Carfinco Announces 2009 First Quarter Results



    TSX: CFN.UN

    EDMONTON, May 5 /CNW/ - Carfinco Income Fund, Canada's leading automotive
specialty finance income fund, today announced its results for the first
quarter of 2009.
    "Carfinco approached the first quarter of 2009 with the same cautious
optimism as in the latter part of 2008,"said Tracy Graf, President and CEO of
Carfinco. "With a backdrop of macroeconomic uncertainty - and the inherent
impact on both credit and auto industries - we continue to adapt our business
model. We're seeing that changes implemented to our finance programs in
mid-2008 are having a positive effect on the Fund's portfolio."
    First quarter revenues were $8.1 million, up 6.3% compared to $7.6
million in the first quarter of 2008. Net earnings were $768,601, or $0.03 per
fund unit, an increase of $2,164,648 from the net loss of $1,396,047, or $0.06
per fund unit, for the first quarter of 2008.
    At quarter end, finance receivables were $108.7 million versus $100.2
million one year ago, an increase of 8.5%.
    In the first quarter, loan originations were $15.4 million, a decrease of
23.0% from $20.0 million for the same period in 2008. The economic slowdown in
Alberta impacted loan originations, which decreased in volume during the
quarter.
    Over the past two years, the Fund has experienced higher loss severity on
liquidated collateral, due to an overall decrease in the auction values of
used vehicles. This decrease in wholesale values started with the past
strength of the Canadian dollar, and recently, due to the general economic
environment. Further declines in auction value of used vehicles, particularly
as franchise dealerships close, create the possibility of excess inventory on
the market, and could result in lower recoveries on the disposition of
repossessed assets for some time. In 2008, the Fund also experienced higher
overall delinquency levels, due to increases in energy and gas prices as well
as higher unemployment levels. While increased energy price levels have
abated, the general economic environment has continued to keep the delinquency
at an elevated level.
    Carfinco has responded to the current economic conditions by implementing
changes to credit criteria, to ensure that customers are better able to meet
their payment obligations, and to collection procedures, to more efficiently
process collection activities. In the third quarter of 2007, the Fund also
introduced GPS and "Starter Interrupt" technology to vehicles on its GO Plan
program, where the dealer has a vested interest in the performance of finance
receivables.
    As announced, the Fund's Board of Trustees unanimously approved to not
distribute any cash or units for the three-month period ending March 31, 2009,
in order to continue to preserve operating cash flow in the best interest of
the Fund and its unitholders.
    During the quarter, Carfinco also announced the appointment of David
Rosenkrantz as Chairman of the Board of Trustees. Mr. Rosenkrantz, who has
been involved with Carfinco since inception, as a member of the Board of
Directors and then as a Trustee of the Fund, replaces David Prussky who
resigned as Chairman. David Prussky, a member of the Board of Trustees since
the formation of the Fund, continues to serve as a Trustee.
    "Carfinco continues to adapt to the challenges and realities of the
current economic environment," said President, Tracy Graf. "While
uncertainties remain, we move forward prudently, but with optimism, having
streamlined our processes to fortify the business. The result is that we
maintain both a healthy balance sheet, and an ultimate focus on long term
value creation."

    About Carfinco

    A growth-oriented income trust, Carfinco focuses on providing consumer
car loans to borrowers unable to obtain financing through traditional lending
sources. A network of select independent and franchise dealerships offer
Carfinco's payment plan to their customers who must, along with the vehicle,
meet Carfinco's underwriting guidelines.
    The units of the Fund trade on The Toronto Stock Exchange under the
symbol "CFN.UN."

    Caution Regarding Forward-Looking Statements - This news release contains
certain forward-looking statements, including statements regarding the
business and anticipated financial performance of the Fund. These statements
are subject to a number of risks and uncertainties. Actual results may differ
materially from results contemplated by the forward-looking statements. When
relying on forward-looking statements to make decisions, investors and others
should carefully consider the foregoing factors and other uncertainties and
should not place undue reliance on such forward-looking statements.

    

    Carfinco Income Fund
    Consolidated Balance Sheets
    -------------------------------------------------------------------------

                                                      March 31,  December 31,
                                                          2009          2008
                                                  ------------- -------------
                                                    (unaudited)     (audited)

    Assets
      Finance receivables                         $108,735,560  $108,016,961
        Allowance for credit losses                (12,500,000)  (12,190,000)
        Dealer reserve                              (3,335,096)   (2,454,715)
                                                  ------------- -------------
          Finance receivables - net                 92,900,464    93,372,246
                                                  ------------- -------------

      Cash                                             188,489        29,162
      Other assets                                     556,750       633,178
      Equipment                                        453,802       456,841
                                                  ------------- -------------
                                                     1,199,041     1,119,181
                                                  ------------- -------------

