goeasy Ltd. Reports Record Results for the Third Quarter

0

Loan Portfolio of $1.90 billion, up 60%
Revenue of $220 million, up 36%
Adjusted Operating Income of $85.8 million, up 51%
Adjusted Quarterly Net Income of $46.7 million, up 48%
Adjusted Quarterly Diluted Earnings per Share of $2.70, up 35%

MISSISSAUGA, Ontario, Nov. 03, 2021 (GLOBE NEWSWIRE) — goeasy Ltd. (TSX: GSY), (“goeasy” or the “Company”), one of Canada’s leading non-prime consumer lenders, today reported results for the third quarter ended September 30, 2021.

Third Quarter Results

During the quarter, the Company generated a record $436 million in total loan originations, up 52% compared to the $287 million produced in the third quarter of 2020, and a sequential increase of 15% from the $379 million in loan originations in the second quarter of 2021. The increase in loan originations led to record organic growth in the loan portfolio of $101 million during the quarter, resulting in a total gross consumer loan receivable portfolio of $1.90 billion, up 60% from $1.18 billion in the third quarter of 2020. The growth in consumer loans led to an increase in revenue, which was a record $220 million in the quarter, up 36% over the third quarter in 2020.

During the quarter, the Company continued to experience stable credit and payment performance. The net charge off rate for the third quarter was 8.3%, compared to 7.8% in the third quarter of 2020 and 8.2% in the second quarter of 2021. The overall allowance for future credit losses reduced slightly from 7.90% in the prior quarter to 7.83%.

Operating income for the third quarter of 2021 was a record $81.4 million, up 43% from $56.9 million in the third quarter of 2020. Operating margin for the third quarter was 37.0%, up from 35.2% in the prior year. After adjusting for items related to the recent acquisition of LendCare Holdings Inc. (“LendCare”), the Company reported record adjusted operating income of $85.8 million, up $28.9 million or an increase of 51% compared to the third quarter of 2020. Adjusted operating margin for the third quarter was 39.1%, up from 35.2% in the prior year. During the quarter, the Company also recorded a $23.2 million before-tax fair value gain on investments.

Net income in the third quarter was $63.5 million, compared to $33.1 million in the same period of 2020, which resulted in diluted earnings per share of $3.66, compared to $2.09 in the third quarter of 2020. After adjusting for non-recurring and unusual items on an after-tax basis, including $1.0 million of transaction and integration costs related to the acquisition of LendCare, $2.4 million in amortization of acquired intangible assets, and a $20.1 million fair value gain on investments, adjusted net income was a record $46.7 million, up 48% from $31.6 million in 2020. Adjusted diluted earnings per share was a record $2.70, up 35% from $2.00 in the third quarter of 2020.

Return on equity during the quarter was 32.7%, compared to 34.7% in the third quarter of 2020. After adjusting for the non-recurring and unusual items previously noted, adjusted return on equity was 24.0% in the quarter, compared to 33.1% in the same period of 2020.

“During the quarter we made significant progress on the integration of LendCare, which is on track to produce the synergies and accretion forecast during our acquisition,” said Jason Mullins, goeasy’s President and Chief Executive Officer, “With consumer demand for credit improving, complemented by the expansion of our auto lending program and point-of-sale channel, we grew the consumer loan portfolio a record $101 million during the quarter, more than double the same quarter last year. Meanwhile, the stable credit performance and improved operating leverage, led to record adjusted diluted earnings per share of $2.70,” Mr. Mullins concluded, “With our fully drawn weighted average cost of borrowing declining to 4.3% and total liquidity now exceeding $900 million, our balance sheet is stronger than ever and we remain on track to achieving our forecast for 2021 and beyond.”

Other Key Third Quarter Highlights

easyfinancial

  • Revenue of $182 million, up 45%
  • 33% of the loan portfolio secured, up from 12%
  • 66% of net loan advances in the quarter were issued to new customers, up from 50%
  • 41% of applications acquired online, up from 38%
  • 25% of new loans issued through point-of-sale financing, up from 18%
  • 4% of new loans issued auto financing, a new product category in 2021
  • Average loan book per branch improved to $4.0 million, an increase of 6%
  • Weighted average interest yield of 33.6%, down from 38.3%
  • Record operating income of $90.6 million, up 42%
  • Operating margin of 49.7%, down from 50.7%

easyhome

  • Record revenue of $37.6 million, up 5%
  • Same store revenue growth of 5.6%
  • Consumer loan portfolio within easyhome stores increased to $61.8 million, up 38%
  • Revenue from consumer lending increased to $7.9 million, up 43%
  • Record operating income of $10.1 million, up 28%
  • Record operating margin of 26.7%, up from 21.9%

