The recent volatility in this stock has been incredible. Up about 75% from its low this week. Earnings just out, two cents ahead of estimates:
T&W Reports Strong Third Quarter Results On Increased Lease Originations
Net Income Increased by 132 Percent on $84 Million in Originations Total Delinquencies Decreased to 4.6 Percent of Portfolio Credit Quality Stable -- Net Charge-Offs Remain Low at 1/2 Percent
October 30, 1998 08:30 AM
TACOMA, Wash., Oct. 30 /PRNewswire/ -- T&W Financial Corporation TWFC today announced strong results on increased lease originations for the third quarter and nine months ending September 30, 1998. Net income for the quarter rose 132 percent to $4.5 million, or $0.54 per share, compared with pro forma net income of $2.0 million, or $0.34 per share, for the same quarter last year. Lease originations for the third quarter increased 82 percent to $84.0 million, compared with lease originations of $46.1 million for the same quarter last year. On a sequential basis, the results were as follows:
Quarter Ending
($ in millions except per share data)
September 30, 1998 June 30, 1998
Net Income $4.5 $4.0
EPS, fully diluted $0.54 $0.48
Lease Originations $ 84.0 $ 73.4
Total Servicing Portfolio $476.0 $403.3
Total Delinquencies 4.6% 6.4%
Net Charge-Offs* 0.45% 0.53%
(*Percentage of total servicing portfolio, annualized)
T&W Chairman and Chief Executive Officer Michael Price said, "Our strong third quarter results reflect the success of our existing origination channels in generating new business as well as significant contributions from our recent joint ventures and cross-marketing opportunities. This increase in business comes from a wide variety of geographically diverse industries spread throughout the U.S. and Canada. T&W remains focused on increasing shareholder value by delivering continued growth in revenues and earnings."
"During the quarter, we achieved a significant reduction in delinquencies. We also maintained T&W's charge-offs at 1/2 percent," said Thomas Price, president of T&W. "While we are enjoying rapid business growth, we are adhering to our strict underwriting standards while maintaining centralized credit control at our headquarters in Tacoma. In addition, we have enhanced our information technology to streamline the credit process and meet the needs of our growing lease servicing portfolio," said Mr. Price.
For the nine months ending September 30, 1998, net income rose 238 percent to $12.5 million, or $1.48 per share. This compares with pro forma net income of $3.7 million, or $.64 per share, for the same period last year. Lease originations increased to $221 million for the nine-month period, a 129 percent increase from lease originations of $96.4 million for the comparable period last year.
All 1997 figures have been presented pro forma to reflect the Company's restructuring to C-Corporation status from its prior structure as multiple pass-through entities.
Recent highlights for the Company include:
* T&W announced its intention to further capitalize upon the opportunities in the small-ticket equipment lease business in Canada by increasing its ownership in Onset Capital through a proposed acquisition of Accel Financial Group of Vancouver.
* Onset Capital established a strategic alliance with Sony of Canada to provide financing to broadcast equipment dealers throughout Canada.
* Member Services Company, an affiliate of T&W, continues to be successful in cross-marketing its lease financing through community banks. In Kansas City, Member Services partnered with Bankers' Bank of Kansas to provide commercial and municipal equipment leasing services to client banks throughout Kansas.
* T&W is increasing its securitization facility with CIBC Oppenheimer to $200 million from $120 million and secured an additional $75 million securitization facility during the quarter.
* The Company expanded into the commercial auto rental and corporate fleet business through a joint venture with Prime One. T&W's partners in this alliance have more than 20 years experience in providing financing options to the commercial auto rental industry.
* The Company increased its penetration into the independent grocer market by establishing a joint venture with Commercial Financial Services. T&W partnered with industry experts with 20-plus years of experience in financing this niche business.
"As we grow, we will continue to maintain our conservative business posture with generous reserves that match economic conditions," commented Paul B. Luke, senior vice president and director of finance at T&W.
