Vancouver, British Columbia--(Newsfile Corp. - May 7, 2025) - Dominion Lending Centres Inc. (DLCG:CA) (TSX: DLCG) ("DLCG" or the "Corporation") today announced financial results for the three months ended March 31, 2025. DLCG is one of Canada's leading franchisors of mortgage professionals, with a national network of over 8,500 agents. The Corporation also owns Newton Connectivity Systems Inc., a financial technology company that provides an integrated end-to-end operating platform, called Velocity, designed to automate and streamline the entire mortgage application, approval, underwriting and funding process.
Financial Highlights for Q1 2025:
- Funded mortgage volumes grew 46% to $16.4 billion over Q1 2024;
- Revenue was $18.7 million for the first quarter of 2025, compared to $13.6 million for the same period last year – an increase of 37%;
- Adjusted EBITDA of $8.0 million rose 61% compared to $5.0 million in Q1 2024;
- Adjusted net income for the quarter reached $0.06 per share or $4.9 million, compared to $0.03 per share or $1.4 million in Q1 2024, respectively;
- Adoption of Velocity across the DLCG broker network increased to 79% from 68% in Q1 2024; and
- A quarterly dividend of $0.03 per share was paid on March 14, 2025.
"Despite an uncertain economic environment and slower than expected activity levels in the Canadian housing market to start the year, I am pleased to report that we achieved strong growth in the first quarter of 2025, with revenue increasing 37% and EBITDA rising 61%," said Gary Mauris, Chairman and CEO of DLCG. "Throughout the quarter we continued to benefit from our long-term focus on growing our broker partner base, supporting our strong network of franchises and mortgage professionals, and the continued adoption of our leading-edge technology connectivity platform, Velocity," added Mr. Mauris.
"The strong top-line growth was augmented by the relatively fixed cost nature of many of our expenses resulting in Adjusted EBITDA margins expanding to 43% from 37% last year. The successful adoption of Velocity across our broker network, which increased from 68% in Q1 2024 to 79% in Q1 2025, also contributed to our strong margin performance."
"While we continue to monitor the impact that the current economic uncertainty is having on the Canadian consumer and therefore the housing market, we remain confident in our ability to grow funded mortgage volumes and revenue in 2025. Our confidence stems from our expectation that the strong mortgage renewal market (as mortgages secured during the pandemic at low rates are now reaching their term) and the recent decline in interest rates, will help offset the weakness in the Canadian housing market. In addition, we remain focused on growing our franchise and broker network, through both recruiting and market share gains by our existing franchises, expanding our total addressable market by educating Canadian consumers on the benefits of using a mortgage broker and continued onboarding of brokers onto Velocity, all of which we expect will positively impact our revenue and profitability in 2025," concluded Mr. Mauris.
First Quarter 2025 Financial Summary
| For the quarter ended March 31, | ||||||
| (in thousands of Canadian dollars, except per share amounts, percentages and KPIs) | 2025 | 2024 | Change | |||
| Revenues | $ | 18,732 | $ | 13,636 | 37% | |
| Income from operations | 6,885 | 3,468 | 99% | |||
| Adjusted EBITDA (1) | 8,031 | 4,996 | 61% | |||
| Adjusted EBITDA margin (1) | 43% | 37% | 6% | |||
| Net income (loss) | 6,267 | 2,631 | 138% | |||
| Diluted earnings per Common Share | 0.08 | 0.05 | 60% | |||
| Adjusted net income (1) | 4,925 | 1,439 | 242% | |||
| Adjusted diluted earnings per Common Share (1) | 0.06 | 0.03 | 100% | |||
| Dividends declared per share | 0.03 | 0.03 | - | |||
| Cash inflows from operating activities | 7,743 | 5,067 | 53% | |||
| Free cash flow attributable to common shareholders (1) | 6,797 | 650 | 946% | |||
(1) Please see the Non-IFRS Financial Performance Measures section of this document for additional information.
| As at | March 31, 2025 |
March 31, 2024 |
Change | |||
| Funded mortgage volumes (1) | 16.4 | 11.2 | 46% | |||
| Number of franchises (2) | 504 | 512 | (2%) | |||
| Number of brokers (2) | 8,544 | 8,170 | 5% | |||
| % of funded mortgage volumes submitted through Velocity (3) | 79% | 68% | 11% |
(1) Funded mortgage volumes are presented in billions and are a key performance indicator that allows us to measure performance against our operating strategy.
