Chesswood’s New U.S. Vendor Channel Business Tops $1MM in Originations

May 15, 2019, 07:15 AM

Filed Under: Industry News

Related: Barry Shafran, Blue Chip Leasing, Chesswood Group, Originations, Pawnee Leasing, Tandem Finance Inc.

Chesswood Group Limited, a North American commercial equipment finance provider for small and medium-sized businesses, reported results for the first quarter.

The company posted strong metrics in the quarter along with the launch of a new business:

free cash flow was strong once again at $4.3 million while dividends for the quarter were $2.8 million,
portfolio has grown by 24 percent since the first quarter of 2018,
revenue was $22.9 million, up by 22 percent from $18.7 million in the first quarter of 2018, and
launched a new vendor channel business, Tandem Finance Inc. Tandem has already posted its first $1 million in originations and operates in a channel many times larger than Chesswood's historical channel.

Chesswood's results for the first quarter were highly influenced by large changes, year-over-year, in two non-cash items, the allowance for credit losses and the mark-to-market valuation on interest rate swaps and caps. These two items increased significantly over the first quarter of last year, reducing operating income by $1.85 million and income before taxes by $2.8 million. Neither of these two non-cash items (or their changes from 2018) affected free cash flow for the period.

"While our financial results were negatively impacted by these two non-cash items this quarter, we're pleased that our operating earnings before this effect and before the expenses from Tandem increased over the first quarter of last year" said Barry Shafran, Chesswood's President and CEO. "We have chosen to remain focused on risk levels in our traditional business at this time in the business cycle while launching our new efforts in the vendor-channel of equipment finance, in the U.S. Tandem is the first provider of funding to this market that can truly offer its vendor partners proven in-house expertise in approving, funding and administering transactions in all credit tiers. This value proposition is attractive to current and prospective equipment vendor customers and is a competitive advantage that we intend to take advantage of."

Toronto-based Chesswood Group has three wholly owned subsidiaries: Colorado-based Pawnee Leasing Corporation, Blue Chip Leasing Corporation in Canada and Tandem Finance Inc.