Callidus Capital Reports First Quarter 2016 Results

All amounts in Canadian dollars unless otherwise indicated.

First Quarter 2016 Highlights

  • Revenue of $49.5 million increased 2% ($1.1 million) from fourth quarter 2015 and 41% ($14.4 million) from first quarter 2015.
  • Net income of $17.1 million, up 125% ($9.5 million) from the prior quarter and 7% ($1.1 million) from the prior year period.
  • Earnings per share (diluted) of $0.34, an increase of 127% ($0.19) from last quarter and 10% ($0.03 per share) from the first quarter of 2015.
  • ROE was 13.9%, an increase from 6.2% in the prior quarter and 13.6% in first quarter 2015.
  • In spite of making the intentional decision not to grow the loan book during the quarter, performance metrics were very strong. The average loan portfolio outstanding was $1,227 million, an increase of $34 million from the prior quarter and $363 million in first quarter 2015.

TORONTO, May 11, 2016 /CNW/ - Callidus Capital Corporation (TSX:CBL), ("Callidus" or the "Company"), today announced its unaudited financial and operating results for the first quarter ended March 31, 2016. 

"Our record of consistently strong performance continued in the first quarter of 2016 with significant gains in revenue, net income and ROE over the prior period and year over year. Our pipeline continued to grow while the loan book was intentionally held basically constant, as we accumulated cash in order to evaluate the best use thereof upon completion of the SIB in late May." said Newton Glassman, Executive Chairman and Chief Executive Officer of Callidus.  "During the first quarter, we began pursuing yield enhancement measures previously discussed and reflected in the National Bank Financial Valuation disclosed with the SIB material.  We have agreed to terms pertaining to "yield enhancement options" related to seven of the loans in our portfolio, and expect to finalize the agreements on three additional loans next quarter.  They are a technical way of improving returns when a client needs or desires changes to the original loan agreement.  This quarter we have provided a description of the yield enhancement mechanisms in our MD&A, and we will begin reporting them on a prospective basis beginning in the second quarter.  Please note that the first quarter results do not reflect the impact of the yield enhancement mechanisms.  We expect the value of these interests to continue to grow as our existing loans mature and new loans are originated."

David Reese, President and Chief Operating Officer added, "The first quarter reflects our focus on maintaining and improving our operating performance over multiple quarters and our intention is to maintain that focus and further improve thereon.  We anticipate favourable market conditions, our sound and proven business model, strong credit quality, and unique competitive advantage, will be reflected positively in our future results."

Business Update (As at May 11, 2016)

  • Gross loans receivable before derecognition stood at $1,170 million.
  • The pipeline of potential new loans stands at approximately $980 million.
  • Signed back term sheets and balance of funding for Project Resolve Inc. of approximately $210 million.
  • Total debt (net of cash and cash equivalents) of $472 million, or 40% of gross loans receivable before derecognition.
  • In the coming months, the Company expects four additional loan repayments, representing approximately $171 million in current gross loans receivable, as of May 11, 2016.
  • The Company expects approximately 31% ($124 million gross loans receivable) of watch-list loans to be resolved in the coming months.
  • On April 22, 2016, an issuer bid circular and related documents (the "Issuer Bid Circular") in connection with the Company's previously announced substantial issuer bid (the "Offer") was mailed to shareholders. Under the Offer, the Company is offering to purchase for cancellation up to 3,571,428 common shares at a purchase price of $14 per common share.
  • In May 2016, the Company received commitments from two syndicate lenders in the revolving credit facility to increase their respective commitments by US$37.5 million, increasing the existing facility to US$337.5 million in the aggregate. Other terms of the facility are unchanged.

Financial Highlights




Three Months Ended

($ 000s unless otherwise indicated)

March 31, 2016

December 31, 2015

March 31, 2015

Average loan portfolio outstanding (1)

$ 1,226,881

$   1,192,994

$        864,324

Total revenue (after derecognition)

49,540

48,467

35,091

Gross yield (%) (1)

19.4%

19.1%

17.9%

Net interest margin (%) (1)

12.5%

12.2%

12.7%

Net income

17,072

7,648

15,989

Earnings per share (diluted)

$0.34

$0.15

$0.31

ROE (%)

13.9%

6.2%

13.6%

Leverage ratio (%)(1)

38.9%

50.9%

40.3%

(1)

Refer to "Description of Non-IFRS Measures" in the MD&A. These financial measures are not
recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS.
Therefore, they may not be comparable to similar measures used by other issuers.