(2) The number of franchises and brokers are as at the respective period end date (not in thousands).
(3) Representing the percentage of the DLC Group's funded mortgage volumes that were submitted through Velocity.
First Quarter 2025 Financial Review:
Despite a challenging macroeconomic environment, the Corporation generated strong results during the first quarter of 2025 as we continued to execute on our proven growth strategy and benefited from an active mortgage renewal market. During the quarter we continued to increase our market presence across Canada and expanded the reach of Velocity. In addition to revenue growth, a continued focus on profitability and financial discipline resulted in strong earnings growth, free cash flow generation and a solid balance sheet.
- Revenue increased 37% from Q1 2024 to $18.7 million and was driven by a 46% increase in Funded Mortgage Volume from Q1 2024, as well as an increase in the adoption of Velocity across our broker network to 79% from 68% in Q1 2024. As a result, revenue from Franchise and Brokering of Mortgages increased 32% while Newton revenue rose 55%. The strong Funded Mortgage Volume growth was the result of several different factors, including an increase in the number of brokers in our network and internal initiatives to leverage Velocity to increase broker productivity and therefore market share and growth in the Canadian mortgage renewal market.
- General and administrative expenses increased 18% or $1.3 million over Q1 2024 levels, with the increase stemming from two acquisitions completed in Q2 2024, higher personnel costs, and higher IT-related costs. The additional general and administrative expenses from the two acquired brokerages was $0.7 million for the quarter. Direct costs increased 8% over Q1 2024 levels stemming from higher advertising fund expenditures due to timing of advertising initiatives.
- Adjusted EBITDA grew 61% to $8.0 million compared to Q1 2024 while Adjusted EBITDA margins increased to 43% from 37% last year. Adjusted EBITDA margins benefited from the strength of Newton revenue as well as the decline in operating expenses as a percent of revenue.
- Net income of $6.3 million increased from $2.6 million in Q1 2024 due to the higher revenue and a gain on sale of an equity-accounted investee, partly offset by higher operating expenses.
- Adjusted diluted earnings per common share increased to $0.06 in Q1 2025 up from $0.03 last year. Adjusted net income increased to $4.9 million from $1.4 million in Q1 2024 or up 242%, mainly due to higher revenue, strong margin performance, and no longer having any income being attributable to Preferred Shareholders.
- Cash flow from operating activities increased 53% to $7.7 million from Q1 2024 levels, driven by higher income from operations.
- The strong cash flow from operations, coupled with a decline in maintenance capital expenditures, resulted in $6.8 million in free cash flow compared to $0.7 million in Q1 2024.
- The Corporation ended the quarter with adjusted total debt-to-EBITDA (on a trailing twelve-month basis) of 0.58x, reflecting the Corporation's strong free cash flow generation.
- The Corporation paid a dividend of $0.03 per share on March 14, 2025 to shareholders of record on February 28, 2025.
Conference Call & Webcast
The Corporation will hold a conference call at 4:00pm Mountain Time (6:00pm Eastern Time) on Wednesday, May 7, 2025 to discuss these results. To participate in the conference call, please dial 1-844-763-8274 or 1-647-484-8814 (International) at least 5 minutes prior to the call.
This conference call will also be webcast live and can be accessed by all interested parties at the following URL: https://www.gowebcasting.com/14023.
A webcast replay will also be available within 24 hours following the call on DLCG's website at www.dlcg.ca, in the Investors section.
Reconciliation of Non-IFRS Financial 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 May 7, 2025 for further information on key performance indicators. The Corporation's MD&A is available on SEDAR+ at www.sedarplus.ca.
The following table reconciles adjusted EBITDA from income before income tax, which is the most directly comparable measure calculated in accordance with IFRS:
| For the quarter ended March 31, | ||||||
| (in thousands of Canadian dollars) | 2025 | 2024 | ||||
| Income before tax | $ | 7,914 | $ | 3,214 | ||
| Add back: | ||||||
| Depreciation and amortization | 1,048 | 939 | ||||
| Finance expense | 322 | 764 | ||||
| Finance recovery on the Preferred Share liability | - | (154) | ||||
| 9,284 | 4,763 | |||||
| Adjustments: | ||||||
| Share-based payments expense | 87 | - | ||||
| Gain on disposal of equity-accounted investment | (1,362) | - | ||||
| Non-cash impairment of equity-accounted investment | - | 236 | ||||
| Other expense (income) (1) | 22 | (3) | ||||
| Adjusted EBITDA (2) | $ | 8,031 | $ | 4,996 | ||
(1) Other expense (income) for the three months ended March 31, 2025 relates to foreign exchange loss and loss on contract settlement. Other (income) expense for the three months ended March 31, 2024, relates to a loss on the disposal of an intangible asset, foreign exchange loss and loss on contract settlement.
