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Input Capital Corp. Announces FY2018 Q3 Results

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Input Capital Corp. Announces FY2018 Q3 Results

Canada NewsWire

REGINA, Aug. 15, 2018 /CNW/ - Input Capital Corp. ("Input" or the "Company") (TSX:INP) (OTC:INPCF) has released its third quarter results for the 2018 fiscal year. All figures are presented in Canadian dollars.

Input Capital Corp. (CNW Group/Input Capital Corp.)

"Mortgage streams continued to be the area of greatest activity for us this quarter," said President & CEO Doug Emsley. "With the success of farmers over the last several years, we are at a point in the cycle where farmers' incremental working capital needs are minimal, but mortgage financing is an ongoing need, at the time of mortgage renewals, farm refinancing, and expansion via acquisition.

"Deployment into mortgages to the end of Q3 was $27.1 million – we are pleased with the response to mortgage streams to date and look forward to engaging with farmers about new mortgage opportunities when this year's harvest comes to an end.

"Harvest activity is well underway across western Canada. This is always an exciting time of year for farmers and for Input – the vast majority of our revenue is recorded over the next several months."

FY2018 Q3 HIGHLIGHTS

  • Adjusted streaming sales1 of $1.536 million on the delivery of 3,092 canola equivalent metric tonnes1 ("MT" or "tonnes") at an average price of $496.73 per MT;

  • Generated an additional $0.361 million in sales from canola trading for total adjusted sales of $1.897 million;

  • Cash operating margin1 $1.234 million, or $399.07 per MT (80.34% cash operating margin);

  • Adjusted operating cash flow1 of $(0.864) million or $(0.01) per share;

  • Adjusted EBITDA1 of $1.036 million, or $0.01 per share;

  • Adjusted net income1 of $0.077 million, or $0.00 per share;

  • Deployed $16.820 million as follows:
    • Upfront payments of $0.740 million into streaming contracts, adding 33 new producers to the portfolio and more than 46,000 MT to the Company's future canola sales; and
    • $16.079 million deployed into mortgage streams with 24 producers. (The grain delivery contracts associated with mortgage streams do not have an upfront payment associated with them, but the number of producers and reserves associated with them are included in the data outlined in the previous bullet);

_______________________________

1 Non-IFRS financial measures with no standardized meaning under IFRS. For further information and a detailed reconciliation, refer to "Non-IFRS Measures" beginning on page 35 of the MD&A

 

  • Finished the quarter with:
    • Cash of $9.007 million;
    • Canola reserves of 366,000 MT;
    • Total canola interests (current portion and long-term portion) and other financial assets (liabilities) (herein referred to collectively as "canola interests") of $45.169 million;
    • Loans and mortgages receivable of $42.969 million;
    • Multi-year active streaming contracts with 371 farm operators, up from 300 a year ago;
    • Total shareholders' equity of $105.450 million;
    • $3.966 million drawn on the $25 million revolving credit facility; and
    • No long-term debt.
  • On April 12, 2018, the Company signed two term sheets for term debt to facilitate the expansion of its mortgage stream program. These facilities will allow Input to margin mortgage streams and will be secured by the underlying conventional farmland first lien mortgages.

  • On May 29, 2018, the Company announced the seventh consecutive quarterly dividend of $0.01 per share which was payable on July 16, 2018, to shareholders of record as of June 30, 2018;

TRAILING TWELVE MONTH (TTM) HIGHLIGHTS

  • Adjusted streaming sales1 of $42.425 million on the delivery of 88,147 canola equivalent metric tonnes1 ("MT" or "tonnes") at an average price of $481.30 per MT;

  • Generated an additional $8.554 million in sales from canola trading for total adjusted sales of $50.978 million;

  • Cash operating margin1 $22.155 million, or $251.34 per MT (52.22% cash operating margin);

  • Adjusted operating cash flow1 of $15.510 million or $0.19 per share;

  • Adjusted EBITDA1 of $18.788 million, or $0.22 per share;

  • Adjusted net income1 of $2.411 million, or $0.03 per share;

  • Deployed $33.710 million as follows:
    • Upfront payments of $6.584 million into streaming contracts, adding 71 new producers to the portfolio and more than 143,000 MT to the Company's future canola sales; and
    • $27.126 million deployed into mortgage streams with 38 producers. (The grain delivery contracts associated with mortgage streams do not have an upfront payment associated with them, but the number of producers and reserves associated with them are included in the data outlined in the previous bullet);

_______________________________

1 Non-IFRS financial measures with no standardized meaning under IFRS. For further information and a detailed reconciliation, refer to "Non-IFRS Measures" beginning on page 35 of the MD&A

 

SUBSEQUENT EVENTS

  • On July 25, 2018, the Company announced the completion of its first credit agreement for mortgage stream financing with Concentra Bank, the wholesale bank and trust company for Canada's credit unions. In early August, the Company completed a first draw against this facility.

