Crown Capital Partners Announces Q2 2024 Financial Results
Q2 2024 Financial & Operating Highlights
- Crown recognized a net loss of
$(15.2) million ($2.71 loss per basic share) in Q2 2024 compared to a net loss of$(1.2) million ($0.21 loss per basic share) in Q2 2023. - Adjusted EBITDA1 was
$2.0 million in Q2 2024 compared to$2.6 million in Q2 2023 due primarily to reductions in revenues from theNetwork Services and Distributed Power segments and a reduction in income distributions fromCrown Partners Fund , partially offset by increased earnings from the Distribution Services and Real Estate segments. - Distribution services revenue was
$9.4 million in Q2 2024 compared to$8.9 million in Q2 2023. This segment reported net income before income taxes of$0.3 million (Q2 2023 – net loss before income taxes of$(1.2) million ), with the improvement attributable to the impact of operational efficiencies implemented throughout 2023 and 2024 and increased capacity utilization across the warehouses. Capacity utilization was 58% atJune 30, 2024 compared with 52% atMarch 31, 2024 and 42% atDecember 31, 2023 . - Network services revenue was
$5.9 million in Q2 2024 compared to$6.4 million in Q2 2023, with the decrease due primarily to the continued runoff of customer contracts from WireIE and the conclusion of a large construction-sector contract in mid-Q2 2023, partially offset by modest growth from customers of Galaxy in the mining sector. This segment reported a net loss before income taxes of$(0.4) million (Q2 2023 – net income before income taxes of$0.5 million ). - Real Estate segment revenue was
$1.2 million in Q2 2024 compared to$0.9 million in Q2 2023, with the increase over the prior-year quarter attributable to property development contracts acquired during Q2 2024. This segment recorded net income before income taxes of$0.3 million (Q2 2023 - net loss before income taxes of$0.2 million ). -
Distributed Power revenue was$0.4 million in Q2 2024 compared to$0.6 million in Q2 2023, with the decrease primarily relating to a decrease in property and equipment under development and to the consolidation of theWilson Creek assets. This segment reported a net loss before income taxes of$(0.2) million (Q2 2023 – net income before income taxes of$0.2 million ). - The Specialty Finance segment recorded a net loss before income taxes of
$(13.6) million (Q2 2023 – net income earnings of$0.8 million ), representing Crown's share of (losses) earnings ofCrown Partners Fund . In Q2 2024,Crown Partners Fund incurred a decrease in net assets of$42.2 million , of which$34.2 million was attributable to limited partnership interests, of which we own 28%, and$8.0 million was attributable to Crown's general partnership interest. The decline from the prior-year quarter is due primarily to an unrealized loss recognized in the period in respect of a loan investment carried at fair value through profit or loss. - Total equity at quarter-end decreased to
$22.4 million , from$38.2 million at the end of 2023, due to a net loss attributable to shareholders of$(15.9) million , driven primarily by Crown's share of the loss ofCrown Partners Fund of$15.4 million . Total equity per share decreased to$4.00 per basic share from$6.84 per basic share as atDecember 31, 2023 . - Since
September 30, 2023 , Crown has not satisfied certain financial covenant clauses of its credit agreement with its bank. Accordingly, the bank is contractually entitled to request immediate repayment of the outstanding loan in the amount as ofAugust 8, 2024 of$24.4 million and the outstanding balance is presented as a current liability as atJune 30, 2024 . The Corporation's bank has not requested early repayment of the loan. Management is currently in discussions with lenders regarding replacing its current credit facility and multiple financing options are being considered; however, there is no assurance that such arrangements will become available. - As of
August 8, 2024 , the Corporation had not paid the scheduled interest payment of$1.0 million due onJune 30, 2024 in respect of the 10% unsecured subordinated debentures ("Debentures"). SinceJuly 31, 2024 , this has constituted an event of default under the terms of the trust indenture that governs the Debentures. Accordingly, the Debentureholders, subject to certain conditions, are contractually entitled to request immediate repayment of the outstanding balance of$21.0 million , including principal and interest, but have not requested immediate repayment. Management is currently evaluating options to address the non-payment of interest on the Debentures. - As of
August 8, 2024 , the Corporation had not paid the scheduled interest payment of$0.04 million due onJune 30, 2024 in respect of the 10% redeemable secured subordinated debentures ("Subordinated Debentures"). This constitutes an event of default, but the holders of the Subordinated Debentures have not requested immediate repayment. - In Q2 2024, Crown's subsidiary,
Community Network Partners , completed the second sublot related to its fibre network under the Province ofOntario's Accelerated High-Speed Internet Program and$20.3 million is included in accounts receivable with the grant funding expected to be received in Q3 2024.
