~Montfort delivers record Q4 revenue having
completed the acquisitions of Brightpath Capital and Langhaus
Financial in second half of 2022~
VANCOUVER, BC, May 1, 2023
/CNW/ - Montfort Capital Corporation ("Montfort" or the
"Company") (TSXV: MONT) (OTCQB: MONTF), today announced
financial results for the fourth quarter and year ended
December 31, 2022. All figures are
reported in Canadian dollars unless otherwise noted.
Fourth Quarter 2023 Highlights
For the three months ended December 31,
2022, the Company had the following highlights:
- Record total revenue of $13.9
million, an increase of $8.6
million or 166% compared to the four months ending
December 31, 2021.
- Interest income from investments was up $6.4 million or 160% to $10.5 million for the three month period compared
to $4.0 million for the four month
period ending December 31, 2021.
- Income from transaction and other fees increased 504% or
$2.7 million to $3.3 million from $0.5
million for the four months ending December 31, 2021.
- Net income of $1.2 million
compared to $1.4 million in the prior
four month period ended December 31,
2021.
- Adjusted net income (a non-GAAP measure)1
attributable to shareholders and adjusted net income per common
share (a non-GAAP measure)2 were $0.8 million and $0.00 per share in the three months ending
December 31, 2022 compared to
$0.3 million and $0.00 per share in the four months ending
December 31, 2021.
Fiscal Year 2022 Highlights
For the twelve months ended December 31,
2022, compared to the thirteen months ended December 31, 2021 the Company had the following
highlights:
- Record total revenue of $31.3
million, an increase of $21.5
million or 221% compared to the thirteen months ending
December 31, 2021.
- Interest income from investments of $23.5 million, up $15.8
million or 208% compared to the thirteen month period ending
December 31, 2021.
- Income from transaction and other fees increased 597% or
$5.6 million to $6.6 million from $0.9
million in the thirteen month period ending December 31, 2021.
- Income from settlements of loans decreased $0.3 million or 27% from $1.0 million in the thirteen months ending
December 31, 2021 to $0.8 million in the year ending December 31, 2022 as a result of less portfolio
exits in the current period compared to exit activities in the
comparative period.
- Net income increased 61% or $1.5
million to $3.9 million
compared to $2.4 million in the
thirteen month period ending December 31,
2021.
- Adjusted net income (a non-GAAP measure) attributable to
shareholders and adjusted net income per common share (a non-GAAP
measure) were $3.1 million and
$0.02 per share in the twelve months
ending December 31, 2022 compared to
a loss of $0.2 million and
$0.02 loss per share in the thirteen
months ending December 31, 2021.
- Total assets increased by 270% to $462.5
million as at December 31,
2022 compared to $125.1
million at December 31,
2021.
- Total Assets Under Management and Administration reached
$490 million as at December 31, 2022 compared to $149 million as at December 31, 2021.
"2022 was a transformative year for Montfort where we saw Assets Under Management
and Administration reach $490 million
and record revenue of $31.3 million,"
said Andrew Abouchar, Interim CEO of
Montfort Capital Corporation. "We have built a robust corporate and
consumer private lending business which has experienced significant
growth in 2022. Furthermore, our pipeline of investments is strong
while the management teams at our four respective private credit
divisions continue to grow and focus on quality lending
opportunities."
"This is a great time for private credit - we believe it is
taking a more prominent role within the lending industry, putting
Montfort in a great position to
expand market share within our corporate and consumer lending
segments," said Ken Thomson, Chief
Strategy Officer at Montfort Capital Corp. "We are growing and see
more opportunities to expand off the back of industry events as
traditional lending sources have scaled back on their lending as a
result of turbulent economic conditions. TIMIA and Pivot are
actively pursuing corporate opportunities in Canada and the US, while Brightpath and
Langhaus, two well known brands in the private credit sector, are
in a great position to leverage their capital expertise in a
dynamic market."
Detailed Financial Review
The Company utilizes a proprietary loan origination platform to
originate, underwrite and service private-market, high-yield loan
opportunities through its operating divisions:
- TIMIA Capital, a technology lending platform that offers
revenue-based investment to fast growing, business-to-business
Software-as-a-Service (or SaaS) businesses in North America,
- Pivot Financial which specializes in asset-backed
private credit targeting mid-market borrowers in Canada,
- Brightpath Capital, one of Canada's leading private providers of
residential mortgages, and
- Langhaus Financial, provides insurance policy-backed
lending solutions to high-net-worth individuals and entrepreneurs
in Canada.
Montfort's overall Assets Under
Management and Administration ("AUMA")[3]
includes assets under management plus loans managed on behalf of
third parties. Montfort's overall
AUMA, as at December 31, 2022, grew
to $490 million ($462 million in Total Assets), compared to
$149 million in overall AUMA
($125 million in Total Assets) as at
December 31, 2021.
