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Press Release Details

Input Capital Corp. Announces FY2017 Year End Results

12/06/2017

REGINA, Dec. 6, 2017 /CNW/ - Input Capital Corp. ("Input" or the "Company") (TSX Venture: INP) (US: INPCF) has released its year end results for the 2017 fiscal year. All figures are presented in Canadian dollars.

"Fiscal 2017 has been a profitable year of growth and expansion in many areas for Input Capital," said President & CEO Doug Emsley. "Not only did we successfully launch our new marketing stream, we expanded our client base by 168%, grew capital deployed by 42%, increased adjusted streaming sales by 37%, increased adjusted EBITDA by 16%, initiated a quarterly dividend, and became a Canadian Grain Commission licensed and bonded grain dealer.

"We are very excited about marketing streams because they require less upfront capital, have higher returns with less risk to Input, and are designed to help every farmer improve their bottom line. Combined with capital streams, they represent what Input Capital is all about – helping farmers improve their bottom lines by improving working capital and canola marketing opportunities."

FY2017 FULL YEAR HIGHLIGHTS

  • Adjusted streaming sales1 of $35.767 million on the delivery of 75,285 canola equivalent metric tonnes1 ("MT" or "tonnes") at an average price of $475 per MT. This is an increase in adjusted streaming sales of 37% and a volume increase of 40% compared to the previous comparable twelve month period (all full year highlights below are compared to the previous comparable twelve month period);

  • Cash operating margin1 of $26.196 million (up 16% over the comparable period last year), or $347.96 per MT (73.24% cash operating margin). Cash operating margin per MT is lower than last year due to the first sales of tonnes from marketing streams, which feature lower nominal cash margins than capital streams. As marketing streams grow as a percentage of Input's portfolio, management expects the cash operating margin to decline on a per tonne basis, but grow in total dollar amounts;

  • Adjusted operating cash flow1 of $18.773 million or $0.23 per share. This is an increase of 1% compared to last year and is in line with management's expectations for the year;

  • Adjusted net income1 of $1.792 million, or $0.02 per share. This is a decline of 29% from last year and is a result of planned investments made in client acquisition and the launch of marketing streams, positioning the company for strong future growth.

  • Recorded gross capital deployment of $36.794 million in upfront payments into 195 streaming contracts, adding 128 new producers to the portfolio and more than 307,000 MT to the Company's future canola sales. This is an increase of 42% in capital deployed and a 168% increase in streaming clients over the same period last year. Canola reserves have increased by 56% year over year;

  • In January 2017, Input soft-launched Marketing Streams, a new variation on streaming that targets farmers looking to get better pricing for their canola. By year-end, Input had signed over 190 marketing stream contracts with farmers, including more than 160 with new clients;

  • The Company received a grain dealer licence from the Canadian Grain Commission ("CGC") and is now licenced and bonded by the CGC, increasing Input's credibility and profile within the western Canadian agriculture marketplace and providing an additional level of assurance to farmers and other industry participants; and

  • In December 2016, Input initiated a quarterly dividend. It has made four dividend payments to date, paying out a total of $3.280 million to shareholders.

 

______________________________

1 Non-IFRS financial measures with no standardized meaning under IFRS. For further information and a detailed reconciliation, refer to "Non-IFRS Measures" beginning on page 27 of the MD&A.

 

FY2017 Q4 Highlights

  • Adjusted streaming sales1 of $13.681 million on the delivery of 28,799 canola equivalent metric tonnes ("MT" or "tonnes") at an average price of $475 per MT;

  • Generated an additional $0.786 million in sales from canola trading for total adjusted sales1 of $14.467 million;

  • Cash operating margin1 $7.110 million, or $247 per MT (51.97% cash operating margin);

  • Adjusted operating cash flow1 of $5.799 million or $0.07 per share;

  • Adjusted net income1 of $1.237 million, or $0.02 per share;

  • Recorded gross capital deployment of $1.751 million in upfront payments into 11 streaming contracts, adding 4 new producers to the portfolio and more than 10,000 MT to the Company's future canola sales;

  • On August 23, 2017, Input announced it retained Stonegate Capital Partners Inc. of Dallas, Texas to provide advisory and institutional outreach services in the United States;

  • On September 11, 2017, the Board of Directors declared a dividend of $0.01 per common share for the quarter ending September 30, 2017;

  • On September 28, 2017, Input President and CEO Doug Emsley presented at the Sidoti & Company Fall 2017 Conference in New York, and;

  • Finished the quarter with:
    • Cash of $17.615 million;
    • Total canola interests (current portion and long-term portion) and other financial assets (liabilities) (herein referred to collectively as "canola interests") of $68.423 million;
    • Multi-year active streaming contracts with 301 farm operators, up from 112 a year ago;
    • Total shareholders' equity of $105.119 million;
    • $6.351 million drawn on its $25 million revolving credit facility; and
    • No long-term debt.

