Chesswood Group Ltd. (TSX:CHW) is a Toronto-based financial services company that provides micro and small ticket equipment financing to small and medium sized businesses. Chesswood stock was up 10.3% in early afternoon trading on March 13. The company released its 2017 fourth quarter and full-year results after trading closed on March 12.
In the fourth quarter operating income climbed to $8.01 million compared to $5.98 million in Q4 2016. Fourth quarter net income benefited from the U.S. Tax Cuts and Jobs Act and the resulting corporate tax reduction as Chesswood reported a $9.4 million one-time recovery of deferred taxes. Chesswood leadership expects the company to reap the benefits of the corporate tax reduction in the years to come.
For the full-year operating income grew to $32.07 million compared to $30.31 million in 2016. Net income increased to $25.4 million from $24.2 million and adjusted EBTIDA was up marginally - $31.86 million compared to $31.03 million in 2016. Chesswood also announced a monthly cash dividend of $0.07 per share representing a 7.9% dividend yield.
Pawnee Leasing Corporation, a subsidiary of Chesswood, is a taxpayer in the United States. Chesswood estimated that tax reform would have generated an increase in its net income of $3 million in 2017 going by the current corporate tax rate. The company has continued to show growth in key business segments going forward.
The boon from tax reform and a solid monthly dividend should entice investors going forward. Shares have dipped in early 2018 so Chesswood may come at a bargain today.
