The Western Investment Company of Canada Limited (TSXV: WI)
(“
Western” or the “
Corporation”)
today reported its financial and operating results for the three
and twelve months ended December 31, 2023. The audited financial
statements, management’s discussion and analysis, and annual
information form have been filed on SEDAR+. Unless otherwise
indicated, financial figures are expressed in Canadian dollars and
comparisons are to the prior period ended December 31, 2022.
Total revenue for the year ended December 31, 2023
increased 48% or $0.6 million to $1.8 million despite one-time
items in both 2022 and 2023 that created a $1 million head-wind for
the year. These one-time items included a gain on dilution in the
fourth quarter of 2022 of $0.8 million, and a loss on debt
settlement in the fourth quarter of 2023 of $0.2 million.
Net income for the year ended December 31, 2023
increased to $201,967 compared with a net loss of $215,376 in 2022.
The recovery and growth seen within Western’s portfolio of
companies (“Associates”) are the result of
operational improvements that drove significant gains in gross
margins and sales at many of the Associates.
|
Year Ended December 31, |
|
|
|
|
|
$ |
2023 |
|
|
2022 |
|
|
Change |
|
|
Income (loss) from equity investments |
1,235,241 |
|
|
(613,687 |
) |
|
1,848,928 |
|
|
Finance income |
605,278 |
|
|
601,682 |
|
|
3,596 |
|
|
Gain on disposal and dilution |
485 |
|
|
950,638 |
|
|
(950,153 |
) |
|
Loss on debt settlement |
(205,594 |
) |
|
- |
|
|
(205,594 |
) |
|
Management fees |
172,500 |
|
|
284,271 |
|
|
(111,771 |
) |
|
Total Revenue |
1,807,910 |
|
|
1,222,904 |
|
|
585,006 |
|
|
|
|
“There is a collective sense of growth and momentum
at Western today. Beyond our proposed transaction with Paul Rivett
to transform Western into a property and casualty insurance and
investment holding company, our portfolio companies are all
performing very well,” said Scott Tannas, President and Chief
Executive Officer of Western. “I want to thank the teams at our
Associate companies for their ongoing focus, commitment, and
operational discipline that drove these solid results. 2023 marks
the year that our Associates were able to shake free from the
market malaise created by COVID, reap the benefits of an improving
business environment, and deliver our best results in four years.
As we shift Western’s focus to insurance, we are taking care to
protect and enhance the other businesses in our portfolio. We spent
considerable blood, sweat, and tears navigating these businesses
through the intense difficulties of COVID, and we have no intention
of squandering that effort. We will continue our good stewardship
of these outstanding companies.”
2023 Portfolio Company Report
Fortress Insurance Company
(“Fortress”) Fortress continued its trajectory of
growth by increasing gross written premiums by 26% to $22.4 million
in 2023. Over the year Fortress increased its capacity on all its
products and added liability and transportation insurance products
to its lineup. Fortress’ underwriting business is now consistently
profitable, and net income is nearly $1 million above the
comparative year. Fortress expects to see continued growth in
written premiums throughout the coming year with a focus on
diversification of both product lines and geography. During the
year Fortress had strong growth in Alberta, and built momentum in
Ontario, Manitoba, and Saskatchewan. Steady but controlled growth
is expected to continue through 2024.
Results were also boosted this year by gains in
their investment portfolio. 2023 investment income exceeds the
prior year by $1.6 million.
The trailing 12-month loss ratio as at December 31,
2023 (incurred losses over earned premium) was 47% (2022 – 41%), an
impressive result and testament to its lean cost structure and
focused execution. The ratio is also indicative of the quality
business Fortress has developed.
|
Year Ended December 31, |
|
|
|
|
|
$ |
2023 |
|
|
20222 |
|
|
Change |
|
|
Insurance revenue |
20,535,772 |
|
|
11,499,180 |
|
|
9,036,592 |
|
|
Investment income (loss) |
913,309 |
|
|
(704,781 |
) |
|
1,618,090 |
|
|
Net income (loss) |
719,536 |
|
|
(382,702 |
) |
|
1,102,238 |
|
|
Gross written premiums1 |
22,406,496 |
|
|
17,719,454 |
|
|
4,687,042 |
|
|
|
|
1 Supplementary financial measure
– total gross insurance premiums written during the
year.2 Prior year numbers have been restated to
conform with the new standard, IFRS 17, Insurance Contracts, which
was adopted by Fortress on January 1, 2023, with retrospective
application.
GlassMasters Autoglass posted
another year of record sales and profit for 2023. Sales exceeded
that of 2022 by $6 million. EBITDA was up 17%. Growth is occurring
at both the retail and warehouse locations and three new locations
came online in 2023. The company has plans for further expansion in
2024.
Foothills Creamery returned to
profit in 2023. Gross margins jumped considerably in 2023 from 13%
to 21% translating into a $3.7 million improvement in EBITDA. The
company achieved this with an improved pricing strategy that more
readily incorporates inflation, and a focus on higher margin
products. Foothills has a strong level of inventory on hand and is
ready to meet high demand heading into the summer months of
2024.
Golden Health Care has made modest
improvements in occupancy leading to a profitable 2023. Golden
provides a steady, but modest return to shareholders. Growth in
market value of the Golden homes is where Western will earn its
return on this investment.
OutlookStrong results from all
Associate in 2023, coupled with an improving business environment,
lead to a positive outlook for 2024. That said, the tremendous
growth in gross written premiums at Fortress is expected to
moderate somewhat as it navigates its entry into the Ontario
marketplace.
