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 https://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 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.
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