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RIFCO research and analysis

Contributed by eResearch

By Bob Weir

RIFCO Inc. has published results for the second quarter and six months of the 2012 fiscal year ended September 30, 2011.

With comprehensive income of $1.1 million and EPS of $0.06 for the first six months of the fiscal year, the Company reversed a $0.05 million comprehensive loss and EPS of $0.00 experienced in the first six months of the previous fiscal year.

Q2/F2012

For the second quarter of fiscal 2012, RIFCO reported earnings of $0.02 per share compared with zero earnings per share for the corresponding period of fiscal 2011. Revenue increased approximately 37% to $4.3 million. Net financial income before operating expenses more than doubled to $1.7 million, as the Company benefitted from an increase of only 17% in interest expense and a further decline in provision for impairment and credit losses.

Loan originations increased 51% to approximately $16 million. The Company’s 12-month rolling credit loss rate was 2.55% in the latest quarter compared with 5.68% a year earlier and 3.17% in the prior quarter. This is the lowest level in the Company’s history.

6M/F2012

For the first six months of fiscal 2012, RIFCO reported earnings of $0.06 per share compared with zero earnings per share for the first half of fiscal 2011. Revenue increased approximately 35% to $8.2 million. Net financial income before operating expenses more than doubled for the latest six-month period as the Company benefitted from the same positive factors for the latest half as outlined for the recent quarter.

Loan originations in the first half increased 57% to approximately $31 million compared with the year-earlier period. The year-to-date annualized quarterly credit-loss rate decreased to 1.56% compared with 5.15% a year earlier and management’s target of 4.25%. Book value per share increased to $0.20 at the end of the latest quarter compared with $0.10 a year earlier.

THE COMPANY

RIFCO Inc. is an auto finance company that provides non-traditional automotive financing to customers through a growing network of select new and used vehicle retailers.

Non-traditional borrowers are those individuals who cannot obtain vehicle loans from traditional sources, such as banks, for a variety of reasons. Industry sources estimate that 30%-35% of Canadians fall into this category. RIFCO operates in all Canadian provinces except Quebec and Saskatchewan. As at September 30, 2011, approximately 67% of the Company’s loans were in western Canada and 33% in eastern Canada.

eResearch Analysts:
Bill Campbell, B.Comm
Bob Weir, B.Sc., B. Comm, CFA