First Quarter Financial Results MAY 11, 2017

Transcription

1 First Quarter 2017 Financial Results MAY 11, 2017

2 Certain infrmatin in this presentatin is frward-lking and related t anticipated financial perfrmance, events and strategies. When used in this cntext, wrds such as will, anticipate, believe, plan, intend, target and expect r similar wrds suggest future utcmes. Frward-lking statements relate t, amng ther things, ECN Capital Crp. s ( ECN Capital ) bjectives and strategy; future cash flws, financial cnditin, perating perfrmance, financial ratis, prjected asset base and capital expenditures; ECN Capital s anticipated dividend plicy; anticipated cash needs, capital requirements and need fr and cst f additinal financing; future assets; demand fr services; ECN Capital s cmpetitive psitin; and anticipated trends and challenges in ECN Capital s business and the markets in which it perates; and the plans, strategies and bjectives f ECN Capital fr the future. The frward-lking infrmatin and statements cntained in this presentatin reflect several material factrs and expectatins and assumptins f ECN Capital including, withut limitatin: that ECN Capital will cnduct its peratins in a manner cnsistent with its expectatins and, where applicable, cnsistent with past practice; the general cntinuance f current r, where applicable, assumed industry cnditins; the cntinuance f existing (and in certain circumstances, the implementatin f prpsed) tax and regulatry regimes; certain cst assumptins; the cntinued availability f adequate debt and/r equity financing and cash flw t fund its capital and perating requirements as needed; and the extent f its liabilities. ECN Capital believes the material factrs, expectatins and assumptins reflected in the frward-lking infrmatin and statements are reasnable but n assurance can be given that these factrs, expectatins and assumptins will prve t be crrect. By their nature, such frward-lking infrmatin and statements are subject t significant risks and uncertainties, which culd cause the actual results and experience t be materially different than the anticipated results. Such risks and uncertainties include, but are nt limited t, perating perfrmance, regulatry and gvernment decisins, cmpetitive pressures and the ability t retain majr custmers, rapid technlgical changes, availability and cst f financing, availability f labr and management resurces, the perfrmance f partners, cntractrs and suppliers. Readers are cautined nt t place undue reliance n frward-lking statements as actual results culd differ materially frm the plans, expectatins, estimates r intentins expressed in the frward-lking statements. Except as required by law, ECN Capital disclaims any intentin and assumes n bligatin t update any frward-lking statement, whether as a result f new infrmatin, future events r therwise. 2

3 Q Analyst Cnference Call STRATEGY AND BUSINESS DEVELOPMENT OPERATING HIGHLIGHTS Summary Cmmercial & Vendr Finance Rail Finance Aviatin Finance CONSOLIDATED FINANCIAL SUMMARY QUESTIONS 3

4 STRATEGY AND BUSINESS DEVELOPMENT Steven Hudsn Chief Executive Officer 4

5 Business Assessment Value creatin since Separatin clsing ECN vs. TSX 120% 115% 110% 105% 100% 95% 90% 85% 80% 10/16 11/16 12/16 01/17 02/17 03/17 04/17 05/17 ECN TSX Assessment criteria utilized n existing businesses and acquisitins Niche specialty finance fcus Acceptable ROE Resilient business platfrm thrugh credit cycles Prven grwth prfile t achieve industry leading scale Abve average industry credit experience Substantial credit/liquidity (including asset management) Track recrd f capital stewardship Business Grwth CActiv US Finance Assets US$1,372 mm Value Generatin Premium Paid/Received US$180 mm US$260 mm US$3 mm Nv 2012 Acquisitin f CActiv Dec 2016 Nv 2012 Acquisitin f CActiv Feb 2017 Sale 5

6 Bard f Directrs and Management ECN Capital recgnizes the benefits that diversity brings t the cmpany. The Bard aims t be cmprised f directrs wh have a range f perspectives, insights and views in relatin t the issues affecting ECN Capital. Bard Member and CEO, Steven Hudsn is a Member f the 30% Canada Club. The 30% Club believes that gender balance n bards encurages better leadership and gvernance, and cntributes t better all rund bard perfrmance. ECN is prud t welcme Ms. Dnna Tth and Ms. Carl Gldman t the Bard as independent directrs Dnna Tth Crprate Directr f LOGiQ Asset Management Inc.; Directr f the Children s Aid Fundatin ( CAF ); frmer Managing Directr f Glbal Equity Sales, Sctia Capital Inc Carl Gldman Executive Vice President and Chief Administrative Officer at Centene Crp (NYSE:CNC) since 2001; Prir t 2001, Ms. Gldman held varius senir human resurces rles at Mallinckrdt Inc, Cybertel Crpratin and Central Micrwave Cmpany. ECN is als prud t annunce the prmtin f Jim Nikpuls t President 6

