Financial Highlights
- Q4-2023 funded volumes of
$14.2 billion and annual funded volume of$56.5 billion , representing a 1% increase and 21% decrease as compared to 2022, respectively; - Q4-2023 revenue of
$15.8 million and annual revenues of$62.5 million , representing a 13% increase and 12% decrease compared to 2022, respectively; - Q4-2023 and annual adjusted EBITDA were
$6.5 million and$24.4 million as compared to$3.0 million and$32.1 million in Q-4 2022 and annual 2022, respectively; - The Corporation’s annual net income for 2023 decreased to
$64 thousand from$12.3 million in 2022, primarily from lower income from operations from decreased funded volume and higher non-cash finance expense on the Preferred Share Liability; - The Corporation declared a quarterly dividend of
$0.03 per class A common share (“Common Share”), resulting in a dividend payment of$1.4 million in Q4-2023 ($5.8 million for the full fiscal year); - During 2023, the Corporation made repurchases under the normal-course issuer bid (“NCIB”) of 125,493 Common Shares at an average price of
$2.46 per share; and - The Corporation amended and restated its credit facility to mature on
December 19, 2026 . The Corporation’s balance sheet remained strong with a debt-to-EBITDA ratio of 1.31:1.00 atDecember 31, 2023 .
Selected Consolidated Financial Summary:
Below is the summary of our financial results for the three months and year ended
Three months ended | Year ended | |||||||||||||||
(in thousands, except per share and KPIs) | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||||||
Revenues | $ | 15,758 | $ | 13,934 | 13% | $ | 62,517 | $ | 70,720 | -12% | ||||||
Income from operations | 3,914 | 1,554 | 152% | 18,311 | 26,386 | -31% | ||||||||||
Adjusted EBITDA (1) | 6,507 | 3,031 | 115% | 24,420 | 32,058 | -24% | ||||||||||
Adjusted EBITDA margin | 41% | 22% | 19% | 39% | 45% | -6% | ||||||||||
Free cash flow attributable to common shareholders (1) | 2,035 | 723 | 181% | 7,459 | 12,164 | -39% | ||||||||||
Net (loss) income (2) | (2,003) | (1,314) | -52% | 64 | 12,286 | -99% | ||||||||||
Adjusted net income (loss) (1) | 1,775 | (175) | NMF (3) | 6,748 | 8,997 | -25% | ||||||||||
Diluted (loss) earnings per Common Share (2) | (0.04) | (0.03) | -36% | - | 0.25 | -100% | ||||||||||
Adjusted diluted earnings per Common Share (1) | 0.04 | (0.00) | NMF | 0.14 | 0.18 | -22% | ||||||||||
Dividends declared per share | $ | 0.03 | $ | 0.03 | -% | $ | 0.12 | $ | 0.09 | 33% | ||||||
Key Performance Indicators (“KPIs”) | ||||||||||||||||
Funded mortgage volumes (4) | 14.2 | 14.0 | 1% | 56.5 | 71.3 | -21% | ||||||||||
Number of franchises (5) | 542 | 539 | 1% | 542 | 539 | 1% | ||||||||||
Number of brokers (5) | 8,192 | 8,221 | 0% | 8,192 | 8,221 | 0% | ||||||||||
% of funded mortgage volumes submitted through Velocity (6) | 65% | 57% | 8% | 63% | 55% | 8% |
(1) Please see the Non-IFRS Financial Performance Measures section of this document for additional information.
(2) Net income for the three months and year ended
(3) The percentage change is not a meaningful figure.
(4) Funded mortgage volumes are presented in billions and are a key performance indicator that allows us to measure performance against our operating strategy.
(5) The number of franchises and brokers are as at the respective period end date (not in thousands).
(6) Representing the percentage of the DLC Group’s funded mortgage volumes that were submitted through Velocity.
During the three months ended
As the Corporation’s operating expenses are largely fixed in nature and are not proportionate to changes in revenues, changes in the Corporation’s revenues have a more pronounced impact to adjusted income, adjusted EBITDA and adjusted EBITDA margins. As such, these metrics have increased with higher revenues during the three months ended
Income from operations during the three months ended
- lower direct costs for commissions and expenses proportionate to funded volume;
- variances in advertising fund expenditures due to the timing of advertising campaigns; and
- lower professional fees, partially offset by higher personnel costs.