 

_________________________________

1 Non-IFRS financial measures with no standardized meaning under IFRS. For further information and a detailed reconciliation, refer to "Non-IFRS Measures" beginning on page 27 of the MD&A.

 

KEY PERFORMANCE INDICATORS FOR THE COMPARABLE PERIODS ARE SUMMARIZED BELOW:




Selected non-IFRS measures1

Three months ended

Sep 30

Twelve months ended

Sep 30

CAD millions, unless otherwise noted

2017

2016

2017

2016

Adjusted streaming sales

13.681

7.656

35.767

26.044

Adjusted streaming volume (MT)

28,799

15,916

75,285

53,949

Average selling price from streaming contracts

$475.04

$481.03

$475.09

$482.75






Cash operating margin

7.110

6.514

26.196

22.548

Cash operating margin per tonne

$246.88

$409.27

$347.96

$417.95






Cash margin

1.991

1.835

7.403

7.803

Cash margin per tonne

$69.13

$115.29

$98.33

$144.64






Adjusted EBITDA

6.351

5.481

20.634

17.824

Adjusted EBITDA per share (basic)

$0.08

$0.07

$0.25

$0.22






Adjusted operating cash flow

5.799

5.891

18.773

18.480

Adjusted operating cash flow per share (basic)

$0.07

$0.07

$0.23

$0.23






Adjusted net income (loss)

1.237

0.550

1.792

2.256

Adjusted net income (loss) per share (basic)

$0.02

$0.01

$0.02

$0.03






Upfront payment per tonne2

 $171.16*

$181.84

 112.23*

280.49


*Upfront payment per tonne reflects upfront payments made into both Capital Streams and Marketing Streams. For more information about Marketing Streams, refer to discussion on Marketing Streams beginning on page 14 of the accompanying MD&A.

 

SALES

For the fiscal year ended September 30, 2017, Input generated adjusted sales from streaming contracts of $35.767 million on the adjusted streaming volume of 75,285 MT an average price of $475 per MT.

The sales from streaming tonnes plus net settlements from streaming tonnes for the twelve months ended September 30, 2017, represent a 40% increase in quarterly volume over the comparable period one year ago, when the Company sold 53,949 MT of canola equivalent for revenue of $26.044 million for an average price of $483 per MT.

For the quarter ended September 30, 2017, Input generated adjusted sales from streaming contracts of $13.681 million on adjusted streaming volume of 28,799 MT for an average price of $475 per MT. 

The sales from streaming tonnes plus net settlements of canola interests for the quarter represent a significant increase in quarterly volume over the comparable quarter one year ago, when the Company sold 15,916 MT of canola equivalent for revenue of $7.656 million for an average price of $481 per MT.

___________________________

1 Non-IFRS financial measures with no standardized meaning under IFRS. For further information and a detailed reconciliation, refer to "Non-IFRS Measures" beginning on page 27 of the MD&A.

 

CAPITAL DEPLOYMENT AND STREAMING CONTRACT PORTFOLIO

Year to Date

For the fiscal year ended September 30, 2017, Input recorded gross capital deployment of $36.794 million (compared to $25.825 million in the same period last year) into 202 streaming contracts for the right to purchase more than 307,000 MT of canola over the life of the streaming contracts. Net deployment for accounting purposes was $32.507 million.

During the twelve months, Input added 189 new contracts; 134 in Saskatchewan, 52 in Alberta and 3 in Manitoba. The remaining contracts were renewals, expansions and of existing contracts.  During the comparable twelve month period ended September 30, 2016, Input added 33 new producers to its portfolio.

During the twelve month period, Input's average upfront payment per tonne was $112.23 compared to $280.49 in the comparable period last year. The upfront payment per tonne reflects upfront payments made into Marketing Streams which are lower than Capital Streams, bringing the upfront payment per tonne down substantially.

As of September 30, 2017, Input's active streaming portfolio consisted of 301 geographically diversified streams. 221 of the Company's canola streams are with farms in Saskatchewan, 71 are located in Alberta, and 9 are in Manitoba. The Company is pleased with its continued growth across Alberta and Saskatchewan over the last year and expects to continue diversifying its asset base across the Prairies in FY2018 as it continues to add new streams to its portfolio.

The change in active streaming contracts by region on a quarterly and annual basis is demonstrated in the table below:

Active Streaming
Contracts

Sep 30, 2017

Jun 30, 2017

Quarterly
Growth

Sep 30, 2016

Year Over Year
Growth

Manitoba

9

9

-

6

3

Saskatchewan

221

220

1

87

134

Alberta

71

71

-

19

52

Total

301

300

1

112

189

 

Quarter Ended September 30

The quarter ended September 30 is always the slowing period of the year for capital deployment. For the three months ended September 30, 2017, Input recorded gross capital deployment of $1.751 million (compared to $1.784 million in the same quarter last year) in upfront payments into 11 streaming contracts for the right to purchase over 10,000 MT of canola over the life of the streaming contracts.

