(TheNewswire)
Red Deer, Alberta / TheNewswire / June 19, 2018 - Rifco Inc. (TSXV: RFC)
(“Rifco” or the “Company”) the largest publicly-traded alternative auto finance company in Canada, is announcing
results for its wholly owned subsidiary Rifco National Auto Finance for the fourth quarter and the year ended March 31,
2018.
Highlights
Highlights for the fiscal year include the following key accomplishments:
-Originated $104M in Finance Receivables – Although this was short of annual target,
the origination total was an increase of 4% over the prior year.
-Addition to Executive Management – After an intensive search process, a new Chief
Credit Officer started with the Company in November 2014.
-Collections Training – The Company completed a project of intensive collections
training led by industry leading consultants.
-Renewal of Securitization Facilities – In November 2017, a Canadian Schedule 1
Chartered Bank, with whom Rifco has received funding since July 2012, renewed its Securitization Facility for $30 million. In
July 2017, Securcor Trust renewed the $50M funding facility.
-Corporate Citizenship – On September 28, 2017, Rifco announced a donation of $33,535
to the Red Deer Food Bank through its 6 th Annual Charity Golf Classic.
Subsequent Event
On June 4, 2018, the Company announced the acquisition of a $25M portfolio consisting of over 1,850 consumer
automobile loans. The Company is excited to announce that the addition of the Portfolio will increase Rifco’s loan assets by
over 10 percent. The favourable terms of the purchase mean that the Portfolio will be immediately accretive to Adjusted Net
Income and Adjusted Net Income Per Share.
Key Period-to-Date Performance Measurement
Please note the Company results as reported against the specific objectives released with the 2017
Annual Report.
-
1. Achieve Loan Originations between $110M - $130M
Loan Originations for the year reached $103.8M. 94% of Target.
-
2. Achieve Finance Receivables between $240M - $260M
Finance Receivables at March 31, 2018 are $232.8M. 97% of
Target.
-
3. Achieve financial revenue of between $35M -
$37M
Revenue for the year reached $34.7M. 99% of Target.
-
4. Achieve Credit Loss Rate between 4.50% - 5.00%
Credit Loss Rate of 6.00%. 100 basis points over Target.
-
5. Achieve earnings per share of $0.10 - $0.15
Earnings per share for the year are $0.007. Target missed.
Annual Results
The Company is reporting its 12 th consecutive year of
profitability.
Total financial revenue increased by 3.6% to $34.7M from $33.5M in the prior year as a result of increasing
average Loan Receivables, offset by a slight decline in Net Portfolio Yield. Average Loan Receivables increased by 4.3% to $229.7M
for the year while the Net Portfolio Yield declined by 9 basis points to 15.12%.
Originations continue to improve from the low experienced in fiscal year 2016 and were 17.3% higher during the
year at $103.8M as compared to $88.4M Originated in 2016. Originations edged higher by 3.7% compared to last
year.
Adjusted Net Income for the year was $0.1M. Net income for the year was $0.2M.
Adjusted Net Income and Net Income were negatively impacted by a 101 basis point increase in the Credit Loss
rate to 6.00%. Total Credit Losses, including costs and net of recoveries, were $2.8M higher than the prior year. This
represented a 25.3% increase from the prior year.
The Financial Expense Ratio increased by 10 basis points, also negatively affecting profitability.
Unsecured Debentures reduced from $8.5M at the end of the prior year to $8.3M at the current year end.
Operating expenses increased by $1.3M from the prior year. This equates to a 36 basis point increase in
the Operating Expense Ratio from 4.42% last year to 4.78% in 2017. The Company continued to invest in work aimed at reducing
Credit Losses and the Delinquency Rate, including a recent project of intensive collections training, led by industry leading
consultants. Also contributing to the increase in Operating Expenses were additions to the sales force, nonrecurring work
related to the management initiated and voluntary review of GST-HST remittances, and startup promotional costs for “Splash Auto
Finance by Rifco”.