"Q2 was very disappointing as an unrealized loss on a single loan resulted in a significant reduction in the carrying value of our limited partnership interest in
"On the go-forward business front, we continue to make good progress with our Telecom, Distribution and Real Estate platforms with all business units exceeding expectations for the first half of the year. We expect the earnings from these businesses to continue to increase over the next 12 months and be the primary sources of our earnings in 2025," added
Q2 2024 Financial Results Summary
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Select Finanical Information |
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Three Months Ended |
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Six Months Ended |
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FOR THE PERIODS ENDED |
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2024 |
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2023 |
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2024 |
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2023 |
Revenue: |
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Distribution services revenue |
$ 9,368 |
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$ 8,882 |
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$ 17,577 |
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$ 17,239 |
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Network services revenue |
5,909 |
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6,414 |
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12,628 |
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13,687 |
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Fees and other income |
1,709 |
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1,416 |
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3,720 |
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2,299 |
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Distributed power interest revenue |
185 |
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624 |
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368 |
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1,166 |
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Merchant power revenue |
195 |
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- |
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799 |
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- |
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Total revenue |
17,366 |
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17,336 |
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35,092 |
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34,391 |
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Share of (losses) earnings of |
(17,594) |
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940 |
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(15,367) |
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2,290 |
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Loss attributable to Shareholders |
(15,153) |
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(1,155) |
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(15,757) |
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(1,867) |
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Comprehensive loss attributable to Shareholders |
(15,181) |
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(1,121) |
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(15,865) |
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(1,833) |
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Adjusted EBITDA1 |
1,988 |
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2,589 |
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3,279 |
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2,851 |
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Total assets |
177,016 |
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173,872 |
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177,016 |
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173,872 |
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Total equity |
22,363 |
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48,594 |
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22,363 |
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48,594 |
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Per share: |
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- Net loss to Shareholders - basic |
$ (2.71) |
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$ (0.21) |
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$ (2.82) |
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$ (0.33) |
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- Net loss to Shareholders - diluted |
(2.71) |
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(0.21) |
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(2.82) |
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(0.33) |
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- Adjusted EBITDA per share - basic1 |
0.36 |
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0.46 |
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0.59 |
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0.51 |
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- Total equity per share - basic |
4.00 |
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8.66 |
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4.00 |
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8.66 |
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Number of common shares: |
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- Outstanding at end of period |
5,588,646 |
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5,610,646 |
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5,588,646 |
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5,610,646 |
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- Weighted average outstanding - basic |
5,588,646 |
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5,630,743 |
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5,588,646 |
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5,636,601 |
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- Weighted average outstanding - diluted |
5,588,646 |
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5,630,743 |
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5,588,646 |
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5,636,601 |
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Three Months Ended |
Six Months Ended |
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FOR THE PERIODS ENDED |
2024 |
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2023 |
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2024 |
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2023 |
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Loss before income taxes |
(14,885) |
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(1,185) |
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(15,191) |
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(2,136) |
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Adjustments for amounts attributable to shareholders in relation to:1 |
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Depreciation |
2,804 |
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2,275 |
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5,521 |
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4,472 |
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Finance costs |
1,975 |
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1,431 |
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4,032 |
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3,007 |
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Payments of lease obligations |
(1,325) |
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(1,296) |
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(2,623) |
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(2,597) |
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Share based compensation (recovery) expense |
(340) |
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65 |
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(478) |
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(47) |
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Loss on disposal of assets held for sale |
22 |
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- |
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22 |
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- |
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Remeasurement of financial instruments |
- |
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- |
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- |
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(611) |
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Provisions for (recoveries of) bad debts and expected credit losses |
2 |
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(0) |
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6 |
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1 |
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Share of losses (earnings) of |
17,594 |
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(940) |
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15,367 |
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(2,290) |
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Income distributions received from |
157 |
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2,069 |
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157 |
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2,704 |
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Performance bonus expense (recovery) |
(4,015) |
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170 |
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(3,533) |
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348 |
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Adjusted EBITDA 1 |
1,988 |
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2,589 |
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3,279 |
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2,851 |
1 Adjusted EBITDA is not a measure of financial performance (nor does it have a standardized meaning) under IFRS. In evaluating this measure, investors should consider that the methodology applied in calculating these measures might differ among companies and analysts. The Corporation has provided a reconciliation of loss before income taxes attributable to Shareholders to Adjusted EBITDA in this news release. Amounts in respect of non-controlling interests are excluded in the calculation of Adjusted EBITDA. We believe that Adjusted EBITDA is a useful supplemental measure in the context of Crown's operations to assist investors in assessing the performance of our business as it provides a more relevant picture of operating results by facilitating a comparison of our performance on a consistent basis from period-to-period and provides a more complete understanding of factors and trends affecting our business. Adjusted EBITDA should not be considered as the sole measure of Crown's performance and should not be considered in isolation from, or as a substitute for, analysis of the Corporation's financial statements. |
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This news release contains certain "forward looking statements" and certain "forward looking information" as defined under applicable Canadian and
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