WCM.B Wilmington Capital Management

Wilmington Capital Management Inc. (“Wilmington” or the “Corporation”) reported net income for the three months ended September 30, 2023, of $2.4 million or $0.19 per share compared to net income of $0.3 million or $0.03 per share for the same period in 2022.   For the nine months ended September 30, 2023, the Corporation reported net income of $2.5 million or $0.20 per share compared to net income of $2.3 million or $0.19 per share for the same period in 2022.

OPERATIONS REVIEW – For the Quarter Ended September 30, 2023As at September 30, 2023, Wilmington had assets under management in its operating platforms of approximately $402 million ($100 million representing Wilmington’s share). A summary of the Corporation and the operations of its investees is set out below.  

Marinas Maple Leaf Partnerships The Maple Leaf Partnerships now own 21 marinas with over 8,800 boat slips and dry rack slips, all within 2 hours driving time from Toronto, Ontario. Boat sales showed signs of slowing late in the third quarter and management is looking to reduce inventory levels, which are somewhat elevated. Rental income and parts and service income remained steady through to the end of the 2023 boating season.

Closing of lot sales continues at Champlain Shores (formerly Bay Moorings). Proceeds from lot sales were used to repay $3.5 million of the outstanding revolving loan facility with the Corporation. Borrowings under the revolving and non-revolving loan facilities at the end of the quarter amounted to $4.8 million.

Real Estate Land Held for Development The Corporation’s development plan for the Seton project will be comprised of three phases being a 96,000 square foot self-storage facility, a retail area and a 17 bay car condo project. A development permit application has been filed and once approved a tender process will be initiated.  

Sunchaser Partnership The Sunchaser Partnership continued to experience strong seasonal demand during the third quarter. Seasonal rental rates remain healthy and the 150-site expansion of one of the existing RV resorts was substantially completed and leased up for the 2024 season.  

Bow City Partnership On August 9, 2023, the Corporation sold its 19.72% interest in the Bow City Partnerships at its fair market value for total consideration of $3.9 million. The Corporation determined that a majority of the development upside in the Bow City Partnerships had been realized and the proceeds realized on the sale were better redeployed in new opportunities.

Private Equity Northbridge, Northbridge Fund 2016, Northbridge Fund 2021 SP#1 and Northbridge Fund 2022 SP#2 and Northbridge Fund SP#4 Subsequent to September 30, 2023, the shareholders of Northbridge agreed in principle to support the wind up the funds managed by Northbridge as proposed by the General Partners of the funds. The aggregate proceeds are expected to be approximately $8.3 million comprised of cash and direct holdings in energy securities.

Outlook Wilmington has had a long history of successfully recycling its capital for reinvestment in alternative asset classes capable of creating value for its shareholders. In the nine months ended September 30, 2023, Wilmington monetized the value embedded in its Bow City investment and deployed capital by continuing its acquisition strategy of consolidating the ownership of “first class” marinas located in the Muskoka/Georgian Bay region, all located within 2 hours drive north of Toronto, Ontario, and acquiring the Seton self-storage development lands. Wilmington is also in the process of monetizing its investment in Northbridge and the underlying energy funds.  

The strategy of monetizing the value embedded in its investments and subsequently recycling the capital into new opportunities has, to date, met with considerable success. Looking forward, a significant portion of the Corporation’s liquidity has been earmarked for the Seton development and to some extent to acquisitions that may arise in its marina and RV resort platforms. The Corporation will continue to examine ways to maximize value for its shareholders through reinvestment of capital and, where appropriate, unlocking the embedded value created to date within existing investments.  

Exception from MI 61-101 As certain limited partner purchasers of the Corporation’s interests in the Bow City partnerships are” related parties” of the Corporation (within the meaning of MI 61-101 - “Protection of Minority Security Holders in Special Transactions” (“MI 61-101”)), the Transaction is considered a “related party transaction” under MI 61-101. The Corporation is relying on exemptions from the formal valuation and minority approval requirements of MI 61-101 that would otherwise apply in respect of the Transaction, pursuant to Section 5.5(a) and Section 5.7(a) (Fair Market Value Not More Than 25% of Market Capitalization) of MI 61-101.

