TORONTO--(BUSINESS WIRE)--Axis Auto Finance Inc. ("Axis" or the "Company") (TSX: AXIS), a rapidly growing financial technology company changing the way Canadians purchase and finance used vehicles, today announced financial results for the fourth quarter and the 2023 fiscal year.
Q4 2023 Financial Highlights
- Total originations of $62.5 million, consisting of $30.3 million in automotive originations and $32.3 million in equipment originations;
- Revenues of $10.1 million in the quarter, a 2% decline year-over-year;
- Goodwill impairment expense of $17.8 million vs nil in prior year;
- Adjusted loss(1) of ($1.4) million as compared to Adjusted Earnings of $1.1 million in prior year; and
- Net loss of ($20.1) million, down from net income of $0.3 million in the fourth quarter of 2022.
For the quarter ending June 30, 2023, auto loan originations were $30.3 million, down from $48.2 million in auto loan originations in the fourth quarter of 2022, as credit and underwriting parameters were tightened. The $30.3 million in fourth quarter originations consisted of $17.8 million owned and on balance sheet, while $12.5 million were volumes managed for Westlake Financial Services ("Westlake").
Equipment finance origination volumes in the quarter were $32.2 million, up 3% from $31.4 in the comparable quarter of 2022. Fourth quarter originations consisted of $13.3 million owned and on balance sheet, with $18.9 million being brokered for third parties or originated for syndication partners.
Revenues for the quarter were $10.1 million, a decrease of 2.0% from the fourth quarter of prior year. Automotive annualized realized credit loss rate(2) for the quarter was 12.90%, up from 7.64% during the same quarter of the prior year. Axis incurred a non-cash, goodwill impairment expense of $17.8 million in the fourth quarter related to its automotive cash generating unit ("CGU"), as compared to nil in the comparable quarter of prior year.
Adjusted loss(1) for the quarter was ($1.4) million, or ($0.011) per share, as compared to Adjusted earnings of $1.1 million or $0.009 per share for the fourth quarter of 2022. The Company recorded a Net loss for the quarter of ($20.1) million or ($0.165) per share, as compared to net income of $0.3 million or $0.002 per share in the fourth quarter of 2022.
Fiscal 2023 Financial Highlights
- Total fiscal 2023 originations of $253.4 million, consisting of $142.9 million in automotive originations and $110.5 million in equipment originations;
- Total owned and managed finance receivables of $334.5 million, consisting of $262.6 million in auto and $71.9 million in equipment;
- Revenues of $40.6 million in fiscal 2023, an increase of 1.0% from prior year;
- Goodwill impairment expense of $17.8 million vs nil in prior year;
- Adjusted loss(1) of ($5.2) million, as compared to Adjusted Earnings(1) of $4.7 million in fiscal 2022; and
- Net loss of ($26.2) million, down from Net income of $1.5 million in prior year.
For the fiscal year ended June 30, 2023, auto loan originations were $142.9 million, consisting of $74.2 million owned and on balance sheet, while $68.7 million were volumes managed for Westlake Financial Services ("Westlake"). This represented a 7% reduction from $154.0 million in total originations in fiscal 2022.
Axis' total owned and managed auto portfolio reached $262.6 million, a 15% year over year increase from $229.3 million in prior year. The auto portfolio at June 30, 2023 consisted of $146.5 million of on balance sheet assets and $116.1 million in Westlake managed assets.
Equipment finance origination volumes in fiscal 2023 were $110.5 million, consisting of $49.1 million owned and on balance sheet, with $61.4 million being brokered for third parties or originated for syndication partners. Fiscal 2023 equipment originations of $110.5 million represented a 8% year over year increase from $102.2 million in fiscal 2022.
Axis's total owned and managed equipment portfolio peaked at $71.9 million as of June 30, 2023, an increase from $21.1 million a year earlier. In aggregate, the Axis' total automotive and equipment on balance sheet and managed assets peaked at $334.5 million as at June 30, 2023, a 34% year over year increase from $250.4 million.