The Company divides its private credit business into two
distinct segments: consumer lending made up of Brightpath and
Langhaus, and corporate lending which includes TIMIA Capital and
Pivot Financial.
Consumer Lending
Brightpath's consumer lending loan portfolio includes a
portfolio of over 600 mortgages. Mortgages are secured by
residential property, located mainly in Ontario, and have a maturity of one year or
less.
Langhaus is primarily involved in providing loans to
entrepreneurs that are ensuring their personal and corporate
affairs are optimally structured to allow for planning
opportunities that generate more after-tax liquidity.
The consumer lending segment reported over $365 million AUMA as at December 31, 2022. For comparison, as at
December 31, 2021, the Company had
$nil AUMA in its consumer lending segment. The consumer lending
business' growth was driven by the acquisitions of Brightpath and
Langhaus in 2022.
Corporate Lending
TIMIA targets companies seeking capital primarily in the
following three subsectors: Software-as-a-Service (SaaS),
software-enabled service companies and hardware-enabled service
companies. The Company is able to efficiently originate
transactions, automate aspects of the underwriting process as well
as manage the loan portfolio and investors on an ongoing basis.
Pivot addresses the borrowing needs of small to mid-sized
enterprises in Canada with bespoke
term debt structures, bridge loans, asset-based revolving loan
facilities, and accounts receivable factoring facilities. Pivot
portfolio companies typically have 1-100 employees and $1-$100 million in
revenue.
Corporate lending segment reported $127
million AUMA as at December 31,
2022. For comparison, as at December
31, 2021, the Company had $149
AUMA in its corporate lending segment.
Fiscal 2022
During fiscal 2022, the Company has noted an increase in both
equity financings and merger and acquisitions activity. This
has impacted both the existing portfolio in terms of loan buyouts
and financings, as well as loan originations via increased
competition in the marketplace.
Total consolidated revenue for the 12 months ended December 31, 2022, increased $21.5 million or 221% from $9.7 million in the thirteen months ended
December 31, 2021 to $31.3 million.
Interest income for the 12 months ended December 31, 2022, was a record $23.5
million compared to $7.6 million
in the prior 13 months ended December 31,
2021. Income from transaction and other fees was
$6.6 million in the year ended
December 31, 2022 compared to
$0.9 million in the prior fiscal
year. Income from the settlement of loans and performance fee
income was $0.8 million in the twelve
months ended December 31, 2022 down
from $1.2 million in the thirteen
months ended December 31, 2021.
During the fiscal year ended December 31,
2022, TIMIA and Pivot benefited from increased payments
(combined principal and interest) as a result of the strong revenue
growth of its underlying portfolio. At the same time, the
Company increased its investments in infrastructure, including key
staff and brand awareness, along with the acquisition of Brightpath
in August 2022 and Langhaus in
October 2022.
Total expenses for the 12 months ended December 31, 2022, were $26.9 million compared with
$6.7 million for the year
ended December 31, 2021. The majority
of the increase in expenses reflect the acquisitions of Pivot,
Brightpath, and Langhaus as well as investment in
infrastructure.
During the twelve months ended December
31, 2022, the Company posted net income of $3.9 million compared to $2.4 million for the year ended December 31, 2021.
During the twelve months ended December
31, 2022, the Company posted comprehensive income of
$6.2 million compared with
$2.0 million for the year ended
December 31, 2021. The year over
year change is due to the increase in net income and foreign
currency translation adjustment.
Please see the table below reflecting the progression of the
attribution of income (loss) between the shareholders of the
Company and non-controlling interests over the previous eight
quarters.
As at December 31, 2022, the
Company's cash balance was $7.0
million compared to $9.3
million as at December 31,
2021, while working capital was $73.9
million compared to $1.8
million as at December 31,
2021. The positive working capital is mainly driven by
limited partnerships used for its lending activities whereby a
portion of initial capital is funded by equity sources and the
remainder funded by debt facilities.
This news release is qualified in its entirety by the Company's
financial statements for the three and twelve months ended
December 31, 2022 and for the four
and thirteen months ended December 31,
2021, and the associated Management's Discussion &
Analysis respecting the same periods, which can be downloaded from
the Company's profile on SEDAR at http://www.sedar.com.
About Montfort Capital
Corporation
Montfort manages a diversified
family of specialized private credit brands that utilize focused
strategies and experienced management teams combined with advanced
technology to improve fee related performance. Montfort facilitates transparency for all of
its investors through public company reporting. For further
information, please visit www.montfortcapital.com.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
Cautionary Note on Non-GAAP Financial
Measures
This release contains some non-Generally Accepted Accounting
Principles (GAAP) financial measures as defined in National
Instrument 52-112 "Non-GAAP and Other Financial Measures
Disclosure". Terms by which non-GAAP financial measures are
identified include, but are not limited to, "adjusted net income",
"adjusted net income per common share", "assets under
administration" and "assets under management". Non-GAAP financial
measures are used to provide management and investors with
additional measures of performance to help assess results where no
comparable GAAP (IFRS) measure exists. However, non-GAAP financial
measures do not have standard meanings prescribed by GAAP (IFRS)
and are not directly comparable to similar measures used by other
companies. Investors may find these financial measures useful in
understanding how management views the underlying business
performance of the Company.