The Delinquency Rate increased by 112 basis points to 6.44% from 5.32% the prior year. The Delinquency Rate
continues to remain higher than the Company’s target of between 4.00% and 5.00%. Improvements to the Delinquency Rate will be
a key measurement of the effectiveness of the previously mentioned collections training project.
Prior competitive behavior, which management had thought to be unprofitable and ultimately unsustainable
appears to be negatively impacting some players in the industry. Management is seeing rationalization within the industry as
competitors consolidate, sell assets and/or cease operations. The Company’s intention is to selectively review opportunities
as they become available.
Rifco is in regular contact with all of its funders and remains optimistic regarding the availability of
increasing amounts of Bank Borrowing and Securitized Facilities as needed. The Company currently has $75.1M in facility
availability for deployment. The Company is continuing discussions with its funders seeking slightly adjusted terms allowing
for greater access to funding for its “D credit” lending program.
Rifco is working actively to develop new initiatives that it expects to positively affect loan Originations in
the coming year while maintaining the Company’s focus on loan credit quality and increasing Net Portfolio Yields. One of these
initiatives is consumer focused originations (direct to consumer) which is a deviation from the Company’s traditional dealer based
indirect loan origination process. Rifco utilizes a variety of referral and advertising techniques to acquire consumer loan
applications. The Company interacts directly with the consumer in order to complete the credit application and credit
adjudication processes. Once the application is approved, the Company looks to one of its trusted dealers in order to fulfil
the vehicle delivery process to the consumer. In order to assist in the promotion of this loan application channel, the
Company has branded the process “Splash Auto Finance by Rifco”. The Company is optimistic enough to warrant
measured expenditures in the Splash channel. However, at this early stage, the quantity of loans originated through
Splash is not yet material.
During the year management has initiated or completed several projects including: The hiring of a new
Chief Credit Officer, developing a dedicated data analytics team, implementing a new loan origination system and rolling out an
intensive collections training.
The Company’s management is focused on returning its credit performance to previous levels. Predictable credit
performance is imperative to achieving the Company’s long-term vision of $500M in annual loan Originations.
Rifco Annual Comparative Results
Statement of Comprehensive Income
|
March 31, 2018
|
March 31, 2017
|
|
|
|
($, 000’s, except per share)
|
|
|
|
|
|
Financial revenue
|
|
|
Interest and fee income
|
34,723
|
33,500
|
Financial expenses
|
|
|
Interest expenses
|
9,687
|
9,080
|
|
|
|
Net financial income before Impairment and Credit Losses
|
25,036
|
24,420
|
|
|
|
Total Credit Losses
|
13,769
|
10,989
|
Adjusted Net Financial Income Before Operating Expenses
|
11,267
|
13,431
|
|
|
|
Operating expenses
|
10,987
|
9,734
|
|
|
|
Adjusted Income Before Taxes
|
280
|
3,697
|
Income tax expense
|
(184)
|
(1,247)
|
Adjusted Total Comprehensive Income
|
96
|
2,450
|
Decrease in Provision for Impairment
|
(57)
|
(473)
|
Total Comprehensive Income
|
153
|
2,923
|
Weighted average number of shares outstanding
|
21,597
|
21,525
|
Weighted average number of shares outstanding for use in determining diluted income per share
|
21,601
|
21,554
|
Adjusted Net Income per common share
Basic
Diluted
|
$0.004
$0.004
|
$0.114
$0.114
|
Net income per common share
Basic
Diluted
|
$0.007
$0.007
|
$0.136
$0.136
|
Fourth Quarter Results
Rifco had Loan Originations in the quarter of $21.7M, compared to $24.3M in the comparable quarter the prior
year, a 10.8% decrease. This is a decrease of 12.9% from originations of $24.9M in the prior quarter.
The Finance Receivables declined by 1.4% to $232.8M from $236.0M in the preceding quarter.
Financial revenue in the quarter was $8.8M, a 6.3% increase over $8.2M in the comparable quarter. Financial
revenue decreased by 2.5% compared to the prior quarter.
