A GROWTH & INCOME
OPPORTUNITY
FORWARD-LOOKING STATEMENTS
This presentation contains forward-looking statements that reflect expectations of
management regarding the future growth, results of operations, performance, prospects
and opportunities of Accord Financial Corp. Readers are cautioned not to place undue
reliance on forward-looking information. All statements other than statements of
historical fact contained or incorporated by reference herein are forward-looking
statements and are often, but not always, identified by the use of words such as “seek”,
“anticipate”, “plan”, “continue”, “estimate”, “may”, “will”, “project”, “predict”,
“potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, and similar
expressions. Such forward-looking statements reflect management’s current beliefs and
are based on information currently available to management. Forward-looking
statements involve significant risks and uncertainties. A number of factors could cause
actual results to differ materially from the results discussed in forward-looking
statements. Although the forward-looking statements contained or incorporated by
reference herein are based upon what management believes to be reasonable assumptions,
Accord Financial Corp. cannot assure investors that actual results will be consistent with
these forward-looking statements.
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COMPANY SNAPSHOT AT OCT. 29, 2015
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Stock Symbol TSX:ACD
Price: $10.30
EPS: $1.00 (trailing 12 mths: Oct. 1/14 – Sept. 30/15)
Adjusted EPS: $1.12 (trailing 12 months)
Dividend Yield: 3.5% (dividend: 9.0 cents/qtr.)
P/E: 10.3 (based on trailing 12 months EPS)
Adjusted P/E: 9.2 (based on trailing 12 months Adjusted EPS)
P/B: 1.2 (based on book value per share of $8.38 @ 9/30/2015)
Shares Outstanding: 8,307,713 (no dilutive options o/s)
52-Week High/Low: $12.05/$9.00
Market Capitalization: $86 Million
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ABOUT US
Accord Financial Corp. is a leading North American provider of asset-based financial services
to small and medium sized companies, providing the working capital these firms need to grow
and succeed.
Accord’s services include asset-based lending (“ABL”) (including factoring), lease and
equipment financing, credit protection and receivables management, as well as supply chain
financing for importers. “Keeping Business Liquid” is what we do.
Accord has been in existence for 38 years. It has approximately 100 employees in Canada and
U.S.
Experienced management and a strong Board of Directors.
Accord operates four finance companies in North America: three in Canada and one in the
U.S. In Canada it operates: (i) an asset-based lending (ABL) (including factoring) subsidiary;
(ii) a credit protection and receivables management subsidiary; and (iii) a lease/equipment
financing and working capital lending company. Its U.S. subsidiary specializes in ABL,
including factoring.
Client industries are numerous and include manufacturing, distribution, retail, financial and
professional services, importers and exporters. The increasing popularity of the Accord brand
provides our operating companies with consistent deal flow.
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WHAT WE DO:
KEEPING BUSINESS LIQUID
Accord serves the SME market, primarily,
companies with annual revenue of $1 million
to $100 million.
The need for financing is typically driven by:
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rapid growth
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turn-around time needed after one or two
“down” years
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funding required for an acquisition
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management buy-out.
The profile of a typical company that comes
to us features one or more of the following
characteristics:
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the unavailability of traditional bank
financing for a variety of reasons (lack
of profitability, weak balance sheet, etc.)
The inability of banks to adequately serve
the SME market is the single biggest reason for
Accord’s success.
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the need for working capital financing in
excess of that normally available from a
bank
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the need for credit protection for their
receivables
Contrary to the banks’ public pronouncements
that they are ready and able to serve the SME
market, the truth is they do not have the
infrastructure or desire to do so.
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the need for equipment or other capital
financing
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ACCORD’S FINANCIAL SERVICES
ASSET-BASED LENDING
Accord’s asset-based lending serves companies of all sizes across North America. Our flexible ABL solutions allow clients to unlock
working capital from their accounts receivable, inventory and equipment. Accord also provides financing solutions to other lending
companies, enabling them to grow more quickly than they would with more traditional funding. Nearly 40 years of superior service
combined with exceptional financial strength makes us a most reliable finance partner for companies positioning for their next phase
of growth.
CREDIT PROTECTION & RECEIVABLES MANAGEMENT
Accord is one of North America’s most experienced firms providing complete receivables management services. For nearly 40 years
we have served small-and medium sized businesses with flexible, cost-effective, risk-free credit guarantees and collection services.
With complete coverage of the U.S. and Canada, and strong alliances worldwide, we have the knowledge, expertise and connections to
deliver superior results across all industries.
LEASE FINANCING
Accord finances equipment for small- and medium-sized business, serving a broad base of Canada’s most dynamic industries, from
forestry and energy to construction and manufacturing. Our success has been built on our commitment to supporting SMEs directly
and on our strong relationships with regional and national equipment vendors. Like all of our services, we’re proud to provide a
flexible approach to financing business that may be underserved by the major banks.
