DLC Group Announces Strong Q2 Results with 31% Increase in Revenue and Doubling of Adjusted Earnings per Share

Executive Summary

• Dominion Lending Centres Inc. (TSX: DLCG) reported strong financial results for the second quarter and first half of 2025, driven by a 25% increase in Funded Mortgage Volumes (FMV) and expanded adoption of its Velocity technology platform.
• The company announced a 33% increase in its quarterly dividend to $0.04 per share, reflecting improved cash flow and profitability.
• Key operational highlights include a 48% rise in Adjusted EBITDA, a doubling of adjusted net income per share, and the successful launch of a new equity-accounted investment, Heartwood Financial Group.

Key Details

• Q2 2025 Financial Performance:
  • Revenue: $24.6 million, up 31% from $18.8 million in Q2 2024.
  • Adjusted EBITDA: $12.6 million, up 48% from $8.5 million in Q2 2024; margin expanded to 51% from 45%.
  • Net Income: $7.7 million, up 89% from $4.1 million in Q2 2024.
  • Adjusted Net Income: $7.8 million, up 198% from $2.6 million in Q2 2024.
  • Adjusted Diluted EPS: $0.10, doubling from $0.05 in Q2 2024.
  • Free Cash Flow: $10.6 million attributable to common shareholders, up 148% from $4.3 million in Q2 2024.
• Six Months Ended June 30, 2025:
  • Revenue: $43.3 million, up 34% from $32.4 million in 2024.
  • Adjusted EBITDA: $20.7 million, up 53% from $13.5 million in 2024.
  • Net Income: $14.0 million, up 108% from $6.7 million in 2024.
  • Adjusted Net Income: $12.7 million, up 214% from $4.0 million in 2024.
  • Free Cash Flow: $17.4 million attributable to common shareholders, up 253% from $4.9 million in 2024.
• Operational Metrics:
  • Funded Mortgage Volumes (FMV): $21.1 billion in Q2 2025, a 25% increase from $16.9 billion in Q2 2024.
  • Velocity Adoption: Increased to 82% of funded mortgage volumes in Q2 2025, up from 72% in Q2 2024.
  • Broker Network: 8,984 brokers (up 4% from 8,668 in Q2 2024) across 504 franchises.
• Dividend Action:
  • Quarterly dividend increased by 33% to $0.04 per share (annualized $0.16), up from $0.03 per share ($0.12 annualized) previously.
• Strategic Updates:
  • Heartwood Financial Group: Launched in Q2 2025; DLC Group holds a 40% equity interest. Activity levels are in-line with expectations, with the first loan funded in early July. A loss of $0.4 million (Q2) and $0.7 million (YTD) from this equity-accounted investment is included in Adjusted EBITDA.
  • Revenue Reclassification: Beginning Q2 2025, revenue from a third-party supplier was reclassified from Franchise to Newton (technology) revenue, impacting Newton revenue by $0.6 million and Franchise revenue by $0.6 million.
• Balance Sheet & Cash Flow:
  • Adjusted total debt-to-EBITDA (TTM) decreased to 0.51x from 0.86x at the same period last year.
  • No longer have any free cash flow or income attributable to Preferred Shareholders.

Notable Quotes

• "We are pleased to report another strong quarter as we remain focused on executing our proven growth strategy. Despite ongoing softness in the housing market, the Canadian residential mortgage origination market has been strong to date in 2025 on the back of a strong renewal market and the decline in interest rates earlier this year," said Gary Mauris, Chairman and CEO.
• "In addition to the strong financial results, a highlight of the quarter was the launch of Heartwood Financial Group... We are excited for the growth ahead for Heartwood and believe that our investment will generate strong profitability and shareholder value for DLC Group in the coming years," added Mr. Mauris.