Axis Announces Record Year End Results for Fiscal 2018

TORONTO, Oct. 24, 2018 /CNW/ - Axis Auto Finance Inc. ("Axis" or the "Company"), (TSXV: AXIS) Canada's fastest growing publicly-traded sub-prime automotive finance company, today announced financial results for the fiscal year ended June 30, 2018.  Fiscal 2018 was a transformational year as Axis closed the acquisitions of Cars on Credit Financial Inc. ("COCF") and Trend Financial Corp. ("Trend"), significantly expanding Axis' geographic footprint, dealer base, and diversifying its funding sources needed to grow the finance receivable portfolio. In financing these acquisitions, Axis successfully raised over $43 million in equity and convertible debentures. 

The fiscal year results cover 12 months of Axis operations and 5 and 3 months of COCF and Trend operations, respectively.

HIGHLIGHTS

• Record net finance receivables of $109.1 million, up from $21.9 million in 2017;
• Record revenues of $15.8 million compared to $6.8 million in 2017;
• Record originations of $30.2 million up 60% from $18.9 million for 2017;
• Average portfolio yield of 35.7% compared to 38.5% in 2017;
• Annualized loss rate at 7.2%, down from 8.8% in fiscal 2017;
• Adjusted Earnings¹ of $1.4 million in Q4 2018 compared to $0.2 million in Q4 2017;
• Adjusted Earnings¹ of $2.8 million in 2018 compared to $0.9 million in 2017; and
• Book Value per share of $0.42 as of June 30^th, 2018.

"We have told investors that the acquisitions will be immediately accretive to Adjusted Earnings and that's exactly what has happened", said Todd Hudson, CEO of Axis. "This represents another step forward towards the roll out of our leading national sub-prime automotive finance platform", he added.

Revenues of $15.8 million for 2018 increased 131% from $6.8 million for 2017. The fourth quarter revenue, factoring in the full quarter of revenues for each of the two acquisitions, equated to an annualized revenue run-rate of $31.9 million.

Finance receivable originations for 2018 were $30.2 million, a 60% increase from $18.9 million in 2017. With the two acquisitions, Axis ended the fiscal year 2018 with $109.1 million in net finance receivables, up nearly 500% from fiscal 2017 receivables of $21.9 million.

Portfolio yields remained very strong, but have expectedly come down from pre-acquisition levels as a result of the better credit quality and therefore lower yields on the COCF portfolio and the related Purchase Price Accounting ("PPA") rules under IFRS.

Equally as strong was the annual loss rate of 7.2% in 2018, down notably from 8.8% in 2017, reflecting an 18% improvement year over year. As a result of the applicable PPA, the Company expects annual loss rates to trend further down in fiscal 2019, as losses on the acquired portfolios are netted against the revenue stream.

Adjusted Earnings for Q4 2018 were $1.4 million, a 7-fold increase compared to $0.2 million in Q4 2017. For the full fiscal year 2018, Adjusted Earnings were $2.8 million compared to $0.9 million in 2017.

Net loss for 2018 after accounting for one time M&A and integration costs was $3.7 million or $0.056 per share compared to a net loss of $0.8 million or $0.016 per share for 2017.

Book value of the Company was $40.8 million at the end of the fiscal year, or $0.42 per share. 

Market Maker Appointment

Effective November 1^st, 2018 Axis will be switching the provider of market making services from Mackie Research Capital Corporation ("Mackie") to INFOR Financial Inc. ("INFOR Financial") in compliance with the policies and guidelines of the TSXV and other applicable legislation. Axis would like to thank Mackie for delivering an excellent service over the last 2 years.

INFOR Financial will trade shares of Axis on the TSXV for the purposes of maintaining a reasonable market and improving the liquidity of Axis' common shares. The agreement between INFOR Financial and the Company is for a minimum of six months and the Company has agreed to pay $5,000 per month during the term. The Company and INFOR Financial act at arm's length, there are no performance factors contained in the agreement between INFOR Financial and the Company and INFOR Financial will not receive any shares or options from the Company as compensation for services it will render.  The Company and INFOR Financial are unrelated and unaffiliated entities, but INFOR Financial and/or its clients may have an interest, directly or indirectly, in the securities of Axis.

About INFOR Financial Inc.

INFOR Financial Inc. is a leading Canadian independent investment bank offering advice on mergers and acquisitions, capital raises, risk management, private funds and corporate restructurings.  Since inception, INFOR Financial Inc. has consistently been ranked as one of the top independent M&A advisors in Canada.

About Axis Auto Finance

Axis provides non-standard financing options targeting roughly 30% of Canadians (Source: Equifax) that do not qualify for traditional bank-type financing for their used vehicle purchase. Through personalized service and a commitment to building strong, long-lasting relationships with dealer partners, Axis continues to be one of Canada's fastest-growing auto-financing companies.

Further information on the Company can be found at www.axisautofinance.com.

¹ In order to track the performance of its finance receivable portfolio in a given period without the volatility associated with estimates and assumptions, Axis introduced a non-IFRS measure called Adjusted Earnings. This measure, now included in the MD&A, is equal to the net income (loss) for the period, adjusted for (i) non-cash expense items (as identified in the Statement of Cash Flows) (ii) actual credit losses incurred (iii) non-recurring one time transaction and integration costs and (iv) specified expenses which were entirely recognized in a given quarter but for which the benefit was derived over more than a given quarter.  For further information on Axis non-IFRS measures, please see the Management's Discussion and Analysis for the year ended June 30, 2018. 

The TSX Venture Exchange has neither approved nor disapproved the contents of this press release. Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Axis Auto Finance Inc.

View original content to download multimedia: http://www.newswire.ca/en/releases/archive/October2018/24/c3192.html