First Quarter 2023 Highlights
For the three months ended March 31, 2023 , the Company had the following highlights:
- Total revenue of $13.1 million , an increase of $8.8 million or 209% from $4.2 million in the three months ended March 31, 2022 (the " Prior Year Period "),
- Interest income from investments was $9.5 million , an increase of $6.0 million or 169% from $3.5 million in the Prior year Period,
- Income from transaction and other fees of $3.1 million , an increase of 420% from $0.6 million in the Prior Year Period,
- Net loss of $1.9 million or three cent loss per common share compared to net income of $0.8 million or one cent loss per common share in the Prior Year Period, due in part to restructuring costs related to severance and the relocation of its head office plus a non-cash expected credit loss provision incurred in the first quarter of 2023.
- Total assets of $465.4 million as at March 31, 2023 compared to $462.5 million at December 31, 2022 . Cash balance, as part of assets, was $9.0 million compared to $7.0 million as at December 31, 2022 , and
- Montfort's loan investment portfolio (loans receivable) decreased to $378.9 million in the first quarter 2023 compared to $380.7 million as of December 31, 2022 .
- Adjusted net income(loss) (a non-GAAP measure) 1 attributable to shareholders and adjusted net income (loss) per common share (a non-GAAP measure) 2 were a loss of $0.5 million and $0.01 loss per share in the three months ending March 31, 2023 compared to adjusted net income attributable to shareholders of $0.3 million and $0.00 per share in the Prior Year Period.
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.
On a comprehensive basis:
- Reported net comprehensive loss of $1.9 million or three cent loss per common share for the three months ended March 31, 2023 , compared to net comprehensive income of $0.4 million or zero cent income per common share for the three months ending March 31, 2022 .
"We continue to see positive business indicators in the marketplace indicating that private credit is assuming a more prominent role within the lending industry," said Andrew Abouchar , Interim CEO of Montfort Capital Corporation. "We have significantly expanded our business scale and are actively leveraging this increased scale to explore new verticals. The current economic environment remains dynamic, and we feel that the underwriting infrastructure that we have put into place across the company is well suited to seek out additional opportunities. Our dedicated management teams, composed of highly experienced professionals specializing in various lending markets, are well-equipped to drive our future endeavors. I am genuinely excited at the possibilities that lie before us as we continue to forge ahead."
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 March 31, 2023 , was $480 million compared to $490 million in overall AUMA as at December 31, 2022 .
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.
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.
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 $347 million AUMA as at March 31, 2023 .
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 $133 million of AUMA as at March 31, 2023 .
First Quarter 2023
During the first quarter of 2023, the Company benefited from the investment in its consumer lending business and the acquisition of Brightpath Capital and Langhaus Financial, and also incurred restructuring costs related to severance and the relocation of its head office and an expected credit loss provision.
Total consolidated revenue for the three months ended March 31, 2023 , increased $8.8 million or 209% to $13.1 million from $4.2 million in the three months ended March 31 , 2022.
Interest income for the 3 months ended March 31, 2023 , was $9.5 million compared to $3.5 million in the three months ended March 31, 2022 ; income from transaction and other fees was $3.1 million in the first quarter 2023 compared to $0.6 million in the Prior Year Period; performance fee income was $0.5 million versus $0.1 million in the Prior Year Period.
During the first quarter ended March 31, 2022 , Montfort benefited from increased payments (combined principal and interest) as a result of the continued revenue growth of its underlying portfolio and the acquisition of Brightpath Capital and Langhaus Financial in the second half of 2022.
Total expenses for the 3 months ended March 31, 2023 , were $14.9 million compared with $3 .4 million for the prior year. The majority of the increase in expenses reflect the acquisitions of Brightpath and Langhaus and the continued investment in infrastructure.
During the three months ended March 31, 2023 , the Company posted net loss of $1.9 million compared with net income of $0.8 million for the three months ended March 31, 2022 .
During the three months ended March 31, 2023 , the Company posted a comprehensive loss of $1.9 million compared with comprehensive income of $0.4 million for the three months ended March 31, 2022 .
As at March 31, 2023 , the Company's cash balance was $9.0 million compared to $7.0 million as at December 31, 2022 , while working capital was negative $14.1 million compared to positive $73.9 million as at December 31, 2022 . The negative working capital is mainly driven by one loan payable that moved from long-term to current in the period as it is due less than one year from March 31, 2023 . The Company continues to monitor the matching between loans receivable and loans payable to ensure all obligations are met. The Company generates cash from interest earned on loans receivable as well as fees for assets managed and administered. The Company has sufficient working capital to meet its obligations and objectives.
This news release is qualified in its entirety by the Company's financial statements for the three months ended March 31, 2023 , and March 31, 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.sedar.com .
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", "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 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:
March 31, 2023
March 31, 2022
IFRS reported net income
Adjusted net income
Reconciliation of adjusted net income attributable to
March 31, 2023
March 31, 2022
IFRS reported net income attributable to shareholders
Adjusted net income attributable to shareholders
Adjusted net income per common share
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.
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.
SOURCE Montfort Capital Corp.
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