Dominion Lending Centres Inc.

Good afternoon and thank you for standing by. Welcome to Dominion Lending Centre's second quarter 2026 results conference call. At this time, participants will be in a 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 that time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Please note this call is also accessible via webcast and a 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 NDNA for the quarter ended March 31, 2026, which can be found on CDARplus 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 NDNA 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 provide additional critical metrics of its 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. These measures 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 Centres.

Good afternoon, everyone, and thank you for joining us today on our second quarter 2026 earning conference call. On the call today with me is Jeff Haag, our Chief Financial Officer, Chris Tate, Executive Vice Chair and Co-Founder, Eddie Cotiolo, President, and James Bell, Executive Vice President and Chief Legal Officer. I'll provide an overview of our second quarter results, followed by a few comments on our announcement earlier this week regarding our acquisition of BiLogix, which marks an important milestone for our company. During the second quarter, we grew funded volume by 5% despite a soft housing market, reflecting the increased productivity of our brokers. This improvement is the result of our continued investment in helping our broker channel succeed. While recruiting remains a cornerstone of our strategy, in recent years, we have placed greater emphasis on helping our existing brokers and franchise partners grow their business through initiatives such as Gold Rush, Goal Setter Training Series, and most recently, the Broker Performance Lab. It's encouraging CR brokers embrace these programs and deliver strong results. Revenues increased 1% in the quarter as growth in funded mortgage volume was partially offset by revenue streams that did not move in line with funded volume, as well as quarter-to-quarter variability in partner mix. Adjusted EBITDA margins remained strong at 50%, resulting in adjusted EBITDA of $12.6 million in the quarter. While our profitability remains strong, we have launched an expense review program to identify additional cost savings opportunities. This reflects our disciplined approach to managing the business while the housing market remains soft. Our strong profitability and cash flow also contributed to continued strength in our balance sheet, with debt to adjusted EBITDA of 0.9 at the end of the second quarter. It was the strength of a balance sheet that enabled us to fund and complete the highly strategic and immediately accretive acquisition of Phylogix, which has closed as of July 31st. The acquisition marks an important milestone in the DLCG evolution. Phylogix is one of Canada's leading mortgage technology and connectivity platforms, and its addition strengthens our position in the Canadian mortgage industry. It also provides important redundancy across our critical connectivity platforms, and significantly expands our access to real-time data and insights into the Canadian residential housing market. Phylogix will operate as a stand-alone, wholly-owned subsidiary, maintaining its operational independence from Velocity and ensuring continuity for its customers and industry partners. We intend to build on Phylogix's strong foundation through continued investments in its technology, customer service and data security. Beyond the strategic importance, BiLogix adds a highly profitable and cash-generative business that is immediately accretive to adjusted earnings per share, while allowing us to maintain a strong balance sheet. For the trading 12 months ending May 31, 2026, BiLogix processed approximately $60 billion in funded mortgage volume. We expect the acquisition to contribute approximately $15 to $18 million in adjusted EBITDA, in its first full year post-closing. With that, I'll turn the call over to Jeff to walk through our second quarter financial results in more detail.

Jeff, over to you. Thanks, Gary. Good afternoon, everyone. For the second quarter of 2026, funded mortgage volumes increased 5% year-over-year to $22.1 billion, driven by higher broker productivity. Total revenue increased 1% to $24.9 million, reflecting 4% growth in franchise and brokering of mortgages revenue Partially offset by a 4% decline in Newton revenue, though this decline in Newton revenue was due primarily to a revenue reclassification recorded in Q2 of 2025, which included $0.3 million in revenue related to Q1 of 2025. Growth in franchise revenue was also impacted by $0.3 million in higher amortization of franchise rights payments, which are recorded over time and do not necessarily move in line with funded mortgage volumes. Turning to expenses. Direct costs decreased 8% compared to the same period last year due to cost savings from the realignment of our sales team structure in Q4 2025. As a percentage of revenue, direct costs decreased to 11.9% versus 13.1% in Q2 2025. General and administrative expenses increased $0.4 million compared to Q2 2025. This increase was primarily due to $0.3 million in higher personnel costs and IT-related costs and was partially offset by a $0.2 million reduction in advertising expenses due to the timing of certain events. Adjusted EBITDA of $12.6 million was consistent with Q2 of 2025, while adjusted EBITDA margins remain strong at 50% compared to 51% in the second quarter of 2025. Included in adjusted EBITDA is a $0.5 million loss from our equity-accounted investment in Hartwood compared to the $0.6 million loss in Q2 of 2025, We do expect Heartwood to reach profitability in late 2026. Net income of $7.1 million decreased by $0.6 million compared to Q2 2025, primarily due to a $0.6 million increase in share-based payment expense and higher general and administrative expenses. The increase in share-based payment expense reflects additional RSU grants under the RSU plan and the impact of great investing on previously issued awards. Adjusted diluted earnings per common share were $0.09 for the quarter compared to $0.10 in Q2 of 2025. Adjusted net income was $7.1 million, down $0.6 million year-over-year, as revenue growth was more than offset by the increase in share-based compensation expense. Cash flow from operations was $12.2 million, a 13% increase compared to $10.8 million in Q2 2025, largely driven by favorable changes in non-cash working capital and due to timing of accounts receivable collections. For the period ended June 30th, 2026, our total debt to trailing 12 months adjusted EBITDA ratio was 0.9 times compared to 0.5 times a year earlier. And as Gary mentioned, we utilized our strong balance sheet to fund the PhiLogix acquisition at a purchase price of $58.5 million subject to closing adjustments. The acquisition was financed using a new $62.3 million term facility as part of an amended and restated credit agreement entered into with TD Bank commensurate with the acquisition. Pro forma the acquisition, our total debt to adjusted pro forma trailing 12-month EBITDA is expected to be approximately 1.65 times. I will now pass it back to Gary for some concluding remarks. Thanks, Jeff.