TORONTO--(BUSINESS WIRE)--Real Matters Inc. (TSX:REAL) (“Real Matters” or the “Company”), a leading network management services platform for the mortgage and insurance industries, today announced its financial results for the fourth quarter and fiscal year ended September 30, 2020. The Company’s Board of Directors (“Board”) also announced that it has appointed Jason Smith as Executive Chairman and Brian Lang as Chief Executive Officer of the Company. Mr. Lang has also joined the Board. The new appointments are effective today.
“As the Company sets its sights on the next chapter of growth and its longer-term data strategy comes into focus, now is the right time for Brian to step into the CEO role,” said former Real Matters Chairman and current Board member, Blaine Hobson.
Real Matters Chief Executive Officer Brian Lang said, “We capped off the year with another strong quarter posting consolidated Adjusted EBITDA(A) of $22.2 million, an increase of 57.5% from the fourth quarter of fiscal 2019. Our U.S. Title business continued to outperform our other segments and for the second consecutive quarter delivered higher Net Revenue(A) and Adjusted EBITDA(A) than our U.S. Appraisal segment – fourth quarter U.S. Title Net Revenue(A) was up 69.7% and Adjusted EBITDA(A) increased 102.0% year-over-year to $15.4 million. We estimate that the U.S. mortgage origination market was flat in the fourth quarter on a year-over-year basis, as the estimated 6% increase in purchase volumes was offset by a 9% year-over-year decline in refinance volumes. The estimated market decline in refinance volumes was partially attributable to a reduction of addressable market volumes as a result of the increased use of waivers for refinance transactions due in part to COVID-19. We continued to rank at the top of lender appraisal scorecards in the fourth quarter and U.S. Appraisal Net Revenue(A) increased 4.6%, generating Adjusted EBITDA(A) margins of 59.2%.
“We ended the year with U.S. Appraisal market share of 11.7% and U.S. Title market share of 2.4%. Our fiscal 2020 consolidated revenues increased over 41% year-over-year to $455.9 million, consolidated Net Revenue(A) was up nearly 59%, and consolidated Adjusted EBITDA(A) more than doubled to $72.2 million while consolidated Adjusted EBITDA(A) margins increased to 44.6% from 28.4% in Fiscal 2019,” added Lang. “The business surpassed the majority of our fiscal 2021 targets, one year ahead of our committed timeline. We look forward to discussing our five-year strategy and our updated growth targets at our virtual investor day on Monday, November 23rd.”
Q4 2020 Key Performance Indicators (year-over-year) |
U.S. Appraisal |
|
U.S. Title |
|
Consolidated |
|
Revenues |
$70.8 million |
|
$43.9 million |
|
$124.4 million |
|
Revenue Growth |
2.7% |
45.9% |
15.9% |
|||
Net Revenue(A) Growth |
4.6% |
69.7% |
36.6% |
|||
Adjusted EBITDA(A) Margin |
59.2% |
53.4% |
47.2% |
Q4 2020 Highlights
- Launched two new lenders in U.S. Appraisal, two new lenders in U.S. Title (including one Top 100 lender in each segment)
- Market adjusted growth of 4.2% in U.S. Appraisal (7.4% for origination only)
- Market adjusted growth of 109.0% in U.S. Title (114.1% for refinance only)
- Purchased 50 thousand shares under our normal course issuer bid (“NCIB”) at a cost of $917 thousand
Fiscal 2020 Key Performance Indicators |
U.S. Appraisal |
|
U.S. Title |
|
Consolidated |
|
Market Share |
11.7% |
2.4% |
NA |
|||
Revenues |
$282.1 million |
|
$142.4 million |
|
$455.9 million |
|
Revenue Growth |
32.6% |
72.3% |
41.4% |
|||
Net Revenue(A) Growth |
34.1% |
91.8% |
58.8% |
|||
Adjusted EBITDA(A) Margin |
59.3% |
49.3% |
44.6% |
Fiscal 2020 Highlights
- Went live with 13 new lenders (including three Top 100) in U.S. Appraisal and went live in new channels with three Top 100 lenders
- Went live with 13 new lenders in U.S. Title (including two top 100)
- Market adjusted growth of 10.8% in U.S. Appraisal (17.5% for origination only)
- Market adjusted growth of 136.9% in U.S. Title (59.2% for refinance only)
- Purchased 1.7 million shares under our NCIB at a cost of $17.0 million
Fiscal 2021 Performance Targets
At the end of fiscal 2020, we achieved or surpassed three of our four fiscal 2021 targets, namely U.S. Title market share, consolidated Net Revenue(A) margins and consolidated Adjusted EBITDA(A) margins.