FINANCIAL RESULTS

STATEMENT OF CONSOLIDATED INCOME AND COMPREHENSIVE INCOME (unaudited)

For the		Three months ended September 30,					Nine months ended September 30,
(CDN $ thousands, except per share amounts)		2023			2022		2023		2022
Management fee revenue		305			133		640		378
Interest and other income		1,022			635		2,660		1,621
		1,327			768		3,300		1,999
Expenses
General and administrative		(423		)	(411	)	(1,331	)	(1,297	)
Amortization		(7		)	(7	)	(21	)	(21	)
Finance costs		(2		)	(2	)	(5	)	(7	)
Stock-based compensation		(23		)	(64	)	(94	)	(272	)
		(455		)	(484	)	(1,451	)	(1,597	)
Fair value adjustments and other activities
Fair value adjustments to investments		1,700			130		1,180		2,355
Realized loss in Energy Securities		---			---		---		(146	)
Equity accounted income (loss)		19			(7	)	(6	)	146
		1,719			123		1,174		2,355
Income before income taxes		2,591			407		3,023		2,757
Current income tax recovery (expense)		(347		)	(70	)	(540	)	(87	)
Deferred income tax recovery (expense)		140			(15	)	37		(340	)
Provision for income taxes		(207		)	(85	)	(503	)	(427	)
Net income		2,384			322		2,520		2,330
Other comprehensive income
Items that will not be reclassified to net income:
Fair value adjustments to investments		(518		)	1,945		(688	)	2,898
Related income taxes		(30		)	(247	)	(17	)	(334	)
Other comprehensive income (loss), net of income taxes			(548	)	1,698		(705	)	2,564
Comprehensive income		1,836			2,020		1,815		4,894
Net income per share
Basic		0.19			0.03		0.20		0.19
Diluted		0.19			0.03		0.20		0.19

CONSOLIDATED BALANCE SHEETS

(unaudited)			September 30,	December 31,
(CDN $ thousands)			2023	2022
Assets
NON-CURRENT ASSETS
Investment in Maple Leaf Partnerships			22,535	18,637
Investment in Bow City Partnerships			---	3,864
Investment in Sunchaser Partnership			3,461	1,806
Investment in Northbridge and Energy Securities			9,220	7,284
Land held for development			6,494	---
Right-of-use asset			71	92
			41,781	31,683
CURRENT ASSETS
Cash			1,362	4,007
Short term securities			23,000	22,000
Amounts receivable and other assets			6,424	13,083
Total assets			72,567	70,773
Liabilities
NON-CURRENT LIABILITIES
Deferred income tax liabilities			1,295	1,316
Lease liabilities			102	116
			1,397	1,432
CURRENT LIABILITIES
Lease liabilities			38	38
Income taxes payable			489	118
Amounts payable and other			621	790
Total liabilities			2,545	2,378
Equity
Shareholders’ equity			51,270	51,179
Contributed surplus			1,203	1,482
Retained earnings			9,902	7,382
Accumulated other comprehensive income			7,647	8,352
Total equity			70,022	68,395
Total liabilities and equity			72,567	70,773

Executive Officers of the Corporation will be available at 403-705-8038 to answer any questions on the Corporation’s financial results.

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND OTHER MEASUREMENTSCertain statements included in this document may constitute forward-looking statements or information under applicable securities legislation. Forward-looking statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding the operations, business, financial conditions, expected financial results, performance, opportunities, priorities, ongoing objectives, strategies and outlook of the Corporation and its investee entities and contain words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar expressions and statements relating to matters that are not historical facts constitute “forward-looking information” within the meaning of applicable Canadian securities legislation.

While the Corporation believes the anticipated future results, performance or achievements reflected or implied in those forward-looking statements are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond the Corporation’s control, which may cause the actual results, performance and achievements of the Corporation to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.

Factors and risks that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include but are not limited to: the ability of management of Wilmington and its investee entities to execute its and their business plans; availability of equity and debt financing and refinancing within the equity and capital markets; strategic actions including dispositions; business competition; delays in business operations; the risk of carrying out operations with minimal environmental impact; industry conditions including changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; operational matters related to investee entities business; incorrect assessments of the value of acquisitions; fluctuations in interest rates; stock market volatility; general economic, market and business conditions; risks associated with existing and potential future law suits and regulatory actions against Wilmington and its investee entities; uncertainties associated with regulatory approvals; uncertainty of government policy changes; uncertainties associated with credit facilities; changes in income tax laws, tax laws; changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates); the effect of applying future accounting changes; and other risks, factors and uncertainties described elsewhere in this document or in Wilmington's other filings with Canadian securities regulatory authorities.

The foregoing list of important factors that may affect future results is not exhaustive. When relying on the forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, the Corporation undertakes no obligation to publicly update or revise any forward-looking statements or information, that may be as a result of new information, future events or otherwise. These forward-looking statements are effective only as of the date of this document.