Western Investment Company Reports Financial Results for the Third Quarter of 2024
Calgary, AB – The Western Investment Company of Canada Limited (TSXV: WI) (“Western” or the “Corporation”) today reported its financial and operating results for the three and nine months ended September 30, 2024. The interim financial statements and management’s discussion and analysis have been filed on SEDAR+. Unless otherwise indicated, financial figures are expressed in Canadian dollars and comparisons are to the prior periods ended September 30, 2023.
Western had a strong third quarter, with equity income coming in at expectations, exceeding all third quarter results for the past five years. Western’s associate companies (“Associates”) are running smoothly, and the transactions that will transition Western to a property and casualty insurance and investment holding company are proceeding as planned. Subsequent to the end of the quarter, Western acquired the first tranche of shares in Fortress Insurance Company (“Fortress”) increasing the Corporation’s ownership in Fortress to 83.57% from 28.45%.
Uncapitalized transaction costs were $260,530 and $277,528 for the three and nine months ended September 30, 2024 respectively. Western’s portion of the $1.1 million gain on the sale of Foothills’ Kelowna warehouse for the nine months ended September 30, 2023, was $554,934. In the absence of these extraordinary items, it is apparent how the strong results in the third quarter allowed Western to make up for the cooler start to the summer that impacted seasonal businesses in the second quarter.
| Three months ended Sept 30, | Nine months ended Sept 30, | |||||
|---|---|---|---|---|---|---|
| ($ unless otherwise noted) | 2024 | 2023 | % Change | 2024 | 2023 | % Change |
| Income from equity investments | 1,008,243 | 681,383 | 48% | 1,178,644 | 1,779,803 | -34% |
| Finance income | 188,269 | 161,969 | 16% | 566,013 | 465,035 | 22% |
| Gain on disposal | 22,978 | 486 | 4,628% | 22,978 | 486 | 4,628% |
| Management fees | 37,500 | 37,500 | 0% | 112,500 | 112,500 | 0% |
| Income | 1,256,990 | 881,338 | 43% | 1,880,135 | 2,357,824 | -58% |
| Net Income | 521,104 | 488,590 | 7% | 149,959 | 149,959 | -86% |
| Remove one-time items: | ||||||
| Extraordinary gain | (554,934) | |||||
| Uncapitalized transaction costs | 260,350 | 277,528 | ||||
| Normalized Income | 781,454 | 488,590 | 60% | 427,487 | 515,101 | -17% |
“It has been an incredibly busy and focused time for Western and our Associates. Our Associates collectively delivered a strong third quarter, allowing Western to outperform relative to the same quarter last year despite some one-time transaction costs we had to absorb,” said Scott Tannas, President and Chief Executive Officer of Western. “Our transition towards a property and casualty insurance and investment holding company is going smoothly. Subsequent to the end of the quarter we increased our total ownership in Fortress to 83.57%, and we expect to acquire the remaining shares in the near future. The Private Placement that was upsized to a maximum of $30 million in aggregate proceeds is expected to close on December 6th and the Rights Offering appears to have been well received. It is truly great to see our plan come together to position Western and Fortress for growth and success.”
Portfolio Company Report for the Nine Months Ended September 30, 2024
Fortress
Fortress gross written premiums increased 102% to $30.9 million for the nine months ended September 30, 2024 compared with $15.3 million in the prior year. Overall, insurance service results at Fortress are comparable to the comparative period in 2023, as the company manages this growth with the increase in administrative expenses that come with it. Fortress is focused on diversification, expanding its product offerings into liability insurance, and on growing the Ontario market. Fortress is primed to become a key focus of Western.
Key Highlights:
- Gross written premiums grew 102% to $30.9 million in the first nine months of 2024 compared with $15.3 million in the comparative period 2023.
- 2024 results include three new programs which didn’t exist in 2023. Such programs add geographic diversity and class of insurance to the portfolio.
- Fortress’s investment portfolio, including cash, grew 23% to $22.7 million compared to $18.4 million as at September 30, 2023.
For the nine months ending September 30, 2024, Western recognized equity income of $85,258 from Fortress compared to $103,496 in equity income for the comparative period ended September 30, 2023.
| Three months ended Sept 30, | Nine months ended June 30, | |||||
|---|---|---|---|---|---|---|
| Financial results ($) | 2024 | 2023 | % Change | 2024 | 2023 | % Change |
| Insurance revenue | 6,206,829 | 5,341,356 | 16% | 17,778,333 | 15,024,227 | 18% |
| Insurance service result | 616,370 | 600,699 | 3% | 1,117,350 | 1,700,079 | -34% |
| Investment income (loss) | 487,185 | (72,147) | N/A | 974,696 | 283,048 | 244% |
| Net income (loss) | 188,588 | 45,692 | 313% | 299,676 | 544,845 | -45% |
| Gross written premiums1 | 15,167,777 | 4,326,060 | 251% | 30,945,542 | 15,307,900 | 102% |
1 Supplementary financial measure – total gross insurance premiums written during the year.
GlassMasters Autoglass (“GlassMasters”)
GlassMasters continued its growth trajectory with a 20% increase in sales for the nine months ended September 30, 2024 compared to the comparative period in 2023. GlassMasters has seen an average of 20% growth in revenue annually for the past four years. This has been achieved through a combination of growth at current retail and warehouse locations and from the addition of new locations. After adding three locations in 2023, GlassMasters opened its first location in Winnipeg in the second quarter of 2024, and the company expects to add a warehouse in Winnipeg in the coming months. GlassMasters serves as Western’s primary cash flow source, with regular interest payments occurring on the restructured shareholder notes.
Foothills Creamery (“Foothills”)
Operational and strategic improvements have given Foothills a boost in profitability over the last couple of years. Gross margins have improved by 2% from 2023. Sales, gross profit and EBITDA for 2024 are comparable to the prior year after removing the prior year’s one time gain on the sale of real estate. Foothills continues to innovate with new products and is expanding its customer base.
Golden Health Care (“Golden”)
Golden Health Care is working to improve occupancy at its underutilized homes resulting in an increase in revenue of 11% compared to the comparative nine month period 2023. Inflation has impacted the cost of care, and attracting staff has been challenging. Management is focused on occupancy and is working to access government funding for senior care, which would allow more seniors in need to access their beds.
Outlook
Looking forward, Western’s financial results and their presentation will change significantly as a result of the consolidation of Fortress, which became a subsidiary on October 1, 2024. Equity income from the remaining Associates for the fourth quarter are expected to be in line with normal seasonality, with the fourth quarter traditionally being a modest quarter. Costs associated with the transactions closing in the fourth quarter will continue to be incurred.
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.
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CONTACT INFORMATION – The Western Investment Company of Canada Limited
Scott Tannas President and Chief Executive Officer (403) 652-2663 [email protected]
Advisories
Completion of the Transaction and the Share Purchases are 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 document contains forward-looking statements. 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 and the Share Purchases, and 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 and Share Purchases.
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 and Share Purchases, 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 and Share Purchases 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.”