Key Performance Indicators |
F2021 Target |
F2020 Actuals |
||
U.S. Appraisal Market Share |
15-20% |
11.7% |
||
U.S. Title Market Share |
1-3% |
2.4% |
||
Consolidated Net Revenue(A) Margin |
35-40% |
35.6% |
||
Consolidated Adjusted EBITDA(A) Margin |
25-30% |
44.6% |
New Fiscal 2025 Performance Targets
We are setting the following new targets through the end of fiscal 2025. These targets include a bifurcation of U.S. Appraisal market share between purchase and refinance, and a refinance only target for U.S. Title, as the purchase and refinance markets each have distinct market factors that drive growth. These targets supersede our fiscal 2021 targets as well as the margin targets that we established in November 2018 based on a doubling of volumes from fiscal 2018 levels.
Key Performance Indicators |
F2025 Target |
|
U.S. Appraisal |
|
|
Purchase Market Share |
7-9% |
|
Refinance Market Share |
17-19% |
|
Net Revenue(A) Margin |
26-28% |
|
Adjusted EBITDA(A) Margin |
65-70% |
|
|
|
|
U.S. Title |
|
|
Refinance Market Share |
6-8% |
|
Net Revenue(A) Margin |
60-65% |
|
Adjusted EBITDA(A) Margin |
50-55% |
|
|
|
|
Canada |
|
|
Net Revenue(A) Margin |
19-20% |
|
Adjusted EBITDA(A) Margin |
65-70% |
We have also established a target for our Corporate segment to contain corporate expenses, excluding stock-based compensation expense, to 7% of Net Revenue(A) by fiscal 2025 and a target to convert 70-75% of Adjusted EBITDA(A) to Free Cash Flow(A) between fiscal 2021 through fiscal 2025.
The new Fiscal 2025 performance targets are more fully defined and discussed in the Company’s MD&A for the year ended September 30, 2020.
Executive Leadership Changes
Jason Smith has been appointed Executive Chairman of Real Matters. Brian Lang, the current President and Chief Operating Officer, has been named Chief Executive Officer of the Company and will assume day-to-day leadership responsibility. He has also joined the Company’s Board.
“Brian is a proven leader whose experience and track-record of working with leading financial institutions will provide a steady hand in continuing to expand our market share in the U.S. mortgage industry. His strong leadership skills and background in technology position him well to lead the team into new markets as the Company looks to diversify its revenue streams through our data monetization strategy. Brian and I have worked very closely over the last 18 months. I look forward to supporting him in my new role and continue to be committed to the Company’s long-term success,” said Real Matters Executive Chairman Jason Smith. “On behalf of the Board, I’d like to thank Blaine for his strategic guidance and insights during his time as Chairman of Real Matters. His contributions to the growth and development of our Company have been invaluable and we look forward to continuing to serve together on the Board,” concluded Smith.
“This is an exciting time for our Company. Mortgage market tailwinds are at our backs and we see significant runway for market share growth in our existing businesses. Beyond the expected surge of mortgage market volumes over the next two to three years, there are new opportunities on the horizon to build out a third pillar of growth for Real Matters,” said Real Matters Chief Executive Officer Brian Lang. “It’s an honour to succeed Jason who has led the Company on an extraordinary journey since founding Real Matters sixteen years ago. We have an exceptional team and I am confident in our ability to deliver on our long-term strategy.”
As the Company’s Executive Chairman, Mr. Smith will focus on leading selected strategic initiatives for the Company and facilitating a smooth leadership transition with Mr. Lang. As result of these changes, Blaine Hobson will remain on the Board as a director, and Garry Foster will assume the role of lead independent director.
