Counsel Announces Third Quarter 2013 Results
MORTGAGE SALES RISE 32%; MUA GROWS TO $16.7B; REVENUES INCREASE 33%; CONSOLIDATED EPS DOUBLES
TORONTO, Nov. 14, 2013 /CNW/ - Counsel Corporation ("Counsel" or the "Company") (TSX: CXS), a financial services company, today announced income from continuing operations attributable to shareholders of $3.0 million, or $0.03 per basic and diluted share, on $38.5 million in revenue in the third quarter ended September 30, 2013, compared to $4.0 million, or $0.05 per basic and diluted share, on $29.0 million in revenue in the same period of 2012. For the nine months ended September 30, 2013, income from continuing operations attributable to shareholders was $10.0 million, or $0.11 per basic and diluted share, on $110.6 million in revenue compared to $11.4 million, or $0.13 per basic and diluted share, on $85.7 million in revenue in the same period of 2012. Excluding the expense related to the increase in the market value of the Company's deferred share units (DSUs), income from continuing operations attributable to shareholders was $4.0 million and $11.8 million in the three and nine months ended September 30, 2013 respectively, compared to $4.1 million and $11.6 million in the respective corresponding periods in 2012. All amounts are stated in Canadian dollars, unless noted.
"We're quite pleased with our results in the third quarter. Our core residential mortgage lending business, Street Capital, continued to grow rapidly, recording $2.3 billion in mortgage sales compared to $1.7 billion in Q3 2012," said Allan Silber, Chairman and CEO of Counsel Corporation. "The company's mortgage sales have grown significantly year-to-date as well, and this strong growth has counteracted the impact of lower spreads in the credit market compared to the same period in 2012."
"Street Capital's mortgages under administration also grew to $16.7 billion, a 56% increase over the past year," added Mr. Silber. "We are now one of Canada's largest non-bank residential mortgage lenders, the result of our focus on cultivating a healthy portfolio of mortgages through stringent underwriting and robust quality assurance combined with the provision of excellent customer service and competitive mortgage products for mortgage brokers and borrowers."
Counsel's revenues are almost entirely generated from its mortgage lending business. The year-over-year increase in Counsel's revenue in the third quarter of 2013 reflects growth in the volume of mortgages sold by Street Capital Financial Corp. ("Street Capital").
Counsel's overall net income attributable to shareholders, including discontinued operations, increased to $3.6 million, or $0.04 per basic and diluted share, in the third quarter of 2013 versus $1.9 million, or $0.02 per basic and diluted share, in the third quarter of 2012. The year-over-year increase was primarily attributable to $0.6 million in income from the Company's discontinued operations attributable to shareholders versus a loss of $2.2 million in the third quarter of 2012. For the nine months ended September 30, 2013, net income attributable to shareholders was $8.8 million, or $0.10 per basic and diluted share, versus $9.3 million, or $0.11 per basic and diluted share, in the same period in 2012. The result includes an expense of $1.8 million due to the increase in market value of the Company's DSUs in the first nine months of 2013, versus an increase of $0.2 million in the nine months ended September 30. In June 2011, the Company ceased granting DSUs. In November, 2013, the Company and the existing DSU holders agreed to amend the DSU Plan to provide for payment in shares rather than cash; therefore, there will be no further impact on the statement of operations.
As part of its focus on financial services, the Company continues to pursue its plan to dispose of its non-core businesses, which were classified as discontinued operations in the first quarter of 2013, by the end of the first quarter of 2014. As part of this process, during and subsequent to the quarter, the Company completed the sale of two of its remaining real estate properties.
Mortgage Lending Business
Counsel carries on its mortgage lending business through its wholly owned subsidiary Street Capital (www.streetcapital.ca). The company sources its mortgages solely through a network of independent, high quality mortgage brokers across Canada with whom it has built relationships. The company offers a broad lineup of high ratio and conventional mortgages, predominantly to prime borrowers, and sells the mortgages it underwrites to top-tier financial institutions. Business revenues are almost entirely from the gain on sale of mortgages.
The business generated $38.3 million and $110.0 million in revenues in the three and nine months ended September 30, 2013 compared to $28.9 million and $85.0 million in the respective corresponding periods in 2012. The increase in both periods was due to growth in the volume of mortgages sold. Operating expenses, consisting of the cost to source and underwrite mortgages sold by Street Capital, totaled $24.5 million and $71.6 million in the three and nine months ended September 30, 2013 compared to $15.7 million and $47.6 million in the respective corresponding periods in 2012. The increases reflect the increase in mortgages sold and costs incurred to expand Street Capital's share of the mortgage broker channel.
Street Capital sold $2.266 billion and $6.316 billion of mortgages in the three and nine months ended September 30, 2013, compared to $1.674 billion and $4.385 billion in the respective corresponding periods in 2012. The business increased its portfolio of mortgages under administration to $16.7 billion at September 30, 2013 compared to $10.7 billion at September 30, 2012 and $15.0 billion at June 30, 2013.
Counsel's Management's Discussion and Analysis and Condensed Consolidated Interim Financial Statements for the three and nine months ended September 30, 2013 will be available on SEDAR (www.sedar.com).
