Mr. Tom Casey reports

CLARKE INC. REPORTS REFINANCING OF CREDIT FACILITIES AND 2023 THIRD QUARTER RESULTS

Clarke Inc. has refinanced credit facilities and has released its results for the three and nine months ended Sept. 30, 2023.

Refinancing of credit facilities

In October, 2023, the company refinanced two of its major credit facilities resulting in incremental borrowing availability of more than $36-million. This borrowing availability will be used to finance working capital and operations, to finance accretive renovations and other initiatives, and to finance the company's continuing construction projects -- in particular, the second phase of the company's Carling Avenue development in Ottawa, Ont.

The company amended an existing revolving line of credit, increasing the maximum borrowing capacity from $40-million to $55-million. The company pledged an additional hotel property and its ferry operations, both previously unencumbered as part of this amendment.

The company renewed an existing credit facility that matured on Oct. 1, 2023. The new $55-million credit facility comprises a $25-million term loan and a $30-million revolving line of credit.

Tom Casey, Clarke's chief financial officer, stated: "We are very pleased to renew and expand our existing credit facilities. Both expanded facilities remain with lending partners who we have long-term and strong relationships with. We wish to thank our lenders for the continued confidence they have shown in the company and our upcoming projects."

Third quarter results

Hotel operations produced strong third quarter results and achieved net operating income of $8.2-million for the quarter and $18.2-million year to date, compared with $7.2-million and $15.2-million, respectively, in 2022. The improved year-over-year results are mainly due to continued recovery from the COVID-19 pandemic, which was still having a significant negative impact in early 2022, the acquisition of the Stanford Inn & Suites in Grande Prairie, Alta., in June, 2022, and the results of the newly renovated Sternwheeler Hotel and Conference Center in Whitehorse, Yukon, which was still undergoing renovations in the first two quarters of 2022. Clarke's four hotels in Grande Prairie, Alta., had a particularly strong quarter due to strong economic activity in the region and from unanticipated business from forest fire evacuees.

The company's net loss was $1.9-million and $4.1-million for the three and nine months ended Sept. 30, 2023, respectively, compared with net income of $3.9-million and $1.9-million for the same periods in 2022. The subdued earnings year-over-year are primarily because the company recorded $4.2-million of net fair value adjustment losses within earnings in the third quarter. This $4.2-million was the aggregate of $7-million of fair value losses on its investment properties, offset by $2.8-million of fair value gains on certain hotel properties. The company also recorded an additional $7.2-million of fair value gains on certain hotel properties within other comprehensive income.

Comprehensive income was $800,000 and $4.5-million for the three months ended Sept. 30, 2023, and 2022, respectively. Comprehensive income was $1-million for the nine months ended Sept. 30, 2023, compared with a comprehensive loss of $10.3-million for the nine months ended Sept. 30, 2022. Comprehensive income for the three and nine months ended Sept. 30, 2023, was primarily driven by the aforementioned revaluation gains on certain hotel properties, partially offset by remeasurement losses on the company's defined benefit pension plans.

During the third quarter of 2023, the company's book value per common share increased by six cents, or 0.4 per cent. The change can be attributed primarily to (i) hotel net operating income of $8.2-million or 58 cents per share; and (ii) revaluation gains, net of tax on property and equipment of $7.6-million or 54 cents per share; offset by (iii) fair value adjustments on investment properties of $7-million or 50 cents per share; (iv) after-tax remeasurement losses and the effect of changes to the asset ceiling on the company's pension plans of $2.9-million or 21 cents per share; (v) depreciation of $2.8-million or 20 cents per share; and (vi) interest and accretion of $1.9-million or 13 cents per share.

The company's book value per common share at the end of the quarter was $15.37 while its common share price was $13.90.

Additional commentary on the company's third quarter results can be found in its management's discussion and analysis for the three and nine months ended Sept. 30, 2023.

About Clarke Inc.

Halifax-based Clarke is an investment and real estate company with holdings in a diversified group of businesses and across real estate sectors. Clarke's common shares trade on the Toronto Stock Exchange.

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