During the quarter, Input added four new producers to its streaming contract portfolio; all of them in Saskatchewan. The remaining contracts were renewals, expansions and restructures of existing contracts.

During the comparable quarter last year, Input added five new producers to its portfolio.

During the quarter, Input's average upfront payment per tonne was $171.16 compared to $181.84 in the comparable quarter last year. The upfront payment per tonne reflects upfront payments made into Marketing Streams which are lower than Capital Streams, bringing the upfront payment per tonne down substantially. As a result, Input now controls more physical canola per dollar invested than at any time in its history.  For more information about Marketing Streams, refer to discussion on Marketing Streams beginning on page 14 of the MD&A.

BALANCE SHEET

Key balance sheet items are summarized below:




Statements of Financial Position 

CAD millions, unless otherwise noted

As at

Sep 30, 2017

As at

Sep 30, 2016

Cash

17.615

16.643

Canola interests and other financial assets

68.423

77.757

Total assets

120.555

118.548

Total liabilities

15.436

2.935

Total shareholders' equity

105.119

115.613

Working capital

28.870

71.181

Revolving credit facility

6.351

-

Long-term debt

-

-

 

OUTLOOK

This is the time of year when the level of activity at Input picks up substantially versus the quiet summer months. Input's business is highly seasonal, both in terms of when the Company signs up new clients and deploys capital (starting in October and building slowly to a climax in February through June), and in terms of when it receives canola deliveries and records revenue (starting in August or September, depending on the pace of harvest, and running through to the end of March).

Except for farmers in the area of southern Saskatchewan that was very dry this year, prairie farmers generally had a good growing season in 2017 featuring a combination of good yields, strong prices, and smooth harvest weather conditions. These factors have contributed to good near-term liquidity for farmers and has the potential to contribute to lower demand for the Company's capital streams. On the other hand, confident farmers tend to expand, and management has previously found farmers who are expanding to represent a good market for capital streams. It is too soon to predict which will be the dominant outcome this year.

As a result, management has discontinued the practice of providing guidance regarding annual capital deployment.  Management's objectives for the year are to continue growing its client base by deploying capital into both capital and marketing streams, and to do so at a level which is greater than the previous year's capital deployment. Since its founding in 2012, Input has grown its annual capital deployment by a Compound Annual Growth Rate (CAGR) of about 18% and management plans to continue to grow deployment year-over-year.

WEBCAST AND CONFERENCE CALL DETAILS

A conference call will be held on Thursday, December 7, 2017 starting at 9:30 am Saskatchewan time (10:30 am Eastern time) to further discuss the year end results. To participate in the conference call use the following dial-in number:

Participant Dial in #: (888) 231-8191 (North America Toll Free)
Participant Dial in #: (647) 427-7450 (International)

Webcast URL:  http://event.on24.com/r.htm?e=1532066&s=1&k=E98FCDAEBA3F1A4CF142138CBA27681C

It is recommended that participants dial in five minutes prior to the commencement of the conference call. Soon after the completion of the call, the webcast will be available for download on the Input Capital website at investor.inputcapital.com.  

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.

ABOUT INPUT

Input is a grain dealer licensed and bonded by the Canadian Grain Commission. Input buys canola from western Canadian farmers via multi-year streaming contracts. Under a streaming contract, Input purchases a fixed portion of the canola produced by a farmer, at pre-negotiated prices, for the duration of the term of the contract.  Input is a non-operating farming company with a diversified portfolio of canola streams, all of which produce canola and revenue for Input within a year of being signed. Input plans to aggregate canola from large numbers of farmers to grow and diversify its low cost canola production profile. Input is focused on farmers with quality production profiles, excellent upside yield potential, and strong management teams.

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.

Non-IFRS Measures

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 Streaming Sales, Adjusted Streaming Volume and Adjusted Gross Profit from Streaming;
  • Crop Payment per Tonne;
  • Cash Operating Margin and Cash Operating Margin per Tonne;
  • Cash Margin and Cash Margin per Tonne;
  • Adjusted EBITDA and Adjusted EBITDA per share;
  • Adjusted Operating Cash Flow and Adjusted Operating Cash Flow per share;
  • Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per share; and
  • Upfront Payment per Tonne.

 

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, and to confirm that these measures remain useful for comparison purposes to other royalty/streaming companies.  For more detailed information, please refer to Input's Management Discussion and Analysis available on the Company's website at investor.inputcapital.com and on SEDAR at www.sedar.com

SOURCE Input Capital Corp.

Doug Emsley, President & CEO, (306) 347-1024, doug@inputcapital.com; Brad Farquhar, Executive Vice-President & CFO, (306) 347-7202, brad@inputcapital.com

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