CFN August Investor Presentation

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  • 1. InvestorPresentation CARFINCO FINANCIAL GROUP INC. Toronto Stock Exchange: CFN Assured Automotive Financing August 2012

2. Forward Looking Statements2This presentation contains certain statements that may be deemed "forward-lookingstatements". All statements in this document, other than statements of historical fact, thataddress events or developments that the Company expects to occur, are forward lookingstatements. Forward looking statements are statements that are not historical facts and aregenerally, but not always, identified by the words "expects", "plans", "anticipates","believes", "intends", "estimates", "projects", "potential" and similar expressions, or thatevents or conditions "will", "would", "may", "could" or "should" occur.Although the Company believes the expectations expressed in such forward-lookingstatements are based on reasonable assumptions, such statements are not guarantees offuture performance and actual results may differ materially from those in the forward-looking statements. Factors that could cause the actual results to differ materially fromthose in forward looking statements include, failure to successfully negotiate orsubsequently close such transactions, inability to obtain required shareholder or regulatoryapprovals, uncertainty with respect to findings under exploration programs and generaleconomic, market or business conditions. Investors are cautioned that any such statementsare not guarantees of future performance and actual results or developments may differmaterially from those projected in the forward-looking statements. Forward lookingstatements are based on the beliefs, estimates and opinions of the Companys managementon the date the statements are made. The Company undertakes no obligation to updatethese forward-looking statements in the event that managements beliefs, estimates oropinions, or other factors, should change. 3. 3Share Price Chart 4. What the Analysts are Saying4Target Price$12.00$11.00$11.50$12.00Top PickBuy Buy OutperformForecast Revenue $71.3 million $72.5 million $66.3 million $71.1 million2012(interest revenue only)Forecast Net$0.88 $0.90 $0.89 $0.85Earnings/Share 2012Past top picks on MarketCall:Jamie Horvat @ SprottJason Donville @ DonvilleKent 5. A Harbour Amidst the Storm5 Management sees no storm clouds as identified in late 2007 prior toeconomic melt-down Credit controls remain as stringent as those introduced in 2008 Reserve allowance for future credit losses far exceed bankcovenants Quality loan originations remain at record levels Delinquencies remain at record low levels 6. Key Investment Highlights6 A uniquely positioned, highly profitable auto finance company Has delivered consistent 20% + annual growth in its business providing car loansto non-prime credit applicants Principal balance of finance receivables at end of June 2012: $181.1 million, 18,700 customers Provides a unique program structure which aligns customer, dealer and Carfincointerests Refined system of credit control checks and balances Combining technology & an experienced human touch Strong management Expertise Ownership Barriers to entry Experienced call center, customized software systems & detailed monitoring of customer base Vertically integrated All key functions are internal: underwriting, account management, inventory tracking, legal, collections, skip tracing, repossession & re-sales 7. Funding7 Credit Facility Summary Bank of America, N.A.Banking Syndicate Wells Fargo Financial Corporation Canada Bank of MontrealFacility Size $130 million Feb. 2008: Increased facility from $65mm to $85mm and added Bank ofMontreal to syndicateIncrease in Facility Size Dec. 2008: Wells Fargo Financial Corporation Canada added to syndicate June 2010: Increased facility from $85mm to $105mm April 2011: Increased facility from $105mm to $130mmMaturity June 30, 2013Rate Bankers Acceptance Rate plus 3.25%Leverage Ratio 3.50:1 8. Carfinco is8 GEOGRAPHICALLY DIVERSE 1997 founded in Alberta. Over 1,600 dealers in 10 provinces 45% franchised dealers & 55% independent used car dealerships Geographically diverse portfolio - 60% West & 40% EastWest 60%East 40% 9. Canadian Vehicle Market9 NEW AND USED VEHICLE SALES (000s OF UNITS)Source: DesRosiers2,890 2,790 2,637 2,634 2,356 1,653 1,636 1,6151,557 1,461NewUsed20062007200820092010 In 2010, there were 22.0 million cars and light trucks on Canadian roads.81.4% were 4 years old or older. 10. 10 Carfincos Competitive Position 11. Canadian Non-prime Market11 BEACON SCORE AS A % OF THE CANADIAN CREDIT MARKET 70% 58% 60%55% 50% 40% 36% 30% 20% 14%10%10% 6% 10% 5% 4%2% 0% No Score000 - 619 [D] 620 - 649 [C] 650 - 679 [B] 680 - 719 [A] 720 - 999 [A+] Canadian MarketCarfinco Portfolio 12. Our Customers12 Average age:37.8 years Average residency:4.7 years Average job length: 4.0 years Average income: $3,200/month 13. Carfincos Typical Car Loan13 Loan size:$12,000 Average term: 51.9 months Average payment:$406 Vehicle age:4.6 years Interest rate:29.5% Effective rate: 32.9% Administration fee: $499 14. Growing Loan Portfolio14 PRINCIPAL OF FINANCE RECEIVABLES$ Millions 181.1 167.6 141.1 113.8109.3 96.574.82006 2007 2008 2009201020112012 - Q2 15. Leads to Growing Revenues15 $ Millions 68.959.648.331.6 32.6 26.021.9 2006 2007 2008 2009 2010 2011 2012 -Q2 Annualized Note: Prepared using IFRS ( Previous GAAP Revenues for 2010 were 37.9) 16. Leads to Earnings Per Share16 QUARTERLY EARNINGS PER SHARE (dollars)0.25 0.220.19 0.18 Q1-10 Q2-10Q3-10 Q4-10Q1-11Q2-11Q3-11Q4-11 Q1-12 Q2-12 Note: 2011 numbers after tax and 2010 forward prepared under IFRS 17. Impressive ROE17 RETURN ON EQUITY (%)79.4 55.8 53.544.633.618.9 -9.0 20062007 2008 2009 2010 2011 2012 - Q2Annualized Note: 2006 through 2010 are percentages before tax 18. Financial Summary18Origination & Portfolio Growth Quarterly Normalized Earnings before Tax & ROE Millions$167.6 Millions Quarterly Normalized Earnings before Tax$160.0OriginationsPortfolioAnnualized ROE on Normalized Earnings before Tax 90% $141.1$9.0 81%79%$140.077% 76% 73% 73% 80% $8.0 72% $116.3$120.0 $113.870%$109.3 $7.0$96.5 $97.060%$100.0 $6.0 50%$74.8 $74.3$5.0 $80.0$72.1 $67.8 40% $4.0$7.7 $60.0$53.7$6.3$6.6 30% $3.0 $5.7 $5.9$5.2$5.4 $40.0 20% $2.0 $20.0 $1.010%$- 0% $-Q4-10 Q1-11 Q2-11 Q3-11Q4-11 Q1-12 Q2-12 Dec 2006Dec 2007Dec 2008 Dec 2009Dec 2010Dec 2011 Seven straight years of revenue and portfolio growth as well as twelve straight quarters of record Normalized Earnings before Tax 19. Capital Structure19 SHARES Issued: Insiders: free-trading 6,516,705 Public: free-trading18,128,525 Total issued:24,645,230 Fully diluted: 24,645,230 No option plan No warrants 20. Leadership Team20 Management Tracy Graf President & CEO Troy Graf COO Stephen Dykau CFO Board of Directors Tracy Graf President & CEO David Prussky Director, Patica Securities Ltd. David Rosenkrantz Director, Patica Securities Ltd. J. Daryl MacLellan President, Desante Financial Services Inc. Brent Channell Managing Director, Spartan Fund Management Inc. Maurice Kagan CEO, Sparkle Solutions LP Simon Serruya Chief Operating Officer, Yogen Frz International Inc. 21. Why Carfinco?21 1. Consistent positive growth amidst economic volatility 2. Target a 20% annual increase in the finance receivableportfolio 3. Board of Directors intends to maintain a minimum 3.5 centper month cash dividend through 2012 and beyond 4. Twelve consecutive quarters of record normalized earningsbefore tax 5. Large management and board ownership aligns the interestwith shareholders 22. InvestorPresentation CARFINCO FINANCIAL GROUP INC. Toronto Stock Exchange: CFN August 2012 For further information, please contact: Mr. Tracy A. Graf President and CEO Telephone: 1-888-486-4356 Facsimile: 1-888-486-7456 Email: