CEO.CA Chairman's Briefing

REGINA, Feb. 14, 2018 /CNW/ - Input Capital Corp. ("Input" or the "Company") (TSX Venture: INP) (US: INPCF) has released its first quarter results for the 2018 fiscal year. All figures are presented in Canadian dollars.

"The first quarter of Input's 2018 fiscal year is remarkable for the rapid and smooth delivery of our canola grown in 2017," said President & CEO Doug Emsley. "This quarter marks a new record for canola sales by Input in a single quarter, at 51,097 MT, bringing in just under $25 million in quarterly streaming revenue. That's more than double the volume sold during the same quarter last year, and is due to a combination of hard work by our team and good weather for both harvest activity and transportation. This is the highest quarterly streaming sales figure in Input's history."

FY2018 Q1 HIGHLIGHTS

• Adjusted streaming sales¹ of $24.718 million on the delivery of 51,097 canola equivalent metric tonnes¹ ("MT" or "tonnes") at an average price of $483.75 per MT. These figures represent increases of 111%, 105%, and 3% compared to the same quarter last year, respectively;
  
  
• Generated an additional $3.142 million in sales from canola trading for total adjusted sales of $27.860 million;
  
  
• Cash operating margin¹ $12.604 million (an increase of 27% over Q1 last year), or $246.70 per MT (50.99% cash operating margin);
  
  
• Adjusted operating cash flow¹ of $10.579 million (an increase of 22% over Q1 last year) or $0.13 per share;
  
  
• Adjusted EBITDA¹ of $10.538 million (an increase of 21% over Q1 last year), or $0.13 per share;
  
  
• Adjusted net income¹ of $1.467 million (an increase of 39% over Q1 last year), or $0.02 per share;
  
  
• Recorded total upfront payments of $2.425 million into 60 streaming contracts, adding 25 new producers to the portfolio and more than 43,000 MT to the Company's future canola sales. During the same quarter last year, total upfront payments made were $12.569 million (which included a single contract for $7.455 million) and 9 new producers were added to the portfolio;
  
  
• On October 16, 2017, the Company paid a quarterly dividend of $0.01 per share to shareholders of record as of September 30, 2017;
  
  
• On December 11, 2017, the Company announced and initiated a Normal Course Issuer Bid for up to 6,578,683 of its common shares. The Company bought back 118,200 shares during the quarter. These shares were subsequently cancelled;
  
  
• Finished the quarter with:
• Cash of $30.343 million;
• Canola reserves of 392,000 MT;
• Total canola interests (current portion and long-term portion) and other financial assets (liabilities) (herein referred to collectively as "canola interests") of $58.823 million;
• Multi-year active streaming contracts with 325 farm operators, up from 121 a year ago;
• Total shareholders' equity of $107.060 million;
• $1.508 million drawn on its $25 million revolving credit facility; and
• No long-term debt.

Subsequent to the Quarter End:

• On January 30, 2018, management announced the start of a pilot project to test a new type of stream called a mortgage stream, which provides a convenient way for farmers to make mortgage payments with canola;
  
  
• Pursuant to its NCIB, the Company bought back 256,200 of its own shares in January 2018.

KEY PERFORMANCE INDICATORS FOR THE COMPARABLE PERIODS ARE SUMMARIZED BELOW:

SALES

For the quarter ended December 31, 2017, Input generated adjusted sales from streaming contracts of $24.718 million on adjusted streaming volume of 51,097 MT for an average price of $483.75 per MT.

The sales from streaming tonnes plus net settlements from streaming tonnes for the quarter represent a 105% increase in quarterly volume over the comparable quarter one year ago, when the Company sold 24,958 MT of canola equivalent for revenue of $11.724 million for an average price of $469.75 per MT. This is a result of an early harvest accompanied by good harvest weather, which allowed for timely and smooth canola transportation and sale throughout the quarter.

STREAMING CONTRACT ORIGINATION AND PORTFOLIO UPDATE

The quarter ended December 31 is a slower period of the year for new contract origination while farmers finish harvesting crops and selling grain. For the three months ended December 31, 2017, Input recorded total upfront payments of $2.425 million into 60 streaming contracts for the right to purchase over 43,000 MT of canola over the life of the streaming contracts.

During the quarter, Input added 25 new producers to its streaming contract portfolio; 22 producers in Saskatchewan and 3 in Alberta. The remaining contracts were renewals, expansions and restructures of existing contracts.

