Input Capital Corp. Announces Strong Deployment & Canola Sales In FY2017 Q1 Results

REGINA, Feb. 7, 2017 /CNW/ - Input Capital Corp. ("Input" or the "Company") (TSX Venture: INP) (US: INPCF) has released its results for the first quarter of its 2017 fiscal year. All figures are presented in Canadian dollars.

"The first quarter of 2017 is marked by a significant increase in capital deployment compared to last year," said President and CEO Doug Emsley. "During the quarter, Input deployed $12.6 million into seventeen streaming contracts, a 90% increase over the same period last year. Our prospect pipeline is also larger than it has ever been, due to the success of several recent farm trade shows."

"During the quarter, we also sold 24,958 MT of canola in spite of weather-related delays to harvest activity in October, and initiated a quarterly dividend. We are well on track for a successful canola sales season with most of our canola expected to be sold by the end of the second quarter. We also have a conditional sale in place on a significant portion of the farmland held for sale and look forward to being able to confirm this sale and other similar asset sales in the near future."

FY2017 Q1 Highlights

• Adjusted streaming sales¹ of $11.724 million on the delivery of 24,958 canola equivalent metric tonnes¹ ("MT" or "tonnes") at an average price of $470 per MT;
• Generated an additional $1.585 million in sales from canola trading for total adjusted sales¹ of $13.309 million;
• Cash operating margin¹ from streaming contracts of $9.918 million, or $397 per MT (84.6% cash operating margin);
• Adjusted net income¹ of $1.047 million, or $0.01 per share;
• Adjusted operating cash flow¹ of $8.597 million or $0.11 per share;
• Invested $12.569 million of upfront payments² into 17 streaming contracts, adding 10 new contracts and more than 66,000 MT to the Company's future canola sales. (Included in these figures are $7.998 million of upfront payments into two streaming contracts representing 45,000 MT which are not yet reflected in the Company's financial statements or the enclosed MD&A financial summaries due to standard closing conditions which had not yet been fully satisfied as at the end of the quarter.)
• Signed an agreement for the sale of farmland that was previously received from a farmer as a partial buydown of a streaming contract. The sale remains subject to the removal of certain conditions and is scheduled to close on April 1, 2017.
• On December 7, 2016, Input announced that it would initiate a dividend, with the initial annual dividend set at $0.04 per share, to be paid at the rate of $0.01 per quarter. The first dividend was paid January 16, 2017 to shareholders of record as at December 30, 2016; and
• Finished the quarter with:
  • Cash and cash equivalents of $28.164 million;
  • Total canola interests (current portion and long-term portion) and other financial assets (herein referred to collectively as "canola interests") of $72.732 million;
  • Multi-year active streaming contracts with 121 farm operators, up from 78 a year ago;
  • Total shareholders' equity of $115.254 million;
  • $0.460 million drawn on its $25 million revolving credit facility; and
  • No long-term debt.

KEY PERFORMANCE INDICATORS FOR THE COMPARABLE PERIODS ARE SUMMARIZED BELOW:

CAD millions, unless otherwise noted	Three months ended Dec 31, 2016	Three months ended Dec 31, 2015*	% Change
Adjusted streaming sales^1	11.724	15.640	-25%
Adjusted streaming volume (MT)^1	24,958	31,889	-22%
Average selling price from streaming contracts	$470	$490	-4%
Ending canola reserves (MT)	254,000	247,000	3%
Capital deployed	4.571	6.653	-31%
Active streaming contracts	121	77	57%
Cash operating margin1	9.918	13.613	-27%
Cash Operating Margin per Streaming MT1	$397.37	$426.87	-7%
Cash margin1	2.697	5.196	-48%
Cash Margin per Streaming MT1	$108.04	$162.93	-34%
Adjusted Net Income (loss)1	1.047	3.084	-66%
Adjusted Net Income (loss) / Share1	$0.01	$0.04	-66%
Adjusted EBITDA1	8.701	12.612	-31%
Adjusted EBITDA / Share1	$0.11	$0.15	-31%
Adjusted Operating Cash Flow1	8.597	11.198	-23%
Adjusted Operating Cash Flow / Share1	$0.11	$0.14	-23%

* An early harvest accompanied by very rapid and efficient canola deliveries during the three months ended December 31, 2015 inflated canola sales during that period relative to Management's normal expectations. The proportion of 2016 production sold during the period ended December 31, 2016 is more in keeping with Management's expectations for normal years.