Overall

  • 46th consecutive quarter of same store sales growth
  • 81st consecutive quarter of positive net income
  • 2021 marks the 17th consecutive year of paying dividends and the 7th consecutive year of a dividend increase
  • Total same store revenue growth of 15.4%
  • Adjusted return on equity of 24.0% in the quarter and adjusted return on tangible common equity of 42.9%
  • Fully drawn weighted average cost of borrowing reduced to 4.3%, down from 5.0%
  • Net external debt to net capitalization of 62% on September 30, 2021, down from 66% in the prior year and below the Company’s target leverage ratio of 70%

Nine Months Results

For the first nine months of 2021, the Company produced record revenues of $592 million, up 24% compared with $480 million in the same period of 2020. Operating income for the period was $201 million compared with $155 million in the first nine months of 2020, an increase of $46.2 million or 30%. Net income for the first nine months of 2021 was $195 million and diluted earnings per share was $11.75 compared with $87.6 million or $5.64 per share, increases of 123% and 108%, respectively. Excluding the effects of the adjusting items related to the acquisition of LendCare and fair value gains on investments, adjusted net income for the first nine months of 2021 was $127 million and adjusted diluted earnings per share was $7.66, increases of 54% and 44%, respectively, while adjusted return on equity was 26.6%.

Balance Sheet and Liquidity

Total assets were $2.47 billion as of September 30, 2021, an increase of 81% from $1.37 billion as of September 30, 2020, driven by growth in the consumer loan portfolio, including the $445 million gross consumer loan portfolio acquired through the acquisition of LendCare, the intangible assets and goodwill arising from the LendCare acquisition, and the return on the Company’s investment in Affirm Holdings Inc. (“Affirm”).

In September 2021, the Company entered into a 9-month total return swap agreement (the “TRS”) to partially hedge its market exposure related to 100,000 of the 468,000 contingent shares related to the equity held in Affirm. The TRS effectively results in the economic value of the hedged portion of the Company’s contingent equity in Affirm being settled in cash at maturity for US$110.35 per share, net of applicable fees. During the third quarter of 2021, the Company recognized a $20.1 million after-tax fair value gain on the investment in Affirm and the TRS. Year to date, the Company has recorded total fair value gains on investments of $92.4 million.

During the quarter, the Company increased its existing revolving securitization warehouse facility to $600 million. The warehouse facility continues to be structured and underwritten by National Bank Financial Markets under a new three-year agreement, which incorporates favorable key modifications, including improvements to eligibility criteria and advance rates. The interest on advances are payable at the rate of 1-month CDOR plus 185 bps, an improvement of 110 bps. Based on the current 1-month CDOR rate of 0.43% as of November 3, 2021, the interest rate would be 2.28%. The Company continues utilizing an interest rate swap agreement to generate fixed rate payments on the amounts drawn and mitigate the impact of interest rate volatility.

Cash provided by operating activities before the net growth in gross consumer loans receivable in the quarter was $89.2 million. Based on the cash on hand at the end of the quarter and the borrowing capacity under the Company’s revolving credit facilities, goeasy has approximately $908 million in total funding capacity, which it estimates is sufficient to fund its organic growth through the fourth quarter of 2023. At quarter-end, the Company’s fully drawn weighted average cost of borrowing reduced to 4.3%, down from 5.0% in the prior year, with incremental draws on its senior secured revolving credit facility bearing a rate of approximately 3.5% and incremental draws on its amended securitization facility bearing a rate of approximately 2.3%.

As of September 30, 2021, the Company also estimates that once its existing and available sources of capital are fully utilized, it could continue to grow the loan portfolio by approximately $200 million per year solely from internal cash flows. The Company also estimates that if it were to run-off its consumer loan and consumer leasing portfolios, the value of the total cash repayments paid to the Company over the remaining life of its contracts would be approximately $3 billion. If, during such a run-off scenario, all excess cash flows were applied directly to debt, the Company estimates it would extinguish all external debt within 16 months.

Future Outlook

The Company has provided 3-year forecasts for the years 2021 through 2023. The Company continues to pursue a long-term strategy that includes expanding its product range, developing its channels of distribution and leveraging risk-based pricing, which increases the average loan size and extends the life of its customer relationships. As such, the total yield earned on its consumer loan portfolio will gradually decline, while net charge-off rates moderate and operating margins expand. The forecasts outlined below contemplate the Company’s expected domestic organic growth plan and do not include the impact of any future mergers or acquisitions, or the associated gains or losses associated with its investments.