NORMAL COURSE ISSUER BID (NCIB) UPDATE

  • From the start of the NCIB in December 2017 to the end of the third quarter, the Company bought back 730,200 shares at an average price of $1.49. These shares were subsequently cancelled.

TRAILING TWELVE MONTH (TTM) HIGHLIGHTS



Selected non-IFRS measures1

Twelve months ended
Jun 30

CAD millions, unless otherwise noted

2018

2017

Adjusted streaming sales

42.425

29.742

Adjusted streaming volume (MT)

88,147

62,402

Average selling price from streaming contracts

$481.30

$476.62




Cash operating margin

22.155

25.599

Cash operating margin per tonne

$251.34

$410.23




Cash margin

6.669

7.246

Cash margin per tonne

$75.66

$116.12




Adjusted EBITDA

18.788

20.098

Adjusted EBITDA per share (basic)

$0.22

$0.25




Adjusted operating cash flow

15.510

18.865

Adjusted operating cash flow per share (basic)

$0.19

$0.23




Adjusted net income (loss)

2.411

1.104

Adjusted net income (loss) per share (basic)

$0.03

$0.01




Upfront payment per tonne2

 $45.84**

$125.37


*Cash operating margin per tonne is significantly lower than the previous period due to the introduction of marketing streams
last year. The most recent period includes marketing stream sales, and the previous period does not. Marketing streams feature
lower cash operating margins than capital streams, but require significantly less capital to fund them

**The Upfront payment per tonne figure includes upfront payments into all types of streams. However, because the upfront
payment associated with the grain delivery contract portion of a mortgage stream is $nil per tonne, this causes the upfront
payment figure to be averaged down in the recent period compared to previous periods are prior to the introduction of mortgage
streams

 

SALES

For the quarter ended June 30, 2018, Input generated adjusted sales from streaming contracts of $1.536 million on adjusted streaming volume of 3,092 MT for an average price of $496.73 per MT.

The sales from streaming tonnes plus net settlements from streaming tonnes for the quarter represent a 21% increase in quarterly volume over the comparable quarter one year ago, when the Company sold 2,536 MT of canola equivalent for revenue of $1.268 million for an average price of $500.07 per MT.

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1 Non-IFRS financial measures with no standardized meaning under IFRS. For further information and a detailed reconciliation, refer to "Non-IFRS Measures" beginning on page 29 of the MD&A

2 Includes upfront payments from contracts that were signed but not completely funded at the end of the quarter ended June 30, 2018

 

CAPITAL DEPLOYMENT AND PORTFOLIO UPDATE

For the three months ended June 30, 2018, Input recorded total upfront payments of $0.740 million into streaming contracts with 57 producers for the right to purchase over 46,000 MT of canola over the life of the streaming contracts. In addition, $16.079 million was deployed into mortgage streams with 24 producers.

During the quarter, Input added 33 new producers to its streaming contract portfolio; 22 producers in Saskatchewan and 11 in Alberta. The remaining contracts were renewals, expansions and restructures of existing contracts.

During the same quarter last year, total upfront payments made were $3.931 million and 124 new producers were added to the portfolio. Management believes that a good farming year in 2017 significantly moderated farmer demand for capital streams during the most recent period.

The change in active streaming contracts by region on a quarterly and annual basis is demonstrated in the table below:

Active Streaming
Contracts

Jun 30, 2018

Mar 31, 2018

Quarterly Growth

Jun 30, 2017

Year Over
Year Growth

Manitoba

8

8

-

9

(1)

Saskatchewan

269

260

9

220

49

Alberta

94

84

10

71

23

Total

371

352

19

300

71

 

BALANCE SHEET

KEY BALANCE SHEET ITEMS ARE SUMMARIZED BELOW:




Statements of Financial Position 

CAD millions, unless otherwise noted

As at

Jun 30, 2018

As at

Jun 30, 2017

Cash

9.007

15.305

Canola interests and other financial assets

45.169

75.311

Loans and mortgages receivable

42.969

12.454

Total assets

115.013

121.008

Total liabilities

9.563

16.173

Total shareholders' equity

105.450

104.835

Working capital

16.145

21.461

Revolving credit facility

3.966

6.162

Long-term debt

-

-

 

NORMAL COURSE ISSUER BID

From the start of the NCIB in December 2017 to the end of the third quarter, the Company bought back 730,200 shares at an average price of $1.49 prior to the end of the quarter. These shares were subsequently cancelled.

