Flow Capital Corp. (TSXV:FW) (“Flow Capital” and “Company”), a
leading provider of flexible growth capital and alternative debt
solutions, announces its audited financial and operating results
for the three-months (Q4 2023) and year ended December 31, 2023.
Q4 2023 Performance
Highlights
- $1.65 million in Recurring Loan
Interest and Royalty Income1 in Q4 2023, up 15.2% from Q4 2022. The
$1.65 million of recurring revenue represents the highest recurring
revenue that Flow has achieved in the past 6 years.
- $0.3 million in Recurring Free Cash
Flow2 in Q4 2023; and $1 million over the last four-quarters.
- $63.6 million in total assets
compared to $58.7 million at Q4 2022.
- $10 million in two loan maturities
in 2023 and early 2024.
- $5.2 million in cash, compared to
$9.6 million at Q4 2022.
“Q4 2023 wrapped up what was a strong second
half of 2023 in terms of deployment of capital. During the second
half of 2023, we closed $12.8 million in new investments into 5
companies. The recurring interest revenue generated from these new
investments contributed to the record recurring revenue of $1.65
million that we reported in the quarter”, said Alex Baluta, CEO of
Flow Capital.
“The deployment strength we saw in the second
half of 2023 has continued into 2024, with an additional $9.5
million deployed into three investments so far this year. We also
had two loans mature in 2023 and early 2024 returning approximately
$10 million in cash. Notably, the IRR on one of the loans was 21.6%
and on the second was 36.2%”, continued Mr. Baluta.
“As an additional highlight during the year, we
were excited about the introduction of the new debenture structure
in July. By providing investors with a floating rate of
interest (currently at 10.5%), redeemability, and seniority to
almost $38M in equity, we expect we can use it to raise additional
capital over time”, said Mr. Baluta. “We expect this
structure will help us grow our asset base for the foreseeable
future”.
Flow Capital continues to focus its efforts on
originating and investing in high growth companies looking to fuel
expansion without the excessive and expensive dilution of equity,
or restrictive covenants of conventional debt.
Detailed Financial results are available on our
website at www.flowcap.com or on www.sedar.com.
- Recurring Loan Interest and Royalty Income is an internally
defined, non-IFRS measure calculated as Loan Interest and Royalty
Income less Loan Amortization Income and one-time payments (e.g.
prepayment fees). Reconciliations of non-IFRS measures to the
nearest IFRS measure can be found in this press release under
“Reconciliation of Non-IFRS Measures”.
- Recurring Free Cash Flow is an internally defined, non-IFRS
measure calculated as Recurring Loan Interest and Royalty Income
less Salaries, Professional fees, Office and general administrative
and Financing expenses. Reconciliations of non-IFRS measures to the
nearest IFRS measure can be found in this press release under
“Reconciliation of Non-IFRS Measures”.
Results of Operations
|
Three-months ended December 31, 2023 |
Three-months ended December 31, 2022 |
Year ended December 31, 2023 |
Year ended December 31, 2022 |
Recurring Loan Interest and Royalty Income (1) |
$1,646,657 |
$1,428,862 |
$6,104,392 |
$6,218,279 |
Loan Interest and Royalty Income |
1,882,908 |
|
2,263,790 |
7,114,942 |
|
7,795,300 |
Total Revenues |
1,117,466 |
|
2,365,702 |
5,844,900 |
|
10,296,116 |
Net income |
(999,262) |
|
9,089,332 |
(369,477) |
|
14,510,720 |
Adjusted Recurring Free Cash Flow (2) |
337,883 |
|
47,458 |
1,000,476 |
|
1,315,665 |
Basic Earnings per share |
(0.0312) |
|
0.2905 |
(0.0116) |
|
0.4640 |
Diluted Earnings per share |
(0.0311) |
|
0.2765 |
(0.0116) |
|
0.4490 |
Book Value per outstanding share (3) |
1.19 |
|
1.22 |
1.19 |
|
1.22 |
Weighted basic average number of shares outstanding |
31,993,510 |
|
31,289,176 |
31,729,392 |
|
31,276,125 |
Weighted diluted average number of shares outstanding |
32,104,020 |
|
32,872,201 |
31,926,402 |
|
32,314,769 |
- Recurring Loan Interest and Royalty Income is an internally
defined, non-IFRS measure calculated as Loan Interest and Royalty
Income less Loan Amortization Income and one-time payments (e.g.
prepayment fees). See the section “Use of Non-IFRS Financial
Measures”.
- Recurring Free Cash Flow is an internally defined, non-IFRS
measure calculated as Recurring Loan Interest and Royalty Income
less Salaries, Professional fees, Office and general administrative
and Financing expenses. See the section “Use of Non-IFRS Financial
Measures”.
- Calculated by taking Total Shareholders’ Equity as reported on
the Statements of Financial Position over the number of outstanding
shares. See the section “Use of Non-IFRS Financial Measures”.
