Solution Financial Reports Q1 2023 Financial Results

Calgary, Alberta and Vancouver, British Columbia–(Newsfile Corp. – March 15, 2023) – Solution Financial Inc. (TSX: SFI) (the “Company“), a leading provider of luxury automotive and yacht leasing in Canada, today announced its financial results for the first quarter ending January 31, 2023.

Earnings Highlights for the Quarter:

• Revenues were $5.1 million, down marginally from the comparative quarter which was $5.3 million.

• Net loss was $328,781 compared to net income of $226,724 during the comparative quarter due primarily to the one-time financing fees associated with the SunLife $35 million facility secured in the quarter.

• Adjusted net income⁽¹⁾ was $71,717, down from $308,751 during the comparative quarter.

• Total lease portfolio decreased to $24.8 million compared to $26.2 million during the prior quarter.

“The first quarter of 2023 was focused on strategic growth, with the finalization of the SunLife securitization financing facility in late December and the kickoff of several initiatives to begin putting this additional capital to productive use,” began Bryan Pang, Solution’s CEO. “We are enthusiastic about rolling out a new near-prime leasing program next month with our key partner dealerships and a new corporate luxury leasing program with interested businesses in Vancouver and Calgary. These programs aim to expand our lease offerings while rising lending rates and recessionary warnings have cooled the volume of new origination opportunities in our traditional leasing markets. We continued to see good sales opportunities in the ultra-luxury market, which bolstered our performance despite the quarterly loss, primarily due to the one-time financing fees associated with the new financing facility. We are also very enthusiastic about the increased immigration targets for 2023 through 2025, recently announced by the Canadian Government. The goal is to increase the number of new permanent resident immigrants to Canada from the current level of 405,000 per year to 500,000 by 2025. People are often not completely aware that many of these new immigrants bring considerable wealth with them when they immigrate to Canada, and Solution has developed leasing packages well suited to this demographic that are welcoming and supportive while they establish themselves in Canada,” concluded Bryan.

Solution is reporting a net loss of $328,781 or ($0.004), per share for the quarter ending January 31, 2023. This compares to net income of $226,724 or $0.003 per share for the quarter ending January 31, 2022.

Adjusted net income, which is more reflective of actual cash earnings, for the quarter ending January 31, 2023, was $71,717⁽¹⁾ or $0.001 per share compared to $308,751 or $0.004 per share for the quarter ending January 31, 2022. Adjusted Net Income excludes the non-cash accretion expense related to the convertible debentures and right-of-use assets of $38,926, income tax recovery of $130,000 amortization expense of $12,884, and non-recurring listing and financing fees of $478,688.

Solution’s operating cash flow for the three months ending January 31, 2023 saw net outflows of $133,332 (net of the operating lease asset disposals) compared to cash inflows of $290,278 during the comparative quarter of 2022.

Lease Portfolio

At January 31, 2023, Solution had 298 vehicles in its lease portfolio, a net decrease of 11 vehicles during the quarter to bring the total lease portfolio to $24.8 million.

At January 31, 2023, the average remaining lease term for the portfolio was 1.7 years, weighted by net book value for each vehicle. At January 31, 2023, Solutions’ 298 leases were generating annualized gross rental and lease revenue of approximately $7.1 million.

About Solution

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Solution Financial Inc. was founded in 2004 and is headquartered in Richmond, British Columbia, and Calgary, Alberta. Solution specializes in sourcing and leasing luxury and ultra luxury vehicles, yachts, and other limited-edition assets that tend to hold their value over time. The Company pioneered an innovative leasing program that has helped make Metro Vancouver the luxury car capital of North America. Solution utilizes a streamlined finance leasing model specializing in assets with limited supply and high resale value. This leasing alternative has proven extremely popular with affluent immigrants, international students, and business owners who may have limited credit histories in Canada or prefer more flexible vehicle ownership options.

Note 1 – Non-IFRS Financial Metrics

Solution provides all financial information in accordance with International Financial Reporting Standards (“IFRS”). To supplement our consolidated financial statements presented in accordance with IFRS, we are also providing with this press release, certain non-IFRS financial measures, including Adjusted Net Income. In calculating these non-IFRS financial measures, we have excluded certain transactions that are not necessarily indicative of our ongoing operations or do not impact cash flows. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains “forward-looking information” as defined under applicable Canadian securities laws. This information includes, but is not limited to, statements concerning our objectives, our strategies to achieve those objectives, as well as statements made with respect to management’s beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plans” or “continue”, or similar expressions suggesting future outcomes or events. Such forward-looking information reflects management’s current beliefs and is based on information currently available to management. Although forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with this forward-looking information. Certain statements included in this press release may be considered a “financial outlook” for purposes of applicable Canadian securities laws, and as such the financial outlook may not be appropriate for purposes other than this press release.

The forward-looking information contained in this press release is made as of the date of this press release and should not be relied upon as representing Solution’s views as of any date subsequent to the date of this press release. Except as required by applicable law, management and Solution’s Board of Directors undertake no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

For further information please contact Sean Hodgins at (778) 318-1514.

ON BEHALF OF THE BOARD

(signed) “Bryan Pang“
Brian Pang
President, CEO and Director

Neither TSX nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.

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To view the source version of this press release, please visit https://www.newsfilecorp.com/release/158636