Input Capital Corp. Announces FY2021 Q2 Results
REGINA, SK, May 17, 2021 /CNW/ - Input Capital Corp. ("Input", "Company", "we", "our") (TSXV: INP) (OTC-PINK: INPCF) has released its results for the second quarter, ended March 31, 2021, of the 2021 fiscal year. All figures are presented in Canadian dollars.
"This most recent quarter represents a new beginning for our company," said President & CEO Doug Emsley. "The acquisition of SRG Security Resource Group Inc. ("SRG") has set in motion a shift from the agriculture business into the physical and cyber security business, and this shift is going much more quickly than we originally anticipated. Already, security revenue represents 48% of consolidated quarterly revenue in Q2.
"We expect to formally become a security company in the very near future, and our balance sheet will make us one of the best capitalized companies in the Canadian security industry. Our senior management team has over 70 years of experience building and operating profitable security companies, and we look forward to leveraging that experience to create value for our shareholders."
FY2021 Q2 HIGHLIGHTS
- On February 1, 2021, we closed the previously announced acquisition of SRG. Our results are now presented on a consolidated basis with SRG's results beginning from the February 1 closing date.
- Consolidated quarterly revenue of $5.1 million, bringing YTD revenue to $10.0 million. This includes only two months of security-related revenue because the SRG acquisition closed on February 1.
- Comprehensive after tax net income of $117K for the quarter and $856K for the YTD.
- Adjusted EBITDA of ($166K) ($0.00 per share) for the quarter and $1.8 million ($0.02 per share) for the YTD.
- Book value per share was $1.25 at the end of the quarter, which is unchanged from a year ago, in spite of the fact that 8.9 million shares were issued in conjunction with the SRG acquisition.
- During the quarter, we bought back 274,300 shares at an average price of $0.90 per share, bringing our total buybacks to 1,602,409 shares at an average price of $0.87 per share for the fiscal year to date.
- On January 15, 2021, we paid a quarterly dividend of $0.01 per share, or $0.04 per share annualized.
- We finished the quarter ended March 31 with:
- Cash and cash equivalents of $20.4 million;
- Total crop interests and other financial assets of $13.2 million;
- Loans and mortgages receivable of $23.6 million;
- Active streaming contracts with 58 farm operators;
- Total shareholders' equity of $76.0 million; and
- Long-term debt of $6.0 million.
KEY PERFORMANCE INDICATORS FOR THE COMPARABLE PERIODS ARE SUMMARIZED BELOW:
Key Performance Indicators
Six months ended
Security revenue as a percent of total revenue
Adjusted EBITDA per share (basic)
Comprehensive net income (loss)
Comprehensive net income per share (basic)
Our agriculture business is highly seasonal and not well-suited to the traditional quarter-to-quarter reporting requirements of public companies, and we remind you to keep this in mind when reading the information in this discussion and analysis of Input's quarter ended March 31, 2021.
REVENUE & NET INCOME
Revenues for the second quarter ended March 31, 2021 were $5.148 million compared with $10.417 million for the same period last year. Revenues for the six months ended March 31, 2021 were $10.033 million, compared with $23.226 million for the same six-month period last year. The decrease in revenues was due to the decline in crop revenue from a smaller book of canola contracts this year compared to last year, partially offset by two months of security revenue resulting from the acquisition of SRG completed on February 1, 2021.
Revenue from agriculture was $2.655 million for the quarter ended March 31, 2021, compared to $10.417 million for the same period last year. Revenue from security services was $2.493 million for the quarter, and already represents 48% of total revenue. We expect agriculture revenue to continue declining, resulting in the proportion of our revenue associated with security to rise over time.
STREAMING CONTRACT PORTFOLIO
As of March 31, 2021, our active streaming portfolio consisted of 58 geographically diversified streams, distributed as follows:
Mar 31, 2021
Dec 31, 2020
Sept 30, 2020
June 30, 2020
Mar 31, 2020
Total Ag Clients
Our book of agriculture contracts is shrinking rapidly as they mature or are bought back by our farm clients. The current low interest rate and high canola price environment offers farmers excellent refinancing opportunities.
