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Real Matters Reports Second Quarter 2019 Financial Results and Intention to Amend its Normal Course Issuer Bid

TORONTO--(BUSINESS WIRE)--

(all amounts are expressed in U.S. dollars, excluding per share amounts and unless otherwise stated)

Real Matters Inc. (REAL.TO) (“Real Matters” or “the Company”), a leading network management services platform for the mortgage and insurance industries, today announced its financial results for the second quarter of fiscal 2019.

“We were pleased with the performance of our U.S. Appraisal business in the second quarter. While U.S. Appraisal revenues were up modestly, we recorded market adjusted volume growth of 15.2% against an estimated 15% decline in U.S. mortgage origination market activity, we continued to expand Net Revenue(A) margins and nearly doubled Adjusted EBITDA(A) in this segment compared to the same quarter in fiscal 2018. We also passed an important milestone with the launch of our last Tier 1 lender in our U.S. Appraisal segment and we are now live with all six of the Tier 1 lenders,” said Real Matters Chief Executive Officer Jason Smith. “Year-over-year weakness in the U.S. mortgage refinance market dampened our U.S. Title results. While revenues were down 9.2% in our U.S. Title business, we reported market adjusted volume growth of 11.2% in the second quarter of fiscal 2019. Looking ahead, we continue to focus on the things we can control like operational performance and building scale to drive continued market share growth. With U.S. mortgage market headwinds behind us, the third quarter should provide an easier comparable period.”

Q2 2019 Summary Information

  • Consolidated revenues down 4.2% from Q2 2018
  • Consolidated net loss of $6.8 million in Q2 2019 compared to consolidated net income of $3.0 million in Q2 2018, due to stronger operating performance offset by higher non-cash expenses
  • Consolidated Net Revenue(A) of $20.1 million in Q2 2019 compared with $20.5 million in Q2 2018, consolidated Net Revenue(A) margins of 31.7% up from 31.0% in Q2 2018
  • U.S. Appraisal: revenues increased 0.5%, market adjusted volume growth of 15.2%, Net Revenue(A) margins up 280 basis points from Q2 2018, Adjusted EBITDA(A) of $4.8 million up 90% from Q2 2018
  • U.S. Title: revenues declined 9.2%, market adjusted volume growth of 11.2%, Net Revenue(A) margins down 340 basis points from Q2 2018, Adjusted EBITDA(A) of $0.8 million compared with $1.1 million in Q2 2018
  • Estimated market decline of 15%
  • Went live with sixth Tier 1 lender and two new Top 100 lenders in U.S. Appraisal
  • Went live with one new Top 100 lender in U.S. Title
  • Repurchased 1.4 million shares at a cost of $4.7 million in Q2 2019

Fiscal 2019 Year-to-Date Summary Information

  • Consolidated revenues down 11.5% from the six month period ended March 31, 2018
  • Consolidated net loss of $2.3 million compared to a consolidated net loss of $2.4 million in the six month period ended March 31, 2018, due to stronger operating performance partially offset by higher non-cash expenses
  • Consolidated Net Revenue(A) of $38.9 million compared with $43.0 million in the six month period ended March 31, 2018, consolidated Net Revenue(A) margins of 31.4% up from 30.7% in the six month period ended March 31, 2018
  • U.S. Appraisal: revenues declined 8.0%, market adjusted volume growth of 15.5%, Net Revenue(A) margins up 340 basis points from the six month period ended March 31, 2018, Adjusted EBITDA(A) of $8.2 million up 74% from the six month period ended March 31, 2018
  • U.S. Title: revenues declined 16.5%, market adjusted volume decline of 5.5%, Net Revenue(A) margins down 410 basis points from the six month period ended March 31, 2018, Adjusted EBITDA(A) of $1.8 million compared with $4.3 million in the six month period ended March 31, 2018
  • Estimated market decline of 19%
  • Repurchased 2.4 million shares at a cost of $7.6 million in the six month period ended March 31, 2019
(millions of dollars)       Three months ended March 31
          2019         2018       $ Change % Change  
             