  Forecasts for 2021 Forecasts for 2022 Forecasts for 2023
Gross Loan Receivable Portfolio at Year End $1.95 billion –
$2.05 billion
$2.35 billion –
$2.55 billion
$2.8 billion –
$3.0 billion
New easyfinancial locations 20 – 25 15 – 20 10 – 15
easyfinancial Total Revenue Yield 40% – 42% 36% – 38% 35% – 37%
Total Revenue Growth 24% – 27% 17% – 20% 12% – 15%
Net charge-off Rate (Average Receivables) 8.5% – 10.5% 8.5% – 10.5% 8.0% – 10.0%
Adjusted Total Company Operating Margin 35%+ 36%+ 37%+
Adjusted Return on Equity 22%+ 22%+ 22%+
Cash provided by Operating Activities before Net Growth in Gross Consumer Loans Receivable $190 million –
$230 million
$270 million –
$310 million
$310 million –
$350 million
Net Debt to Net Capitalization 64% – 66% 64% – 66% 63% – 65%

Dividend

The Board of Directors has approved a quarterly dividend of $0.66 per share payable on January 14, 2022 to the holders of common shares of record as at the close of business on December 31, 2021.

Forward-Looking Statements

All figures reported above with respect to outlook are targets established by the Company and are subject to change as plans and business conditions vary. Accordingly, investors are cautioned not to place undue reliance on the foregoing guidance. Actual results may differ materially.

This press release includes forward-looking statements about goeasy, including, but not limited to, its business operations, strategy, expected financial performance and condition, the estimated number of new locations to be opened, targets for growth of the consumer loans receivable portfolio, annual revenue growth targets, strategic initiatives, new product offerings and new delivery channels, anticipated cost savings, planned capital expenditures, anticipated capital requirements, liquidity of the Company, plans and references to future operations and results and critical accounting estimates. In certain cases, forward-looking statements are statements that are predictive in nature, depend upon or refer to future events or conditions, and/or can be identified by the use of words such as ‘expects’, ‘anticipates’, ‘intends’, ‘plans’, ‘believes’, ‘budgeted’, ‘estimates’, ‘forecasts’, ‘targets’ or negative versions thereof and similar expressions, and/or state that certain actions, events or results ‘may’, ‘could’, ‘would’, ‘might’ or ‘will’ be taken, occur or be achieved.

Forward-looking statements are based on certain factors and assumptions, including expected growth, results of operations and business prospects and are inherently subject to, among other things, risks, uncertainties and assumptions about the Company’s operations, economic factors and the industry generally, as well as those factors referred to in the Company’s most recent Annual Information Form and Management Discussion and Analysis, as available on www.sedar.com, in the section entitled “Risk Factors”. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those expressed or implied by forward-looking statements made by the Company, due to, but not limited to, important factors such as the Company’s ability to enter into new lease and/or financing agreements, collect on existing lease and/or financing agreements, open new locations on favourable terms, purchase products which appeal to customers at a competitive rate, respond to changes in legislation, react to uncertainties related to regulatory action, raise capital under favourable terms, manage the impact of litigation (including shareholder litigation), control costs at all levels of the organization and maintain and enhance the system of internal controls. The Company cautions that the foregoing list is not exhaustive.

The reader is cautioned to consider these, and other factors carefully and not to place undue reliance on forward-looking statements, which may not be appropriate for other purposes. The Company is under no obligation (and expressly disclaims any such obligation) to update or alter the forward-looking statements whether as a result of new information, future events or otherwise, unless required by law.

About goeasy

goeasy Ltd., a Canadian company, headquartered in Mississauga, Ontario, provides non-prime leasing and lending services through its easyhome, easyfinancial and LendCare brands. Supported by more than 2,200 employees, the Company offers a wide variety of financial products and services including unsecured and secured instalment loans. Customers can transact seamlessly through an omni-channel model that includes an online and mobile platform, over 400 locations across Canada, and point-of-sale financing offered in the retail, power sports, automotive, home improvement and healthcare verticals, through more than 4,000 merchants across Canada. Throughout the Company’s history, it has acquired and organically served over 1 million Canadians and originated over $7.2 billion in loans, with one in three easyfinancial customers graduating to prime credit and 60% increasing their credit score within 12 months of borrowing.