Net income decreased during the three months and year ended
The Corporation recognized a non-cash impairment loss of
Free cash flow increased during the three months ended
Non-IFRS Financial Performance Measures
Management presents certain non-IFRS financial performance measures which we use as supplemental indicators of our operating performance. These non-IFRS measures do not have any standardized meaning, and therefore are unlikely to be comparable to the calculation of similar measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Non-IFRS measures are defined and reconciled to the most directly-comparable IFRS measure. Non-IFRS financial performance measures include adjusted EBITDA, adjusted net income, adjusted earnings per share, and free cash flow. Please see the Non-IFRS Financial Performance Measures section of the Corporation’s MD&A dated
The following table reconciles adjusted EBITDA from income before income tax, which is the most directly-comparable measure calculated in accordance with IFRS:
Three months ended | Year ended | |||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||
(Loss) income before income tax | $ | (846) | $ | (750) | $ | 4,187 | $ | 18,993 | ||||||
Add back: | ||||||||||||||
Depreciation and amortization | 939 | 971 | 3,787 | 3,985 | ||||||||||
Finance expense | 820 | 645 | 3,149 | 2,355 | ||||||||||
Finance expense on the Preferred Share liability (1) | 1,931 | 1,905 | 9,922 | 2,397 | ||||||||||
2,844 | 2,771 | 21,045 | 27,730 | |||||||||||
Adjustments: | ||||||||||||||
Share-based payments expense (recovery) | 263 | 215 | (70) | (104) | ||||||||||
Promissory note income | (35) | (49) | (151) | (49) | ||||||||||
Foreign exchange loss | 10 | 40 | 36 | 79 | ||||||||||
Loss on contract settlement | 9 | 67 | 67 | 115 | ||||||||||
Gain on disposal of equity-accounted investment | - | - | - | (525) | ||||||||||
Non-cash impairment of equity-accounted investments | 3,390 | - | 3,466 | 4,778 | ||||||||||
Other income (2) | 26 | (13) | 27 | 34 | ||||||||||
Adjusted EBITDA (3) | $ | 6,507 | $ | 3,031 | $ | 24,420 | $ | 32,058 |
(1) The Corporation recognized a lower revaluation recovery on the Preferred Share liability during the year ended
(2) Other expense in the three months and year ended
(3) Amortization of franchise rights and relationships of
The following table reconciles free cash flow from cash flow from operating activities, which is the most directly-comparable measure calculated in accordance with IFRS:
Three months ended | Year ended | |||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||
Cash flow from operating activities | $ | 3,433 | $ | (1,300) | $ | 17,086 | $ | 15,873 | ||||||
Changes in non-cash working capital and other non-cash items | 1,426 | 4,247 | 4,378 | 12,225 | ||||||||||
Cash provided from operations excluding changes in non-cash working capital and other non-cash items | 4,859 | 2,947 | 21,464 | 28,098 | ||||||||||
Adjustments: | ||||||||||||||
Distributions from equity-accounted investees (1) | 46 | 50 | 321 | 677 | ||||||||||
Maintenance CAPEX | (680) | (1,212) | (6,719) | (5,629) | ||||||||||
Lease payments (1) | (126) | (157) | (602) | (610) | ||||||||||
Loss on contract settlement | 9 | 67 | 67 | 115 | ||||||||||
Other non-cash items (2) | (89) | (13) | (88 ) | (155) | ||||||||||
4,019 | 1,682 | 14,443 | 22,496 | |||||||||||
Free cash flow attributable to Preferred Shareholders (3) | (1,984) | (959) | (6,984) | (10,332) | ||||||||||
Free cash flow attributable to common shareholders | $ | 2,035 | $ | 723 | $ | 7,459 | $ | 12,164 |
(1) Comparative amounts presented reflect the Corporation’s Common Shareholders’ proportion and exclude amounts attributed to Newton’s NCI holders.