7 Balance Sheet Ready U.S. C&V Sale Highlights Recrded a $342 millin gain n sale f the business, representing a 15% after-tax gain versus bk value f assets 1 $214 millin premium n assets $155 millin in realized AOCI N cash taxes were paid n the sale f the business enabled by the utilizatin f prir net perating lsses (NOLs) riginating frm accelerated depreciatin in ECN s railcar prtfli Transactin frees up equity f $610 millin bringing ttal equity firepwer t ~$750 millin Capacity n current cmmitted senir facility f ~$2.8 billin Based n leverage rati f 4:1, ECN is currently targeting acquisitins with ttal assets f ~$4 billin DBRS and Krll have maintained their investment grade ratings n ECN Syndicatin incme lwer in Q1 cnsistent with strategy t retain riginated assets t maximize value fr ECN sharehlders Cntinue t fcus n best wners fr businesses 1. Includes C&V (US) and US Trucks 7

8 Grwth Opprtunities Assessed ver $25 billin in ptential acquisitins t date (55+ pprtunities) within ur cre markets using assessment criteria: Niche specialty finance fcus Acceptable ROE Resilient business platfrm thrugh credit cycles Prven grwth prfile t achieve industry leading scale Abve average industry credit experience Substantial credit/liquidity (including asset management) Can currently execute n ~C$4B f assets with cash n hand (at ~4:1 leverage) Strategic plan underway Significant prgress n redeplyment and search fr pprtunities Cmmitted t ding the right deal at the right time 8

9 Illustrative Capital Pr-Frma Unit Sales Business Unit Assets (C$B) Equity (C$MM) Expected Premium % (Assets) Expected Adjusted C$ Implied Premium %(Current Equity) Pr Frma Equity (C$MM) Rail $2.5 $661 NA NA 100% $661 Disc C&V US $1.8 $610 NA NA 100% $610 C&V CDN $1.1 $191 NA NA 100% $191 Aviatin $1.0 $477 NA NA 100% $477 1 Ttal $6.4 $1,939 NA NA 100% $1,939 2 Bk Value PS ~$4.75 Successful sales transactins and aviatin runff will result in ECN having substantial capital t redeply int strategic pprtunities Sales will substantiate bk value per share 1. Includes pre-cautinary C$40 pre tax reserve fr heavy lift helicpters 2. Includes C$97 mln Preferred Issuance in 4Q 2016 Bk Value $1,842/388 mln shares = $4.75/sh 9

10 OPERATING HIGHLIGHTS Steven Hudsn Chief Executive Officer 10

11 Q1 Operating Highlights SUMMARY Ttal Originatins were C$398 millin fr the quarter Traditinally 1Q seasnally slwer perid fr Originatins Befre-tax adjusted perating incme return n average earning assets f 1.77% fr cnslidated and 1.96% fr cntinued peratins Average debt advance rate t average finance assets f 75.7% After-tax adjusted EPS f C$0.05 Tangible leverage f 2.2:1; 1.3:1 as f April 3, 2017 Bk value per share f C$ Excluding Preferred Issuance and after prviding fr ne-time helicpter valuatin reserve 11

12 Q1 Operating Highlights ORIGINATIONS AVERAGE EARNING ASSETS C$ millins Q Q Q Q Q Q Cntinuing Operatins/Prgrams Cmmercial & Vendr Rail Finance , , , , , ,202.2 Discntinued Operatins/Prgrams Discntinued Operatins , , ,734.1 Aviatin Finance , , Assets under Management Aviatin Fund , , ,673.9 Ttal Originatins / Average Earning Assets including Assets under Management , , ,