"Our recent success in the securitization market is evidence of continued investor confidence in our portfolio quality. We are proud of our excellent reputation with asset-backed securities investors since we began securitizing our leases in 1992. T&W remains cash positive on our securitizations with approximately 45 to 50 percent of our gain on sale received up front in cash," Mr. Luke concluded.
Based in Tacoma, Washington, and founded in 1976, T&W Financial Corporation is a specialty commercial finance company. It provides equipment leasing, focusing primarily on the "small-ticket" sector of the market, which are leases less than $250,000. Its customers are small-to medium-sized independent businesses throughout the U.S. and Canada.
This release contains forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Readers should not place undue reliance on the forward-looking statements, which reflect the management's view only as of the date hereof. T&W undertakes no obligations to publicly revise these forward-looking statements to reflect subsequent events or circumstances. Readers should also carefully review the risk factors described in documents T&W files from time to time with the Securities and Exchange Commission.
[financial tables to follow]
T & W FINANCIAL CORPORATION AND AFFILIATES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Income Statement Data:
Revenues:
Lease contract revenue $ 4,421 $ 3,514 $ 12,975 $ 10,812
Gain on sale of leases 10,725 4,492 25,754 7,940
Fee income 839 288 1,729 422
Servicing and other income 1,456 168 3,632 906
Total revenues 17,441 8,462 44,090 20,080
Expenses:
Interest expense 2,176 1,912 5,918 5,638
Compensation and related
expenses 1,992 1,254 4,264 3,240
Amortization of initial direct
costs 1,274 558 2,938 1,780
Provision for credit losses 883 372 2,311 774
Other general and administrative
expenses 2,759 765 5,733 1,838
Total expenses 9,084 4,861 21,164 13,270
Net income 8,357 3,601 22,926 6,810
Pro Forma Amounts:
Income before minority interest
and income taxes 8,357 3,601 22,926 6,810
Minority interest 1,254 540 3,439 1,022
Income before income taxes 7,103 3,061 19,487 5,788
Provision for income taxes 2,556 1,102 7,015 2,084
Net income 4,547 1,959 12,472 3,704
Net income per share $0.54 $0.34 $1.48 $0.64
Weighted average number of shares
of Common Stock and Common
Stock equivalent shares
outstanding 8,400 5,800 8,400 5,800
T & W FINANCIAL CORPORATION AND AFFILIATES
FINANCIAL DATA
(Unaudited)
September 30, 1998 September 30, 1997
Balance Sheet Data:
Cash and cash equivalents $15,971 $9,247
Net investment in leases 109,101 105,978
Total Assets 193,122 137,807
Notes payable - recourse 56,648 24,245
Notes payable - non-recourse 36,001 70,354
Total Liabilities 129,490 122,095
Shareholders' Equity 53,319 15,712
Deferred tax liability (a) 18,215 4,602
Minority interest (a) 10,313 2,365
Shareholders' equity (a) $53,319 $8,745
Operating Data:
Lease financing
receivables originated:
Number of contracts 954 529
Lease originations (b) $83,800 $46,100
Leases serviced:
Number of contracts 10,894 7,584
Portfolio of leases serviced (c) $476,019 $216,900
Average portfolio yield (d) 12.8% 12.6%
Credit quality statistics:
Delinquencies as a percentage
of portfolio of leases serviced
31-60 days 2.27% 2.84%
61-90 days 0.96% 1.84%
91-120 days 0.55% 1.58%
Over 120 days 0.77% 2.44%
Total 4.55% 8.70%
Net charge-offs (e) 0.45% 0.33%
(a) -- 1997 figures are pro forma to reflect the Company's restructuring to C-Corporation status from its prior structure as multiple pass-through entities.
(b) -- Represents the equipment costs for leases originated during the period.
(c) -- Represents the aggregrate of minimum lease payments, under all leases serviced by the company held as direct-financing leases and leases sold to special-purpose entities.
(d) -- Represents the average yield recognized during the period for the portfolio of leases serviced.
(e) -- Represents charge-offs (reduced by recoveries), divided by the respective periods average net investment, under all leases serviced by the company held as direct-financing leases and leases sold to special purpose entities.
SOURCE T&W Financial Corporation |