Management of Input believes that the Company's shares have been trading in a price range which does not adequately reflect their value and that the purchase of shares under the Bid will enhance shareholder value in general.

QUARTERLY DIVIDEND

The Board of Directors has declared a cash dividend of $0.01 per common share for the quarter ending June 30, 2018, representing $0.04 per share on an annualized basis. The dividend is payable on October 15, 2018 to shareholders of record on September 30, 2018. 

OUTLOOK

Last year was a good farming year for most farmers in western Canada. Yields and prices were strong, harvest went smoothly, crop quality was good, and grain movement was satisfactory in many areas. As a result, strong cash flow reduced the need of farmers to turn to the Company to solve working capital issues, which is the focus of the Company's capital stream product. Capital deployment into capital streams has been slow this year.

Mortgage streams have been the area of most activity this year. The next year will provide us with a greater feel for the depth of potential demand for mortgage streams. Early signs are excellent – without any significant promotion, Input Capital has funded in excess of $27.1 million in mortgages since the mortgage stream became a part of the company's product suite.

As of this writing, harvest activity has begun in most areas, a bit earlier than average. As a result, management expects significant early canola sales in late August and throughout September prior to the fiscal year end. These canola sales will enhance final results for this fiscal year.

WEBCAST AND CONFERENCE CALL DETAILS

A conference call will be held on Thursday, August 16, 2018 starting at 8:30 am Saskatchewan time (10:30 am Eastern time) to further discuss the FY2018 Q3 results. To participate in the conference call use the following dial-in number:

Participant Dial in #: (888) 231-8191 (North America Toll Free)
Participant Dial in #: (647) 427-7450 (International)

Webcast URL: 
https://event.on24.com/wcc/r/1659455/98BBCD928DA8E19DDE7F512E28C92B74

It is recommended that participants dial in five minutes prior to the commencement of the conference call. Soon after the completion of the call, the webcast will be available for download on the Input Capital website.

NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

ABOUT INPUT

Input is an agriculture commodity streaming company with a focus on canola, the largest and most profitable crop in Canadian agriculture. The Company has developed several flexible and competitive forms of financing which help western Canadian canola farmers solve working capital, mortgage finance and canola marketing challenges and improve the financial position of their farms. Under a streaming contract, Input provides capital in exchange for a stream of canola via multi-year fixed-volume canola purchase contracts. To a farmer, Input is like a virtual grain company, buying canola and providing financial solutions. To canola buyers, Input is like a large virtual farm which produces and sells canola over a large geographically diverse footprint, but does not own the land, or equipment or operate the farm. In production terms, Input is the largest canola farm in the world.

Input plans to continue to grow and diversify its low cost canola production profile by entering into streaming contracts with canola farmers across western Canada. Input is focused on farmers with quality production profiles, excellent upside yield potential, and strong management teams.

Forward Looking Statements

This release includes forward-looking statements regarding Input and its business. Such statements are based on the current expectations and views of future events of Input's management. In some cases the forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms, or other similar expressions intended to identify forward-looking statements. The forward-looking events and circumstances discussed in this release may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting Input, including risks regarding the agricultural industry, economic factors and the equity markets generally and many other factors beyond the control of Input. No forward-looking statement can be guaranteed. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Input undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Non-IFRS Measures

Input measures key performance metrics established by management as being key indicators of the Company's strength, using certain non-IFRS performance measures, including:

  • Adjusted Streaming Sales, Adjusted Streaming Volume and Adjusted Gross Profit from Streaming;
  • Crop Payment per Tonne;
  • Cash Operating Margin and Cash Operating Margin per Tonne;
  • Cash Margin and Cash Margin per Tonne;
  • Adjusted EBITDA and Adjusted EBITDA per share;
  • Adjusted Operating Cash Flow and Adjusted Operating Cash Flow per share;
  • Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per share; and
  • Upfront Payment per Tonne

The Company uses these non-IFRS measures for its own internal purposes. These non-IFRS measures do not have any standardized meaning prescribed by IFRS, and these measures may be calculated differently by other companies. The presentation of these non-IFRS measures is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Company provides these non-IFRS measures to enable investors and analysts to understand the underlying operating and financial performance of the Company in the same way as it is frequently evaluated by Management. Management will periodically assess these non-IFRS measures and the components thereof to ensure their continued use is beneficial to the evaluation of the underlying operating and financial performance of the Company, and to confirm that these measures remain useful for comparison purposes to other royalty/streaming companies.  For more detailed information, please refer to Input's Management Discussion and Analysis available on the Company's website at investor.inputcapital.com and on SEDAR at www.sedar.com.

SOURCE Input Capital Corp.

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