 

  • Our First Quarter 2016 MD&A, Unaudited Financial Statements and Issuer Bid Circular are available on our website (www.calliduscapital.ca) or on SEDAR (www.sedar.com).
  • Average loan portfolio outstanding was $1,227 million, an increase of $34 million or 3% from the prior quarter, and an increase of $363 million or 42% from the same quarter last year.
  • Total revenue for the quarter was $49.5 million, an increase from $48.5 million the prior quarter, and an increase from $35.1 million in the same quarter last year.
  • Gross yield for the quarter was 19.4%, an increase from 19.1% in the prior quarter, and an increase from 17.9% in the same quarter last year. As noted previously, gross yields can be "lumpy" quarter to quarter.
  • Net income was $17.1 million for the quarter, an increase from $7.6 million in the prior quarter and from $16.0 million in the same quarter last year. Earnings for the prior quarter were impacted by an unusual pre-tax provision of $22.7 million related to the expected loss related to an isolated event experienced by one borrower, Gray Aqua Group Ltd. The increase from the same quarter last year was due to higher revenues partially offset by higher loan loss provisions.
  • Earnings per share (diluted) were $0.34 for the quarter, an increase from $0.15 in the prior quarter and from $0.31 in the same quarter last year.
  • ROE was 13.9%, an increase from 6.2% in the prior quarter and from 13.6% in the same quarter last year.
  • Leverage ratio of 38.9% at the end of the current quarter, a decrease from 50.9% at the end of the prior quarter. The Company primarily used the proceeds from the guarantees of a loan sold to the Catalyst Funds to repay a portion of the balance outstanding under the subordinated bridge facility.
  • As at March 31, 2016, the estimated collateral value coverage across aggregate net loans receivable was approximately 150% with a range between 100% and 444% on an individual loan basis. Furthermore, the aggregate watch-list loans had an estimated aggregate collateral value coverage of 108% and non-watchlist loans had an estimated collateral value coverage of 166%. It should be noted that there is no cross-collateralization of the asset coverage as between borrowers.
  • Provision for loan losses for the first quarter was $7.9 million. Of this total provision, $4.3 million relates to interest revenue recorded on those loans for the current quarter. Under IFRS, the Corporation continues to record loan interest and income on impaired loans at the original effective interest rate and provides for the loan interest and income in instances where timely collection of interest and principal is unlikely.

About Callidus Capital Corporation
During the quarter, Paula Myson joined Callidus as Vice President Investor Relations and Special Projects. Paula is a CFA charterholder with extensive experience in capital markets, finance and operations in domestic and international companies.  Further descriptions of our Management Team can be found on our website, www.calliduscapital.ca.

Established in 2003, Callidus Capital Corporation is a Canadian company that specializes in innovative and creative financing solutions for companies that are unable to obtain adequate financing from conventional lending institutions. Unlike conventional lending institutions who demand a long list of covenants and make credit decisions based on cash flow and projections, Callidus credit facilities have few, if any, covenants and are based on the value of the company's assets, its enterprise value and borrowing needs. Callidus employs a proprietary system of monitoring collateral and exercising control over the cash inflows and outflows of each borrower, enabling Callidus to very effectively manage risk of loss. Further information is available on our website, www.calliduscapital.ca.

Forward-Looking Statements
Certain statements made herein contain forward-looking information. Although Callidus believes these statements to be reasonable, the assumptions upon which they are based may prove to be incorrect. Furthermore, the forward-looking statements contained in this press release are made as at the date of this press release and Callidus does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Conference call
Callidus will host a conference call to discuss Q1 2016 results on May 12, 2016 at 9:00 a.m. Eastern Time.  The dial in number for the call is (647) 427-7450 or (888) 231-8191 (reference number: 93999844). A taped replay of the call will be available until May 19, 2016 at (416) 849-0833 or (855) 859-2056 (reference number: 93999844).

SOURCE Callidus Capital Corporation

For further information: Paula Myson, (416) 945-3226, pmyson@calliduscapital.ca


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