INTERNATIONAL TRADE FINANCING
Since 1978, Accord has been a leader in cross-border trade, simplifying supply chain finance for importers and exporters. Our unique
AccordOctet program provides trade financing for North American companies sourcing goods anywhere in the world, while our
alliance with Factor Chain International facilitates seamless credit and collection services through a network of more than 265 banks
and trade finance firms in 75 countries worldwide.
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EXPERIENCED MANAGEMENT
Ken Hitzig, Toronto, Ontario, Canada: Chairman of the Board. Mr. Hitzig founded Accord in 1978 and has seen his initial vision grow into
a highly successful North American asset-based finance company. Mr. Hitzig has a B.Comm from McGill University and has over 50 years
experience in the ABL and factoring industry. Mr. Hitzig has been a director of Accord since March 6, 1992 and is a member of the Company’s
Compensation Committee.
Tom Henderson, Greenville, SC, USA: President and CEO. Mr. Henderson has been associated with the ABL industry for over 45 years,
first with Heller International where he concentrated on managing asset-based lending units in the U.S., Asia and Australia. Mr. Henderson
joined Accord Financial, Inc., the Company's U.S. subsidiary, in 1998 and was promoted to President and CEO in 2001, a position he still holds.
Mr. Henderson was appointed President and CEO of Accord on May 6, 2009 and has been a director since July 28, 2009.
Stuart Adair, Toronto, Ontario, Canada: Senior Vice President, Chief Financial Officer. Stuart is a Chartered Accountant with over 30
years finance and accounting experience. He has been Accord’s CFO since 2002. Stuart commenced his career with a predecessor of
PricewaterhouseCoopers in the United Kingdom, transferring to its Toronto office in 1988. Stuart holds a B.A. from Sheffield University, U.K.,
and an M.A. in Economics from Queens University, Canada.
Fred Moss, Montreal, Quebec, Canada: President of Accord Financial Inc. Fred brings a wealth of experience and expertise in all aspects
of the finance industry to his role as President of Accord’s Canadian ABL business. Formerly President of CAFCO, he went on to found
Montcap Financial Corp. Under his careful leadership, the company was sold to Accord in 1992 and grew to become a dominant player in the
Canadian ABL industry. Fred holds a B.Comm. from McGill University, as well as a C.P.A.
Simon Hitzig, Toronto, Ontario, Canada: President of Accord Financial Ltd. Simon brings fifteen years of financial services success to
Accord. Prior to joining Accord, he held executive positions in marketing, product development and distribution strategy at Goodman &
Company Ltd., Manager of Dynamic Mutual Funds. His innovative approach was a key ingredient as Dynamic became one of Canada’s fastest
growing investment companies. Simon is a graduate of York University and holds an M.B.A. from Georgetown University. Simon is President
of Accord’s credit protection and receivables management business, as well as its lease and equipment financing subsidiary.
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CONSISTENTLY PROFITABLE FOR MORE
THAN 34 YEARS OF OPERATION
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Accord has a been profitable in
each of the last 34 years.
Net earnings were $6.9 million in
2014. On an adjusted basis,
excluding non-operating expenses,
adjusted net earnings were $8.1M
in 2014
Trailing net earnings for the
twelve months ended Sept. 30,
2015 were $8.3M. Adjusted net
earnings for the twelve months
ended Sept. 30, 2015 were $9.3M.
Accord’s adjusted ROE was
14.3% in 2014. Adjusted ROE for
the twelve months ended Sept. 30,
2015 was 14.6%.
Growth potential is seen through
U.S. operations, leasing, working
capital lending, import financing
and acquisitions.
CURRENT TRAILING EPS and P/E RATIO
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Earnings per share (EPS) and adjusted
EPS were 83 and 98 cents, respectively,
for 2014.
Trailing EPS and adjusted EPS were
$1.00 and $1.12, respectively, for the
twelve months ended Sept. 30, 2015.
EPS for the first 9M of 2015 were 72
cents, 33% higher than 9M/2014.
Adjusted EPS for 9M/2015 rose 25% to
76 cents (9M/2014 – 61 cents).
P/E ratio of 9.2 at Oct. 29, 2015 (based on
Accord’s share price of $10.30 and
trailing adjusted net earnings of $1.12).
Fourth quarter operating performance has
historically been Accord’s strongest due
to some seasonality.
QUARTERLY DIVIDENDS HAVE STEADILY
INCREASED TO 9 CENTS PER SHARE
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Dividends have steadily increased
since Accord went public in 1992.
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Current dividend is 9 cents per share
per quarter or 36 cents per annum.
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Dividends per annum have doubled
between 2005 and the current
dividend rate (36 cents per annum).
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Accord’s dividend yield is approx.
3.5% (based on an $10.30 share
price at Oct. 29, 2015).
