Builders Capital Mortgage Corp. Reports 2018 Second Quarter Results
Company strengthens mortgage portfolio and maintains conservative debt-to-equity ratio
CALGARY, Alberta, Aug. 23, 2018 (GLOBE NEWSWIRE) — Builders Capital Mortgage Corp. (TSX VENTURE: BCF) (Builders Capital or the company) today released financial results for the three months ended June 30, 2018, comprising the second quarter of the company’s 2018 fiscal year.
Q2 2018 Highlights
- Consistent with Builders Capital’s targeted distribution, dividends paid to Class A public shareholders in the quarter were $0.1995 per share, representing an 8% annual return on the original $10.00 issue price.
- The company’s mortgage portfolio increased by $2.3 million, or 8.8%, in the second quarter, compared to Q2 of 2017.
- The company reduced its portfolio of foreclosed properties with the sale of two properties in the second quarter. Subsequent to the quarter end, the company sold an additional property and has a sales contract in place for a fourth. The company is actively marketing the one remaining foreclosed property in the portfolio, which is valued at approximately $1 million.
- The company generated second quarter mortgage revenue of $0.85 million, representing an annualized 12.3% of gross share capital, calculated on the weighted average shares outstanding. This compares to mortgage revenue of $0.87 million or 14.2% of gross share capital in Q2 2017.
- Quarterly operating expenses (excluding interest and funds set aside for potential loan losses) were slightly higher year-over-year at 11.6% of revenues.
- At quarter-end, the company’s debt-to-equity ratio was a conservative 21.5%.
- Earnings exceeded the amount required to pay planned Class A Non-Voting Share dividends by a healthy 1.3 times.
“We were successful in increasing our mortgage portfolio by $2.3 million in Q2, while also significantly reducing the number of unproductive inventory assets in our portfolio resulting from foreclosures,” said Sandy Loutitt, President of Builders Capital. “Barring further foreclosures, we anticipate having 97% of our assets invested in productive loans by the end of the third quarter. This, together with a larger mortgage portfolio, will help to mitigate the impacts that unproductive assets have had on revenue and earnings in the second quarter and first half of this year, while setting the stage for stronger results and a quicker turnover of capital going forward.”
“In the interim, our share structure continues to work as intended, with Class A shareholders once again receiving their full, planned quarterly dividend in Q2 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.
|Q2 2018 FINANCIAL OVERVIEW
June 30, 2018
June 30, 2017
|Total comprehensive income||492,450||625,909|
|Basic and diluted earnings per share||0.18||0.26|
|Cash dividends declared||542,343||627,214|
|Cash dividends declared per Class A share||0.1995||0.1995|
|Cash dividends declared per Class B share||0.1763||0.2346|
A more detailed discussion of the company’s financial results can be found in Builders Capital’s Second 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 August 23, 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.
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