Western also intends to transform itself into an
insurance and investment holding company through a proposed
transaction previously announced on March 22, 2024 (the
“Transaction”). The Transaction proposes an
investment of at least $20 million from companies affiliated with
Paul Rivett and the concurrent rights offering is expected to raise
up to an additional $30 million. Upon the successful closing of the
Transaction, Paul Rivett is to be appointed to President and Chief
Executive Officer of Western with the following initial
priorities:
- Grow the Fortress platform to $100
million per annum in written premiums by 2028 through a combination
of prudent organic growth and accretive acquisitions; and
- Continue managing Western’s
non-insurance holdings as long-term investments.
For more information about the Transaction you can
watch a recording of the webcast that took place on March 27, 2024
here.
Completion of the Transaction (including any rights
offering) is subject to the approval of the TSX Venture Exchange
(the “Exchange” or “TSXV”),
shareholder approval and various other conditions. The Transaction
as contemplated constitutes a Change of Business under the policies
of the TSXV.
About The Western Investment Company of
Canada Limited Western is a unique publicly traded,
private equity company founded by a group of successful Western
Canadian businesspeople, and dedicated to building and maintaining
ownership in successful Western Canadian companies, and helping
them to grow. Western's shares are traded on the Exchange under the
symbol WI.
For more information on Western, please visit its
website at www.winv.ca.
To add yourself to our email news alert
subscription please visit this link.
CONTACT INFORMATION - The Western Investment
Company of Canada Limited
Scott Tannas President and Chief Executive Officer
(403) 652-2663 stannas@winv.ca
Advisories Completion of the
Transaction is subject to a number of conditions, including but not
limited to, TSXV acceptance and if applicable, disinterested
shareholder approval. Where applicable, the Transaction cannot
close until the required shareholder approval is obtained. There
can be no assurance that the Transaction will be completed as
proposed or at all.
Investors are cautioned that, except as disclosed
in the management information circular to be prepared in connection
with the Transaction, any information released or received with
respect to the Transaction may not be accurate or complete and
should not be relied upon. Trading in the securities of Western
should be considered highly speculative.
The TSXV has in no way passed upon the merits of
the proposed Transaction and has neither approved nor disapproved
the contents of this news release.
This news release may contain certain
forward-looking information and statements, including without
limitation, statements pertaining to future results and plans for
Western and its associated companies, acquisitions, financings and
returns. Statements containing the words: 'believes', 'intends',
'expects', 'plans', 'seeks' and 'anticipates' and any other words
of similar meaning are forward-looking. All statements included
herein involve various risks and uncertainties because they relate
to future events and circumstances beyond Western's control.
More particularly, this document contains
statements concerning: the completion of the transactions
contemplated by the Definitive Agreement (as defined in the March
22, 2024 news release), including the completion of the
Transaction, the appointment of the new CEO and additional
directors; the use of proceeds from the Transaction; the future
strategy and focus for Western; and future acquisitions and growth
opportunities. Readers are cautioned that the foregoing list of
factors should not be construed as exhaustive.
The forward-looking statements are based on certain
key expectations and assumptions made by Western, including
expectations and assumptions concerning the ability of Western to
successfully implement its strategic plans and initiatives, the
timing of receipt of required shareholder and regulatory approvals
(including TSXV approval) and third party consents and the
satisfaction of other conditions to the completion of the
Transaction.
Although Western believes that the expectations and
assumptions on which the forward-looking statements made by Western
are based are reasonable, undue reliance should not be placed on
the forward-looking statements because no assurance can be provided
that they will prove to be correct. Since forward-looking
statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual
results could differ materially from those currently anticipated
due to a number of factors and risks. These include, but are not
limited to, risks that required shareholder, TSXV, regulatory and
third party approvals and consents are not obtained on terms
satisfactory to the parties within the timelines provided for in
the Definitive Agreement, or at all, and risks that other
conditions to the completion of the Transaction are not satisfied
on the timelines set forth in the Definitive Agreement or at all,
the ability of management to execute its business strategy, and the
impact of general economic conditions in Canada and the United
States. A description of additional assumptions used to develop
such forward-looking information and a description of risk factors
that may cause actual results to differ materially from
forward-looking information can be found in Western's disclosure
documents on the SEDAR+ website at www.sedarplus.ca.
The forward-looking statements contained in this
news release are made as of the date hereof and Western undertakes
no obligation to update publicly or revise any forward-looking
statements or information, whether as a result of new information,
future events or otherwise, unless so required by applicable
securities laws.
This news release also contains financial outlook
information (“FOFI”) about prospective results of
operations and book value, which are subject to the same
assumptions, risk factors, limitations, and qualifications as set
forth in the above paragraphs. FOFI contained in this news release
was made as of the date of this news release to provide information
about management's current expectations and plans relating to the
future. Readers are cautioned that such information may not be
appropriate for any other purpose. Western disclaims any intention
or obligation to update or revise any FOFI contained in this news
release, whether as a result of new information, future events or
otherwise, except as required by applicable law.
This news release shall not constitute an offer to
sell or the solicitation of an offer to buy securities in the
United States, nor shall there be any sale of the securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful. The rights issued under any rights offering and
underlying Single Voting Shares and the Multiple Voting Shares (as
defined in the March 22, 2024 news release) being offered have not
been, nor will they be, registered under the 1933 Act or under any
U.S. state securities laws, and may not be offered or sold in the
United States absent registration or an applicable exemption from
the registration requirements of the 1933 Act, as amended, and
applicable state securities laws.
“Neither the TSX Venture Exchange nor its
Regulatory Services Provider (as that term is defined in policies
of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release.”
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