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Axis Auto Finance Inc. (“Axis” or the “Company”) (TSX:AXIS), a financial technology leader transforming the way Canadians buy and finance used vehicles, has announced its financial results for the fourth quarter and the 2024 fiscal year, revealing significant challenges amid a tightening credit environment.
In the fourth quarter of 2024, Axis recorded total originations of $16.2 million, which included $4.3 million in automotive loans and $11.9 million in equipment financing. This marks a notable decrease in both segments compared to the previous year. Revenue for the quarter was $8.1 million, reflecting a 19% decline year-over-year, as the Company faced increasing credit risks and market pressures.
A major factor influencing the financial results was the write-off of deferred tax assets, resulting in a substantial income tax charge of $10.8 million during the quarter. The adjusted loss for Q4 was ($16.9 million), a significant increase from an adjusted loss of ($1.4 million) reported in the same period last year. The net loss for the quarter stood at ($17.7 million), slightly improved from a net loss of ($20.1 million) in Q4 2023.
Automotive loan originations saw a drastic drop, falling from $30.3 million in Q4 2023 to just $4.3 million this quarter. This decline can be attributed to tightened credit and underwriting parameters, which limited the Company’s ability to extend loans. Additionally, Axis did not originate any near-prime volumes managed for Westlake Financial Services, which contributed to the reduced total.
Equipment finance origination volumes also faced a steep decline, decreasing 63% from $32.2 million in the same quarter last year to $11.9 million. The fourth quarter's equipment originations were primarily brokered for third parties or originated for syndication partners, indicating a shift in Axis’s operational strategy.
For the entire fiscal year 2024, Axis reported total originations of $109.5 million, comprising $28.1 million in automotive loans and $81.4 million in equipment financing. The Company’s total owned and managed finance receivables reached $192.1 million, with $104.0 million in auto loans and $88.1 million in equipment loans.
Revenue for fiscal 2024 totaled $38.8 million, a decline of 4.3% compared to the previous year. The Company also recorded a charge of $9.0 million due to the write-off of deferred tax balances, further impacting its financial health. The adjusted loss for the fiscal year was ($20.2 million), compared to an adjusted loss of ($5.2 million) in fiscal 2023. The net loss for the year was ($23.1 million), an improvement from the net loss of ($26.2 million) reported in the prior year.
Axis Auto Finance Inc. is navigating a challenging financial landscape marked by declining originations and rising credit losses. The tightening of credit parameters has significantly affected the Company’s automotive and equipment financing segments. As Axis continues to adapt to market conditions, it remains focused on innovating its financial technology solutions to better serve Canadian consumers in the used vehicle market.
Moving forward, stakeholders will be keenly observing how Axis addresses these challenges and positions itself for recovery in the competitive automotive finance landscape. The Company’s strategic adjustments and focus on technology may provide a pathway to improved performance in the upcoming fiscal periods.