Financial and Operational Summary
(millions of dollars) |
|
|
Three months ended September 30 |
||||||||||||||||||
|
|
2020 |
|
Margin |
|
2019 |
|
Margin |
|
$ Change |
|
% Change |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Appraisal |
|
$ |
70.8 |
|
|
$ |
68.9 |
|
|
$ |
1.9 |
|
|
2.7 |
% |
||||||
U.S. Title |
|
|
43.9 |
|
|
|
30.1 |
|
|
|
13.8 |
|
|
45.9 |
% |
||||||
Canada |
|
|
9.7 |
|
|
|
8.3 |
|
|
|
1.4 |
|
|
16.8 |
% |
||||||
Consolidated revenues |
|
$ |
124.4 |
|
|
$ |
107.3 |
|
|
$ |
17.1 |
|
|
15.9 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Revenue(A) |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Appraisal |
|
$ |
16.6 |
|
23.5 |
% |
$ |
15.9 |
|
23.1 |
% |
$ |
0.7 |
|
|
4.6 |
% |
||||
U.S. Title |
|
|
28.9 |
|
65.7 |
% |
|
17.0 |
|
56.5 |
% |
|
11.9 |
|
|
69.7 |
% |
||||
Canada |
|
|
1.5 |
|
15.2 |
% |
|
1.5 |
|
17.8 |
% |
|
- |
|
|
-0.1 |
% |
||||
Consolidated Net Revenue(A) |
|
$ |
47.0 |
|
37.8 |
% |
$ |
34.4 |
|
32.0 |
% |
$ |
12.6 |
|
|
36.6 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted EBITDA(A) |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Appraisal |
|
$ |
9.8 |
|
59.2 |
% |
$ |
9.3 |
|
58.6 |
% |
$ |
0.5 |
|
|
5.6 |
% |
||||
U.S. Title |
|
|
15.4 |
|
53.4 |
% |
|
7.7 |
|
44.9 |
% |
|
7.7 |
|
|
102.0 |
% |
||||
Canada |
|
|
1.1 |
|
71.8 |
% |
|
0.9 |
|
60.3 |
% |
|
0.2 |
|
|
18.9 |
% |
||||
Corporate |
|
|
(4.1 |
) |
|
|
(3.8 |
) |
|
|
(0.3 |
) |
|
-9.9 |
% |
||||||
Consolidated Adjusted EBITDA(A) |
|
$ |
22.2 |
|
47.2 |
% |
$ |
14.1 |
|
41.0 |
% |
$ |
8.1 |
|
|
57.5 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income |
|
$ |
12.7 |
|
|
$ |
8.0 |
|
|
$ |
4.7 |
|
|
|
|||||||
Net income per diluted share |
|
$ |
0.14 |
|
|
$ |
0.09 |
|
|
$ |
0.05 |
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted Net Income(A) |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted Net Income(A) |
|
$ |
15.6 |
|
|
$ |
9.5 |
|
|
$ |
6.1 |
|
|
|
|||||||
Adjusted Net Income(A) per diluted share |
|
$ |
0.18 |
|
|
$ |
0.11 |
|
|
$ |
0.07 |
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Market adjusted growth |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Appraisal |
|
|
4.2 |
% |
|
|
|
|
|
|
|
|
|||||||||
U.S. Title |
|
109.0 |
% |
|
|
|
|
|
|
|
|||||||||||
Financial and Operational Summary (continued)
(millions of dollars) |
|
|
Year ended September 30 |
||||||||||||||||||
|
|
2020 |
|
Margin |
|
2019 |
|
Margin |
|
$ Change |
|
% Change |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Appraisal |
|
$ |
282.1 |
|
|
$ |
212.7 |
|
|
$ |
69.4 |
|
|
32.6 |
% |
||||||
U.S. Title |
|
|
142.4 |
|
|
|
82.6 |
|
|
|
59.8 |
|
|
72.3 |
% |
||||||
Canada |
|
|
31.4 |
|
|
|
27.2 |
|
|
|
4.2 |
|
|
15.7 |
% |
||||||
Consolidated revenues |
|
$ |
455.9 |
|
|
$ |
322.5 |
|
|
$ |
133.4 |
|
|
41.4 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Revenue(A) |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Appraisal |
|
$ |
67.2 |
|
23.8 |
% |
$ |
50.2 |
|
23.6 |
% |
$ |
17.0 |
|
|
34.1 |
% |
||||
U.S. Title |
|
|
89.8 |
|
63.1 |
% |
|
46.8 |
|
56.7 |
% |
|
43.0 |
|
|
91.8 |
% |
||||
Canada |
|
|
5.1 |
|
16.1 |
% |
|
5.1 |
|
18.8 |
% |
|
- |
|
|
-1.2 |
% |
||||
Consolidated Net Revenue(A) |
|
$ |
162.1 |
|
35.6 |
% |
$ |
102.1 |
|
31.6 |
% |
$ |
60.0 |
|
|
58.8 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted EBITDA(A) |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Appraisal |
|
$ |
39.9 |
|
59.3 |
% |
$ |
26.0 |
|
51.9 |
% |
$ |
13.9 |
|
|
53.1 |
% |
||||
U.S. Title |
|
|
44.3 |
|
49.3 |
% |
|
13.7 |
|
29.2 |
% |
|
30.6 |
|
|
223.4 |
% |
||||
Canada |
|
|
3.1 |
|
61.6 |
% |
|
2.7 |
|
51.9 |
% |
|
0.4 |
|
|
17.4 |
% |
||||
Corporate |
|
|
(15.1 |
) |
|
|
(13.4 |
) |
|
|
(1.7 |
) |
|
-12.1 |
% |
||||||
Consolidated Adjusted EBITDA(A) |
|
$ |
72.2 |
|
44.6 |
% |
$ |
29.0 |
|
28.4 |
% |
$ |
43.2 |
|
|
149.3 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income |
|
$ |
42.8 |
|
|
$ |
10.1 |
|
|
$ |
32.7 |
|
|
|
|||||||
Net income per diluted share |
|
$ |
0.47 |
|
|
$ |
0.10 |
|
|
$ |
0.37 |
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted Net Income(A) |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted Net Income(A) |
|
$ |
49.4 |
|
|
$ |
20.9 |
|
|
$ |
28.5 |
|
|
|
|||||||
Adjusted Net Income(A) per diluted share |
|
$ |
0.56 |
|
|
$ |
0.23 |
|
|
$ |
0.33 |
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Market adjusted growth |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Appraisal |
|
|
10.8 |
% |
|
|
|
|
|
|
|
|
|||||||||
U.S. Title |
|
|
136.9 |
% |
|
|
|
|
|
|
|
|
|||||||||
Q4 2020 Conference Call and Webcast
A conference call to review the results will take place at 10:00 a.m. (ET) on Friday, November 20, 2020, hosted by Executive Chairman Jason Smith, Chief Executive Officer Brian Lang, and Chief Financial Officer Bill Herman. An accompanying slide presentation will be posted to the Investor Relations section of our website shortly before the call.