13 COMMERCIAL & VENDOR FINANCE Jim Nikpuls President 13

14 Cmmercial &Vendr (Canada) Finance Highlights KEY HIGHLIGHTS Originatins increased 62% year ver year Originatin yields up 25bps quarter ver quarter NIM expansin enhancement cntinues with imprved quarterly margin ROAA increased frm Q Cnsistent prtfli perfrmance with stable delinquency and net charge ffs belw industry average. Prtfli cntinues t perfrm well with minimal expsure t Oil & Gas sectr Incme Statement (C$, 000) Net Interest incme and rental revenue net less interest expense Q4 Q (3) ,414 7,927 Syndicatin and ther incme 1,809 1,314 Adjusted perating expenses (1) 3,080 2,683 Adjusted perating incme befre tax (1) 4,836 6,558 Key Ratis (2) Q4 Q (3) 2017 Originatins (C$MM) Average earning assets (C$MM) Financial revenue yield 7.1% 6.9% Interest expense 3.0% 2.8% Net interest margin yield 3.6% 4.0% Adjusted perating expense rati (1) 1.4% 1.2% 1. Excludes allcated crprate expenses 2. As a percent f average earning assets 3. Adjusted fr sale f US C&V Pre-tax ROAA (1) 2.2% 2.9% Actual debt advance rate 82.4% 80.8% 14

15 RAIL & AVIATION FINANCE David McKerrll President, Rail & Aviatin Finance 15

16 Slid fundatin frm highly diversified rail prtfli 1 Imprving Industry Fundamentals Rbust Business Mdel 2 Rising carlad vlume, reduced new railcar supply and declining railrad velcity underpinning equipment demand and stabilizing lease rates Built a diverse prtfli nt verly expsed t any given car type, industry, cmmdity, bligr, r lease maturity windw Prduces stable perfrmance in challenging perating envirnments Supprted by Trinity, an industry leader in bth the manufacturing and management f railcars 4 Highly Desirable Asset Base Lease Diversificatin 3 One f the yungest railcar fleets in Nrth America at ~5 years Railcar equipment is highly diversified by freight and tank cars and by asset specificatin Reduces expsure t any single industry r cmmdity gruping Lng remaining term f ~4 years Balanced maturity prfile with 8.5% f the prtfli renewing ver the balance f 2017 Stable utilizatin rate f 96% as f April 30 High credit quality f underlying bligrs 16

17 Rail Highlights KEY HIGHLIGHTS Incme Statement (C$,000) Q Q ECN Capital cntinues t be disciplined in building its Rail prtfli: C$41 millin added in Q Q4 gain n sales led t imprved financial revenue yield versus Q ECN Capital cntinues t selectively participate in the Railcar business given current market cnditins Rail business cntinues t perfrm well and is supprted by the Strategic Alliance with Trinity Interest incme and rental revenue net less interest expense 15,660 16,768 Syndicatin and ther incme 7,724 2,947 Adjusted perating expenses (1) 4,297 4,652 Adjusted perating incme befre tax (1) 19,087 15,063 Key Ratis (2) Q Q Originatins (C$MM) Average earning assets (C$MM) 2,320 2,287 Financial revenue yield 7.5% 6.9% Interest expense 3.5% 3.5% Net interest margin yield 4.0% 3.4% Adjusted perating expense rati (1) 0.7% 0.8% Pre-tax ROAA (1) 3.3% 2.6% (1) Excludes allcated crprate expenses (2) Percent f average earning assets Actual debt advance rate 77.4% 77.9% 17

18 General Aviatin Wind Dwn Wind dwn f General Aviatin cntinues as previusly annunced: C$700 millin target balance by end f 2017 remains unchanged $1,500 $1,445 GENERAL AVIATION WIND-DOWN C$ millin $1,000 $500 $1,051 $700 $0 Dec-15 Dec-16 Dec-17 F 18

19 Aviatin Highlights KEY HIGHLIGHTS N riginatins within Aviatin during Q1; same as Q4 (C$119M in Q1 2016) Wind-dwn f General Aviatin cntinued at expected pace ECN Capital has reached an agreement t sell its Cmmercial Aviatin advisry/asset management business including the ECAF prgram t Acasta Enterprises Inc. The business will be cmbined with Acasta s Aviatin business the Stellwagen Grup Stellwagen will be a fully-integrated prvider f capital financing slutins fr the glbal aviatin industry and institutinal investrs with prven structuring, asset, technical, and fleet management expertise Stellwagen will be significantly enhanced by ECN s Cmmercial Aviatin team s expertise in debt structuring, financing prducts and asset management capabilities The purchase price will be paid in Acasta Enterprise cmmn shares (1) Excludes allcated crprate expenses (2) Percent f average earning assets Incme Statement (C$, 000) Interest incme and rental revenue net less interest expense Q Q ,323 7,148 Syndicatin and ther Incme 1,989 1,354 Operating expenses (1) 2,350 2,406 Adjusted perating incme befre tax (1) 7,839 5,975 Key Ratis (2) Q Q Originatins (C$MM) - - Average earning assets (C$MM) 1, Financial revenue yield 6.4% 5.7% Interest expense 2.3% 2.1% Net interest margin yield 4.1% 3.5% Adjusted perating expense rati (1) 0.9% 1.0% Pre-tax ROAA (1) 3.1% 2.5% Actual debt advance rate 56.4% 56.1% 19

