Accord Financial Reports Mixed Q1 2024 Results Amid Economic Uncertainty

Accord Financial Corp, a financial services company, has released its first-quarter financial results, reporting revenue growth but lower net earnings compared to the same period last year, amidst an uncertain economic environment and strategic initiatives to generate additional capital and create shareholder value. This description focuses on the primary topic (Accord Financial Corp's financial results), main entities (Accord Financial Corp), context (uncertain economic environment), significant actions (strategic initiatives), and objective details (revenue growth, lower net earnings) that will guide the AI in creating an accurate visual representation of the article's content.

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Accord Financial Reports Mixed Q1 2024 Results Amid Economic Uncertainty

Accord Financial Reports Mixed Q1 2024 Results Amid Economic Uncertainty

Accord Financial Corp (TSX: ACD) has released its financial results for the first quarter ended March 31, 2024, reporting revenue growth but lower net earnings compared to the same period last year. The company posted revenue of $20.7 million, up from $18.4 million in Q1 2023, driven by modest portfolio growth and higher average yields.

However, net earnings attributable to shareholders declined to $632,000, or $0.07 per common share, compared to $2.019 million, or $0.24 per share, in the first quarter of 2023. Adjusted net earnings, which exclude certain non-cash items and professional fees related to amending the company's primary banking facility, were $1.532 million, or $0.18 per share, down from $2.158 million, or $0.25 per share, in Q1 2023.

Why this matters: The performance of Accord Financial Corp, a key player in the financial services sector, has implications for the broader economy and investors. As the company navigates the uncertain economic environment, its strategic initiatives and financial results can serve as a bellwether for the industry as a whole.

Commenting on the results, Accord's President and CEO Simon Hitzig stated, "The end of 2023 through the first quarter brought significant changes to Accord's balance sheet... While these initiatives stabilized the Company's financing environment, the ripple effects can be seen in the financial results." He noted that the uncertain economic environment is driving a steady flow of new applications, but the challenging credit environment is keeping the company highly selective in onboarding new clients.

Accord's finance receivables and loans stood at $457 million as of March 31, 2024, up from $450 million at the end of the first quarter last year. The portfolio declined from $477 million at the start of the year due to the exit of certain accounts to reduce leverage. Average funds employed increased to $460 million from $451 million in Q1 2023.

The company's expenses grew in the quarter due to a lengthy negotiation to amend its primary banking facility, resulting in $1.1 million of professional fees. Hitzig said Accord is making progress on strategic initiatives to generate additional capital to support portfolio growth and create shareholder value. These initiatives include adding new funding sources, shifting the overall product mix, and potentially divesting one or more non-core subsidiaries.

Despite the mixed results, Accord's book value per share increased to $9.90 from $9.80 at the start of the year. The company reduced its leverage and strengthened its balance sheet in response to a non-recurring reduction in equity in the fourth quarter of 2023. Looking ahead, Hitzig expressed optimism, stating, "With the headwinds from 2023 subsiding, we have set our sights back on the opportunities ahead of us."

Key Takeaways

  • Accord Financial Corp reports $20.7M revenue, up from $18.4M in Q1 2023.
  • Net earnings decline to $632,000, or $0.07 per share, from $2.019M in Q1 2023.
  • Adjusted net earnings are $1.532M, or $0.18 per share, down from $2.158M in Q1 2023.
  • Finance receivables and loans stand at $457M as of March 31, 2024, up from $450M in Q1 2023.
  • Book value per share increases to $9.90 from $9.80 at the start of the year.