Mr. Andrew Abouchar reports

MONTFORT CAPITAL ANNOUNCES YEAR END AND FOURTH QUARTER FINANCIAL RESULTS

Montfort Capital Corp. has released financial results for the fourth quarter and year ended Dec. 31, 2022.

Fourth quarter 2023 highlights

For the three months ended Dec. 31, 2022, the company had the following highlights:

• Record total revenue of $13.9-million, an increase of $8.6-million or 166 per cent compared with the four months ended Dec. 31, 2021;
• Interest income from investments was up $6.4-million or 160 per cent to $10.5-million for the three-month period compared with $4.0-million for the four-month period ended Dec. 31, 2021;
• Income from transaction and other fees increased 504 per cent or $2.7-million to $3.3-million from $500,000 for the four months ended Dec. 31, 2021;
• Net income of $1.2-million compared with $1.4-million in the prior four-month period ended Dec. 31, 2021;
• Adjusted net income (a non-generally accepted accounting principle measure) attributable to shareholders and adjusted net income per common share (a non-GAAP measure) were $800,000 and nil per share in the three months ended Dec. 31, 2022, compared with $300,000 and nil per share in the four months ended Dec. 31, 2021.

Fiscal year 2022 highlights

For the 12 months ended Dec. 31, 2022, compared with the 13 months ended Dec. 31, 2021, the company had the following highlights:

• Record total revenue of $31.3-million, an increase of $21.5-million or 221 per cent compared with the 13 months ended Dec. 31, 2021;
• Interest income from investments of $23.5-million, up $15.8-million or 208 per cent compared with the 13-month period ended Dec. 31, 2021;
• Income from transaction and other fees increased 597 per cent or $5.6-million to $6.6-million from $900,000 in the 13-month period ended Dec. 31, 2021;
• Income from settlements of loans decreased $300,000 or 27 per cent from $1.0-million in the 13 months ended Dec. 31, 2021 to $0.8-million in the year ended Dec. 31, 2022, as a result of less portfolio exits in the current period compared with exit activities in the comparative period;
• Net income increased 61 per cent or $1.5-million to $3.9-million compared with $2.4-million in the 13-month period ended Dec. 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 two cents per share in the 12 months ended Dec. 31, 2022, compared with a loss of $200,000 and two-cent loss per share in the 13 months ended Dec. 31, 2021;
• Total assets increased by 270 per cent to $462.5-million as at Dec. 31, 2022, compared with $125.1-million at Dec. 31, 2021;
• Total assets under management and administration reached $490-million as at Dec. 31, 2022, compared with $149-million as at Dec. 31, 2021.

"Two thousand twenty-two 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 chief executive officer of Montfort. "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. "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 [Capital] and Pivot [Financial] are actively pursuing corporate opportunities in Canada and the [United States] 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;
• Langhaus Financial, providing insurance policy-backed lending solutions to high-net-worth individuals and entrepreneurs in Canada.

Montfort's overall assets under management and administration include assets under management plus loans managed on behalf of third parties. Montfort's overall AUMA, as at Dec. 31, 2022, grew to $490-million ($462-million in total assets), compared with $149-million in overall AUMA ($125-million in total assets) as at Dec. 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 who 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 Dec. 31, 2022. For comparison, as at Dec. 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 and automate aspects of the underwriting process, as well as manage the loan portfolio and investors on a continuing 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 one to 100 employees and $1-million to $100-million in revenue.

Corporate lending segment reported $127-million AUMA as at Dec. 31, 2022. For comparison, as at Dec. 31, 2021, the company had $149 AUMA in its corporate lending segment.

Fiscal 2022

During fiscal 2022, the company noted an increase in both equity financings and merger and acquisition activity. This has impacted both the existing portfolio in terms of loan buyouts and financings, as well as loan originations through increased competition in the marketplace.

Total consolidated revenue for the 12 months ended Dec. 31, 2022, increased $21.5-million or 221 per cent from $9.7-million in the 13 months ended Dec. 31, 2021, to $31.3-million.

Interest income for the 12 months ended Dec. 31, 2022, was a record $23.5-million compared with $7.6-million in the prior 13 months ended Dec. 31, 2021. Income from transaction and other fees was $6.6-million in the year ended Dec. 31, 2022, compared with $900,000 in the prior fiscal year. Income from the settlement of loans and performance fee income were $800,000 in the 12 months ended Dec. 31, 2022, down from $1.2-million in the 13 months ended Dec. 31, 2021.

During the fiscal year ended Dec. 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 Dec. 31, 2022, were $26.9-million compared with $6.7-million for the year ended Dec. 31, 2021. The majority of the increase in expenses reflects the acquisitions of Pivot, Brightpath and Langhaus, as well as investment in infrastructure.

During the 12 months ended Dec. 31, 2022, the company posted net income of $3.9-million compared with $2.4-million for the year ended Dec. 31, 2021.

During the 12 months ended Dec. 31, 2022, the company posted comprehensive income of $6.2-million compared with $2.0-million for the year ended Dec. 31, 2021. The year-over-year change is due to the increase in net income and foreign currency translation adjustment.

As at Dec. 31, 2022, the company's cash balance was $7.0-million compared with $9.3-million as at Dec. 31, 2021, while working capital was $73.9-million compared with $1.8-million as at Dec. 31, 2021. The positive working capital is mainly driven by limited partnerships used for its lending activities whereby a portion of initial capital is financed by equity sources and the rest is financed by debt facilities.

This news release is qualified in its entirety by the company's financial statements for the three and 12 months ended Dec. 31, 2022, and for the four and 13 months ended Dec. 31, 2021, and the associated management's discussion and analysis respecting the same periods, which can be downloaded from the company's profile on SEDAR.

About Montfort Capital Corp.

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.

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