During the same quarter last year, total upfront payments made were $12.569 million (which included a single contract for $7.455 million) and 9 new producers were added to the portfolio.

During the quarter, Input's average upfront payment per tonne was $55.50 compared to $190.24 in the comparable quarter last year. The upfront payment per tonne reflects upfront payments made into marketing streams which are lower than capital streams, bringing the upfront payment per tonne down substantially. For more information about marketing streams, refer to discussion on marketing streams beginning on page 14.

The change in active streaming contracts by region on a quarterly and annual basis is demonstrated in the table below:

BALANCE SHEET

KEY BALANCE SHEET ITEMS ARE SUMMARIZED BELOW:

NORMAL COURSE ISSUER BID

The Company bought back 118,200 shares during the quarter at prices ranging from $1.53 to $1.59 per share. These shares were subsequently cancelled.

Management of Input believes that the Company's shares have been trading in a price range which does not adequately reflect their value and that the purchase of shares under the Bid will enhance shareholder value in general.

INSIDER PURCHASES

Since April 2017, management, employees and directors of the Company have increased their ownership by 6.85 million shares, spending over $10 million of their own capital to do so. Insiders now own about 28% of Input on a fully diluted basis.

OUTLOOK

Historically, the Company has found the October to December quarter to be unpredictable in terms of new client acquisition. A long, drawn-out harvest can distract farmers from their future planning because they are still busy in the field trying to get last year's crop harvested, but it can also constrain farm cash flow and create a more urgent need for the farmer to consider a capital stream to enhance his/her working capital position. Conversely, a smooth and easy harvest or strong grain movement can free farmers to think about plans for potential expansion, but strong grain movement also tends to enhance farm cash flows and remove the year-end pressure of bills coming due.

These timing issues, which are inherent to agriculture, also affect the Company. Like farmers, Input also benefits from smooth and early grain movement, which enhances its cash flow position, but the timing of demand for its capital and marketing streams can also be affected, although management expects these issues to sort themselves out over the course of an annual cycle.

Western Canadian farmers generally had a good growing season in 2017 featuring a combination of good yields and crop quality, strong prices, and smooth harvest weather conditions. In addition, the grain handling system has been working smoothly and export demand has been high for the crops that farmers produce. In particular, industry data shows that cash flows from spring wheat are over $400 million higher this year over last year to date. These factors have contributed to good near-term liquidity for farmers and has the potential to contribute to lower near-term demand for the Company's capital streams. On the other hand, confident farmers tend to expand, and management has previously found farmers who are expanding to represent a good market for capital streams. It remains too soon to predict which will be the dominant outcome this year.

Industry forecasts currently project near record acres of canola to be seeded in 2018 as farmers shift crop rotations to compensate for low prices for pulse crops such as peas and lentils which are a result of new tariffs on pulse imports into India. With little demand pull for pulses, strong canola prices are creating high farmer interest in adding canola acres this season. This may contribute to farmer demand for the Company's capital and marketing streams.

WEBCAST AND CONFERENCE CALL DETAILS

A conference call will be held on Thursday, February 15, 2018 starting at 9:30 am Saskatchewan time (10:30 am Eastern time) to further discuss the FY2018 Q1 results. To participate in the conference call use the following dial-in number:

Participant Dial in #: (888) 231-8191 (North America Toll Free)
Participant Dial in #: (647) 427-7450 (International)

Webcast URL:
http://event.on24.com/r.htm?e=1585933&s=1&k=0F52013935CF5E9D0B09A65F4DFD4618

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.

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 a grain dealer licensed and bonded by the Canadian Grain Commission. Input buys canola from western Canadian farmers via multi-year streaming contracts. Under a streaming contract, Input purchases a portion of the canola produced by a farmer, at pre-negotiated prices, for the duration of the term of the contract. Farmers use the proceeds to improve working capital and canola marketing outcomes. 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 aggregate canola from large numbers of farmers to grow and diversify its low cost canola production profile. 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;
• Crop Payment per Tonne;
• Cash Operating Margin and Cash Operating Margin per Tonne;
• Cash Margin and Cash Margin per Tonne;
• Adjusted EBITDA and Adjusted EBITDA per share;
• Adjusted Operating Cash Flow and Adjusted Operating Cash Flow per share;
• Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per share; 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.

SOURCE Input Capital Corp.

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