SALES

For the three months ended December 31, 2016, Input generated adjusted sales1 from streaming contracts of $11.724 million on the adjusted streaming volume1 of 24,958 MT an average price of $470 per MT, slightly below the average Prairie cash canola price of $472 during the quarter. Input's average price is expected to rise in Q2 as canola sales are realized at contracted higher prices.

Adjusted streaming sales decreased by 25% compared to the comparable quarter one year ago, when the Company sold 31,889 MT of canola equivalent. The high numbers last year are the result of unusually rapid canola movement during the 2015 harvest as well as carry-in volume from the 2014 harvest that was not able to be sold previously.

Supplementing the Company's marketing and logistics plan for streaming tonnes, Input generated revenue from canola trading during the quarter of $1.585 million compared to $6.973 million in the comparable quarter one year ago. Trading revenues are subject to fluctuations and generate low margins. They are often a result of filling gaps in the Company's streaming contract marketing program to optimize deliveries.

CAPITAL DEPLOYMENT AND STREAMING CONTRACT PORTFOLIO

For the three months ended December 31, 2016, Input invested $12.569 million (compared to $6.653 million in the same quarter last year) in upfront payments into 17 streaming contracts for the right to purchase just over 66,000 MT of canola over the life of the streaming contracts. During the quarter, Input added 10 new contracts; 9 in Saskatchewan and 1 in Alberta. 7 contracts were renewals/expansions in Alberta (1) and Saskatchewan (6). Input also executed one complete contract buyout in Alberta during the quarter. (Included in these figures are $7.998 million of upfront payments into two streaming contracts representing 45,000 MT which are not yet reflected in the Company's financial statements or the MD&A financial summaries due to standard closing conditions which had not yet been fully satisfied as at the end of the quarter.)

During the comparable three month period ended December 31, 2015, Input added two new contracts to its portfolio. Input has taken deliberate steps to add a larger number of smaller contracts to its portfolio of streaming contracts and is pleased to have added more than four times the number of new producers in the period this year as it did in the comparable period last year.

As of December 31, 2016, Input's active streaming portfolio consisted of 121 geographically diversified streams. 95 of the Company's canola streams are with farms in Saskatchewan, 20 are located in Alberta, and 6 are in Manitoba.

Active Streaming Contracts	Dec 31, 2016	Sep 30, 2016	Quarterly Growth	Dec 31, 2015	Year Over Year Growth
Manitoba	6	6	0	5	1
Saskatchewan	95	87	8	66	29
Alberta	20	19	1	7	13
Total	121	112	9	78	43

Balance Sheet

KEY BALANCE SHEET ITEMS ARE SUMMARIZED BELOW:

Statement of Financial Position  CAD millions, unless otherwise noted	As at Dec 31, 2016	As at Sep 30, 2015	Change
Cash and cash equivalents	28.164	16.643	69%
Canola interests and other financial assets	72.732	77.757	-6%
Total assets	122.636	118.548	3%
Total liabilities	7.382	2.935	152%
Total shareholders' equity	115.254	115.613	0%
Working capital	68.977	71.181	-3%
Revolving credit facility	0.460	-	NMF
Long-term debt	-	-	NMF

OUTLOOK

While the 2016 growing season featured a slow harvest which delayed some canola sales from Q1 into Q2 of the current fiscal year, management is pleased with the progress of sales from its overall program and expects the majority of canola contracted from the 2016 crop to be sold by the end of Q2.

Input's collection efforts with regard to three terminated streaming contracts continue. Approximately $11.8 million of the original $18.4 million has been collected to date and management believes the full amount outstanding will be collected in due course. Input is a secured creditor, and the collection and land sale processes associated with these funds continues to proceed as expected.