Adjusted net income and Adjusted net income per common
share
Adjusted net income presents shareholders' net income before
stock-based compensation, business acquisition expenses and
amortization of intangible assets. Adjusted net income per common
share is calculated as adjusted net income less dividends paid
divided by the weighted average number of common shares
outstanding. Management feels this metric is useful to understand
the operating income of the Company's lending business before
non-cash and expenses that are not directly related to lending
activities.
Reconciliation of
adjusted net income:
|
|
Twelve
months
ended
December 31,
2022
|
|
Thirteen
months
ended
December
31,
2021
|
IFRS reported net
income
|
$
|
3,931,690
|
$
|
2,441,701
|
Add:
|
|
|
|
|
Acquisition
costs
|
|
557,607
|
|
272,136
|
Share-based
payments
|
|
606,611
|
|
149,662
|
Amortization
|
|
1,323,080
|
|
98,600
|
Adjusted net
income
|
|
6,418,988
|
|
2,962,099
|
Reconciliation of
adjusted net income:
|
|
Twelve
months
ended
December 31,
2022
|
|
Thirteen months
ended
December
31,
2021
|
IFRS reported net
income attributable to shareholders
|
|
591,077
|
|
(759,870)
|
Add:
|
|
|
|
|
Acquisition
costs
|
|
557,607
|
|
272,136
|
Share-based
payments
|
|
606,611
|
|
149,662
|
Amortization
|
|
1,323,080
|
|
98,600
|
Adjusted net income
attributable to shareholders
|
|
3,078,375
|
|
(239,472)
|
Adjusted net income
per common share
|
|
0.02
|
|
(0.02)
|
Assets under Management and Administration (AUMA)
Assets under management and administration is a non-GAAP
financial measure that provides an indicator of the size and
volumes of the Company's overall business. Management and
administrative services are an important aspect of the overall
business of the Company and should be considered when comparing
volumes, size and trends. "Total assets" is the most directly
comparable financial measure to AUMA that is disclosed in the
Company's financial statements. AUMA includes assets under
management plus loans managed on behalf of third parties. Assets
under management include the current portion of loans receivable
and loans receivable on the statement of financial position within
Total Assets.
Forward-Looking Information
Certain information and statements in this news release contain
and constitute forward-looking information or forward-looking
statements as defined under applicable securities laws
(collectively, "forward-looking statements"). Forward-looking
statements normally contain words like 'believe', 'expect',
'anticipate', 'plan', 'intend', 'continue', 'estimate', 'may',
'will', 'should', 'ongoing' and similar expressions, and within
this news release include any statements (express or implied)
respecting the future growth of the Company and the Company's
future financial performance.
Forward-looking statements are not guarantees of future
performance, actions, or developments and are based on
expectations, assumptions and other factors that management
currently believes are relevant, reasonable and appropriate in the
circumstances, including, without limitation, the assumption that
the Company and its investee companies are able to meet their
respective future objectives and priorities and assumptions
concerning general economic growth and the absence of unforeseen
changes in the legislative and regulatory framework for the
Company.
Although management believes that the forward-looking statements
are reasonable, actual results could be substantially different due
to the risks and uncertainties associated with and inherent to
Montfort's business. Material
risks and uncertainties applicable to the forward-looking
statements set out herein include but are not limited to: intense
competition in all aspects of business; reliance on limited
management resources; continued availability of equity and debt
financing; general economic risks; new laws and regulations and
risk of litigation. Although Montfort has attempted to identify factors
that may cause actual actions, events or results to differ
materially from those disclosed in the forward-looking statements,
there may be other factors that cause actions, events or results
not to be as anticipated, predicted, estimated or intended. Also,
many of the factors are beyond the control of Montfort. Accordingly, readers should not
place undue reliance on forward-looking statements. Montfort undertakes no obligation to reissue
or update any forward-looking statements as a result of new
information or events after the date hereof except as may be
required by law. All forward-looking statements contained in this
news release are qualified by this cautionary statement.
__________________________
|
1 "Adjusted net income" is
a non-GAAP financial measure. Refer to "Cautionary Note on Non-GAAP
Financial Measures" section of this release for additional
details.
|
2 "Adjusted net income per
common share" is a non-GAAP financial measure. Refer to "Cautionary
Note on Non-GAAP Financial Measures" section of this release for
additional details.
|
3"Assets under management and
administration" and "assets under management" are non-GAAP
financial measures. Refer to "Cautionary Note on Non-GAAP Financial
Measures" section of this release for additional
details.
|
SOURCE Montfort Capital Corp.