Insignia(LDWY) - 2023 Q4 - Annual Results

Company Overview and Strategic Transformation Lendway has strategically transformed into a specialty agriculture and finance company, focusing on agricultural investments and marking a key growth moment with the Bloomia acquisition, with seamless integration as the immediate priority Strategic Business Operations Update Lendway has strategically transformed into a specialty agriculture and finance company, focusing on agricultural investments and marking a key growth moment with the Bloomia acquisition, with seamless integration as the immediate priority - The company has strategically evolved into a specialty agriculture and finance company over the past 12 months, with operations focused on its agricultural investments[3] - The acquisition of a majority stake in Bloomia B.V., one of the largest fresh-cut tulip producers in the U.S., for $47.5 million, marks a pivotal moment in the company's growth trajectory[3][4] - In the short term, the company's primary focus remains the successful integration of Bloomia[3] Key Strategic Milestones Lendway experienced significant strategic milestones from 2023 to early 2024, including launching non-bank lending, selling its in-store marketing business, rebranding, and becoming the majority owner of Bloomia - April 2023: The company launched its lending business by hiring Randy Uglem, aiming to build a scalable non-bank lending operation[7] - August 2023: The company completed the sale of assets and liabilities related to its in-store marketing business, reported as discontinued operations, rebranded as Lendway, Inc., reincorporated in Delaware, and changed its ticker to LDWY[7] - February 2024: The company became the majority owner of Bloomia B.V. and its affiliated entities, one of the largest fresh-cut tulip producers in the U.S.[7] About Lendway, Inc. Lendway, Inc. is a specialty agriculture and finance company focused on managing agricultural investments domestically and internationally, fully owning FarmlandCredit.com, and holding a majority stake in Bloomia - Lendway, Inc. is a specialty agriculture and finance company focused on making and managing its agricultural investments in the U.S. and internationally[13] - The company wholly owns and operates FarmlandCredit.com, a non-bank lending business designed to purchase existing loans and/or originate and fund new loans domestically[13] - The company is also the majority owner of Bloomia, one of the largest fresh-cut tulip producers in the U.S.[13] Business Segment Updates Lendway has acquired a majority stake in Bloomia, a major U.S. fresh-cut tulip producer, which reported strong Q1 2024 momentum due to automation investments, while its non-bank lending business faces limited capital and expected operating losses for the remainder of 2024 Specialty Ag Business Update (Bloomia) Lendway acquired a majority stake in Bloomia, a major U.S. fresh-cut tulip producer, which reported preliminary unaudited net sales of approximately $45 million in 2023 and $43 million in 2022, showing strong Q1 2024 momentum due to automation investments - Lendway acquired a majority stake in Bloomia B.V., one of the largest fresh-cut tulip producers in the U.S., for $47.5 million[4] Bloomia Preliminary Unaudited Net Sales | Year | Net Sales (approx.) | | :--- | :------------------ | | 2023 | $45.0 million | | 2022 | $43.0 million | - Bloomia's CEO reported a strong start to Q1 2024, with strategic automation investments yielding significant improvements in operational quality, productivity, and efficiency[6] Non-Bank Lending Business Update The company aims to develop a scalable non-bank lending business but completed no loan transactions in 2023, with minimal revenue and operating losses expected for the remainder of 2024 due to capital allocation to Bloomia - The company is committed to building a scalable non-bank lending business but, despite negotiations with multiple prospective clients, did not close any loan transactions in 2023[8] - Capital and management resources available for developing the non-bank lending business are limited in the short term due to the allocation of capital to the Bloomia acquisition and operations[8] - The lending business is expected to generate minimal revenue and incur operating losses for the remainder of 2024[10] Financial Results Lendway reported a full-year 2023 net income of $2,414,000, a significant decrease from 2022, primarily due to reduced income from discontinued operations, while net loss from continuing operations increased and total liabilities significantly decreased Financial Results Overview Lendway reported operating expenses from continuing