Vancouver, British Columbia--(Newsfile Corp. - January 29, 2025) - Solution Financial Inc. (TSX: SFI) (the "Company") a leading provider of luxury and ultra luxury asset leasing in Canada, today announced its financial results for the year ending October 31, 2024.
Earnings Highlights for the Year Ending October 31, 2024:
- Net income for the year increased to $355,018 compared to $38,672 in 2023.
- Adjusted net income(1) increased to $587,736 compared to $457,520 in 2023.
- Revenue decreased to $12,509,839 compared to $13,916,092 (restated) (2) in 2023
- Total leasing portfolio increased 9.45% to $27,995,172 at the end of the year.
Operational Highlights for the Year End:
- Continued to optimize the Company's Securitization Financing facility to further strengthen the Company's working capital position, secure more favourable fixed interest rates.
- Continued to expand relationships with new dealerships in Ontario and Alberta.
- Further streamlined operational costs to improve overall profitability.
"In the fiscal year ending October 31, 2024, I am pleased with our revenue results, especially given the ongoing challenges in the automotive and leasing sectors," stated Bryan Pang, CEO of Solution Financial Inc. "While revenues were slightly lower year-over-year, this reflects our continued strategic transition to prioritize finance-type leases over operating leases, coupled with tighter margins primarily in resale and brokerage operations. These results underscore the resilience of our business model and our ability to adapt to changing market conditions.
The Canadian automotive market has faced significant challenges, including high interest rates and tightening credit conditions, which have impacted both consumers and industry operators. Despite these headwinds, our focus on our local leasing programs has enabled us to capture increased market share, particularly as some competitors have struggled to adapt to the evolving rate environment. Our strong relationships with banking partners, who understand and support our vision, have been instrumental in helping us reaffirm profitability during this period.
Looking ahead, despite the uncertainty of the new Trump administration and tariff impacts on Canada, we are optimistic about the recent improvements in interest rates and the opportunities they present. We remain committed to leveraging our unique approach to leasing-balancing customer credit considerations with a keen focus on the resale and remarketing potential of the underlying leased assets-to drive long-term growth and profitability. Our ability to weather market challenges and emerge stronger underscores our dedication to delivering value to both our shareholders and clients," concluded Pang.
Financial Results
Solution is reporting net income of $355,018 or $0.004, per share for the year ending October 31, 2024. This compares to net income of $38,672 or $0.0004 per share for the year ending October 31, 2023.
Adjusted net income, which is more reflective of actual cash earnings, for the year ending October 31, 2024, was $476,736(1) or $0.006 per share compared to $457,520 or $0.005 per share for the year ending October 31, 2023. Adjusted Net Income excludes the non-cash accretion expense related to the convertible debentures and right of use assets of $119,829, income tax recovery of $111,000, amortization of $100,465, and provision for credit losses of $123,424.
Lease Portfolio
At October 31, 2024, Solution had 342 vehicles in its lease portfolio, a net increase of thirty-nine vehicles over the year to bring the total lease portfolio to $28 million.
At October 31, 2024 the average remaining lease term for the portfolio was 2.25 years, weighted by net book value for each vehicle. At October 31, 2024, Solutions' 342 leases were generating annualized gross rental and lease cash flows of approximately $7.3 million.
About Solution
Solution Financial commenced operations in 2004 and specializes in sourcing and leasing luxury and exotic vehicles, yachts and other high value assets. Solution works with a select group of luxury automotive and marine dealerships providing lending solutions to clients who prefer more flexible leasing options than those traditionally offered by banks and other lease providers. Typical customers include new immigrants, business owners and international students who tend to upgrade their vehicles more frequently than traditional lease agreements allow. Solution Financial provides a unique leasing experience whereby it partners with its clients to help source limited edition and difficult to acquire vehicles as well as providing white glove services to clients for insuring, maintaining, upgrading, and reselling their vehicles.
Note 1- Non-IFRS Financial Metrics
Solution provides all financial information in accordance with International Financial Reporting Standards ("IFRS"). To supplement our consolidated financial statements presented in accordance with IFRS, we are also providing with this press release, certain non-IFRS financial measures, including Adjusted Net Income. In calculating these non-IFRS financial measures, we have excluded certain transactions that are not necessarily indicative of our ongoing operations or do not impact cash flows. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS.
Note 2- Restatement of Comparative Amounts
During the year ended October 31, 2024, the Company identified an accounting error related to the recognition of vehicle sales revenue and cost of sales in connection with the buyout option on finance leases with guaranteed residual values. Previously, these amounts were recorded as revenue and cost of sales with no impact on gross profit; however, under IFRS, they should have been treated as a derecognition of the lease receivable with no impact on revenue or cost of sales. As a result, for the year ended October 31, 2023, vehicle sales and cost of sales have been reduced by $1,461,358, with no impact on net income, cash flows, or shareholders' equity.
Cautionary Statement Regarding Forward- Looking Statements
This press release contains "forward-looking information" as defined under applicable Canadian securities laws. This information includes, but is not limited to, statements concerning our objectives, our strategies to achieve those objectives, as well as statements made with respect to management's beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or "continue", or similar expressions suggesting future outcomes or events. Such forward-looking information reflects management's current beliefs and is based on information currently available to management. Although forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with this forward-looking information. Certain statements included in this press release may be considered a "financial outlook" for purposes of applicable Canadian securities laws, and as such the financial outlook may not be appropriate for purposes other than this press release.
The forward-looking information contained in this press release is made as of the date of this press release and should not be relied upon as representing Solution's views as of any date subsequent to the date of this press release. Except as required by applicable law, management and Solution's Board of Directors undertake no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
For further information please contact Sean Hodgins at (778) 318-1514.
ON BEHALF OF THE BOARD
(signed) "Bryan Pang"
Bryan Pang
President, CEO and Director
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SOURCE: Solution Financial Inc.