                                                  $ 94,099,505  $ 94,491,427
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------

    Liabilities
      Bank credit facility                        $ 66,673,576  $ 67,878,411
      Accounts payable and accrued liabilities         562,179       502,989
      Deferred dealer obligation                     1,631,423     1,604,385
      Derivatives                                    1,889,904     1,983,486
      Long term debt                                 2,300,000     2,300,000
                                                  ------------- -------------
                                                    73,057,082    74,269,271
                                                  ------------- -------------

    Unitholders' Equity
      Unitholders' capital                          29,635,129    29,583,463
      Deficit                                       (8,592,706)   (9,361,307)
                                                  ------------- -------------
                                                    21,042,423    20,222,156
                                                  ------------- -------------

                                                  $ 94,099,505  $ 94,491,427
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------



    Carfinco Income Fund
    Consolidated Statements of Earnings (Loss), Comprehensive Income (Loss)
     and Deficit
    -------------------------------------------------------------------------

                                                  Three months ended March 31
                                                  ---------------------------
                                                       2009          2008
                                                  ------------- -------------
                                                   (unaudited)   (unaudited)
    Financial Revenue
      Interest                                    $  7,551,871  $  7,075,126
      Administration fees                              498,317       500,838
                                                  ------------- -------------
                                                     8,050,188     7,575,964

    Financial Expense
      Interest                                       1,139,243     1,077,106
                                                  ------------- -------------
    Net financial income before provision
     for credit losses                               6,910,945     6,498,858

      Provision for credit losses                    3,778,864     4,982,803
                                                  ------------- -------------
    Net financial income before operating
     expenses                                        3,132,081     1,516,055
                                                  ------------- -------------

    Operating Expenses
      General and administrative                     2,412,257     2,351,092
      (Gain) loss on derivatives                       (93,582)      532,789
      Amortization of equipment                         44,805        28,221
                                                  ------------- -------------
                                                     2,363,480     2,912,102
                                                  ------------- -------------

    Net earnings (loss) and comprehensive
     income (loss)                                $    768,601  $ (1,396,047)
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------

    Deficit, beginning of period                  $ (9,361,307) $ (5,483,698)
      Net earnings (loss)                              768,601    (1,396,047)
      Cash distribution of fund unit equity                  -    (1,890,046)
                                                  ------------- -------------
    Deficit, end of period                        $ (8,592,706) $ (8,769,791)
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------

    Earnings (Loss) per Fund Unit
      Basic and diluted                           $       0.03  $      (0.06)
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------



    Carfinco Income Fund
    Consolidated Statements of Cash Flows
    -------------------------------------------------------------------------

                                                  Three months ended March 31
                                                  ---------------------------
                                                       2009          2008
                                                  ------------- -------------
                                                   (unaudited)   (unaudited)
    Increase (decrease) in cash

    Operating
      Net earnings (loss)                         $    768,601  $ (1,396,047)

      Adjustments to reconcile net earnings
       to net cash from operations:
        Provision for credit losses                  3,778,864     4,982,803
        Amortization of equipment                       44,805        28,221
        Accrued interest                               111,814       (61,435)
        Deferred dealer obligation                     450,000       225,000
        Derivatives                                    (93,582)      532,789
        Accounts payable and accrued liabilities        59,190    (1,050,577)
        Other assets                                    76,428        80,575
                                                  ------------- -------------
                                                     5,196,120     3,341,329
                                                  ------------- -------------

    Investing
      Funds advanced on finance receivables        (12,266,360)  (17,888,780)
      Principal collections on finance receivables   9,958,561    10,181,514
      Change in finance receivable reserves and
       transaction costs                            (1,534,059)   (1,538,402)
      Purchase of equipment                            (41,766)      (58,768)
                                                  ------------- -------------
                                                    (3,883,624)   (9,304,436)
                                                  ------------- -------------

    Financing
      Advances on bank credit facility                 895,165     9,002,857
      Repayments on bank credit facility            (2,100,000)     (800,000)
      Repayments on unit purchase financing             51,666        51,666
      Fund unit cash distribution                            -    (1,890,046)
                                                  ------------- -------------
                                                    (1,153,169)    6,364,477
                                                  ------------- -------------

    Net increase in cash                               159,327       401,370

    Cash
      Beginning of period                               29,162      (165,886)
                                                  ------------- -------------

      End of period                               $    188,489  $    235,484
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------

    Supplemental cash flow information:
      Interest paid                               $  1,063,139  $  1,046,021
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------
    

    %SEDAR: 00019164E




For further information:

For further information: Mr. Tracy A. Graf, CEO & Trustee of Carfinco
Income Fund, Telephone: 1-888-486-4356, Facsimile: 1-888-486-7456, E-mail:
tgraf@carfinco.com

Organization Profile

Carfinco Financial Group Inc.

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