operations (lending business) and significant income from discontinued operations, including a gain from the 2023 sale of its in-store marketing business, with $16.077 million in cash and cash equivalents at year-end 2023 subsequently used for the Bloomia acquisition Operating Expenses from Continuing Operations (Lending Business) | Period | Amount | | :----------- | :--------- | | Q4 2023 | $536,000 | | Full Year 2023 | $3,519,000 | Net Income from Discontinued Operations (After Tax) | Year | Amount | | :--- | :------------ | | 2023 | $2,474,000 | | 2022 | $12,340,000 | - In 2023, the company recorded a pre-tax gain of $3,044,000 from the sale of discontinued operations[11] - As of December 31, 2023, Lendway's cash and cash equivalents totaled $16,077,000, subsequently reduced by the Bloomia acquisition, which was financed through $9.2 million in cash, $22.8 million in new credit facility borrowings, and a $15.5 million seller note payable[12] Condensed Statements of Operations Lendway reported a full-year 2023 net income of $2,414,000, a significant decrease from $10,046,000 in 2022, primarily due to reduced income from discontinued operations, while net loss from continuing operations increased Condensed Statements of Operations (Selected Data) | Metric | Q4 2023 | Q4 2022 | Full Year 2023 | Full Year 2022 | | :-------------------------------------- | :----------- | :----------- | :------------- | :------------- | | Operating Loss | $(536,000)$ | $(779,000)$ | $(3,519,000)$ | $(2,442,000)$ | | Net Loss from Continuing Operations | $(367,000)$ | $(681,000)$ | $(3,021,000)$ | $(2,294,000)$ | | Net Income (Loss) from Discontinued Operations, After Tax | $52,000$ | $(52,000)$ | $2,474,000$ | $12,340,000$ | | Gain (Loss) on Sale of Discontinued Operations, After Tax | $(9,000)$ | — | $2,961,000$ | — | | Net (Loss) Income | $(324,000)$ | $(733,000)$ | $2,414,000$ | $10,046,000$ | | Basic and Diluted Earnings Per Share | $(0.19)$ | $(0.41)$ | $1.36$ | $5.61$ | - Full-year 2023 net income was $2,414,000, a significant decrease from $10,046,000 in 2022, primarily due to reduced income from discontinued operations[16] - Net loss from continuing operations increased from ($2,294,000) in 2022 to ($3,021,000) in 2023[16] Selected Balance Sheet Data As of December 31, 2023, Lendway's cash and cash equivalents and restricted cash increased to $16.077 million, shareholder equity rose to $15.532 million, while total liabilities significantly decreased Selected Balance Sheet Data | Metric | December 31, 2023 | December 31, 2022 | Year-over-Year Change | | :-------------------------------------- | :---------------- | :---------------- | :-------------------- | | Cash and Cash Equivalents and Restricted Cash | $16,077,000 | $14,524,000 | +$1,553,000 | | Working Capital | $15,525,000 | $13,379,000 | +$2,146,000 | | Total Assets | $16,673,000 | $20,968,000 | -$4,295,000 | | Total Liabilities | $1,141,000 | $7,567,000 | -$6,426,000 | | Shareholders' Equity | $15,532,000 | $13,401,000 | +$2,131,000 | - Total liabilities significantly decreased from $7,567,000 in 2022 to $1,141,000 in 2023[18] - Shareholders' equity increased by $2,131,000, reaching $15,532,000 at the end of 2023[18] Cautionary Statement Regarding Forward-Looking Statements This section provides standard cautionary language regarding forward-looking statements, highlighting various risks and uncertainties that could cause actual results to differ materially from projections, including business integration challenges, market competition, interest rate fluctuations, and capital availability Forward-Looking Statements This section provides standard cautionary language regarding forward-looking statements, highlighting various risks and uncertainties that could cause actual results to differ materially from projections, including business integration challenges, market competition, interest rate fluctuations, and capital availability - Statements in this press release regarding the short-term and long-term benefits of the Bloomia acquisition, potential growth, allocation of capital resources between businesses, and timing of future financial reporting are forward-looking statements[14] - Factors that could cause actual results to differ materially from estimates and assumptions include the ability to successfully integrate and operate the Bloomia business, competitive capabilities, changes in interest rates, ability to comply with credit agreements, limited history of the lending business, market conditions, and availability of additional capital[14] - Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release and are based on current information that may change rapidly[14]