KEY BALANCE SHEET ITEMS ARE SUMMARIZED BELOW:
Statements of Financial Position
Mar 31, 2021
Mar 31, 2020
Crop interests and other financial assets (liabilities)
Loans and mortgages receivable
Total shareholders' equity
Common shares outstanding
Book value per share
UPDATE ON NORMAL COURSE ISSUER BID
On December 29, 2020, we announced the renewal of the Normal Course Issuer Bid (NCIB), allowing the company to buy back up to 3,400,000 of its Class A common shares during the 2021 calendar year. Under our NCIB, during the three months ended March 31, 2021, we bought back a total of 274,300 shares at an average price of $0.90 per share. For the six months of the fiscal year to date, we bought back a total of 1,602,409 shares at an average price of $0.87 per share.
We continue to believe that our shares have been trading in a price range which does not adequately reflect their value and that the purchase of shares under the NCIB will enhance shareholder value in general.
Every indication is that our book of canola streaming contracts will continue to decline rapidly as farmers take advantage of low interest rates and high canola prices to refinance and/or buy out of their contracts with us. This will accelerate the pace of our shift into the security business beyond our original expectations.
Further, as the agriculture segment of our business shrinks and the security segment of our business grows, the price of canola will have a declining impact on our financial results. Future growth will be in the security segment, in part from organic growth as SRG wins new contracts, and via acquisition, as SRG looks to acquire other companies in the Canadian cyber and physical security space(s).
We plan to continue to distribute capital to shareholders via the dividend, reduce our debt while maintaining solid liquidity, and focus on maximizing Adjusted EBITDA and Book Value per Share.
The ongoing effects of the COVID-19 pandemic and uncertainty within international markets could impact the Company's financial performance for the year ended September 30, 2021 and, possibly, beyond. The financial impact will be dependent on the spread and duration of the pandemic and on related restrictions and government advisories. We have not seen any material impact on our agriculture business to date, but we have seen some shifting of client demand for security services as a result of COVID. Demand is smaller in certain market segments, such as airport security services, but higher in other segments, such as IT and cyber security services, which have higher gross margins than physical security services. Given the balance of uncertainties, the long-term financial impact on the Company, if any, cannot be determined with any certainty. Taken together, COVID-19 has not had a material impact on the results of our agriculture business or on the security business of SRG.
Since the end of March 2021, our agriculture business has continued to shrink rapidly. There have been an additional fifteen streaming contracts and mortgages bought back, with proceeds to Input of over $3.7 million. We have also completed the further sale of $1.6 million in assets held for sale and paid down about $2.6 million in outstanding debt. As of May 17, 2021, we had $22.6 million in cash.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
Input was founded as an agriculture commodity streaming company providing several flexible and competitive forms of financing which help western Canadian farmers solve working capital, mortgage finance and canola marketing challenges and improve the financial position of their farms. On February 1, 2021, Input acquired SRG Security Resource Group Inc. as a platform for growth in the cyber and physical security business in Canada. For more information, please visit www.inputcapital.com.
SRG is a market-leading Canadian provider of world-class Cyber Security and physical Protective Security Services. Founded in 1996, most of SRG's employees are located in Western Canada, but solutions and services are provided to organizations across the country. SRG clients include federal and provincial governments, Crown corporations, and many high profile corporate and public sector clients such as hospitals, airports, utility companies and police forces. SRG now operates as a wholly-owned subsidiary of Input. More information is available on SRG's website at www.securityresourcegroup.com.
Forward Looking Statements
This release includes forward-looking statements regarding Input and its business. Such statements are based on the current expectations and views of future events of Input's management. In some cases the forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms, or other similar expressions intended to identify forward-looking statements. The forward-looking events and circumstances discussed in this release may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting Input, including risks regarding the agricultural industry, economic factors and the equity markets generally and many other factors beyond the control of Input. No forward-looking statement can be guaranteed. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Input undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
Input measures key performance metrics established by management as being key indicators of the Company's strength, using certain non-IFRS performance measures, including:
- Adjusted Net Income (Loss), Adjusted Net Income (Loss) per share, Adjusted EBITDA, Adjusted EBITDA per share, and;
- Book Value per share.
The Company uses these non-IFRS measures for its own internal purposes. These non-IFRS measures do not have any standardized meaning prescribed by IFRS, and these measures may be calculated differently by other companies. The presentation of these non-IFRS measures is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Company provides these non-IFRS measures to enable investors and analysts to understand the underlying operating and financial performance of the Company in the same way as it is frequently evaluated by Management. Management will periodically assess these non-IFRS measures and the components thereof to ensure their continued use is beneficial to the evaluation of the underlying operating and financial performance of the Company. For more detailed information, please refer to Input's Management Discussion and Analysis available on the Company's website at www.inputcapital.com and on SEDAR at www.sedar.com.
SOURCE Input Capital Corp.