Callidus Capital Reports Strong Third Quarter Results

Significant gains in EPS, revenue, gross yield, ROE, loan book while maintaining credit strength

Note: All amounts in Canadian dollars unless otherwise indicated.

Third Quarter 2015 Highlights

• Earnings per share (diluted) of $0.40, an increase of 11% from $0.36 last quarter, and 48% from $0.27 in the same quarter last year
• Total revenue of $48 million for the quarter, up $9 million or 23% from previous quarter, and $22 million or 85% from the same quarter last year
• Gross yield for the quarter was 19.7%, an increase from 18.8% in the prior quarter, and a slight decline from 20.0% in the same quarter last year. As noted previously, this figure is lumpy quarter to quarter
• ROE was 16.1%, an increase from 15.2% in the prior quarter, and an increase from 13.6% in the same quarter last year
• Gross loans receivable before derecognition of $1,193 million at September 30, 2015, up $149 million or 14% from the prior quarter, and up $538 million or 82% from the same quarter last year
• Average loan portfolio outstanding was $1,102 million, an increase of $174 million or 19% from the prior quarter, and an increase of $493 million or 81% from the same quarter last year
• Credit quality continues to be very strong, as evidenced by the current run-rate for annualized provisioning of 1.5% year-to-date
• Leverage ratio of 52.8% at the end of the current quarter, an increase from 49.0% at the end of the prior quarter
• Net income was $19.9 million for the quarter, up $1.5 million or 8% from the prior quarter and $6.7 million or 50% from the same quarter last year
• As at September 30, 2015, the estimated collateral value coverage across aggregate net loans receivable was approximately 138% with a range between 100% and 384% on an individual loan basis. Furthermore, the aggregate watchlist loans had an estimated aggregate collateral value coverage of 107% and non-watchlist loans had an estimated aggregate collateral value coverage of 147%. It should be noted that there is no cross collateralization of the asset coverage between borrowers

TORONTO, Nov. 5, 2015 /CNW/ - Callidus Capital Corporation ("Callidus" or the "Company") (TSX: CBL), reported strong loan portfolio growth, strong revenue growth, and further incremental earnings in the third quarter of 2015.  Callidus, which provides flexible and innovative asset-based loans, primarily to growth and distressed or troubled companies, today reported its financial results for the third quarter ended September 30, 2015, and provided an update on the current state of its business.

Newton Glassman, Executive Chairman and Chief Executive Officer of Callidus said: "Callidus' history of consistent improvement in all key metrics continued and strengthened in the third quarter, demonstrating strong momentum in loan portfolio growth, revenues, earnings and return on equity, while maintaining a substantial new loan pipeline. Although Callidus has surpassed its original target of doubling the loan book every two to three years by doubling in the first five quarters after its IPO, Callidus is not only expected to double its loan book again over the next two to three years, but to also see continued improvement in key metrics (EPS, revenue, gross yield, and ROE) over the same period.  However, some metrics have been and will likely in the future continue to be "lumpy" as a result of the very nature of the business.  Callidus currently finds itself in the envious position of being able to exploit the intersection of three things, namely: (i) its competitive advantages in dealing with these loans as well as high barriers to entry; (ii) a growing market opportunity resulting from the current state of the Canadian economy; and (iii) changes in the last few years to lenders' regulatory environment."

"Callidus continues to deliver and expand on its track record of very strong operating results, quarter over quarter over quarter. These results, coupled with our continued excellent credit quality, demonstrate the strength and robustness of our business model. Through constant refinement and focus of our marketing strategy, we are expecting higher conversion rates of prospects to funded clients from our current pipeline. Furthermore, Callidus has, and will continue to, capitalize on its unique access to Catalyst's workout expertise and capital for the benefit of Callidus shareholders, given how strategically critical Callidus is to Catalyst," added David Reese, President and Chief Operating Officer of Callidus.

