Transcript $25M Subscription Receipt Offering

Western Financial Group
Q1 2008 Financial Results
Conference Call
May 9, 2008
Forward-Looking Statements
This presentation contains certain forward-looking statements. Forward-looking statements include, without
limitation, statements regarding the future financial position, business strategy, budgets, litigation, projected
costs, capital expenditures, financial results, taxes and plans and objectives of or involving Western
Financial Group Inc. (the “Company”) or its subsidiaries. Many of these statements can be identified by
looking for words such as ‘‘believe’’, ‘‘expects’’, ‘‘expected’’, ‘‘will’’, ‘‘intends’’, ‘‘projects’’, ‘‘anticipates’’,
‘‘estimates’’, ‘‘continues’’ or similar words. The Company believes the expectations reflected in such
forward-looking statements are reasonable but no assurance can be given that these expectations will
prove to be correct and such forward-looking statements should not be unduly relied upon. Forwardlooking statements are not guarantees of future performance and involve a number of risks and
uncertainties only some of which are described herein. Many factors could cause the Company’s actual
results, performance or achievements to, or future events or developments to, differ materially from those
expressed or implied by the forward-looking statements, including, without limitation, the risk factors, which
are discussed in greater detail in the ‘‘Risk Factors’’ section of the prospectus. Any forward-looking
statements are made as of the date hereof and the Company does not assume any obligation to publicly
update or revise such statements to reflect new information, subsequent events or otherwise.
Non-GAAP Measures
Throughout this presentation, the Company may use the term ‘‘operating income’’ to refer to earnings,
including investment income, before interest expense, taxes, depreciation and amortization of intangible
and capital assets, excluding gain (loss) from the sale of assets and income (loss) from equity investments.
The Company uses ‘‘operating income’’ to assist it in measuring corporate performance before the costs of
capital and amortization of capital and intangible assets. Operating income is not a measure recognized by
GAAP and does not have a standardized meaning prescribed by GAAP. Therefore, this measure may not
be comparable to similar measures presented by other issuers and investors are cautioned that it should
not be used as an alternative to ‘‘net income’’ or other measures of financial performance
calculated in accordance with GAAP.
Today’s Remarks
•
•
•
•
Operational Progress in Q1
Strategic Events in Q1
Financial Update
Priorities for Q2
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TSX: WES
Operational Progress
in Q1 2008
WFG Agency Network
•
•
•
•
Same store customer count 3.4% YTDA
Same store sales 8.5%
Soft market continues – AB Auto Increase?
“Insurance to Value” initiative building
revenue.
• Acquisition of Southern Insurance
Lethbridge, AB
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Western Life Assurance
• Creditor Life still strong
• Certificate count and growth highest ever
13% over Q1/07
• Bolt-on product for network is at 5,088
policies. Target of 20,000 by Q2/08 revised to
be Q2/ 09.
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Bank West
• Negative portfolio growth in Q1, Summer
funding season expected to be slower than
2007
• Portfolio target for 2008 - $320 million
• Very low specific provisions in Q1, credit
quality solid
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Strategic Events in Q1
Q1 Strategic Events
• Agency acquisition pipeline filling
• Loan portfolio acquisition opportunities
• Business development discussions with
Partners are underway
• Employment market in Alberta is turning – we
are at full employment
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Financial Update
($ Millions)
Total Revenue
140
120
100
80
60
40
20
0
114 120
CAGR 28.0%
83
64
28
20
22
33
42
00 001 002 003 004 005 006 007 TM
0
L
2
2
2
2
2
2
2
2
8
0
0
2
1
Q
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Earnings Per Share
0.3
0.24
0.25
0.18
0.2
0.17
0.23
CAGR 32%
0.22
0.15
0.08
0.1
0.05
0.08
0.11
0.03
0
00 001 002 003 004 005 006 007 TM
0
L
2
2
2
2
2
2
2
2
8
0
20
1
Q
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Overall
Revenue ($)
Income from Equity
Investments ($)
Net Income ($)
Earnings per share ($)
Basic
Diluted
13
2008
2007
30,102
24,559
613
2,386
762
2545
0. 05
0. 04
0.06
0.05
TSX: WES
The Network
2008
2007
Commission & other
customer revenue ($)
16,489
14,544
Operating expenses ($)
12,639
10,162
3,850
4,382
Operating income ($)
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Bank West
2008
2007
Interest & investment income ($)
4,942
2,560
Net interest & investment income ($)
1,546
922
Operating & provision expenses ($)
849
634
Operating income ($)
697
288
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Western Life Assurance
Investment income ($)
2008
7,172
832
2007
6,260
630
Policyholder benefits ($)
3,705
3,409
Operating expenses ($)
3,123
2,648
Operating income ($)
1,176
833
Premium income ($)
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Corporate & All Other
Other revenues ($)
2008
667
2007
565
Operating expenses ($)
2,397
2,180
(1,730)
(1,615)
Operating loss ($)
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10
9
8
7
6
5
4
3
2
1
0
7.2
7.5
8.3
8.1
8.4
9.4
8.9
CAGR 28%
5.6
1.9
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
Q 07
1
LT
M
Percent
Western Financial Group
Historical Consolidated ROE
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200
180
160
140
120
100
80
60
40
20
0
173
131
115
81
59
19
17
16
20
01
20
02
20
03
20
04
20
05
20
06
Q
20
1
07
20
08
LT
M
Percent
Western Financial Group
Debt to Equity Ratio
19
TSX: WES
Priorities for Q2
Q2 Priorities
• Agency acquisitions
• Ubiquity Bank / Wealthview integration
• Network/Life WFGO
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Questions
…because we live here.