more positive results at end of v good yearlots of progress made in 2021 in diversifying lending book, expanding funding sources and lowering cost of funds, almost doubling size of company, making two acquisitions and maintaining good profitability throughout. for a new management team, good execution. trailing fcf yield on the current equity price is 13.2%. rifco adds $9-10 million in quarterly revenue and with organic growth, likely quarter of a billion annual revenue business in 2022, considering almost did $45 million in q42021(ex rifco). More than doubled headcount in 2021, so headcount growth shud lag revenue growth in 2022 (needed to frontload expenses in 2021 for origination growth). even with credit normalizing from post covid, shud be good eps and fcf growth.
ended year with net receivables up 94% to $1.4 billion, & gross receiv. at $1.7 billion. w/rifco, that shud end q122 at >$2 billion. ROE ended year at 19% and free cash return on avg equity was 20.4%.
free cash for fourth quarter was $11.5 million, $0.56 per share, +44% yoy. Eps, after adjusting for one time share grant, = $0.52 per share. hiked the dividend 33% to $0.04 per month and have been buying back shares so far this year.
opex growth of 60% mirrored new lease contract growth also 60%. most of costs with a new lease/loan are up front (underwriting, funding, provision for loss), while interest revenue is recognized over the multi-year life of the lease/loan. as new originations growth slows, shud lead to operating leverage.
aging of receivables looked fine for both us and cdn divisions, with >31 days delinquent (as % of netfinance receivalbes) at 0.94% and 0.24%, respectively. as does diversification of leases in us: over 110 equipment categories, over 256 industry segments, no borrower more than 0.07% of total, 50 US states with only Texas and California more than 10% (at 14.3% and 11.9%). Tandem now 31% of gross receivables.
lots of room left on the various funding options, as stated in m,d&a just filed.
outlook from m,d&a:
Chesswood exited 2021 with record originations and the largest receivables portfolio in the Company’s history. We expect this momentum to continue throughout 2022 with the added benefit of contributions from our newly acquired automobile finance entity, Rifco. The equipment finance subsidiaries continue to see strong origination volumes in both Canada and the United States. Changes in the general interest rate environment are expected to impact pricing for prime credits as the industry passes through increases in funding cost. Historically, we have been successful in maintaining credit spreads in a rising rate environment. Any negative impact from rising rates will likely be seen in weaker industry wide origination volumes. Portfolio losses and recoveries throughout 2021 were the strongest in Chesswood’s history due to several economic factors. For 2022, we expect these metrics to begin normalizing towards levels more consistent with our underwriting expectations. Furthermore, the addition of near-prime receivables, from our Rifco acquisition, will increase overall portfolio provisioning and losses. On a net basis, we expect to maintain strong credit margins, consistent with Chesswood's historical performance.