Company increases mortgage revenue, builds mortgage portfolio and maintains conservative debt-to-equity ratio
CALGARY, Alberta, May 30, 2018 (GLOBE NEWSWIRE) — Builders Capital Mortgage Corp. (TSX VENTURE:BCF) (Builders Capital or the company) today released financial results for the three months ended March 31, 2018. The three-month period represents the first quarter of Builders Capital’s 2018 fiscal year.
Q1 2018 Highlights
- Consistent with the company’s targeted distribution, dividends paid to Class A public shareholders in the quarter were $0.1973 per share, or 8% of the original $10.00 issue price.
- First quarter mortgage revenue of $0.8 million was up 3.4% year-over-year and represented an annualized 12.8% of gross share capital, calculated on the weighted average shares outstanding. This compares to 13.7% of gross share capital in Q1 2017.
- Operating expenses (excluding interest and funds set aside for potential loan losses) were within expectations at 10.7% of revenues.
- At quarter-end, the company’s debt-to-equity ratio was a conservative 17.0%.
- Earnings exceeded the amount required to pay planned Class A Non-Voting Share dividends by a healthy 1.7 times.
“Our topline results strengthened in the first quarter, with revenue up 3.4% compared to the same period last year,” said Sandy Loutitt, President of Builders Capital. “However, our earnings continued to be negatively affected by a block of unproductive inventory assets resulting from foreclosures. I am pleased to report that subsequent to the quarter-end, we entered into contracts for the sale of two of these properties, which have a combined value of $1.2 million. Closing dates are set for the second quarter of this year.”
The company was also successful in increasing its mortgage portfolio by $1.0 million or 3.7% in the first quarter of 2018, reflecting a number of financing initiatives completed last year. These included raising $2.6 million in new capital, increasing the available limit on its line of credit by $1 million, and securing a $1.3 million loan against property held for resale.
“The funds raised during 2017 have since been invested in profitable mortgages, which going forward, will help to mitigate the negative impact that any remaining unproductive assets have on earnings. In the interim, our share structure continues to work as intended, with Class A shareholders once again receiving their full, planned quarterly dividend in the first quarter of this year,” added Mr. Loutitt.
Going forward, market forecasters predict a continued gradual recovery for Alberta’s economy following the province’s lengthy recession and the outlook is generally favourable for all three of the company’s key geographic markets: Alberta, BC and Saskatchewan. Builders Capital remains well positioned to continue sourcing high-quality lending opportunities that appropriately balance risk while maintaining attractive returns for shareholders.
Q1 2018 FINANCIAL OVERVIEW
Three months ended March 31,
Three months ended March 31,
|Total comprehensive income||575,892||626,712|
|Basic and diluted earnings per share||0.21||0.27|
|Cash dividends declared||583,522||638,626|
|Cash dividends declared per Class A share||0.1973||0.1973|
|Cash dividends declared per Class B share||0.1763||0.3119|
A more detailed discussion of the company’s financial results can be found in Builders Capital’s First Quarter 2018 Management’s Discussion and Analysis, which will be posted along with unaudited interim condensed financial statements for the quarter on the company’s website (www.builderscapital.ca) and SEDAR (www.sedar.com) on May 30, 2018.
About Builders Capital
Builders Capital is a mortgage lender providing short-term course of construction financing to builders of residential, wood-frame properties in Western Canada. The company was formed on March 28, 2013 but did not commence active operations until December 12, 2013, on the closing of its initial public offering, following which it acquired a portfolio of mortgages from two predecessor companies.
Builders Capital’s investment objective is to generate attractive returns, relative to risk, in order to provide stable and steady distributions to shareholders while remaining focused on capital preservation and staying within the criteria mandated for mortgage investment corporations, as defined in the Income Tax Act.
As an MIC, Builders Capital is not subject to income tax provided that it distributes all of its taxable income as dividends to shareholders within 90 days of its December 31st year-end. Such dividends are generally treated by shareholders as interest income, so that each shareholder is in the same tax position as if their proportionate share of mortgage investments made by the company had been made directly by the shareholder.
This news release contains forward-looking statements within the meaning of applicable securities legislation, including statements with respect to management’s beliefs, estimates and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intent”, “estimate”, “anticipate”, “believe”, “should”, “plans” or “continue” or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. These statements are not guarantees of future performance and are based on estimates and assumptions that are subject to risks and uncertainties which could cause actual results to differ materially from the forward-looking statements contained in this news release. These include, among other things, risks associated with mortgage lending, competition for mortgage lending, real estate values, interest rate fluctuations, environmental matters and the general economic environment. The company cautions that the foregoing list is not exhaustive, as other factors could adversely affect its results, performance or achievements. Readers are cautioned against undue reliance on any forward-looking statements. Although the forward-looking information contained in this news release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Except as required by applicable law, Builders Capital undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
For more information, please contact:
John Strangway, Chief Financial Officer
Telephone: (403) 685-9888