Reports 2021 Second Quarter Results
Note: All dollar amounts in this press release are expressed in U.S. dollars, except as otherwise noted.
The financial results are reported under International Financial Reporting Standards, except as otherwise noted.
The Westaim Corporation (“Westaim” or the “Company”) (TSXV:WED) today announced its unaudited financial results for the quarter ended June 30, 2021. Westaim recorded a net profit of $10.9 million ($0.08 earnings per diluted share) and a net profit of $20.0 million ($0.14 earnings per diluted share) for the three and six months ended June 30, 2021, respectively, compared to a net loss of $0.1 million ($0.00 loss per diluted share) and a net loss of $20.6 million ($0.15 loss per diluted share) in the three and six months ended June 30, 2020, respectively.
Westaim’s adjusted earnings, excluding unusual items, was a net profit of $11.6 million ($0.08 earnings per diluted share) and a net profit of $20.7 million ($0.14 earnings per diluted share) for the three and six months ended June 30, 2021, respectively, compared to a net profit of $4.8 million ($0.03 earnings per diluted share) and a net loss of $0.8 million ($0.02 loss per diluted share) in the three and six months ended June 30, 2020, respectively.
At June 30, 2021, Westaim’s consolidated shareholders’ equity was $340.5 million and the Company had 143,186,718 common shares (“Common Shares”) outstanding. Book value per fully diluted share was $2.38 (C$2.95) at June 30, 2021, compared to $2.24 (C$2.85) at December 31, 2020, an increase of 6.3% YTD 2021.
Key Results for the three months ended June 30, 2021 include:
- Skyward Specialty: Skyward Specialty reported net income of $13.4 million in Q2 2021 compared to $0.9 million in Q2 2020 (excluding unusual items, the net income in Q2 2021 was $14.9 million compared to $12.1 million in Q2 2020). Westaim recorded net income from its share of Skyward Specialty of $4.9 million in the quarter compared to $2.2 million in Q2 2020. Improved underwriting performance resulted in a combined ratio of 93.6% in Q2 2021 compared to 96.2% in Q2 2020 primarily due to strategic actions taken over the past year to re-underwrite the portfolio and improved industry market conditions. Underwriting actions over the past year are being reflected as an improvement in loss ratio excluding CATs and prior year development of 65.9% in Q2 2021 vs. 71.8% in Q2 2020. Skyward Specialty’s investment income continued to deliver consistent results in Q2 2021 at $13.4 million compared to $13.4 million in Q2 2020. The year-to-date result from investment income is notable at $25.6 million in 2021 compared to a loss of $4.3 million in 2020 from unrealized losses on equity holdings reported in the first half of 2020.
- Arena FINCOs: Arena FINCOsnet income was $2.7 million (+1.6% net return) for Q2 2021 compared to $1.4 million (0.9% net return) in Q2 2020. During the quarter, the Arena FINCOs were able to stay fully invested in productive, yield-earning investments which delivered year-to-date net income of $10.1 million (+6.2% net return) for 2021 compared to a loss of $2.0 million (-1.1% net return) for 2020.
- Arena Investors: Arena Investors’ net income was $4.2 million in Q2 2021 versus a loss of $0.8 million in Q2 2020. Westaim recorded its share of net income from Arena Investors of $2.2 million in the quarter compared to a net loss of $0.4 million in Q2 2020. Committed AUM at June 30, 2021 of $2.3 billion was an increase from $2.0 billion at December 31, 2020. Due to closing subsequent to the end of the quarter, as of August 2, 2021 estimated committed AUM grew further to $2.6 billion. The increase in income was primarily the result of an 160% increase in revenue in the quarter over the prior year due to stronger incentive fees from higher returns in the managed funds and stronger management and servicing fees from an increase in fee-paying AUM compared to Q2 2020. Fee-paying AUM at June 30, 2021 was $1.7 billion compared to $1.0 billion at June 30, 2020.
“We are pleased to report consecutive quarterly earnings by following our strong performance in Q1 of $0.06 earnings per share with $0.08 in Q2. We believe, each of the businesses is benefiting from the foundation built over the past several years and have the expertise in place to continuously evolve and grow to deliver earnings for shareholders,” said Cameron MacDonald, President and Chief Executive Officer of Westaim. “To assist shareholders in their deeper dive into our Q2 2021 results from each of our businesses, Westaim has again included on our website an 'Investor Presentation'. We are encouraged by the positive business momentum and pipeline of opportunities at Skyward Specialty, Arena FINCOs and Arena Investors to continue to enhance shareholder value.”
“As we are encouraged by the earnings momentum of our businesses, Westaim intends to undertake a normal course issuer bid ('NCIB') through the facilities of the TSX Venture Exchange (the 'TSXV'). Commencement of the NCIB is subject to the approval of the TSXV. Under the NCIB, Westaim intends to repurchase, on an opportunistic basis, up to 10% of the public float at the commencement of the NCIB (currently 11,331,704 common shares). We believe this will be an attractive investment and a desirable use of a portion of Westaim’s corporate funds.”
This press release should be read in conjunction with Westaim’s unaudited consolidated financial statements and management’s discussion and analysis for the three and six months ended June 30, 2021 and 2020 which were filed on SEDAR at www.sedar.com. These documents and the Company’s Q2 2021 Investor Presentation can be found and on the Company’s website at www.westaim.com.
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