DLC Releases Q3-2023 Results; YTD Funded Volumes of $42.3 Billion; Management Change

 Vancouver, British Columbia – November 7, 2023 – Dominion Lending Centres Inc. (TSX:DLCG) (“DLCG” or the “Corporation”) is pleased to report its financial results for the three (“Q3-2023”) and nine months ended September 30, 2023. For complete information, readers should refer to the interim financial statements and management discussion and analysis which are dated November 7, 2023 and available on SEDAR at www.sedar.com and on the Corporation’s website at www.dlcg.ca. All amounts are presented in Canadian dollars unless otherwise stated. 

DLCG includes the Corporation and its three main subsidiaries: MCC Mortgage Centres Canada Inc. (“MCC”), MA Mortgage Architects Inc. (“MA”), and Newton Connectivity Systems Inc. (“Newton”). 

Q3-2023 Summary 

• Q3-2023 funded volumes of $17.7 billion, representing a 9% decrease as compared to the three months ended September 30, 2022 (“Q3-2022”); 
• Q3-2023 revenue of $19.6 million, representing a 9% increase as compared to Q3-2022, primarily from an increase in Newton revenues from lender renewals and increased Velocity adoption; 
• Q3-2023 Adjusted EBITDA of $10.1 million as compared to $9.4 million during Q3-2022, representing an 8% increase over the prior year period; 
• The Corporation recorded net income for Q3-2023 of $5.3 million as compared to net income of $29.4 million in Q3-2022, primarily due to a non-cash finance expense on the Preferred Share Liability of $0.9 million compared to a recovery of $27.8 million in Q3-2022; 
• 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 Q3-2023; and 
• During Q3-2023, the Corporation made repurchases under the normal-course issuer bid (“NCIB”) of 15,550 Common Shares at an average price of $2.15 per share. 

Gary Mauris, Executive Chairman and CEO, commented, “With our continued focus to onboard our brokers onto our connectivity platform Velocity, we have seen an increase in revenues and adjusted EBITDA in Q3-2023. This increase in revenues resulted in an increase in our adjusted EBITDA margins to 52% in Q3-2023, due to our fixed cost structure. However, our funded mortgage volumes remain lower than Q3-2022 by 9%. While we are seeing improvements in our funded mortgage volumes in Q3-2023, the Canadian real estate market continues to face headwinds largely caused by increased interest rates contributing to lower housing transactions. We anticipate seeing further recovery in our margins and mortgage volumes, as we expect the market to stabilize over the next 12-18 months.” 

Selected Consolidated Financial Summary: 

Below is the summary of our financial results for the three and nine months ended September 30, 2023 and September 30, 2022. 

During the three months ended September 30, 2023, the Corporation saw an increase in revenues over the three months ended September 30, 2022, from higher Newton revenues primarily due to an increase in Velocity adoption and lender contract renewals. However, headwinds continue to impact the Canadian housing market primarily by decreasing Canadian housing sales activity due largely to increased interest 

rates, as evidenced by a decrease in funded mortgage volumes during the three and nine months ended September 30, 2023, compared to the previous year periods. The decrease in funded volumes has resulted in a decrease in revenues during the nine months ended September 30, 2023. 

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 September 30, 2023 and have decreased during the nine months ended September 30, 2023, when compared to the previous year periods. 

Income from operations during the three months ended September 30, 2023 increased from higher revenues, partly offset by higher operating expenses; and decreased during the nine months ended September 30, 2023 from lower revenues and higher operating expenses. The Corporation’s operating expenses have increased during the three and nine months ended September 30, 2023 when compared to the previous year periods, primarily due to: 

higher advertising fund expenses from timing of expenditures; 

an increase in advertising expenses from increased event costs (associated with the recommencement of certain corporate events); and, 

higher personnel costs. 

The increase in operating expenses combined with an increase in other expenses has driven a decrease in net income during the three and nine months ended September 30, 2023, compared to the previous year periods. In the prior year period, the Corporation recognized a revaluation recovery of $33.2, which contributed to net income during the three months ended September 30, 2022. Comparatively, the third quarter of 2023 recognized a revaluation recovery of $3.5 million, resulting in lower net income during the three months ended September 30, 2023, when compared to the third quarter of 2022. The Dividend Entitlement (defined in our MD&A dated November 7, 2023) changes due to updates in our outlook and forecasts. Refer to the Preferred Shares section in our MD&A dated November 7, 2023 for further information. This decrease in net income is partly offset by an impairment loss recognized in 2022 and an increase in income from equity-accounted investments in 2023. 

Free cash flow of the Corporation has decreased during the three and nine months ended September 30, 2023 when compared to the same periods in the previous year, primarily from an increase in maintenance capital expenditures, as the Corporation continues its franchise renewal efforts, and increased operating expenses. 

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 November 7, 2023, for the three and nine months ended September 30, 2023, for further information on key performance indicators. The Corporation’s MD&A is available on SEDAR at www.sedar.com. 

The following table reconciles adjusted EBITDA from income before income tax, which is the most directly-comparable measure calculated in accordance with IFRS: 

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: 

The following table reconciles adjusted net income from net income, which is the most directly-comparable measure calculated in accordance with IFRS: 

Management Change 

Effective November 20, 2023, Robin Burpee (Co-CFO) will be leaving the Corporation and Geoff Hague will transition to Chief Financial Officer from Co-CFO. Geoff joined DLC in 2009 and was appointed Chief Financial Officer in January 2014. He was appointed Co-CFO of the Corporation in January 2021, when it amalgamated with Founders Advantage Capital Corp. (“FAC”). Robin was appointed Chief Financial Officer of FAC in May 2019 and helped transition the Corporation from FAC to Dominion Lending Centres Inc. James Bell, Co-President of the Corporation commented: “On behalf of the management team, board of directors and shareholders, I’d like to thank Robin for her many contributions over the last four years. Robin is a talented finance professional, and an excellent teammate and we wish her much success in her next role. Notwithstanding Robin’s departure, the finance team at DLCG is in good hands as Geoff Hague will continue as Chief Financial Officer of the Corporation”. 

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 an outlook. 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 MD&A 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; 
• 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 8,000 agents and over 520 locations. Headquartered in British Columbia, DLC was founded in 2006 by Gary Mauris and Chris Kayat. 

DLCG can be found on Twitter, Facebook and Instagram and LinkedIn @DLCGmortgage and on the web at www.dlcg.ca.” 

Contact information for the Corporation is as follows: 

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