~Montfort reports 64% increase in revenue to
$13 million in Q3 2023~
VANCOUVER, BC, Nov. 28,
2023 /CNW/ - Montfort Capital Corporation
("Montfort" or the "Company") (TSXV: MONT) (OTCQB: MONTF),
today announced financial results for the third quarter ended
September 30, 2023. All figures are
reported in Canadian dollars unless otherwise noted.
Third Quarter 2023 Highlights
For the three months ended September 30,
2023, the Company had the following highlights:
- Total revenue of $13.0 million,
an increase of $5.1 million or 64%
from $7.9 million in the three months
ended September 30, 2022 (the "Prior
Year Period");
- Interest income was $9.2 million,
an increase of $3.5 million or 60%
from $5.7 million in the Prior Year
Period;
- Income from transaction and other fees was $3.4 million, an increase of 63% from
$2.1 million in the Prior Year
Period;
- A net loss of $3.9 million or
five cents per common share compared
to net income of $0.5 million or
two cents per common share in the
Prior Year Period, reflecting a $3.4
million non-cash impairment charge;
- Total assets of $374.4 million as
at September 30, 2023 compared to
$455.5 million at December 31, 2022. The reduction was the result
of management's strategic decision to eliminate a low-margin
portion of the loan portfolio. Cash balance, as part of assets, was
$6.7 million compared to $7.0 million as at December 31, 2022;
- Montfort's loan investment
portfolio (loans receivable) decreased to $292.2 million in the third quarter 2023 compared
to $380.7 million as of December 31, 2022; and
- Adjusted net loss (a non-GAAP measure)1
attributable to shareholders and adjusted net loss per common share
attributable to shareholders (a non-GAAP
measure)2 were $3.1 million and four
cents per share in the three months ending September 30, 2023 compared to adjusted net
income attributable to shareholders of $0.8
million and zero per share in the Prior Year Period.
On a comprehensive basis:
- Reported net comprehensive loss of $3.9
million for the three months ended September 30, 2023, compared to net comprehensive
income of $2.6 million for the three
months ending September 30,
2022.
_____________________
|
1
"Adjusted net income" is a non-GAAP financial measure. Refer to
"Cautionary Note on Non-GAAP Financial Measures" and "Adjusted net
income attributable to shareholder and Adjusted net income per
common share" sections 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"
and "Adjusted net income attributable to shareholder and Adjusted
net income per common share" sections of this release for
additional details.
|
"While our private credit business model continues to deliver as
the Company generated $13 million of
revenue in the third quarter, our bottom line was impacted by a
non-cash impairment charge," said Andrew
Abouchar, Interim CEO of Montfort Capital Corporation. "We
made the decision to take an impairment to one of our loans given
the facts that we were presented with at the end of the
quarter. We feel strongly that this was a prudent course of
action given the current economic environment, however Management
is actively pursuing recovery. We may see all or part of the
impairment reversed in the coming quarters. Montfort rigorously reviews our portfolio on a
monthly basis. We believe the remainder of our portfolio is
performing well. We are excited about our business prospects as the
uncertain economic environment has driven both corporate and
consumer borrowers to look for alternatives outside of the
traditional bank lending channels."
Financial Review
The Company utilizes focused management teams and proprietary
systems 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
September 30, 2023, was $388 million compared to $490 million in overall AUMA as at December 31, 2022. Total Assets were $374.4 million as at September 30, 2023 compared to $455.5 million as at December 31, 2022. The decrease in Total Assets
was due to a decision by management to terminate a low margin
administration partnership on a portfolio of loans.
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 $269 million AUMA as at September 30, 2023.
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 $119
million AUMA as at September 30,
2023.
This news release is qualified in its entirety by the Company's
financial statements for the three months ended September 30, 2023, and 2022, 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.sedarplus.ca.
__________________________
|
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.
|
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 attributable to shareholders", "adjusted net
income per common share", and "assets under management and
administration". 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 attributable to shareholders and Adjusted
net income per common share
Adjusted net income attributable to shareholders presents
shareholders' net income before stock-based compensation, business
acquisition expenses, restructuring and amortization of intangible
assets. Adjusted net income per common share is calculated as
adjusted net income attributable to shareholders 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 non-recurring or not directly
related to lending activities.
Reconciliation of
adjusted net income:
|
|
Three
months
ended
September 30,
2023
|
|
Three
months
ended
September 30,
2022
|
|
Nine
months
ended
September 30,
2023
|
|
Nine
months
ended
September 30,
2022
|
IFRS reported net
income
|
$
|
(3,892,151)
|
$
|
514,175
|
$
|
(6,919,549)
|
$
|
2,768,550
|
Add:
|
|
|
|
|
|
|
|
|
Acquisition
costs
|
|
17,482
|
|
347,478
|
|
60,057
|
|
582,371
|
Share-based
payments
|
|
292,100
|
|
179,579
|
|
789,977
|
|
380,485
|
Amortization
|
|
519,796
|
|
651,747
|
|
1,586,020
|
|
923,444
|
Restructuring
|
|
-
|
|
-
|
|
650,000
|
|
-
|
Adjusted net
income
|
$
|
(3,062,773)
|
$
|
1,692,979
|
$
|
(3,833,495)
|
$
|
4,654,850
|
Reconciliation of
adjusted net income attributable to shareholders:
|
|
Three
months
ended
September 30,
2023
|
|
Three
months
ended
September 30,
2022
|
|
Nine
months
ended
September 30,
2023
|
|
Nine
months
ended
September 30,
2022
|
IFRS reported net
income attributable to shareholders
|
$
|
(3,912,981)
|
$
|
(337,577)
|
$
|
(6,892,703)
|
$
|
389,908
|
Add:
|
|
|
|
|
|
|
|
|
Acquisition
costs
|
|
17,482
|
|
347,478
|
|
60,057
|
|
582,371
|
Share-based
payments
|
|
292,100
|
|
179,579
|
|
789,977
|
|
380,485
|
Amortization
|
|
519,796
|
|
651,747
|
|
1,586,020
|
|
923,444
|
Restructuring
|
|
-
|
|
-
|
|
650,000
|
|
-
|
Adjusted net income
attributable to shareholders
|
$
|
(3,083,603)
|
$
|
841,227
|
$
|
(3,806,649)
|
$
|
2,276,208
|
Adjusted net income
per common share
|
$
|
(0.04)
|
$
|
0.00
|
$
|
(0.06)
|
$
|
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; ability to recover on impaired loans; 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.
SOURCE Montfort Capital Corp.