Revenues
U.S. Appraisal $ 43.2 $ 43.0 $ 0.2 0.5 %
U.S. Title 14.8 16.3 (1.5 ) -9.2 %
Canada         5.3         6.8         (1.5 )     -22.1 %
Consolidated revenues $ 63.3 $ 66.1 $ (2.8 ) -4.2 %
Net (loss) income $ (6.8 ) $ 3.0 $ (9.8 )
Net (loss) income per diluted share $ (0.08 ) $ 0.03 $ (0.11 )
 
Non-GAAP measures
Net Revenue(A) $ 20.1 $ 20.5 $ (0.4 ) -2.0 %
Net Revenue(A) margin 31.7 % 31.0 % 0.7 %
Adjusted EBITDA(A) $ 2.8 $ 0.3 $ 2.5
Adjusted EBITDA(A) margin 13.8 % 1.5 % 12.3 %
Adjusted Net Income(A) $ 1.0 $ 1.4 $ (0.4 )
Adjusted Net Income (A) per diluted share $ 0.01 $ 0.02 $ (0.01 )
 
(millions of dollars)     Six months ended March 31
        2019         2018       $ Change     % Change  
               
Revenues
U.S. Appraisal $ 82.7 $ 89.9 $ (7.2 ) -8.0 %
U.S. Title 29.8 35.7 (5.9 ) -16.5 %
Canada       11.3         14.3         (3.0 )     -21.0 %
Consolidated revenues $ 123.8 $ 139.9 $ (16.1 ) -11.5 %
Net loss $ (2.3 ) $ (2.4 ) $ 0.1
Net loss per diluted share $ (0.03 ) $ (0.03 ) $ -
 
Non-GAAP measures
Net Revenue(A) $ 38.9 $ 43.0 $ (4.1 ) -9.5 %
Net Revenue(A) margin 31.4 % 30.7 % 0.7 %
Adjusted EBITDA(A) $ 4.5 $ 2.7 $ 1.8
Adjusted EBITDA(A) margin 11.5 % 6.3 % 5.2 %
Adjusted Net Income(A) $ 2.8 $ 2.7 $ 0.1
Adjusted Net Income (A) per diluted share $ 0.03 $ 0.03 $ -

Intention to Amend Normal Course Issuer Bid (“NCIB”)

We announced today that, subject to the approval of the Toronto Stock Exchange (“TSX”), we intend to amend our current NCIB to increase the number of common shares that we may purchase for cancellation from 4 million common shares to 5 million common shares. Since commencement of our NCIB, we have purchased for cancellation 3.6 million common shares. Our current NCIB commenced on June 11, 2018 and will continue until June 10, 2019, or such earlier date as we have acquired the maximum number of common shares permitted under the NCIB. Purchases will continue to be made through the facilities of the TSX and alternative Canadian trading systems at the prevailing market price at the time of acquisition. All purchased shares will be cancelled.

Conference Call and Webcast

A conference call to review the results will take place at 11:00 a.m. (ET) on Thursday, May 2, 2019, hosted by Chief Executive Officer Jason Smith 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) 247-5856
  • Participant International Dial-In Number: (647) 689-4232
  • Conference ID: 1987047

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.

(A) Non-GAAP Measures

The non-GAAP measures used in this Press Release, including Net Revenue, Adjusted EBITDA and Adjusted Net Income or Loss 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 three and six months ended March 31, 2019, available on SEDAR at www.sedar.com.

Full reports for Real Matters financial results for the three and six months ended March 31, 2019 are outlined in the unaudited condensed consolidated financial statements and the related MD&A of the Company, which are 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, 2018 and under the heading “Important Factors Affecting Results from Operations” in our MD&A for the three and six months ended March 31, 2019, 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 approximately 60 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.

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