Input Capital Corp. Announces FY2021 Q3 Results

REGINA, SK, Aug. 17, 2021 /CNW/ - Input Capital Corp. ("Input", "Company", "we", "our") (TSXV: INP) (US: INPCF) has released its results for the third quarter, ended June 30, 2021, of the 2021 fiscal year. All figures are presented in Canadian dollars.

"The quarter that ended in June is our first full quarter reporting on our security business since we acquired SRG Security Resource Group Inc. ("SRG") on February 1," said President & CEO Doug Emsley. "The shift from the agriculture business into the physical and cyber security business is moving along rapidly, such that in this quarter, security revenue represents 90% of consolidated quarterly revenue. Our balance sheet continues to strengthen as we are rapidly repatriating our capital from the ag sector.

"We have set in motion plans to rebrand Input more formally as a security company in the very near future, and our balance sheet makes us one of the best capitalized companies in the Canadian security industry.  Our senior management team has over 70 years of experience building and operating profitable security companies, and we look forward to leveraging that experience and balance sheet to create value for our shareholders."

In early July, SRG completed a tuck-in acquisition in the security sector and we look forward to further expansions from acquisitions, organic growth and new product developments.

FY2021 Q3 HIGHLIGHTS

• Q3 is our first quarter which includes a full three months of security revenue.
• Consolidated quarterly revenue of $4.4 million, bringing YTD revenue to $14.4 million. The YTD figure includes only five months of security-related revenue because the SRG acquisition closed on February 1. Security revenue represented 90% of revenue in the quarter and 45% of YTD revenue.
• Comprehensive after-tax net income of $1.3 million for the quarter and $2.1 million for the YTD.
• Adjusted EBITDA of $1.5 million ($0.02 per share) for the quarter and $2.6 million ($0.05 per share) for the YTD.
• Book value per share was $1.26 at the end of the quarter, up from $1.25 last quarter.
• Increased our cash position by $4.6 million while repaying $3.0 million in long-term debt, bringing our total debt outstanding to approximately $3.1 million.
• On April 15, 2021, we paid a quarterly dividend of $0.01 per share, or $0.04 per share annualized.
• We finished the quarter ended June 30 with:
• Cash and cash equivalents of $25.0 million;
• Loans and mortgages receivable of $18.0 million;
• Total shareholders' equity of $76.7 million; and
• Long-term debt of $3.1 million.

KEY PERFORMANCE INDICATORS FOR THE COMPARABLE PERIODS ARE SUMMARIZED BELOW: 

Our agriculture business is highly seasonal and not well-suited to the traditional quarter-to-quarter reporting requirements of public companies, and we remind you to keep this in mind when reading the information in this discussion and analysis of Input's quarter ended June 30, 2021.

REVENUE & NET INCOME

Revenues for the third quarter ended June 30, 2021 were $4.362 million compared with $14.395 million for the same period last year. Revenues for the nine months ended June 30, 2021 were $14.395 million, compared with $24.036 million for the same nine-month period last year. The decrease in revenues was due to the decline in crop revenue from a smaller book of canola contracts this year compared to last year, partially offset by five months of security revenue resulting from the acquisition of SRG completed on February 1, 2021.

Revenue from agriculture was $452K for the quarter ended June 30, 2021, compared to $7.993 million for the same period last year. Revenue from security services was $3.909 million for the quarter, representing 90% of total revenue in the quarter. We expect agriculture revenue to continue declining, resulting in the proportion of our revenue associated with security rising over time.

STREAMING CONTRACT PORTFOLIO

As of June 30, 2021, we have active streaming contracts with 43 farmers, distributed as follows:

Our book of agriculture contracts continues to shrink rapidly as they mature or are bought back by our farm clients. The current low interest rate and high commodity price environment offers farmers excellent refinancing opportunities.

BALANCE SHEET

Key balance sheet items are summarized below:

UPDATE ON NORMAL COURSE ISSUER BID

On December 29, 2020, we announced the renewal of the Normal Course Issuer Bid (NCIB), allowing the company to buy back up to 3,400,000 of its Class A common shares during the 2021 calendar year. Under our NCIB, during the three months ended June 30, 2021, we did not buy back any shares. For the nine months of the fiscal year to date, we have bought back a total of 1,602,409 shares at an average price of $0.87 per share.

We continue to believe that our shares have been trading in a price range which does not adequately reflect their value and that the purchase of shares under the NCIB will enhance shareholder value in general.

OUTLOOK

Our book of canola streaming contracts continues to decline rapidly as farmers take advantage of low interest rates and high commodity prices to refinance and/or buy out of their contracts with us. This is accelerating the pace of our shift into the security business beyond our original expectations.

Further, as the agriculture segment of our business shrinks and the security segment of our business grows, the price of canola has a declining impact on our financial results. Future growth will be in the security segment, in part from organic growth as SRG wins new contracts, and via acquisition, as SRG looks to acquire other companies in the Canadian cyber and physical security space(s).

We plan to continue to distribute capital to shareholders via the dividend, reduce our debt while maintaining solid liquidity, and focus on maximizing Adjusted EBITDA and Book Value per Share.

The ongoing effects of the COVID-19 pandemic and uncertainty within international markets could impact the Company's financial performance for the year ended September 30, 2021 and, possibly, beyond. The financial impact will be dependent on the spread and duration of the pandemic and on related restrictions and government advisories. We have not seen any material impact on our agriculture business to date, but we have seen some shifting of client demand for security services as a result of COVID. Given the balance of uncertainties, the long-term financial impact on the Company, if any, cannot be determined with any certainty. Taken together, COVID-19 has not had a material impact on the results of our agriculture business or on the security business of SRG.

SUBSEQUENT EVENTS

On July 10, 2021, the Company finalized an asset purchase agreement with Impact Security Group Inc. ("Impact") to purchase all Impact security and guard contracts in the Province of Saskatchewan, Canada. The purchase price was $2.0 million, with $1.35 million in cash paid on closing and the balance to be paid as an earnout based on the performance of the contracts over the next twelve months.

At a Special Meeting of the Shareholders held on August 9, 2021, Input shareholders voted overwhelmingly in support of a corporate name change and share consolidation for the Company. The Board and Management are considering the appropriate timing of these initiatives by the Company.

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 was founded as an agriculture commodity streaming company providing several flexible and competitive forms of financing which help western Canadian farmers solve working capital, mortgage finance and canola marketing challenges and improve the financial position of their farms. On February 1, 2021, Input acquired SRG Security Resource Group Inc. as a platform for growth in the cyber and physical security business in Canada.  For more information, please visit www.inputcapital.com.

ABOUT SRG

SRG is a market-leading Canadian provider of world-class Cyber Security and physical Protective Security Services. Founded in 1996, most of SRG's employees are located in Western Canada, but solutions and services are provided to organizations across the country. SRG clients include federal and provincial governments, Crown corporations, and many high profile corporate and public sector clients such as hospitals, airports, utility companies and police forces. SRG now operates as a wholly-owned subsidiary of Input. More information is available on SRG's website at www.securityresourcegroup.com.

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 Net Income (Loss), Adjusted Net Income (Loss) per share, Adjusted EBITDA, Adjusted EBITDA per share, and;
• Book Value per share.

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.  For more detailed information, please refer to Input's Management Discussion and Analysis available on the Company's website at www.inputcapital.com and on SEDAR at www.sedar.com.

SOURCE Input Capital Corp.