ECN Capital Corp
Q3/22 EPS was in line with our forecast; originations below; 2023 guidance revised
TSX: ECN | CAD 3.45 | Sector Perform | Price Target CAD 6.50
Sentiment: Neutral
Our take: ECN reported Q3/22 basic operating EPS of US$0.05, which was in line with our forecast and consensus of US$0.05 (consensus range: US$0.04 – $0.09).
ECN maintained its 2023 adjusted EPS guidance of US$0.36 to US$0.42, however, it provided new disclosure on the composition of the EPS guidance. ECN's new 2023 EPS guidance assumes organic EPS of US$0.25 to US$0.30 (ECN indicated the prior assumed organic EPS growth was US$0.30 to US$0.35, although this was not disclosed when they announced the Kessler sale in August 2022). In terms of M&A, ECN is guiding to US$0.06 to US$0.12/share in M&A-related EPS in 2023. ECN said it is in advanced discussions with 3 Marine & RV platforms which in aggregate could add US$5MM to US$7MM in adjusted operating income in 2023 and that there were several platforms currently under letter-of-intent and others under review.
We are still reviewing the full financials, so we are not certain if there are any notable items. However, here are some key metrics from Q3/22 results:
• Manufactured Housing (Triad Financial):
Originations: US$381MM were below our US$445MM forecast.
Ending managed assets: US$4.1B were marginally above our US$4.0B forecast. EBITDA: US$27.5MM was in line with our US$27.6MM forecast.
• RV & Marine (Source One and IFG):
Originations: US$298MM were in line with our US$299MM forecast. EBITDA: US$5.1MM was below our US$6.6MM forecast.
Conference call today at 5:30pm ET; dial in: 1-800-319-4610. Link to webcast on the company’s website.