ECN Capital Reports $50MM+ EBITDA in Q3/18


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ECN Capital reported financial results for the three-month period ending September 30, 2018. Readers should note that as of January 1, 2018, the company changed its presentation and functional currency from Canadian dollars to U.S. dollars.

For the three-month period ending September 30, 2018, ECN Capital reported adjusted net income applicable to common shareholders of $21.3 million or $0.07 per share (basic) versus $13.4 million or $0.04 per share (basic) for the previous three-month period ending June 30, 2018 and $12.8 million or $0.03 per share (basic) for the same period last year.

Book value per common share as at September 30, 2018 was $3.47 versus $3.63 as at the end of the previous three-month period and $3.62 for the same period last year.

Originations for the three-month period ending September 30, 2018 were $509.0 million versus $505.2 million in the previous three-month period and $90.7 million for the same period last year.

Total earning assets managed and advised as at September 30, 2018 were $28.8 billion, versus $28.2 billion as at June 30, 2018.

EBITDA, net of provision for credit losses, for the three-month period ending September 30, 2018 was $50.9 million versus $36.6 million for the previous three-month period and $34.4 million for the same period last year.

Operating Expenses for the three-month period ending September 30, 2018 were $34.7 million versus $25.0 million reported for the previous three-month period ending June 30, 2018 and $8.5 million for the same period last year.

Net Income (loss) for the three-month period ending September 30, 2018 was ($57.5) million versus $2.6 million for the previous three-month period and ($40.6) million for the same period last year.

“With our transition to a business services company serving banks and financial institutions largely complete, I am excited to have a $50 million EBITDA quarter,” said Steven Hudson, CEO of ECN Capital. “Further, we now expect 97% of our Q4 2018 adjusted operating income before tax to come from our new businesses.” Additional Rail Sale
ECN Capital also announced today that it has entered into a definitive agreement to sell the remaining railcar assets to GATX Corporation for proceeds of approximately $229 million. The Company recorded a total after-tax loss of $38.5 million in the third quarter of 2018 on this sale. The transaction is expected to close in the fourth quarter of 2018.

Combined with the earlier railcar assets sold on October 17, 2018, ECN recorded a total after-tax loss of approximately $67.2 million in the third quarter of 2018 for these two transactions, reflecting a combined 0.90x book value of assets (together, the “2018 Railcar Dispositions”).

“The 2018 Railcar Dispositions were completed on an accelerated basis to execute the wind-down of our legacy rail assets”, said Jim Nikopoulos, ECN Capital’s President. “These transactions have resulted in the sale of substantially all of our rail portfolio and will release approximately $140 million in equity capital for deployment. Including these transactions, ECN’s total legacy assets have been reduced from approximately $5 billion at year-end 2016 to approximately $450 million, while preserving book value through the process.”

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Terry Mulreany
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Susie Angelucci
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