(2) Amortization of franchise rights and relationships of $1.3 million for the three months ended March 31, 2025 (March 31, 2024 – $1.3 million) is classified as a charge against revenue and has not been added back for adjusted EBITDA.
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:
| For the quarter ended March 31, | ||||||
| (in thousands of Canadian dollars) | 2025 | 2024 | ||||
| Cash flow from operating activities | $ | 7,743 | $ | 5,087 | ||
| Changes in non-cash working capital and other non-cash items | (27) | (569) | ||||
| Cash provided from operations excluding changes in non-cash working capital and other non-cash items | 7,716 | 4,518 | ||||
| Adjustments: | ||||||
| Distributions from equity-accounted investees | - | 185 | ||||
| Maintenance CAPEX | (746) | (3,133) | ||||
| Lease payments | (100) | (112) | ||||
| Loss on contract settlement | 13 | 10 | ||||
| NCI portion of cash provided from operations excluding changes in non-cash working capital | (95) | - | ||||
| Other non-cash items (1) | 9 | (13) | ||||
| 6,797 | 1,455 | |||||
| Free cash flow attributable to Preferred Shareholders | - | (805) | ||||
| Free cash flow attributable to common shareholders | $ | 6,797 | $ | 650 | ||
(1) Other non-cash items for the three months ended March 31, 2025 represent foreign exchange loss and promissory note income. The three months ended March 31, 2024 includes gain on disposal of an intangible asset, foreign exchange loss and promissory note income.
The following table reconciles adjusted net income from net income, which is the most directly comparable measure calculated in accordance with IFRS:
| For the quarter ended March 31, | ||||||
| (in thousands of Canadian dollars) | 2025 | 2024 | ||||
| Net income | $ | 6,267 | $ | 2,631 | ||
| Adjustments: | ||||||
| Gain on disposal of equity-accounted investment | (1,362) | - | ||||
| Finance recovery on the Preferred Share liability | - | (154) | ||||
| Non-cash impairment of equity-accounted investment | - | 236 | ||||
| Other expense (income) (1) | 22 | (3) | ||||
| Income tax effects of adjusting items | (2) | (3) | ||||
| 4,925 | 2,707 | |||||
| Income attributable to Preferred Shareholders | - | (1,268) | ||||
| Adjusted net income | 4,925 | 1,439 | ||||
| Adjusted net income attributable to common shareholders | 4,892 | 1,435 | ||||
| Adjusted net income attributable to non-controlling interest | 33 | 4 | ||||
| Diluted adjusted earnings per Common Share | $ | 0.06 | $ | 0.03 | ||
(1) Other expense (income) for the three months ended March 31, 2025 relates to foreign exchange loss and loss on contract settlement. Other expense for the three months March 31, 2024 relates to a loss on the disposal of intangible assets, loss on contract settlement and foreign exchange loss.
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 interest rate reductions and expected record amount of mortgage renewals.
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 brokers, and to add additional franchisees and brokers;
- 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 and regulations;
- Changes in the Canadian mortgage lending marketplace;
- Changes in the fees paid for mortgage brokerage services in Canada; 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 Dominion Lending Centres Inc.
Dominion Lending Centres Inc. is Canada's leading network of mortgage professionals. DLCG operates through Dominion Lending Centres Inc. and its three main subsidiaries, MCC Mortgage Centre Canada Inc., MA Mortgage Architects Inc. and Newton Connectivity Systems Inc., and has operations across Canada. DLCG extensive network includes over 8,500 agents and over 500 locations. Headquartered in British Columbia, DLC was founded in 2006 by Gary Mauris and Chris Kayat.
DLCG can be found on X (Twitter), Facebook (META) and Instagram and LinkedIn @DLCGmortgage and on the web at www.dlcg.ca.
Contact information for the Corporation is as follows:
Eddy Cocciollo
President
eddy@dlc.ca
James Bell
EVP, Corporate and Chief Legal Officer
jbell@dlcg.ca
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/251178
SOURCE Dominion Lending Centres Inc.