CAPITAL RETURNED TO SHAREHOLDERS:
EXCELLENT TRACK RECORD
ACCORD FINANCIAL CORP.
CAPITAL RETURNED TO SHAREHOLDERS: DIVIDENDS PAID AND SHARE
REPURCHASES: 2006-2015
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Total dividends paid
during the period 20069M/2015 were $24.2
million.
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Total value of shares
repurchased during
2005-2014 was $14.7
million.
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Total number of shares
repurchased in the last
10+ years was over 2.0
million.
DIVIDENDS
DIVIDENDS
PAID
PAID PER
SHARE
$
$
2006
1,966,028
0.20
2007
2,081,147
2008
SHARES
SHARES
AVERAGE
REPURCHASED
REPURCHASED
PRICE PAID
$
#
$
4,466,086
573,100
7.79
0.22
332,634
41,600
8.00
2,280,810
0.24
1,005,017
154,000
6.53
2009
2,449,986
0.26
455,021
78,200
5.82
2010
2,634,272
0.28
2,569,161
343,400
7.48
2011
2,669,088
0.30
2,438,491
346,573
7.04
2012
2,592,907
0.31
3,402,463
497,500
6.84
2013
2,630,880
0.32
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2014
2,741,545
0.33
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2015 YTD
2,160,007
0.26
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24,206,670
2.72
14,668,873
2,034,373
7.21
TOTAL CAPITAL RETURNED TO SHAREHOLDERS $38,875,543
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ACCORD’S BOOK VALUE PER SHARE
HAS RISEN TO RECORD LEVELS
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December 31, 2014 book value was
$7.38 per share.
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Sept. 30, 2015 book value was a
record $8.38 per share.
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Accord has a strong balance sheet
and low degree of leverage. At Sept.
30, 2015 assets were $174MM,
liabilities were $104MM and
shareholders’ equity was a record
$70MM.
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P/B ratio at Oct. 29, 2015 was only
1.2 (based on a $10.30 share price).
ACCORD SEEKS TO ACHIEVE
A ROE OF OVER 15%
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ROE has averaged 14.3% over the
last 10 years. In 2014 ROE was
12.1%, while adjusted ROE was
14.3%.
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9M ended Sept. 30, 2015, ROE
was 12.2%, while adjusted ROE
was 12.8%.
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Based on trailing 12 months
earnings (10/1/14 – 9/30/15),
ROE was 13.1%, while adjusted
ROE was 14.6%.
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Accord is currently underleveraged and has excess capital
to deploy on internal growth or
acquisitions.
REVENUE AND CREDIT & LOAN LOSSES:
CRITICAL LINE ITEMS TO SUCCESS
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POTENTIAL ACQUISITION OPPORTUNITIES
Recent opportunities have emerged. Entry into lease financing
made through the Varion Capital acquisition.
Targets in Canada include other specialty finance companies.
The U.S. market is undergoing consolidation. Accord is
constantly looking at potential targets.
Accord considers acquisitions if they are accretive to earnings
and will provide future revenue and earnings at a higher growth
rate than can be achieved organically.
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COMPARATIVE VALUATIONS
(@ OCT. 29, 2015)
Company
Current
Price (Oct.
29, 2015)
(A)
Shares
outstanding
(Sept. 30, 2015)
(‘000)
Market Cap
($M)
Diluted
2014 EPS
(B)
Trailing
P/E(1)
(A/B)
Dividend
Yield
P/Book(2)
2014
ROAE(3)
Accord Financial Corp.
10.30
8,308
86
0.83
12.4
3.5%
1.23
12.1%
Callidus Capital Corp.
11.13
49,209
548
1.03
10.8
6.3%
1.14
10.6%
Element Financial Corp.
16.92
385,798
6,528
0.15
113.0
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1.64
1.9%
Goeasy Ltd. (formerly
Easyhome Ltd.)
16.55
13,394
222
1.42
11.7
2.4%
1.35
13.7%
Chesswood Group Ltd.
11.15
16,264
181
0.93
12.0
7.0%
1.30
14.5%
2.50
21,347
53
0.28(4)
8.9
-
1.97
27.6%
Rifco Inc.
Note
(1) Based on 2014 annual net earnings
(2) Based on book value per share (BVPS) @ 6/30/2015, except in Accord’s case where it is based on BVPS @ 9/30/2015
(3) Return on average equity
(4) Year ended March 31, 2015
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INVESTMENT OPPORTUNITY
• Q3/2015 and 9M/2015 record operating performance and financial
position.
• Proven record. Experienced management.
• 3.5% dividend yield.
• Increasing popularity of the Accord brand.
• Organic growth anticipated, particularly, in the U.S. ABL market and
Accord’s leasing business; capital available to support growth.
• Accretive acquisition opportunities to be pursued.
• Low comparable investment metrics compared to peers.
• Improved profitability and dividend payouts are always Accord’s focus.
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