syndication lead.
On January 22, 2014, the Company
announced that it has not renewed its Bank West securitization
facility. As per the master agreement signed on August 31, 2009,
Rifco will continue to administer the $14.3M auto loan portfolio.
The portfolio balance will naturally reduce as borrower payments
are made over the coming years.
On January 29, 2014, the Company was
able to increase its syndicated secured revolving credit facility
with Wells Fargo Corporation of Canada and ATB Corporate Financial
Services from $95M to $100M.
-----------------------------------------------------------------------------
|Q3 Financial Highlights: | | | |
|---------------------------------------------------------------------------|
| | | | |
|---------------------------------------------------------------------------|
|($,000's except ratios and per share)|Q3-14 |Q3-13 | | |
|---------------------------------------------------------------------------|
| | | | | |
|---------------------------------------------------------------------------|
|Revenue |7,694 |6,417 |Increased 20% | |
|---------------------------------------------------------------------------|
|Net Income |1,672 |1,229 |Increased 36% | |
|---------------------------------------------------------------------------|
|Operating Expenses |1,761 |1,491 |Increased 18% | |
|---------------------------------------------------------------------------|
|Loan Originations |25,277 |23,180 |Increased 9% | |
|---------------------------------------------------------------------------|
|Finance Receivables |179,093|137,644 |Increased 30% | |
|---------------------------------------------------------------------------|
|Credit Losses |1,568 |978 |Increased by $590K| |
|---------------------------------------------------------------------------|
|Average Interest Expense |5.03% |6.16% |Decreased | |
| | | |(Improved) | |
|---------------------------------------------------------------------------|
|Operating Expense Ratio |4.03% |4.50% |Decreased | |
| | | |(Improved) | |
|---------------------------------------------------------------------------|
|Delinquency Ratio |3.63% |3.27% |Increased | |
| | | |(Worsened) | |
|---------------------------------------------------------------------------|
|Average (rolling 12 | | |Increased | |
|month) Credit Loss |3.17% |2.58% |(Worsened) | |
|Rate | | | | |
|---------------------------------------------------------------------------|
|Basic EPS |$0.080 |$0.061 |Increased 31% | |
-----------------------------------------------------------------------------
------------------------------------------------------------------------
| |Sequential Quarters:| | | |
|----------------------------------------------------------------------|
| | | | | |
|----------------------------------------------------------------------|
| |($,000's except |Q3-14 |Q2-14 | | |
| |ratios and per | | | | |
| |share) | | | | |
|----------------------------------------------------------------------|
| | | | | | |
|----------------------------------------------------------------------|
|Revenue |7,694 |7,539 |Increased 2% | |
|----------------------------------------------------------------------|
|Net Income |1,672 |1,407 |Increased 19% | |
|----------------------------------------------------------------------|
|Operating Expenses |1,761 |1,662 |Increased 6% | |
|----------------------------------------------------------------------|
|Loan Originations |25,277 |29,224 |Decreased by 13% | |
|----------------------------------------------------------------------|
|Finance Receivables |179,093|173,000|Increased 4% | |
|----------------------------------------------------------------------|
|Credit Losses |1,568 |1,365 |Increased by $203K| |
|----------------------------------------------------------------------|
|Average Interest Expense |5.03% |5.24% |Decreased | |
| | | |(Improved) | |
|----------------------------------------------------------------------|
|Operating Expense Ratio |4.03% |3.97% |Increased | |
| | | |(Worsened) | |
|----------------------------------------------------------------------|
|Delinquency Ratio |3.63% |4.00% |Decreased | |
| | | |(Improved) | |
|----------------------------------------------------------------------|
|Average | |3.02% |Increased | |
|(rolling |3.17% | |(Worsened) | |
|12 month) | | | | |
|Credit | | | | |
|Loss Rate | | | | |
|----------------------------------------------------------------------|
|Basic EPS |$0.080 |$0.067 |Increased 19% | |
------------------------------------------------------------------------
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 nine months are $86.20M, a new record.
Progress to target 72%.
-
2.Achieve record Finance Receivables
of over $192 million
Finance Receivables
for the first nine months grew to $179.09M from $147.53M, a new
record. Progress to target
71%.
-
3.Achieve record revenue of over $30
million
Revenue for the first
nine month totalled $22.23M, a new record. Progress to target 74%.
-
4.Achieve an annualized write off rate
below 3.25%
Year to date
Annualized Credit Loss Rate of 3.25%. On target
-
5.Achieve record earnings per share of
$0.300.
Earnings per share
for the first nine months are $0.223, a new
record. Progress to target
74%.
About
Rifco
Rifco Inc. operates
through its wholly owned subsidiary Rifco National Auto Finance
Corporation in order 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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