20 CONSOLIDATED FINANCIAL SUMMARY Grier Clter Chief Financial Officer 20

21 Balance Sheet KEY HIGHLIGHTS Ttal assets were flat quarter ver quarter Ttal finance assets declined by C$106 millin fr cntinuing peratins Ttal assets at March 31, 2017 include amunt receivable f C$1.759 billin frm PNC which was fully paid n April 3, 2017 Balance Sheet Summary (C$, MM) Dec 31, 2016 Mar 31, 2017 Apr 3, 2017 Ttal assets $6,436 $6,371 $4,612 Ttal finance assets (1) $6,007 $4,145 $4,145 Ttal finance assets, Cntinuing Operatins (1) $4,251 $4,145 $4,145 Tangible Bk equity $1,822 $1,935 $1,935 The full prceeds f C$1.759 billin were used t repay securitizatin and senir facility debt Tangible Bk equity (excl. pref. shares) $1,725 $1,838 $1,838 The tangible leverage rati f 2.17:1 at March 31, 2017 fell t 1.27:1 n April 3, 2017, well within the Cmpany s mst restrictive cvenant f 4:1 Tangible leverage rati 2.47:1 2.17:1 1.27:1 (1) Ttal finance assets = Net investment in finance receivables + Equipment under perating leases 21

22 Cnslidated Incme Statement Cntinuing Operatins KEY HIGHLIGHTS Interest incme and rental revenue net f interest expense was cnsistent with Q4, 2016 n a cntinuing peratins basis Syndicatin and ther incme decreased C$5.9 millin frm Q4, 2016 driven by lwer syndicatin revenue cnsistent with syndicatin strategy Interest expense at 3.0% was cnsistent with Q4, Operating expenses increased ver Q4, 2016 due t increased csts incurred related t ptential acquisitins and accrual true ups Incme Statement (C$, 000) Interest incme and rental revenue net less interest expense Q Q ,397 31,843 Syndicatin and ther incme 11,522 5,615 Adjusted perating expenses 13,016 16,923 Adjusted perating incme befre tax Key Ratis (1) 28,473 20,418 Q Q Average earning assets (C$MM) 4,211 4,170 Financial revenue yield 7.2% 6.6% Interest expense 3.1% 3.0% Net interest margin yield 3.9% 3.6% Adjusted perating expense rati 1.2% 1.6% Pre-tax ROAA 2.7% 2.0% (1) Percent f average earning assets Actual average debt advance rate t average finance assets 73.4% 73.5% *FX Adjusted using current perid FX rates 22

23 Return n Average Equity and Per Share Amunts KEY HIGHLIGHTS Befre-tax adjusted perating incme n average equity was 5.5% fr the quarter cmpared t 7.6% during the previus quarter After-tax adjusted perating incme was 4.2% fr the current quarter cmpared t 5.7% during the previus quarter ROAE fr 3 Mnths Ended Q Q Befre-tax adjusted perating incme return (1) 7.6% 5.5% After-tax adjusted perating incme return (1) 5.7% 4.2% Pre-tax adjusted earnings f C$0.07/share slightly lwer than Q n lwer syndicatin incme and higher perating expenses Fr the 3 Mnths Ended and as at End f Perid (C$) Q Q After-tax adjusted earnings f C$0.05/share versus prir quarter f C$0.07/share Bk value per share increased t(excluding preferred shares) f C$4.75/share frm C$4.47/share at Q4, 2016 Pre-tax adjusted earnings (basic) $0.09 $0.07 After-tax adjusted earnings (basic) Bk value (net f preferred shares) $0.07 $0.05 $4.47 $4.75 It is anticipated that the tax rate fr the Cmpany ging frward will be between 20-25% (1) Reprted average perating incme n average f cmmn sharehlders equity 23

24 QUESTIONS