Carfinco Extends Record Earnings Streak to Eight Quarters
Carfinco Income Fund saw its pre-tax earnings hit an all-time high for the eighth consecutive time during the first quarter, as the company enjoyed closed to a 70-percent gain from the year-ago period.
Specifically, Carfinco pulled in pre-tax earnings of $5.5 million, a 69.2-percent year-over-year increase. This pushed Carfinco’s record streak to two full years, a streak that goes back to the first quarter of 2009. Net earnings and comprehensive income came in at $4.1 million, up from $3.3 million a year ago.
Continuing on, the company noted one major change in how it will report results.
“As per the changes to the tax treatment of income funds, announced by the Federal Government in the fall of 2006, Q1 2011 is the first quarter the Fund becomes a taxable entity,” officials explained. “This is also the first quarter the Fund is required to report under International Financial Reporting Standards instead of Canadian Generally Accepted Accounting Principles.
“These changes have had a substantial impact to the financial reporting of the Fund. Please read the MD&A, interim financial statements and notes to the interim financial statements for clarification on these changes,” they continued. “Comparative figures for 2010 differ from previously reported figures in order to conform to IFRS standards and be comparable to Q1 2011 figures.”
Delving into some more first-quarter performance data, Carfinco generated $13.5 million in revenue, up 23.6 percent from the year-ago period.
Carfinco reported earnings per unit of $0.17, an increase of 21.4 percent year-over-year. The company pulled in $24.4 million in loan originations, up 13.3 percent from the year-ago period.
The principal balance on Carfinco’s finance receivables climbed 3.3 percent during the quarter, coming in at $145.8 million. The company stressed, however, that the finance receivables reported on the Consolidated Statement of Financial Position has decreased from previous quarterly reports due to a difference in reporting between IFRS and GAAP and referred to note 19 on its interim financial statements for more clarification.
Meanwhile, finance receivables were up to $129.4 million, compared to $125.2 million in prior quarter.
“Management continues to process monthly loan originations at a level to achieve 20-percent growth in finance receivables for the year,” officials commented. “The majority of monthly loan originations continue to be from the Fund’s underwriting programs that have been in place for a number of years.
“As we branch out into risk based pricing, we believe there is still significant room for growth in the products currently offered by the fund. Geographical expansion into Quebec is slowly contributing to monthly loan originations, and management feels there is substantial potential for increased loan originations in this province at a controlled and monitored pace,” they added.
“Risk-based pricing has recently been introduced in the province of Alberta with underwriting programs designed to provide financing for consumers whose credit rating is nearer to prime,” they noted.