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The Westaim Corporation Reports Q4 and Full Year 2023 ResultsThe Westaim Corporation ("Westaim" or the "Company") (TSXV: WED) today announced its audited financial results for the quarter and full year ended December 31, 2023. Westaim recorded a net profit of $35.1 million ($0.26 diluted earnings per share) for Q4 2023 compared to a net profit of $32.8 million ($0.23 diluted earnings per share) for Q4 2022. For the full year ended December 31, 2023 Westaim recorded a net profit of $183.9 million ($1.32 diluted earnings per share) compared to a net profit of $18.0 million ($0.12 diluted earnings per share) for 2022. At December 31, 2023, Westaim's consolidated shareholders' equity was $518.3 million and the Company had 131,757,285 common shares ("Common Shares") outstanding. Book value per fully diluted share1 was $3.83 (C$5.08) at December 31, 2023, compared to $2.56 (C$3.46) at December 31, 2022. In Q4 2023, Westaim canceled 3,761,100 Common Shares that it acquired at a cost of $10.1 million through its normal course issuer bid ("NCIB"). In the full year 2023, Westaim canceled an aggregate of 9,896,178 Common Shares that it acquired at a cost of $26.4 million. Westaim participated in an upsized follow-on offering of Skyward Specialty Insurance Group, Inc.'s ("Skyward Specialty) common shares on November 20, 2023 and sold 3,600,000 Skyward Specialty common shares for net cash proceeds of approximately $104.9 million. Together with the previously announced June 12, 2023 Skyward Specialty secondary offering, Westaim sold a total of 7,587,500 Skyward Specialty common shares in the full year 2023 for net cash proceeds of approximately of $192.3 million. 1 The Company uses both IFRS and non-generally accepted accounting principles ("non-GAAP") measures to assess performance. Book value per fully diluted share is a non-GAAP measure. Book value per share is computed as adjusted book value divided by the adjusted number of Common Shares. See "Non-GAAP Financial Measure" and the reconciliation of such measure to the most comparable IFRS figure below. Key Results for Q4 2023 Skyward Specialty Westaim's income from its investment in Skyward Specialty common shares was $51.9 million in Q4 2023 compared to $40.5 million in Q4 2022. The full year income from the valuation of Skyward Specialty was $210.3 million in 2023 compared to $26.8 million in 2022. Westaim's investment in Skyward Specialty is $236.5 million at December 31, 2023 compared to $218.9 million at December 31, 2022, which is net of proceeds of $192.3 million from selling Skyward Specialty common shares which decreased the investment value at December 31, 2023. Arena FINCOs *
Arena *
1 Total recurring revenue, FRE, AIS EBITDA, net incentive fees and total Arena EBITDA are non-GAAP measures. These measures are reconciled to the most comparable Arena US GAAP figures in the Arena supplementary financial measures below and are used in order to show an accurate recurring revenue and contributions to net income from the advisory and non-advisory businesses. 2 AUM refers to the assets for which Arena Investors provides investment management, advisory or certain other investment-related services. AUM is generally based on the net asset value of the funds managed by Arena Investors plus any unfunded commitments. Arena Investors' calculation of AUM may differ from the calculations of other asset managers, and as a result, may not be comparable to similar measures presented by other asset managers. Arena Investors' calculations of AUM are not based on any definition set forth in the governing documents of the investment funds and are not calculated pursuant to any regulatory definitions. * Refer to the Supplementary Financial Measures sections of the MD&A (as defined herein): for Arena FINCOs see section 3.B.(ii), and for Arena see section 3.C.(iii). Supplementary financial measures from Arena's financial statements:
1 Adjusted to conform to the presentation of the current period financial statements. "We believe Westaim materially increased the intrinsic value per diluted share of the Company due to the excellent operating performance of Skyward Specialty and Arena, highlighted by the Initial Public Offering ("IPO") of Skyward Specialty early in the year. We are incredibly pleased with the results in 2023, as they reflect several years of value creating activities in our businesses," said Cameron MacDonald, President and Chief Executive Officer of Westaim. "Arena's platform is built and we are collectively laser focused on capitalizing on the market opportunity created by elevated interest rates and inflation following a decade of irresponsible monetary policy and Covid-inspired acceleration of fiscal imprudence. Fund raising momentum since the end of the year has been solid, resulted in AUM increasing to $3.5 billion at February 29, 2024. Westaim's activities through 2023 were focused on increasing our intrinsic value per diluted share, with the proceeds from the sales of Skyward Specialty shares resulting in a debt-free balance sheet and the ability to acquire and cancel 9.9 million Common Shares at a cost of $26.4 million." This press release should be read in conjunction with Westaim's audited consolidated financial statements (the "Financial Statements") and management's discussion and analysis for the year ended December 31, 2023 and 2022 (the "MD&A") which were filed on SEDAR+ at www.sedarplus.ca. These documents and the Company's Q4 2023 Investor Presentation can be found on the Company's website at www.westaim.com. Non-GAAP Financial Measures Westaim reports its Financial Statements using GAAP and accounting policies consistent with IFRS. Westaim uses both IFRS and non-GAAP measures to assess performance. The Company cautions readers about non-GAAP measures that do not have a standardized meaning under IFRS and are unlikely to be comparable to similar measures used by other companies. Readers are urged to review Section 15 Non-GAAP Measures in the MD&A (available on SEDAR+ at www.sedarplus.ca) which is incorporated by reference into this news release and discloses historical figures for book value per share in respect of the three months and year ended December 31, 2023 as well as additional disclosures regarding this measure. The Supplementary Financial Measures relating to Arena and Arena FINCOs contained in the MD&A are unaudited and have been derived from the financial statements of the related entities. Readers are cautioned that certain Arena and Arena FINCO financial information, including any US non-GAAP measures contained therein, has not been reconciled to IFRS and so may not be comparable to the financial information of issuers that present their financial information in accordance with IFRS. About Westaim Westaim is a Canadian investment company specializing in providing long-term capital to businesses operating primarily within the global financial services industry. The Company invests, directly and indirectly, through acquisitions, joint ventures and other arrangements, with the objective of providing its shareholders with capital appreciation and real wealth preservation. Westaim's strategy is to pursue investment opportunities with a focus towards the financial services industry and grow shareholder value over the long term. Westaim's investments include significant interests in Skyward Specialty, Arena and Arena FINCOs. Skyward Specialty, Arena FINCOs and Arena are defined in the notes to Westaim's audited consolidated financial statements for the year ended December 31, 2023 and 2022 and the MD&A. Westaim's Common Shares are listed on the TSX Venture Exchange under the trading symbol WED.
1 At December 31, 2023, 7,597,513 stock options and 3,455,198 RSUs were outstanding. At December 31, 2022, 10,428,337 stock options, 2,975,198 RSUs and 14,285,715 warrants were outstanding. Details regarding these stock options, RSUs and warrants are disclosed in the Company's public filings including its financial statements which are available under the Company's profile on SEDAR+ at www.sedarplus.ca.
1 See Note 11, Share-based Compensation in the Notes to the Financial Statements. Liability related to RSUs converted from C$ to US$ at period end exchange rates. RSUs are exercisable for Common Shares or cash at no cost to the holders. Adjustment made to reflect a reclassification of the RSU liability to shareholders' equity assuming all outstanding RSUs were exercised for Common Shares.
The Company does not undertake to update any forward-looking statement, forward-looking information or financial out-look that are incorporated by reference herein, except in accordance with applicable securities laws. The information provided herein does not constitute an offer or solicitation regarding any investment products offered by Arena Investors. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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