Accredited by the Better Business Bureau, goeasy is the proud recipient of several awards including Waterstone Canada’s Most Admired Corporate Cultures, Glassdoor Top CEO Award, Achievers Top 50 Most Engaged Workplaces in North America, Greater Toronto Top Employers Award, the Digital Finance Institute’s Canada’s Top 50 FinTech Companies, ranking on the TSX30 and placing on the Report on Business ranking of Canada’s Top Growing Companies and has been certified as a Great Place to Work®. The company is represented by a diverse group of team members from over 75 nationalities who believe strongly in giving back to the communities in which it operates. To date, goeasy has raised and donated over $3.8 million to support its long-standing partnerships with BGC Canada, Habitat for Humanity and many other local charities.

goeasy Ltd.’s. common shares are listed on the TSX under the trading symbol “GSY”. goeasy is rated BB- with a stable trend from S&P and Ba3 with a stable trend from Moody’s. Visit www.goeasy.com.

For further information contact:

Jason Mullins
President & Chief Executive Officer
(905) 272-2788

Farhan Ali Khan
Senior Vice President, Corporate Development & Investor Relations
(905) 272-2788

goeasy Ltd.        
         
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION    
(Unaudited)        
(expressed in thousands of Canadian dollars)        
         
         
    As At As At  
    September 30, December 31,  
    2021 2020    
         
ASSETS        
Cash   124,685 93,053    
Amounts receivable   18,057 9,779    
Prepaid expenses   8,668 13,005    
Consumer loans receivable, net   1,780,073 1,152,378    
Investments   64,178 56,040    
Lease assets   44,482 49,384    
Property and equipment, net   34,397 31,322    
Deferred tax assets, net   4,066    
Derivative financial assets   422    
Intangible assets, net   161,189 25,244    
Right-of-use assets, net   54,663 46,335    
Goodwill   180,923 21,310    
TOTAL ASSETS   2,471,737 1,501,916    
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Liabilities        
Revolving credit facility   14,339 198,339    
Accounts payable and accrued liabilities   61,433 46,065    
Income taxes payable   22,860 13,897    
Dividends payable   10,888 6,661    
Unearned revenue   9,329 10,622    
Accrued interest   22,968 2,598    
Deferred tax liabilities, net   38,983    
Derivative financial liabilities   19,076 36,910    
Lease liabilities   62,915 53,902    
Revolving securitization warehouse facility   122,648    
Secured borrowings   191,574    
Notes payable   1,087,397 689,410    
TOTAL LIABILITIES   1,664,410 1,058,404    
         
Shareholders’ equity        
Share capital   369,475 181,753    
Contributed surplus   20,518 19,732    
Accumulated other comprehensive income (loss)   6,666 (5,280 )  
Retained earnings   410,668 247,307    
TOTAL SHAREHOLDERS’ EQUITY   807,327 443,512    
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   2,471,737 1,501,916    
         
goeasy Ltd.            
             
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME        
(Unaudited)            
(expressed in thousands of Canadian dollars except earnings per share)            
             
             
    Three Months Ended Nine Months Ended  
    September 30, September 30, September 30, September 30,  
    2021 2020 2021 2020  
             
REVENUE            
Interest income   146,132   101,833 380,109   302,799  
Lease revenue   27,923   28,416 84,708   84,232  
Commissions earned   42,052   28,540 117,824   83,166  
Charges and fees   3,655   3,035 9,651   9,506  
    219,762   161,824 592,292   479,703  
             
EXPENSES BEFORE DEPRECIATION AND AMORTIZATION            
Salaries and benefits   41,776   36,457 120,986   102,283  
Stock-based compensation   2,116   1,718 6,103   5,587  
Advertising and promotion   7,751   7,377 20,815   18,195  
Bad debts   45,297   27,221 123,444   100,505  
Occupancy   5,995   5,639 17,272   17,126  
Technology costs   4,900   3,817 12,721   10,499  
Other expenses   9,852   6,624 32,356   22,378  
    117,687   88,853 333,697   276,573  
             
DEPRECIATION AND AMORTIZATION            
Depreciation of lease assets   8,601   8,701 26,687   26,790  
Depreciation of right-of-use assets   4,650   4,053 13,416   11,994  
Amortization of intangible assets   5,405   1,820 11,285   4,699  
Depreciation of property and equipment   2,067   1,451 5,833   4,488  
    20,723   16,025 57,221   47,971  
             
TOTAL OPERATING EXPENSES   138,410   104,878 390,918   324,544  
             
OPERATING INCOME   81,352   56,946 201,374   155,159  
             
OTHER INCOME   23,219   1,700 106,505   5,700  
             
FINANCE COSTS            
Interest expense and amortization of deferred financing charges   20,889   12,543 54,450   39,624  
Interest expense on lease liabilities   797   690 2,294   2,025  
    21,686   13,233 56,744   41,649  
             