Revenues for the year were $40.6 million, an increase of 1.0% year-over-year. Automotive annualized realized credit loss rate(2) for fiscal 2023 was 11.13%, up from 7.89% during fiscal 2022, while the Company concluded the year with reportable delinquency of 5.17%.
Adjusted loss(1) for fiscal 2023 was ($5.2) million, or ($0.043) per share, as compared to Adjusted earnings of $4.7 million or $0.041 per share for fiscal 2022. The Company recorded a Net loss in fiscal 2023 of ($26.2) million or ($0.215) per share, as compared to net income of $1.5 million or $0.013 per share in fiscal 2022.
Axis Reconciliation(3) of Net Income (Loss) to Adjusted Earnings (Loss) - Fourth Quarter | |||
Q4 2023 | Q4 2022 | ||
Net Income (Loss), as reported in financial statements | (20,091,194) | 313,372 | |
Adjustments: | |||
Non-cash interest | 288,243 | 401,809 | |
Depreciation | 241,965 | 202,104 | |
Amortization | 171,978 | 161,484 | |
Acquisitions and integration | 34,239 | 20,000 | |
Stock-based compensation | 214,987 | 119,536 | |
IFRS-16 lease expense | (75,225) | (88,119) | |
Goodwill impairment expense | 17,810,702 | - | |
Adjusted Earnings (Loss) | (1,404,305) | 1,130,186 | |
Axis Reconciliation(3) of Net Income (Loss) to Adjusted Earnings (Loss) - Fiscal Year | |||
FY 2023 | FY 2022 | ||
Net Income (Loss), as reported in financial statements | (26,182,080) | 1,484,860 | |
Adjustments: | |||
Non-cash interest | 1,218,637 | 1,580,944 | |
Depreciation | 817,500 | 196,622 | |
Amortization | 695,304 | 153,904 | |
Acquisitions and integration | 65,936 | 27,260 | |
Stock-based compensation | 652,108 | 66,720 | |
IFRS-16 lease expense | (327,655) | (87,152) | |
Goodwill impairment expense | 17,810,702 | - | |
Adjusted Earnings (Loss) | (5,249,548) | 4,653,107 | |
About Axis Auto Finance
Axis is a financial technology company changing the way Canadians buy and finance used vehicles. Through our direct-to-consumer portal, DriveAxis.ca, customers can choose their next used vehicle, arrange financing, and get the car delivered to their home. In addition, the company continues to grow B2B non-prime auto loan originations by delivering innovative technology solutions and superior service to its Dealer Partner Network. All Axis auto loans report to Equifax, resulting in over 70% of customers seeing a significant improvement of their credit scores. Further information on the Company can be found at https://www.axisfinancegroup.com/investors-press-releases/.
(1) Adjusted loss is a non-IFRS measure as defined in the Company's MD&A, which is published on Sedar. Refer to pages 5 and 6 of the MD&A, that is incorporated by reference.
(2) Annualized realized credit loss rate is a non-IFRS measure as defined in the Company's MD&A which is published on Sedar. Refer to pages 5 and 6 of the MD&A, that is incorporated by reference.
(3) The reconciliation from Net Income (Loss) to Adjusted Earnings (Loss) for the current quarter and for the full fiscal year is shown on page 17 of the Company's MD&A, which includes the basis for adjustments.
Non-IFRS Measures
The Company's audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and the accounting policies we adopted in accordance with IFRS. Non-IFRS measures are not standardized financial measures under the financial reporting framework used to prepare the financial statements of the Company to which the non-IFRS measures relate and might not be comparable to similar financial measures disclosed by other issuers.
The Company believes that certain Non-IFRS Measures can be useful to investors because they provide a means by which investors can evaluate the Company's underlying key drivers and operating performance of the business, exclusive of certain adjustments and activities that investors may consider to be unrelated to the underlying economic performance of the business of a given period. A full description of these measures can be found in the Management Discussion & Analysis that accompanies the financial statements for the corresponding period, which is published on Sedar.
The TSX Exchange has neither approved nor disapproved the contents of this press release. Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.
Contacts
Axis Auto Finance Inc.
Todd Hudson
CEO
(416) 633-5626
ir@axisautofinance.com