Adjusted Net Loss in the quarter was $0.3M compared to net income of $0.4M in the comparable quarter, a $0.7M
decline. Adjusted EPS decreased to ($0.012) from $0.020 in the prior year.
Net Loss in the quarter was $0.2M compared to net income of $0.8M in the comparable quarter, a $1.0M decline.
EPS decreased to ($0.011) from $0.035 in the prior year.
Interest Expense in the quarter was $2.6M compared to $2.2M in the prior year and $2.5M in the prior quarter.
The annualized Interest Expense Ratio increased to 4.45% from 4.02% in the comparable quarter the prior year.
Credit Losses, including costs and net of recoveries, are $3.6M in the quarter, an increase of $1.0M over the
comparable quarter. The Annualized Credit Loss Rate for the quarter was 6.28% a 159 basis point increase from 4.69% in the
comparable quarter.
The Loan Delinquency Rate increased to 6.44% compared to 5.32% in the comparable quarter the prior year. The
Loan Delinquency Rate increased by 43 basis points from 6.01% in the preceding quarter.
Operating Expenses increased to $2.9M from $2.6M compared to the prior year. The
increase is primarily related to increased wages and benefits along with increased office and general expenses.
The Operating Expenses also increased from the $2.7M in the prior quarter .
Rifco Fourth Quarter Comparative Results
Statement of Comprehensive Income
|
March 31, 2018
|
March 31, 2017
|
|
|
|
($, 000’s, except per share)
|
|
|
|
|
|
Financial revenue
|
|
|
Interest and fee income
|
8,766
|
8,247
|
Financial expenses
|
|
|
Interest expenses
|
2,576
|
2,241
|
|
|
|
Net financial income before Impairment and Credit Losses
|
6,190
|
6,006
|
|
|
|
Total Credit Losses
|
3,635
|
2,615
|
Adjusted Net Financial Income Before Operating Expenses
|
2,555
|
3,391
|
|
|
|
Operating expenses
|
2,865
|
2,647
|
|
|
|
Adjusted Income (Loss) Before Taxes
|
(310)
|
744
|
Income tax recovery (expense)
|
48
|
(304)
|
Adjusted Total Comprehensive Income (Loss)
|
(262)
|
440
|
Decrease in Provision for Impairment
|
(14)
|
(317)
|
Total Comprehensive Income (Loss)
|
(248)
|
757
|
Weighted average number of shares outstanding
|
21,597
|
21,597
|
Weighted average number of shares outstanding for use in determining diluted income per share
|
21,597
|
21,605
|
Adjusted Net Income per common share Basic
Diluted
|
($0.012)
($0.012)
|
$0.020
$0.020
|
Net income per common share Basic
Diluted
|
($0.011)
($0.011)
|
$0.035
$0.035
|
Rifco today filed its annual financial statements and management discussion and analysis for the year ended
March 31, 2018. The previously released financial statements and the related management’s discussion and analysis can be viewed
at www.sedar.com or at www.rifco.net .
About Rifco
Rifco Inc. is focused on being the best alternative auto finance company through its wholly owned subsidiary
Rifco National Auto Finance Corporation. Our mission is to help deserving
Canadians own automobiles . Rifco is Canada’s largest publicly traded alternative auto finance
company.
Rifco seeks to create sustainable long-term competitive advantages through personalized partnerships with
dealers, innovative products, the use of industry-leading data and analytics, and leading collections practices. Rifco’s
corporate culture fosters employees that are highly engaged, innovative, and performance driven.
Rifco is committed to creating value for all stakeholders through profitable growth and predictable credit
performance, while pursuing its long-term vision of $500M in annual loan Originations.
The common shares of Rifco Inc. are traded on the
TSX Venture Exchange under the symbol “RFC”. There are 21.60 million shares (basic) outstanding and 22.95 million (fully diluted)
shares.
CONTACT:
Rifco Inc.
Warren Van Orman
Vice President and Chief Financial Officer
Telephone: 1-403-314-1288 Ext 7007
Fax: 1-403-314-1132
Email: vanorman@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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