Conference Call Details
Flow Capital will host a conference call to
discuss these results at 9:00 a.m. Eastern Time, on Tuesday, April
30, 2024. Participants should call +1 800 717 1738 or +1 289 514
5100, and ask an operator for the Flow Capital earnings call,
Conference ID 65275. Please dial in 10 minutes prior to the call to
secure a line. A replay will be available shortly after the call.
To access the replay, please dial (+1) 888 660 6264 or +1 289 819
1325 and enter passcode 65275 #.
An audio recording of the conference call will
be also available on the investors’ page of Flow Capital’s website
at www.flowcap.com/financials.
About
Flow Capital
Flow Capital Corp. is a diversified alternative
asset investor and advisor, specializing in providing minimally
dilutive capital to emerging growth businesses. To apply for
financing, visit www.flowcap.com.
For further information, please contact:
Flow Capital Corp.Alex
BalutaChief Executive Officeralex@flowcap.com
47 Colborne St, Suite 303, Toronto, Ontario M5E 1P8,
Non-IFRS Financial Measures
This press release includes references to
certain non-IFRS financial measures such as recurring Loan Interest
and Royalty income and recurring free cash flow. These financial
measures are employed by the Company to measure its operating and
economic performance and to assist in business decision-making, as
well as providing key performance information to senior management.
The Company believes that, in addition to conventional measures
prepared in accordance with IFRS, certain investors and analysts
use this information to evaluate the Company’s operating and
financial performance. These financial measures are not defined
under IFRS nor do they replace or supersede any standardized
measure under IFRS. Other companies in our industry may calculate
these measures differently than we do, limiting their usefulness as
comparative measures. Reconciliations of non-IFRS measures to the
nearest IFRS measure can be found in this press release under
“Reconciliation of Non-IFRS Measures”.
Reconciliation of Non-IFRS
Measures
The tables below reconcile Loan Interest and
Royalty Income to recurring Loan Interest and Royalty income and
recurring free cash flow for the periods indicated.
Recurring Loan Interest and Royalty Income is an
internally defined, non-IFRS measure calculated as Loan Interest
and Royalty Income less Loan Amortization Income and one-time
payments (e.g. prepayment fees).
|
Three-months ended December 31, 2023 |
Three-months ended December 31, 2022 |
Year ended December 31, 2023 |
Year ended December 31, 2022 |
Loan Interest and Royalty Income |
$ |
1,882,908 |
|
$ |
2,263,790 |
|
$ |
7,114,942 |
|
$ |
7,795,300 |
|
Less: Loan Amortization Income |
$ |
(236,251 |
) |
$ |
(373,304 |
) |
$ |
(848,706 |
) |
$ |
(802,854 |
) |
Less: One-time payments |
|
- |
|
$ |
(461,624 |
) |
$ |
(161,844 |
) |
$ |
(774,167 |
) |
Total Adjustments |
$ |
(236,251 |
) |
$ |
(834,928 |
) |
$ |
(1,010,550 |
) |
$ |
1,577,021 |
) |
Recurring Loan Interest and Royalty Income |
$ |
1,646,657 |
|
$ |
1,428,862 |
|
$ |
6,104,392 |
|
$ |
6,218,279 |
|
Recurring Free Cash Flow is an internally
defined, non-IFRS measure calculated as Recurring Loan Interest and
Royalty Income less Salaries, Professional fees, Office and general
administrative and Financing expense.
|
Three-months ended December 31, 2023 |
Three-months ended December 31, 2022 |
Year ended December 31, 2023 |
Year ended December 31, 2022 |
Recurring Loan Interest and Royalty Income |
$ |
1,646,657 |
|
$ |
1,428,862 |
|
$ |
6,104,392 |
|
$ |
6,218,27 |
|
Less: Salaries |
$ |
(463,971 |
) |
$ |
(393,929 |
) |
$ |
(1,679,119 |
) |
$ |
(1,482,244 |
) |
Less: Professional fees |
$ |
(18,167 |
) |
$ |
(184,996 |
) |
$ |
(641,187 |
) |
$ |
(741,373 |
) |
Less: Office and general administrative |
$ |
(201,767 |
) |
$ |
(334,869 |
) |
$ |
(744,670 |
) |
$ |
(880,895 |
) |
Less: Financing Expense |
$ |
(624,869 |
) |
$ |
(467,610 |
) |
$ |
(2,038,940 |
) |
$ |
(1,798,102 |
) |
Total Adjustments |
$ |
(1,308,774 |
) |
$ |
(1,381,404 |
) |
$ |
(5,103,916 |
) |
$ |
(4,902,614 |
) |
Recurring Free Cash Flow |
$ |
337,883 |
|
$ |
47,458 |
|
$ |
1,000,476 |
|
$ |
1,315,665 |
|
Forward-Looking Information and Statements
This press release contains certain
“forward-looking information” within the meaning of applicable
Canadian securities legislation and may also contain statements
that may constitute “forward-looking statements” within the meaning
of the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995. Such forward-looking information and
forward-looking statements are not representative of historical
facts or information or current condition, but instead represent
only the Company’s beliefs regarding future events, plans or
objectives, many of which, by their nature, are inherently
uncertain and outside of the Company’s control. Generally, such
forward-looking information or forward-looking statements can be
identified by the use of forward-looking terminology such as
“plans”, “expects” or “does not expect”, “is expected”, “budget”,
“scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or
“does not anticipate”, or “believes”, or variations of such words
and phrases or may contain statements that certain actions, events
or results “may”, “could”, “would”, “might” or “will be taken”,
“will continue”, “will occur” or “will be achieved”. The
forward-looking information contained herein may include, but is
not limited to, information with respect to: prospective financial
performance; including the Company’s opinion regarding the current
and future performance of its portfolio, expenses and operations;
anticipated cash needs and need for additional financing;
anticipated funding sources; future growth plans; royalty
acquisition targets and proposed or completed royalty transactions;
estimated operating costs; estimated market drivers and demand;
business prospects and strategy; anticipated trends and challenges
in the Company’s business and the markets in which it operates; the
amount and timing of the payment of dividends by the Company; and
the Company’s financial position. By identifying such information
and statements in this manner, the Company is alerting the reader
that such information and statements are subject to known and
unknown risks, uncertainties and other factors that may cause the
actual results, level of activity, performance or achievements of
the Company to be materially different from those expressed or
implied by such information and statements.
An investment in securities of the Company is
speculative and subject to a number of risks including, without
limitation, risks relating to: the need for additional financing;
the relative speculative and illiquid nature of an investment in
the Company; the volatility of the Company’s share price; the
Company’s limited operating history; the Company’s ability to
generate sufficient revenues; the Company’s ability to manage
future growth; the limited diversification in the Company’s
existing investments; the Company’s ability to negotiate additional
royalty purchases from new investee companies; the Company’s
dependence on the operations, assets and financial health of its
investee companies; the Company’s limited ability to exercise
control or direction over investee companies; potential defaults by
investee companies and the unsecured nature of the Company’s
investments; the Company’s ability to enforce on any default by an
investee company; competition with other investment entities; tax
matters, including the potential impact of the Foreign Account Tax
Compliance Act on the Company; the potential impact of the Company
being classified as a Passive Foreign Investment Company (“PFIC”);
the Company’s ability to pay dividends in the future and the timing
and amount of those dividends; reliance on key personnel,
particularly the Company’s founders; dilution of shareholders’
interest through future financings; and general economic and
political conditions; as well as the risks discuss ed in the joint
management information circular of the Company dated May 2, 2018
and the risks discussed herein. Although the Company has attempted
to identify important factors that could cause actual results to
differ materially from those contained in the forward- looking
information and forward-looking statements, there may be other
factors that cause results not to be as anticipated, estimated or
intended.
In connection with the forward-looking
information and forward-looking statements contained in this press
release, the Company has made certain assumptions. Assumptions
about the performance of the Canadian and U.S. economies over the
next 24 months and how that will affect the Company’s business and
its ability to identify and close new opportunities with new
investees are material factors that the Company considered when
setting its strategic priorities and objectives, and its outlook
for its business.
Key assumptions include, but are not limited to:
assumptions that the Canadian and U.S. economies relevant to the
Company’s investment focus will remain relatively stable over the
next 12 to 24 months; that interest rates will not increase
dramatically over the next 12 to 24 months; that the Company’s
existing investees will continue to make royalty payments to the
Company as and when required; that the businesses of the Company’s
investees will not experience material negative results; that the
Company will continue to grow its portfolio in a manner similar to
what has already been established; that tax rates and tax laws will
not change significantly in Canada and the U.S.; that more small to
medium private and public companies will continue to require access
to alternative sources of capital; that the Company will have the
ability to raise required equity and/or debt financing on
acceptable terms; and that the Company will have sufficient free
cash flow to pay dividends. The Company has also assumed that
access to the capital markets will remain relatively stable, that
the capital markets will perform with normal levels of volatility
and that the Canadian dollar will not have a high amount of
volatility relative to the U.S. dollar. In determining expectations
for economic growth, the Company primarily considers historical
economic data provided by the Canadian and U.S. governments and
their agencies. Although the Company believes that the assumptions
and factors used in preparing, and the expectations contained in,
the forward- looking information and statements are reasonable,
undue reliance should not be placed on such information and
statements, and no assurance or guarantee can be given that such
forward-looking information and statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such information and
statements.
The forward-looking information and
forward-looking statements contained in this PRESS RELEASE are made
as of the date of this PRESS RELEASE, and the Company does not
undertake to update any forward-looking information and/or
forward-looking statements that are contained or referenced herein,
except in accordance with applicable securities laws. All
subsequent written and oral forward- looking information and
statements attributable to the Company or persons acting on its
behalf is expressly qualified in its entirety by this notice.
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
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