Third Quarter 2024 Highlights
For the three months ended September 30, 2024 the Company had the following highlights:
- Loans receivable as at September 30, 2024 increased by $10.6 million or 3% compared to June 30, 2024.
- Total revenue for the quarter decreased $0.4 million or 3% compared to the prior year period, as although the average loan portfolio balance was larger, there was lower revenue earned on transactions and other fees.
- Total expenses decreased $2.0 million or 12% to $14.8 million from $16.8 million, mainly driven by an impairment loss on intangible assets of $3.6 million recognized in the comparative prior year period, partially offset by increased expected credit loss provisions and interest and financing fees.
- The net loss of $2.3 million was an improvement of $1.6 million or 41% compared to a net loss of $3.9 million in the prior year period, reflecting the lower expenses incurred in Q3 2024.
For the nine months ended September 30, 2024 the Company had the following highlights:
- Loans receivable as at September 30, 2024 increased by $38.9 million or 12% compared to December 31, 2023 and by $67.3 million or 23% compared to September 30, 2023.
- Total revenue decreased $3.4 million or 9% compared to the prior year period, as although the average loan portfolio balance was larger, lower interest revenue was earned as interest rates began to come down in 2024 and there was lower revenue earned on transaction and other fees.
- Total expenses decreased $1.9 million or 4% from $45.5 million in the prior year period to $43.6 million, mainly driven by an impairment loss on intangible assets and restructuring costs recognized in the prior year period, partially offset by increases in expected credit loss provisions and interest and financing fees.
- Net loss of $7.7 million was $0.8 million or 11% higher compared to a net loss of $6.9 million in the prior year period, as the decline in revenue from lower interest rates and transaction fees has been higher than expense savings.
“Our third quarter results saw the size of our loan book increase and previous efforts to reduce expenses helped move us closer to profitability and we believe the outlook for a declining interest rate environment enhances our opportunity for profitable growth” said Ken Thomson, CEO of Montfort “The sale of our TIMIA business unit subsequent to quarter end was a significant step in our plan to reduce our debt not directly supported by loan investments and will reduce interest expense and contribute to equity value.”
Potential Sale of Brightpath Mortgage Business
In an effort to focus Montfort’s operations on the high-growth lending segments operated from our Toronto head office, we are pleased to announce that Montfort has today entered into a non-binding letter of intent to, among other things, sell Brightpath Capital Corporation and its subsidiaries (collectively, “Brightpath”) to Blake Albright, a director of Montfort and the founder and current CEO of Brightpath in exchange for shares of Montfort held by him (the “Proposed Divestiture”).
“Over the last two years, we’ve had the pleasure of working with Blake, who is a great entrepreneur and leader in the Canadian alternative mortgage lending space” said Ken Thomson, CEO of Montfort. “It’s with mixed feelings that we are negotiating the divestiture of Brightpath, but we believe that a sale is the right strategic decision for Montfort, allowing us to focus our attention and resources on our growing insurance, fund finance and SME lending segments.”
The completion of the Proposed Divestiture is contingent upon, among other things, securing all requisite regulatory and third-party approvals, including the TSXV and certain lenders of Brightpath, and the negotiation and execution of final documentation. The board of directors of Montfort established an independent special committee to evaluate and negotiate the Proposed Divestiture. Further details of the Proposed Divestiture will be provided upon the execution of final documentation.
This news release is qualified in its entirety by the Company’s financial statements for the three and nine months ended September 30, 2024 and the associated Management’s Discussion & Analysis, which can be downloaded from the Company’s profile on SEDAR+ at https://www.sedarplus.ca/
About Montfort Capital Corp.
Montfort is a trusted provider of focused private credit strategies for institutional investors, family offices, and wealth managers. Our experienced management teams employ focused strategies to drive superior risk-adjusted investment returns. The Company originates, underwrites and manages secured loans through the following operating divisions:
- Brightpath Capital, one of Canada’s leading providers of alternative residential mortgages.
- Langhaus Financial, provides insurance policy-backed lending solutions to high-net-worth individuals and entrepreneurs in Canada.
- Nuvo Financial, is focused on providing net asset value (NAV) loans to small and mid-sized investment funds in Canada.
- Pivot Financial which specializes in asset-backed private credit targeting mid-market borrowers in Canada.
- 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. This business unit was sold on November 1, 2024 to an affiliate of Round 13 Capital.
For further information, please visit www.montfortcapital.com.
Company contacts:
Matthew Priebe, Director of Business Development
Ken Thomson, CEO
Montfort Capital Corp.
P: (647) 296-1994
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.
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, the Company’s future financial performance, the terms of the Proposed Divestiture, including the consideration thereunder, and the benefits of the Proposed Divestiture.
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, the absence of unforeseen changes in the legislative and regulatory framework for the Company, and the successful negotiation of documentation regarding the Proposed Divestiture and the completion of the Proposed Divestiture, including the ability of the parties to satisfy all potential conditions related thereto.
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; interest rates remaining elevated for longer; new laws and regulations and risk of litigation; and the failure to successfully negotiate documentation in relation to and the failure to close the Proposed Divestiture. 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.