Real Matters Reports Fourth Quarter and Fiscal 2020 Financial Results, Establishes New Fiscal 2025 Performance Targets and Announces Executive Leadership Changes
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 Highlights
Fiscal 2020 Highlights
Fiscal 2021 Performance Targets
New Fiscal 2025 Performance Targets
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
"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
Financial and Operational Summary (continued)
Q4 2020 Conference Call and Webcast
To access the call:
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
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
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.
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
#TECHSUPERSHOW Conference Party
Get Your Factories Connected -- Fast!