(2) Other non-cash items for the three months and year ended
(3) Free cash flow attributable to the Preferred Shareholders is determined based on free cash flow of the Core Business Operations (as defined in the Preferred Shares section of the MD&A).
The following table reconciles adjusted net income from net income, which is the most directly-comparable measure calculated in accordance with IFRS:
Three months ended | Year ended | |||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||
Net (loss) income | $ | (2,003) | $ | (1,314) | $ | 64 | $ | 12,286 | ||||||
Adjustments: | ||||||||||||||
Gain on sale of an equity-accounted investment | - | - | - | (525) | ||||||||||
Non-cash impairment of equity-accounted investments | 3,390 | - | 3,466 | 4,778 | ||||||||||
Foreign exchange loss | 10 | 40 | 36 | 79 | ||||||||||
Finance expense on the Preferred Share liability (1) | 1,931 | 1,905 | 9,922 | 2,397 | ||||||||||
Loss on contract settlement | 9 | 67 | 67 | 115 | ||||||||||
Promissory note interest income | (35) | (49) | (151) | (49) | ||||||||||
Other expense (income) (2) | 26 | (13) | 27 | 34 | ||||||||||
Income tax effects of adjusting items | (3) | (4) | (7) | (22) | ||||||||||
3,325 | 632 | 13,424 | 19,093 | |||||||||||
Income attributable to Preferred Shareholders (3) | (1,550) | (807) | (6,676) | (10,096) | ||||||||||
Adjusted net income (loss) | 1,775 | (175) | 6,748 | 8,997 | ||||||||||
Adjusted net income (loss) attributable to common shareholders | 1,770 | (188) | 6,727 | 8,772 | ||||||||||
Adjusted net income attributable to non-controlling interest | 5 | 13 | 21 | 225 | ||||||||||
Diluted adjusted earnings per Common Share | $ | 0.04 | $ | (0.00) | $ | 0.14 | $ | 0.18 |
(1) The Preferred Share liability is revalued at the end of each reporting period to reflect our most recent outlook and forecast. Refer to the Preferred Shares section of the MD&A.
(2) Other expense in the three months and year ended
(3) Adjusted net income attributable to the Preferred Shareholders is determined based on adjusted net income of the Core Business Operations (as defined in the Preferred Shares of the MD&A).
Forward-Looking Information
Certain statements in this document constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as “anticipate,” “believe,” “estimate,” “will,” “expect,” “plan,” or similar words suggesting future outcomes or outlooks. Forward-looking information in this document includes, but is not limited to: our anticipation of further recovery in our margins and mortgage volumes as we expect the market to stabilize over the next 12-18 months.
Such forward-looking information is based on many estimates and assumptions, including material estimates and assumptions, related to the following factors below that, while considered reasonable by the Corporation as at the date of this press release considering management’s experience and perception of current conditions and expected developments, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to:
- Changes in interest rates;
- The DLC Group’s ability to maintain its existing number of franchisees and add additional franchisees;
- Changes in overall demand for Canadian real estate (via factors such as immigration);
- Changes in overall supply for Canadian real estate (via factors such as new housing-start levels);
- At what period in time, the Canadian real estate market stabilizes;
- Changes in Canadian mortgage lending and mortgage brokerage laws;
- Material decreases in the aggregate Canadian mortgage lending marketplace;
- Changes in the fees paid for mortgage brokerage services in
Canada ; - Changes in the regulatory framework for the Canadian housing and lending sectors; and
- Demand for the Corporation’s products remaining consistent with historical demand.
Many of these uncertainties and contingencies may affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All forward-looking statements made in this document are qualified by these cautionary statements. The foregoing list of risks is not exhaustive. The forward-looking information contained in this document is made as of the date hereof and, except as required by applicable securities laws, we undertake no obligation to update publicly or revise any forward-looking statements or information, whether because of new information, future events or otherwise.
About
Contact information for the Corporation is as follows:
President 647-403-7320 eddy@dlc.ca | EVP, Corporate and Chief Legal Officer 403-560-0821 jbell@dlcg.ca | ||
NEITHER THE TSX EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
Source:
2024 GlobeNewswire, Inc., source