To access the call:
- Participant Toll Free Dial-In Number: (833) 968-2239
- Participant International Dial-In Number: (825) 312-2065
- Conference ID: 1986892
To listen to the live webcast of the call:
The webcast will be archived, and a transcript of the call will be available in the Investor Relations section of our website following the call.
Virtual Investor Day Webcast
The virtual investor day will be webcast live starting 10:00 a.m. (ET) on Monday, November 23, 2020. The accompanying slide presentation will be posted to the Investor Relations section of our website shortly before the event begins. Analysts and institutional investors interested in participating in the live question and answer session will be able to submit questions online via the webcast platform.
To watch the live event:
The webcast and presentation materials will be archived and available in the Investor Relations section of our website following the live event.
(A) Non-GAAP Measures
The non-GAAP measures used in this Press Release, including Net Revenue, Adjusted EBITDA, Adjusted Net Income or Loss and Free Cash Flow do not have a standardized meaning prescribed by International Financial Reporting Standards and are therefore unlikely to be comparable to similar measures presented by other issuers. These non-GAAP measures are more fully defined and discussed in the Company’s MD&A for the year ended September 30, 2020 available on SEDAR at www.sedar.com.
Full reports for Real Matters financial results for the year ended September 30, 2020 are outlined in the annual audited consolidated financial statements and the accompanying MD&A, which will be available on SEDAR at www.sedar.com. In addition, supplemental information is available on our website at www.realmatters.com.
Forward-Looking Information
This Press Release contains “forward-looking information” within the meaning of applicable Canadian securities laws. Words such as “could”, “forecast”, “target”, “may”, “will”, “would”, “expect”, “anticipate”, “estimate”, “intend”, “plan”, “seek”, “believe”, “likely” and “predict” and variations of such words and similar expressions are intended to identify such forward-looking information, although not all forward-looking information contains these identifying words.
The forward-looking information in this Press Release includes statements which reflect the current expectations of management with respect to our business and the industry in which we operate and is based on management’s experience and perception of historical trends, current conditions and expected future developments, as well as other factors that management believes appropriate and reasonable in the circumstances. The forward-looking information reflects management’s beliefs based on information currently available to management, including information obtained from third party sources, and should not be read as a guarantee of the occurrence or timing of any future events, performance or results.
The forward-looking information in this Press Release is subject to risks, uncertainties and other factors that are difficult to predict and that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. A comprehensive discussion of the factors which could cause results or events to differ from current expectations can be found in the “Risk Factors” section of our Annual Information Form for the year ended September 30, 2019 and under the heading “Important Factors Affecting our Results from Operations” and “COVID-19 – Impact on Risk Factors” in our MD&A for the year ended September 30, 2020, each of which is available on SEDAR at www.sedar.com.
Readers are cautioned not to place undue reliance on the forward-looking information, which reflect our expectations only as of the date of this Press Release. Except as required by law, we do not undertake to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
About Real Matters
Real Matters is a leading network management services provider for the mortgage lending and insurance industries. Real Matters’ platform combines its proprietary technology and network management capabilities with tens of thousands of independent qualified field professionals to create an efficient marketplace for the provision of mortgage lending and insurance industry services. Our clients include the majority of the top 100 mortgage lenders in the U.S. and some of the largest insurance companies in North America. We are a leading independent provider of residential real estate appraisals to the mortgage market and a leading independent provider of title and mortgage closing services in the U.S. Established in 2004, Real Matters has offices in Buffalo (NY), Denver (CO), Middletown (RI), and Markham (ON). Real Matters is listed on the Toronto Stock Exchange under the symbol REAL. For more information, visit www.realmatters.com.
