Dominion Lending Centres Inc.

Good afternoon and thank you for standing by. Welcome to Dominion Lending Center's first quarter 2026 results conference call. At this time, all participants will be in listen-only mode. After the speaker's presentation, there will be a question and answer period. If you would like to ask a question during this time, simply press start followed by the number one on your telephone keypad. If you would like to re-do your question, press start one again. Please note this call is also accessible via webcast and replay of the webcast will be available on the corporation's website at www.dlcg.ca. During the call, management's remarks may contain forward-looking information that is based on certain assumptions and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected. please refer to our forward-looking information disclosure in the MD&A for the quarter ended March 31, 2026, which can be found on CEDAR Plus and on the corporation's website. In addition, during the call, the corporation may refer to specific non-IFRS measures. These measures are also defined in the MD&A for the quarter ended March 31, 2026. The corporation's MD&A includes reconciliations of non-IFRS measures to the most directly comparable IFRS measures. Management believes that these non-IFRS measures provide useful information to investors regarding the corporation's financial condition and results of operations as they provided additional critical metrics of this performance. These non-IFRS measures are not recognized under IFRS, do not have any standardized meaning prescribed under IFRS, and may differ from Similarly named measures reported by other issuers and accordingly may not be comparable. This measure should not be considered as a substitute for the related financial information prepared by IFRS. I would now like to turn the call over to Gary Morris, Chairman and CEO of Dominion Lending Center.

Good afternoon, everyone, and thank you for joining us today on our first quarter 2026 Earning Conference Call. On the call with me today is Jeff Haag, our Chief Financial Officer, Chris Kaye, Executive Vice Chair and Co-Founder, Eddie Cotillo, President, and James Bell, Executive Vice President and CLO. I'm pleased to report that we delivered a solid quarter despite a challenging year-over-year comparison and the impact of winter storms early in the period. We generated 7% revenue growth driven by continued expansion in new revenues strength in the renewal market, and growth in our broker network, which more than offset softness in the housing market. Adjusted EBITDA margins expanded to 44%, up from 43% last year, resulting in a 9% growth in adjusted EBITDA for the quarter. Our funded mortgage volume was flat compared to Q1 2025, as we saw a decline in January due to winter storms and a particularly difficult comparison month, which was offset by a return to growth in both February and March. Looking ahead, we remain positive on the outlook for 2026 as we continue to execute on our growth strategy. As we've highlighted on prior calls, a core priority for the DOC G Group is investing in the success of our franchise and broker partners. In late 2024, we launched Gold Rush, leveraging our Velocity platform to help brokers stay top of mind with clients in a more continued and efficient way. This initiative has been very successful, driving increased customer engagement and volume growth, for our participating brokers. Building on that momentum in 2026, we introduced GoalGetter, a 12-week sales program that I'm personally leading with approximately 600 brokers. The program is designed to equip participants with new tools, techniques, and insights to help grow their business. We believe these initiatives have been important contributors to the growth and recruitment, and we plan to continue investing in programs that support our partners going forward. We also remain disciplined in managing our balance sheet with a debt to adjusted EBITDA of 1.06 times exiting Q1, 2026 with a clear focus on generating strong cashflow and allocating capital strategically to support long-term growth. This includes prioritizing high return organic and inorganic opportunities, maintaining a sustainable dividend and executing opportunistic share repurchases. During the quarter, we completed 51% equity investment in ClearTrust, a large existing franchise, and a 50% equity investment in Dunderade Management, which increases our exposure to the growing alternative lending market. In addition, our board approved an increase to our quarterly dividend to $0.05 per share, up from $0.04 per share effective June 2026. We continue to maintain a robust pipeline of potential acquisitions, With the strength of our balance sheet, we're well-positioned to deploy capital in ways that enhance our broker network, broaden our market reach, and drive sustained growth. With that in mind, I'll turn the call over to Jeff to walk through our first quarter financial results in more detail.

Jeff, over to you. Thanks, Gary, and good afternoon, everyone. For the first quarter of 2026, revenue increased 7% year-over-year to $20.0 million, and with revenue from franchise and brokering of mortgages increasing by 2% and Newton revenue increasing 20% year over year. The growth in Newton revenue was driven by the increase in velocity adoption to 85% this quarter from 79% in Q1 2025. And as Jerry mentioned, funded mortgage volumes were flat year over year due to winter storm activity early in the quarter, combined with a difficult comparison quarter. Turning to expenses, Direct costs decreased 27% year-over-year due to cost savings from the realignment of our sales team structure in Q4 of 2025 and due to lower advertising fund expenditures. On a percentage of revenue basis, direct costs decreased 7.8% compared to 11.4% in Q1 2025. General and administrative expenses increased 14% compared to Q1 2025. On a percentage of revenue basis, general and administrative expenses increased 49.0% from 45.8% in Q1 2025. The increase was driven primarily by higher personnel costs, a $400,000 increase in advertising expenses, primarily related to certain of the corporation's 20th anniversary marketing initiatives, and higher IT costs. The higher personnel costs were the result of higher headcount, wage inflation, and higher EBITDA-based executive incentive compensation. Adjusted EBITDA grew 9% year-over-year in the quarter to $8.7 million, and adjusted EBITDA margins improved to 44% in the first quarter of 2026 compared to 43% in the first quarter of 2025. Current quarter's adjusted EBITDA margins benefited from the strong performance of Newton. Included in adjusted EBITDA is a $0.3 million loss from our equity-accounted investment in Hartwood, but we do continue to expect Hartwood to reach profitability in 2026. Net income of $4.8 million decreased $1.5 million compared to Q1 2025 due to a $1.4 million gain on the sale of an equity-accounted investee that was recorded in Q1 of 2025, which did not occur in 2026. Adjusted diluted earnings per common share were consistent at $0.06 for the quarter, as the higher revenue and margins were offset by higher stock-based payment expense and higher other expenses. The increase in share-based payments reflects the impact of great investing for both April 2024 and April 2025 RSU grants, as compared to the prior year, which only reflected the expense related to the April 2024 grant. Strong cash flow from operations adjusted for non-cash working capital fluctuations was offset by higher maintenance capital expenditures for franchise renewal payments, which resulted in $6.8 million in free cash flow, which was consistent with Q1 of 2025. Our debt to trailing 12 months adjusted EBITDA ratio for the period ending March 31, 2026 was 1.06 times compared to 0.58 times at the same period last year. The increase in debt was due primarily to several strategic investments completed during the quarter, including the acquisition of a 51% equity interest in ClearTrust Mortgages and a 50% equity interest in Dunderave Management Limited, as well as investments in franchise renewal and recruiting and a $3.2 million change in non-cash working capital due primarily to timing of commissions payable. I'll now pass it back over to Gary for some concluding remarks.