DLS DealNet Capital Corp

On a Clear Path to Profitability

• Focused on Quality Growth
• Sale of Impact Mobile for $27.8 million
• Turnaround Plan Completed
• Breakeven within Reach

TORONTO, Nov. 19, 2018 /CNW/ - Dealnet Capital Corp. ("Dealnet" or the "Company") (TSX VENTURE: DLS), reported today its financial results for the three-month and nine-month periods ending September 30, 2018. All results are reported under International Financial Reporting Standards ("IFRS") and in Canadian dollars, unless otherwise specified. The results of operations attributable to Impact Mobile have been segregated from Dealnet's ongoing continuing business and presented as discontinued operations.

Including $23.1 million of income from discontinued operations attributable to the sale of Impact Mobile which closed on July 6, 2018, the net income for the three-month period was $19.7 million or $0.07 per share versus a net loss of $16.6 million ($0.06) per share for the same period last year. For the three-month period ending September 30, 2018, the Company reported a loss from continuing operations of $3.4 million or ($0.01) per share versus a loss of $17.7 million or ($0.06) per share for the same period last year.  

The loss from continuing operations of $3.4 million includes non-recurring costs of $1.4 million attributable to the repayment of the Senior Secured Debentures, $565,000 of severance costs, and $408,000 of additional costs attributable to the liquidation of Gemma.

"With the turnaround completed, our management team is now singularly focused on growing the business by delivering high quality, high yielding assets to the portfolio," said Brent Houlden, Dealnet's Chief Executive Officer. "By aggressively reducing our operating costs and driving quality originations, breakeven is within reach and our path to profitability is clear," added Mr. Houlden.

Subsequent to the end of the period, the Company renewed its funding facilities with its two primary funders at favourable terms including an additional $5 million warehouse facility from its Schedule 1 bank funder.

Q3-2018 Financial Highlights

Originations

Q3 originations of $11.5 million were 21% higher than the previous quarter and 12% higher than Q3 2017. With the introduction of risk-based pricing and improvements to the overall dealer experience, the Company was able to achieve this growth with improved credit quality and a higher net interest margin.

Net Interest Margin

Net interest margin increased to $1.9 million in the third quarter from $1.8 million in the previous period and $1.4 million reported in the same period last year.  

Gross Profit

For the three-month period ending September 30, 2018, the Company reported gross profit from continuing operations of $2.4 million versus $3.0 million reported in the previous three-month period and $2.6 million reported in the same period last year. The decline from Q2 is primarily due to higher credit loss provisions, decreased fees and higher costs associated with increased activity related to collecting delinquent accounts.

Operating Expenses

Consolidated operating expenses from continuing operations were $5.8 million for the three-month period ending September 30, 2018 versus $4.4 million reported in the previous three-month period and $20.3 million reported for the same period last year. After adjusting operating expenses for the previously-noted one-time costs incurred in the current quarter, operating expenses decreased by 22% to $3.4 million over the previous period and improved by 16% over the same period last year.  

Key Performance Indicators

The following table summarizes some of the Key Performance Indicators that the Company uses to measure the achievement of its business plan objectives:

The financial statements for the three-month and nine-month periods ending September 30, 2018 together with management's discussion and analysis of these results have been filed on SEDAR and are available on the Company's website at www.dealnetcapital.com.

The Company will host a conference call to discuss these results on November 20, 2018 commencing at 10:00 A.M. Eastern Time.

Conference Call Details:

About Dealnet Capital Corp.

Dealnet is a specialty finance company servicing the $20 billion home improvement finance market through both dealer-based and direct homeowner-based originations of secured finance assets (equipment leases and loans). The company earns net finance income over the term of these assets and from fee income derived from the transaction support services that it provides to its dealer network. The Company also uses its engagement platform to provide customer support services on a contract basis to third-party institutions.

For additional information please visit www.sedar.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-looking Statements

This news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "would", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Forward-looking information is based on the opinions and estimates of management at the date the information is provided and is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. For a description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company's Management's Discussion and Analysis. The Company undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change, unless required by law. The reader is cautioned not to place undue reliance on forward-looking information.

SOURCE Dealnet Capital Corp.