Crosswinds Holdings Inc.
TSX : CWI

Crosswinds Holdings Inc.

May 16, 2016 08:00 ET

Crosswinds Holdings Inc. Reports Q1 2016 Financial Results

TORONTO, ONTARIO--(Marketwired - May 16, 2016) - Crosswinds Holdings Inc. ("Crosswinds" or the "Company") (TSX:CWI) today announced its financial results as at and for the three months ended March 31, 2016 and 2015.

Business Highlights

  • During Q1 2016, Monarch Delaware Holdings LLC and its subsidiaries ("Monarch") completed its first full year of operations. Monarch achieved profitability during the quarter. The Company recorded significant start-up costs during 2015 establishing Monarch.
  • As previously announced, in April 2016, Monarch received approval for a rate decrease on its homeowners' insurance program from the Florida Office of Insurance Regulation. This recently approved rate decrease should result in premium volume growth for Monarch.
  • Crosswinds' future results are expected to be driven by growth in asset management and net income associated with Monarch. A key metric to evaluate these results will be Monarch's premium growth.
  • During Q1 2016, the Company has been exploring capital raising opportunities as additional capital will be required to execute the Company's insurance and reinsurance strategy.

Q1 2016 Financial Highlights

As at and for the three months ended March 31, 2016, the Company reported:

  • Net loss attributable to Crosswinds' shareholders of $(446,830) or $(0.08) per common share ("Share") compared to net income attributable to Crosswinds' shareholders of $456,211 or $0.09 per Share for the three months ended March 31, 2015;
  • Share of income from Monarch of $0.1 million compared to a loss of $(0.6) million for the three months ended March 31, 2015; and
  • Shareholders' equity attributable to Crosswinds' shareholders (or net book value1) of $20.0 million or $3.76 per Share1 compared to $21.0 million or $3.96 per Share1 at December 31, 2015.

The Company's net loss during the quarter was primarily attributable to:

  • Foreign exchange fluctuations between the CAD and USD as Monarch, which represents the majority of the Company's assets, is a USD denominated investment. This resulted in a decline of $1.0 million in other comprehensive loss on translation from USD to CAD. This was partially offset by the Company's share of income in Monarch in the amount of $110,600;
  • Non-cash compensation expense related to deferred share units ("DSUs") in the amount of $123,526. This expense will continue to appear during 2016 on a declining scale as the balance of the granted units vest;
  • Decline in interest income following the Salbro repayment of $1.8 million in December 2015 and the interest rate reduction on the remaining outstanding debentures; and
  • Annual expenses which are typically incurred in Q1 of each year including payroll related expenses, rent and corporate filing fees.
1 Net book value per share is a non-IFRS financial measure and is calculated as total shareholders' equity under International Financial Reporting Standards (IFRS) divided by the number of common shares outstanding as at the period end. See the cautionary statement regarding use of Non-IFRS financial measures at the end of this release.
Statement of Operations Highlights
Three months ended March 31,
In C$ thousands, except per Share 2016 2015
Revenue $ 107 $ 104
Net results of investments 21 344
(Expenses) recovery (559 ) 8
Net (loss) income $ (431 ) $ 456
Net income attributable to the non-controlling interest 16 -
Net loss (income) attributable to Crosswinds' shareholders $ (447 ) $ 456
Net (loss) income per Share $ (0.08 ) $ 0.09

Q1 2016 Balance Sheet Highlights

For the quarter ended March 31, 2016, the Company reported:

  • Cash of $2.5 million compared to $3.0 million at December 31, 2015; and
  • Carrying value of $17.5 million for Monarch compared to $18.3 million at December 31, 2015
Balance Sheet Highlights
In C$ thousands, except per Share amounts March 31, 2016 December 31, 2015
Cash $ 2,524 $ 3,014
Investments in an associate and private entity 19,959 20,745
Other assets 223 211
Total Assets $ 22,706 $ 23,970
Total Liabilities 245 368
Total Shareholders' Equity $ 22,461 $ 23,602
Shareholders' equity attributable to the non-controlling interest 2,498 2,609
Shareholders' equityattributable to Crosswinds' shareholders $ 19,963 $ 20,993
Number of shares outstanding (millions) 5.3 5.3
Net book value per Share $ 4.23 $ 4.45

Financial Information

For a comprehensive review of the Company's results, shareholders are encouraged to read the Company's condensed interim consolidated financial statements and accompanying Interim Management's Discussion and Analysis for the period ended March 31, 2016, copies of which will be available on the Company's website at www.crosswindsinc.com and on SEDAR at www.sedar.com.

Crosswinds Holdings Inc.

Crosswinds is a publicly traded private equity firm and asset manager targeting strategic and opportunistic investments in the financial services sector with a particular focus on the insurance industry.

Caution Regarding Forward-Looking Information

This release includes certain forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or "continue" or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. These forward-looking statements are subject to a number of risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements. Reference should be made to the risk factors in the Company's 2015 Annual Information Form, in the Management's Discussion and Analysis for the year ended December 31, 2015 and in our other filings with Canadian securities regulators. Additional important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, interest rates, tax related matters, loss of personnel, reliance on key personnel, ability of the Company to generate positive future returns for investors, ability of the Company to execute its strategies from time to time; the receipt of any regulatory approvals or consents required from time to time. This news release makes reference to the net book value per share which is a non-IFRS financial measure. The Company calculates the net book value per share as it believes it to be an important metric that shareholders use and frequently request and refer to because shareholders often view the Company as an holding company of investments in private entities. Net book value is a non-IFRS financial measure that does not have any standardized meaning prescribed by International Financial Reporting Standards and therefore it is unlikely to be comparable to similar measures presented by other issuers. This classification is not an IFRS measure and should not be considered either in isolation of, or as a substitute for, measures prepared in accordance with IFRS.

Cautionary Statement Regarding the Valuation of Investments in Private Entities

In the absence of an active market for its investments in private entities, fair values are determined by management using the appropriate valuation methodologies after considering the history and nature of the business, operating results and financial conditions, the outlook and prospects, the general economic, industry and market conditions, capital market and transaction market conditions, contractual rights relating to the investment, public market comparables, private market transactions multiples and, where applicable, other pertinent considerations. The process of valuing investments for which no active market exists is inevitably based on inherent uncertainties and the resulting values may differ from values that would have been used had an active market existed. The amounts at which the Company's investments in private entities could be disposed of may differ from the fair value assigned and the differences could be material. Estimated costs of disposition are not included in the fair value determination.

Crosswinds Holdings Inc.
365 Bay Street, Suite 400
Toronto, Ontario, M5H 2V1
Telephone: 1-800-439-5136

Contact Information