Callidus Capital Corporation Investor Presentation May 2016
Disclaimers Forwa ward rd-Looki oking ng Inform rmatio ion Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future events, performance or results, and will not necessarily be accurate This document contains “forward -looking information” within the meaning of applicable indicators of whether such events, performance or results will be achieved. Forward-looking Canadian securities legislation. Such forward-looking information includes, forward-looking statements are based on information available at the time and/or management’s expectations statements regarding Callidus and the industries in which it operates, including statements with respect to future events that involve a number of risks and uncertainties. Any forward- about, among other things, expectations, beliefs, plans, future loans and origination, business looking information concerning prospective results of operations, financial position, and acquisition strategies, opportunities, objectives, prospects, assumptions, including those expectations of cash flows and future cash flows is based upon assumptions about future related to trends and prospects and future events and performance. Sentences and phrases results, economic conditions and courses of action and is presented for the purpose of providing containing or modified by words such as “anticipate”, “plan”, “continue”, “estimate”, “intend”, prospective purchasers with a more complete perspective on Callidus ’ present and planned “expect”, “may”, “will”, “project”, “predict”, “potential”, “targets”, “projects”, “is designed to”, future operations. Such information may not be appropriate for other purposes and actual “strategy”, “should”, “believe”, “contemplate” and similar expressions, and the negative of such results may differ materially from those anticipated in such forward-looking statements. expressions, are not historical facts and are intended to identify forward-looking statements. To the extent any forward-looking information in this MD&A constitutes future-oriented financial These statements involve known and unknown risks, uncertainties and other factors that may information or financial outlooks within the meaning of Canadian securities laws, such cause actual results or events to differ materially from those anticipated in such forward-looking information has been prepared by the Corporation to provide a reasonable estimate of the statements. Forward-looking statements should not be read as guarantees of future events, potential earnings of the current loan portfolio, subject to (among other things) the assumptions future performance or results, and will not necessarily be accurate indicators of the times at, or and risks discussed in this MD&A, and readers are cautioned that this information should not be by which, such events, performance or results will be achieved, if achieved at all. Forward- relied upon for any other purpose. Future-oriented financial information and financial outlooks looking statements are based on information available at the time and/or management’s are, without limitation, based on the assumptions and subject to the risks set out herein. expectations with respect to future events that involve a number of risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the The Corporation discloses a number of financial measures in this document that are calculated forward-looking statements. and presented using methodologies other than in accordance with IFRS. The Corporation utilizes these measures in managing the business, including performance measurement and valuation Specific forward-looking statements contained in this document include, among others, purposes, and believes that providing these performance measures on a supplemental basis to statements, management’s beliefs, expectations or intentions regarding the following: Callidus ’ its IFRS results is helpful to investors in assessing the overall performance of the business of expected growth, including organic growth in the Canadian market; through acquisitions; the Corporation. These financial measures should not be considered as a substitute for similar expansion of the ‘ Callidus Lite ’ loan product; through expansion into the United States; and the financial measures calculated in accordance with IFRS. The Corporation cautions readers that purchase of Loan Assets from the Catalyst Funds; the targeted Gross Yields of the Callidus and these non-IFRS financial measures may differ materially from the calculations disclosed by other ‘ Callidus Lite ’ loans; funding pursuant to the Participation Agreement and the relationships businesses, and as a result, may not be comparable to similar measures presented by others. between Callidus, CCGI and the Catalyst Funds. Reconciliations of these non-IFRS financial measures to the most directly comparable financial In making the forward-looking statements, the Corporation has made assumptions regarding: measures calculated and presented in accordance with IFRS are included within the company’s general economic conditions, reliance on debt financing, funding pursuant to the Participation most recent MD&A. See also the sections entitled “Non -IFRS Measures ” and ‘Outlook” in such Agreement, interest rates, continued lack of ABL regulation, continued operation of key systems, MD&A. debt service, the expectation that the number of industry competitors in Callidus’ marketplace will continue to decline, bank lending to mid-market companies will continue to be constrained for at least several years, future capital needs, retention of key employees, adequate management of conflicts of interests, continued performance of the Loan Portfolio and solvency of borrowers, limited loan prepayment, effective use of leverage, and such other risks or factors described in the final prospectus and from time to time in public disclosure documents of Callidus that are filed with securities regulatory authorities. 2
Q1 2016 Highlights Revenue of $49.5 million up 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 Q4 2015 and 7% ($1.1 million) from Q1 2015 EPS (diluted) of $0.34, up 127% ($0.19) from Q4 2015 and 10% ($0.03 per share) from Q1 2015. ROE was 13.9%, an increase from 6.2% in the Q4 2015 and 13.6% in Q1 2015. Gross yield for the quarter was 19.4%, an increase from 19.1% in Q4 2015, and an increase from 17.9% in Q1 2015 Leverage ratio of 38.9% at the end of the current quarter, a decrease from 50.9% at the end of the prior quarter. Provision for loan losses for the first quarter was $7.9 million, $4.3 million of which relates to interest revenue recorded on those loans for the current quarter. 3
Post Q1 2016 Highlights Announced and mailed documents relating to a Substantial Issuer Bid (“SIB”) Under the SIB: The Company is offering to purchase for cancellation up to 3,571,428 common shares Purchase price of $14 per common share. Expanded facility 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. Increases the existing facility to US$337.5 million in the aggregate. Other terms of the facility are unchanged. 4
Q1 2016 Highlights 31 31-Ma Mar-16 16 31-Dec 31 Dec-15 15 31-Ma 31 Mar-15 15 Q1/Q4 Change Y/Y Y Change (C$ thousands, except per share data) Gross loans receivable $1,157,7 ,734 $1,220,715 $905,582 (5%) 28% Average loan portfolio 1,226,8 ,881 1,192,994 864,324 3% 42% outstanding (1) Total revenue after derecognition 49,5 ,540 48,467 35,091 2% 41% Gross yield (1) 19.4 .4% 19.4% 17.9% Net interest income 37,7 ,704 36,734 27,125 3% 39% Net interest margin 12.5 .5% 12.2% 12.7% Net income 17,0 ,072 7,648 15,989 123% 7% EPS (diluted) $0.3 .34 $0.15 $0.31 127% 10% Return rn on equit ity 13.9 .9% 6.2% 13.6% 124% 0.43% (2) 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. 2. Expressed as a difference in percentage points. 5
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