Conference Call Counsel will host a conference call on Friday, November 15, 2013 at 9:00 a.m. ET to discuss its 2013 third quarter financial results. Allan Silber, CEO of Counsel Corporation and Ed Gettings, CEO of Street Capital Financial Corporation, will chair the call. To participate in the call, please dial 647-427-7450 or 1-888-231-8191 ten minutes prior to the scheduled start of the call. A taped replay of the conference call will be available until Monday, December 16, 2013 by calling 416-849-0833 or 1-855-859-2056, reference number 91519205.
About Counsel Corporation (www.counselcorp.com) Counsel Corporation (TSX: CXS) is a financial services company operating in residential mortgage lending through its wholly owned subsidiary Street Capital Financial Corporation, one of the largest non-bank mortgage lenders in Canada. Founded in 1979 and a public company for more than a quarter century, Counsel's goal is to build consistently profitable, industry-leading financial services companies by investing in great leaders and providing them with the strategic guidance and financial resources they need to succeed.
Forward-Looking Statements The statements made in this release that are not historical facts contain forward-looking information that involves risks and uncertainties. All statements, other than statements of historical facts, which address Counsel Corporation's expectations, should be considered as forward-looking statements. Such statements are based on knowledge of the environment in which Counsel Corporation currently operates, but because of the factors listed herein, as well as other factors beyond Counsel Corporation's control, actual results may differ materially from the expectations expressed in the forward-looking statements. Important factors that may cause actual results to differ from anticipated results include, but are not limited to, obtaining necessary approvals and other risks detailed from time to time in the Company's securities and other regulatory filings.
Condensed Consolidated Interim Statements of Operations
(in thousands of Canadian Dollars, except per share amounts)
Three months ended Nine months ended September September 30, 30, 2013 2012 2013 2012 $ $ $ $ Revenues 38,473 28,986 110,605 85,719 Expenses Operating costs 24,520 15,716 71,621 47,626 Selling, general and 9,049 7,319 24,002 19,634 administrative expense Foreign exchange - (58) - (5) (gain) loss Depreciation and 344 325 1,007 1,060 amortization Interest expense 447 557 1,558 1,708 34,360 23,859 98,188 70,023 Income before fair 4,113 5,127 12,417 15,696 value adjustments Fair value adjustments 159 16 4,927 1,187 Income before income 4,272 5,143 17,344 16,883 taxes and discontinued operations Income tax provision 1,206 1,269 3,431 4,085 Income from continuing 3,066 3,874 13,913 12,798 operations Less: Income (loss) 34 (159) 3,959 1,405 attributable to non-controlling interest Income attributable to 3,032 4,033 9,954 11,393 shareholders Income from 307 (2,718) (2,492) (3,141) discontinued operations Less: Income (loss) (245) (540) (1,349) (1,079) attributable to non-controlling interest Income (loss) 552 (2,178) (1,143) (2,062) attributable to shareholders Net income 3,584 1,855 8,811 9,331 attributable to shareholders Basic and diluted net income (loss) per share : Continuing operations 0.03 0.05 0.11 0.13 Discontinued 0.01 (0.03) (0.01) (0.02) operations Basic and diluted net 0.04 0.02 0.10 0.11 income per share Weighted average number of common shares outstanding (in 96,224 85,783 90,622 85,433 thousands) - basic and diluted The notes contained in the Company's condensed consolidated interim financial statements are an integral part of these statements. Condensed Consolidated Interim Statements of Financial Position (in thousands of Canadian Dollars) (Unaudited) September 30, December 31, 2013 2012 $ $ Assets Current assets Cash and cash equivalents 37,877 12,196 Marketable securities 117 109 Mortgages, accounts and deferred 36,967 26,360 interest receivable Inventory - 6,863 Prepaid expenses, deposits and 4,216 4,637 deferred charges Investment held for sale - 1,851 Income tax receivable - 70 Assets of discontinued operations 17,058 91 96,235 52,177 Non-current assets Deferred interest and mortgage 14,559 17,086 receivable Deferred charges 33,878 24,692 Investment properties - 3,969 Properties under development - 6,739 Property, plant and equipment 3,141 3,216 Interests in joint ventures - 3,600 Investment in associates - 20 Portfolio investments 45,751 53,454 Intangible assets 5,718 11,324 Goodwill 24,919 43,837 Deferred income tax assets - 27,438 Other assets 49 64 Assets of discontinued operations 68,197 - Total assets 292,447 247,616 Liabilities Current liabilities Accounts payable and accrued 65,343 30,395 liabilities Customer deposits - 587 Income taxes payable 19 19 Current portion of mortgages and 14,933 24,659 loans payable Contingent consideration 4,027 2,757 Liabilities of discontinued 24,943 575 operations 109,265 58,992 Non-current liabilities Mortgages and loans payable 6,623 16,144 Convertible debentures - 11,937 Contingent consideration 4,416 9,264 Deferred income tax liabilities 6,972 3,608 Derivative liability 14 27 Other liabilities - 643 Liabilities of discontinued 319 - operations Total liabilities 127,609 100,615 Shareholders' equity 164,838 147,001 Total liabilities and shareholders' equity 292,447 247,616 The notes contained in the Company's condensed consolidated interim financial statements are an integral part of these statements.
SOURCE Counsel Corporation
Counsel Corporation Stephen Weintraub EVP, Secretary & CFO email@example.com Tel: (416) 866-3058
TMX Equicom Tim Foran firstname.lastname@example.org Tel: (416) 815-0700 ext. 251
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/November2013/14/c7761.html
CO: Counsel Corporation ST: Ontario NI: FIN ERN CONF
-0- Nov/14/2013 23:23 GMT