Current state of the business, as at November 4, 2015:

• Gross loans receivable before derecognition stood at $1.17 billion
• The pipeline of potential new loans stands at approximately $600 million
• Signed back term sheets of approximately $300 million
• Total debt (net of cash and cash equivalents) of $625 million, or 53% of gross loans receivable
• The Company substantially realized on two of its watchlist loans in line with its $11 million provision. Provisioning was accurate and the Catalyst guarantee was realized upon immediately
• Approximately 2.2 million shares were acquired into treasury and cancelled under the normal course issuer bid (approximately 86% of the 2.6 million shares under the program)

Financial Highlights

	Three Months Ended		Three Months Ended
($ 000s)	Sept 30, 2015	Sept 30, 2014	Jun 30, 2015	Y/Y Change	Q/Q Change
Average loan portfolio outstanding^(1)	$1,101,675	$608,925	$928,172	81%	19%
Total revenue (after derecognition)	48,419	26,182	39,329	85%	23%
Gross yield^(1)	19.7%	20.0%	18.8%
Net interest margin^(1)	13.6%	15.3%	13.5%
Net income	19,925	13,246	18,390	50%	8%
Earnings per share (diluted)	$0.40	$0.27	$0.36	48%	11%
ROE	16.1%	13.6%	15.2%

Notes:
(1)	Refer to "Description of Non-IFRS Measures" in the MD&A. These financial measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. Therefore, they may not be comparable to similar measures used by other issuers.

Additional highlights of the third quarter, relative to the last quarter:

• In September 2015, the Company increased the amount of its revolving unsecured subordinated bridge facility from Catalyst by US$50 million to US$250 million in the aggregate. All other terms remain substantially unchanged
• During the third quarter, 1.15 million shares were acquired into treasury and cancelled under the normal course issuer bid
• Net new provision for loan losses for the third quarter was $7.5 million, of which a $3.3 million recovery was recognized related to the Catalyst guarantee. Provision on assets held for sale for the current quarter was $3.0 million of which a recovery of $3.0 million was recognized related to the Catalyst guarantee
• In the quarter, three new loans representing $95 million in total credit facilities were extended and two loans were repaid totalling $10 million. In addition to these new loans, $92 million in net new funding was provided to existing borrowers
• Our gross yield was 20.8% on our core product and 14.5% on Callidus Lite
• Catalyst Fund II, an investment fund and major shareholder of the Company, was previously scheduled to dispose of its assets no later than 2016. The term of that Fund has now been extended at least until November 2017
• In September 2015, the Company implemented a dividend reinvestment plan ("DRIP"). Catalyst has elected to participate in the DRIP on 100% of their shareholdings of the Company and, therefore, received 469,529 shares in consideration of their dividend subsequent to quarter-end

About Callidus Capital Corporation
Established in 2003, Callidus Capital Corporation is a Canadian company that specializes in innovative and creative financing solutions for companies that are unable to obtain adequate financing from conventional lending institutions. Unlike conventional lending institutions who demand a long list of covenants and make credit decisions based on cash flow and projections, Callidus credit facilities have few, if any, covenants and are based on the value of the company's assets, its enterprise value and borrowing needs. Callidus employs a proprietary system of monitoring collateral and exercising control over the cash inflows and outflows of each borrower, enabling Callidus to very effectively manage risk of loss.

Forward-Looking Statements
Certain statements made herein contain forward-looking information. Although Callidus believes these statements to be reasonable, the assumptions upon which they are based may prove to be incorrect. Furthermore, the forward-looking statements contained in this press release are made as at the date of this press release and Callidus does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Conference call
Callidus will host a conference call to discuss Q3 2015 results on November 6^th, 2015 at 10:30 a.m. Eastern Time.  The dial in number for the call is [phone] or [phone] (reference number: 61680751). A taped replay of the call will be available until November 11, 2015 at [phone] or [phone] (reference number: 61680751).

SOURCE Callidus Capital Corporation

David Reese, President and Chief Operating Officer, [phone], [email protected], www.calliduscapital.ca