Input's capital deployment program is yielding good results in the aftermath of two very successful trade shows in early January. The prospect pipeline is larger than ever, and the Regional Account Manager team is busy meeting with farmers to follow up on their expressed interest in canola streaming. Market expectations for high canola seeded acres this year are indicative of high farmer interest in producing canola, which can be quite profitable at current prices. However, canola is also input intensive, providing an excellent opportunity for the Company to partner with farmers via streaming contracts. Management remains confident in its goal of deploying $50 million into new streaming deals during this fiscal year.

WEBCAST AND CONFERENCE CALL DETAILS

A conference call will be held on Wednesday, February 8, 2017 starting at 9:30 am Saskatchewan time (10:30 am Eastern time) to further discuss the year end results. To participate in the conference call use the following dial-in number:

Participant Dial in #: [phone] (North America Toll Free)
Participant Dial in #: [phone] (International)

Webcast URL: http://event.on24.com/r.htm?e=1359466&s=1&k=ED894994CC97909CADA7FCEB2E441A29

It is recommended that participants dial in five minutes prior to the commencement of the conference call. Soon after the completion of the call, the webcast will be available for download on the Input Capital website at investor.inputcapital.com.  

NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

ABOUT INPUT

Input is an agriculture commodity streaming company with a focus on canola, the largest and most profitable crop in Canadian agriculture. Input enters into multi-year canola streaming contracts with canola farmers in western Canada.  Pursuant to the streaming contract, Input purchases a fixed portion of the canola produced, at a fixed price, for the duration of the term of the contract.  Input is a non-operating farming company with a diversified portfolio of canola streams, all of which produce canola and revenue for Input within a year of being signed. Input plans to grow and diversify its low cost canola production profile through entering into additional canola streaming contracts with farmers across western Canada. Input is focused on farmers with quality production profiles, excellent upside yield potential, and strong management teams.

Forward Looking Statements

This release includes forward-looking statements regarding Input and its business. Such statements are based on the current expectations and views of future events of Input's management. In some cases the forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms, or other similar expressions intended to identify forward-looking statements. The forward-looking events and circumstances discussed in this release may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting Input, including risks regarding the agricultural industry, economic factors and the equity markets generally and many other factors beyond the control of Input. No forward-looking statement can be guaranteed. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Input undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Non-IFRS Measures

Input measures key performance metrics established by management as being key indicators of the Company's strength, using certain non-IFRS performance measures, including:

• Adjusted Streaming Sales, Adjusted Streaming Volume and Adjusted Gross Profit from Streaming;
• Adjusted Operating Cash Flow and Adjusted Operating Cash Flow per share;
• Adjusted EBITDA and Adjusted EBITDA per share;
• Adjusted Net Income and Adjusted Net Income per share;
• Crop Payment per Tonne;
• Cash Operating Margin and Cash Operating Margin per Tonne;
• Cash Margin and Cash Margin per Tonne; and
• Upfront Payment per Tonne.

The Company uses these non-IFRS measures for its own internal purposes. These non-IFRS measures do not have any standardized meaning prescribed by IFRS, and these measures may be calculated differently by other companies. The presentation of these non-IFRS measures is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Company provides these non-IFRS measures to enable investors and analysts to understand the underlying operating and financial performance of the Company in the same way as it is frequently evaluated by Management. Management will periodically assess these non-IFRS measures and the components thereof to ensure their continued use is beneficial to the evaluation of the underlying operating and financial performance of the Company, and to confirm that these measures remain useful for comparison purposes to other royalty/streaming companies.  For more detailed information, please refer to Input's Management Discussion and Analysis available on the Company's website at investor.inputcapital.com and on SEDAR at www.sedar.com.

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1 Non-IFRS financial measures with no standardized meaning under IFRS. For further information and a detailed reconciliation, refer to "Non-IFRS Measures" in the accompanying MD&A.

2 Includes contracts that were signed but not completely funded at the end of the quarter ended December 31, 2016.

SOURCE Input Capital Corp.

please contact: Doug Emsley, President & CEO, [phone], [email protected]; Brad Farquhar, Executive Vice-President & CFO, [phone], [email protected]

Related Links

http://www.inputcapital.ca/