Flow Capital Announces Q3 2022 Financial Results
Recurring Revenues from Interest and Royalties of over $1.67M – YoY growth of 41.7%
TORONTO, November 18, 2022 – Flow Capital Corp. (TSXV:FW) (“Flow Capital” and “Company”), a leading provider of flexible growth capital and alternative debt solutions, announces its unaudited financial and operating results for the quarter ending September 30, 2022 (“Q3 2022”). Financial references are in Canadian dollars unless otherwise specified.
Q3 2022 Highlights
- Recurring Revenue of $1.67 million in Q3.
- Adjusted Recurring Free Cash Flow of approx. $400,000 in Q3; over $2 million YTD and $2.3 million over the past four-quarters.
- Total assets of approximately $53 million compared to $44 million at YE 2021.
- Cash of approx. $9.5 million compared to $4.1 million at YE 2021.
- Book Value ~$0.95 per share; up 27.3% YTD.
 Adjusted recurring free cash flow is an internally defined number represented by revenues from interest and royalties, less recurring operating expenses less interest expenses.
“In spite of the volatile capital markets backdrop and recessionary and inflationary economic environment we all find ourselves in, we are pleased with our Q3 performance” said Alex Baluta, CEO of Flow Capital. “Our performance represents the resiliency of the recurring revenue business model we have adopted over the past several years, as well as the cash flow generation and book value upside that can be generated from our portfolio of loans to “growth” companies”, he continued.
Flow Capital continues to focus its efforts on originating and investing in high growth companies looking to fuel expansion without the excessive and expensive dilution of equity, or restrictive covenants of conventional debt. With over thirty million small and medium sized business in the United States and Canada, and tens of millions of others in Flow Capital’s addressable geographies and sectors, there is a large market of potential investment opportunities.
“Q3 saw a material improvement in the size and quality of our pipeline driven by realizations that the broader equity markets are more challenging for businesses. The equity market volatility is generating a marked increased demand for the type of creative and flexible capital provided by Flow”, said Alex Baluta, CEO of Flow Capital.
“While broader economic volatility and inflation led to us to adjust some discount rates, which in turn led to a slight increase in our loan loss allowances, such adjustments have no impact on our current cash flow generation. We also believe that our carefully selected portfolio of investments will continue to grow and secure capital to repay us when due. Our $2.3M in adjusted recurring cash flow generated over the past 4 quarters is a record level of performance going back more than 4 years”, said Mr. Baluta.
Revenue reclassification: Effective January 1, 2022, the Company has revised the presentation of its income statement to exclude foreign exchange gain and losses from revenue and reclassified them as a non-operating expense item. The previously reported comparative figures have been updated accordingly. For the nine-month period ended September 30, 2021, after reclassifying the foreign exchange loss of $218,223, total revenue for the period is restated as $7,302,202 compared to $7,083,979, reported previously. There is no change to the net income.
Total revenue for the three-month period ended September 30, 2022, was $670,337 compared to $(323,997) in the three-month period ended September 30, 2021. Loan interest and royalty payment income for the three-month period ended September 30, 2022, was $1,676,567 representing a 41.7% increase from the $1,182,866, earned in the three-month period ended September 30, 2021.
Of the $1,676,567 loan interest and royalty payment income earned during the three-month period ended September 30, 2022, $358,546 was contributed by interest earned from new investments acquired in the last twelve months, $1,233,230 from loan interest and royalty payment income from the existing portfolio and $104,790 on account of loan amortization adjustments.
Income from changes in value of financial assets for the three-month period ended September 30, 2022 was $(1,006,139) compared to $(1,444,690) for the three-month period ended September 30, 2021.
Total revenue for the nine-month period ended September 30, 2022, was $7,930,414, a 8.6% increase from $7,302,202 in the nine- month period ended September 30, 2021. Loan interest and royalty payment income for the nine-month period ended September 30, 2022, was $5,531,510 representing a 23.3% increase from the $4,485,123, earned in the nine-month period ended September 30, 2021.
Of the $5,531,510 loan interest and royalty payment income earned during the nine-month period ended September 30, 2022, $1,229,432 was contributed by interest earned from new investments acquired in the last twelve months, $4,015,892 from loan interest and royalty payment income from the existing portfolio and $306,186 on account of loan amortization adjustments.
Total operating expenses for the three and nine-month periods ended September 30, 2022 were $881,638 (2021 – $669,453) and $ 2,363,882 (2021 – $2,151,752), respectively. The increase is primarily due to higher professional fees compared to the previous corresponding periods.
Profit (Loss) After Taxes
Profit (loss) after taxes for the three and nine-month periods ended September 30, 2022 were $502,663 (2021 – $(1,040,381) and $5,421,388 (2021 – $3,333,468), respectively. The movements in the profit (loss) after taxes was on account of higher loan interest and royalty payment income and favourable foreign exchange impacts, offset by fewer buyouts, fair value movements, and higher operating costs, compared to the corresponding periods in the previous year.
Conference Call Details
Flow Capital will host a conference call to discuss these results at 9:00 a.m. Eastern Time, on Monday, November 21, 2022. Participants should call +1 (888) 396-8049 or +1 (416) 764-8646 and ask an operator for the Flow Capital earnings call, Conference ID 65839061. Please dial in 10 minutes prior to the call to secure a line. A replay will be available shortly after the call. To access the replay, please dial +1 (416) 764-8692 or +1 (877) 674-7070 and enter passcode 471759#. The replay recording will be available until 11:59 p.m. Eastern Time, December 4, 2022.
Flow Capital Corp. is a diversified alternative asset investor and advisor, specializing in providing minimally dilutive capital to emerging growth businesses. To apply for financing, visit www.flowcap.com.
For further information, please contact:
Chief Executive Officer
1 Adelaide Street East, Suite 3002,
PO Box 171,
Toronto, Ontario M5C 2V9