INCOME BEFORE INCOME TAXES   82,885   45,413 251,135   119,210  
             
INCOME TAX EXPENSE (RECOVERY)            
Current   25,769   9,990 58,577   23,288  
Deferred   (6,424 ) 2,350 (2,424 ) 8,328  
    19,345   12,340 56,153   31,616  
             
NET INCOME   63,540   33,073 194,982   87,594  
             
BASIC EARNINGS PER SHARE   3.79   2.20 12.15   5.95  
DILUTED EARNINGS PER SHARE   3.66   2.09 11.75   5.64  
             
Segmented Reporting            
               
      Three Months Ended September 30, 2021  
($ in 000’s except earnings per share)   easyfinancial1 easyhome Corporate Total  
               
Revenue            
  Interest income   140,266 5,866   146,132  
  Lease revenue   27,923   27,923  
  Commissions earned   39,234 2,818   42,052  
  Charges and fees   2,619 1,036   3,655  
      182,119 37,643   219,762  
               
Total operating expenses before            
       depreciation and amortization   83,167 16,752 17,768   117,687  
               
Depreciation and amortization            
  Depreciation and amortization of lease assets, property and equipment and intangible assets   5,880 8,912 1,281   16,073  
  Depreciation of right-of-use assets   2,512 1,924 214   4,650  
      8,392 10,836 1,495   20,723  
               
Segment operating income (loss)   90,560 10,055 (19,263 ) 81,352  
               
Other income         23,219  
               
Finance costs            
  Interest expense and amortization of deferred financing charges         20,889  
  Interest expense on lease liabilities         797  
            21,686  
               
Income before income taxes         82,885  
               
Income taxes         19,345  
               
Net Income         63,540  
               
Diluted earnings per share         3.66  
1 LendCare’s financial results are reported under the easyfinancial reporting segment.        
               
      Three Months Ended September 30, 2020  
($ in 000’s except earnings per share)   easyfinancial easyhome Corporate Total  
               
Revenue            
  Interest income   97,543 4,290   101,833  
  Lease revenue   28,416   28,416  
  Commissions earned   26,474 2,066   28,540  
  Charges and fees   1,839 1,196   3,035  
      125,856 35,968   161,824  
Total operating expenses before            
       depreciation and amortization   58,089 17,208 13,556   88,853  
               
Depreciation and amortization            
  Depreciation and amortization of lease assets, property and equipment and intangible assets   2,014 9,051 907   11,972  
  Depreciation of right-of-use-assets   1,977 1,824 252   4,053  
      3,991 10,875 1,159   16,025  
               
Segment operating income (loss)   63,776 7,885 (14,715 ) 56,946  
               
Other income         1,700  
               
Finance costs            
  Interest expense and amortization of deferred financing charges         12,543  
  Interest expense on lease liabilities         690  
            13,233  
               
Income before income taxes         45,413  
               
Income taxes         12,340  
               
Net Income         33,073  
               
Diluted earnings per share         2.09  
               
      Nine Months Ended September 30, 2021  
($ in 000’s except earnings per share)   easyfinancial1 easyhome Corporate Total  
               
Revenue            
  Interest income   363,806 16,303   380,109  
  Lease revenue   84,708   84,708  
  Commissions earned   109,809 8,015   117,824  
  Charges and fees   6,721 2,930   9,651  
      480,336 111,956   592,292  
               
Total operating expenses before            
       depreciation and amortization   223,784 50,143 59,770   333,697  
               
Depreciation and amortization            
  Depreciation and amortization of lease assets, property and equipment and intangible assets   12,423 27,652 3,730   43,805  
  Depreciation of right-of-use assets   7,021 5,750 645   13,416  
      19,444 33,402 4,375   57,221  
               
Segment operating income (loss)   237,108 28,411 (64,145 ) 201,374  
               
Other income         106,505  
               
Finance costs            
  Interest expense and amortization of deferred financing charges         54,450  
  Interest expense on lease liabilities         2,294  
            56,744  
               
Income before income taxes         251,135  
               
Income taxes         56,153  
               
Net Income         194,982  
               
Diluted earnings per share         11.75  
1 LendCare’s financial results are reported under the easyfinancial reporting segment.        
               
      Nine Months Ended September 30, 2020  
($ in 000’s except earnings per share)   easyfinancial easyhome Corporate Total  
               
Revenue            
  Interest income   290,483 12,316   302,799  
  Lease revenue   84,232   84,232  
  Commissions earned   76,785 6,381   83,166  
  Charges and fees   6,113 3,393   9,506  
      373,381 106,322   479,703  
               
Total operating expenses before            
       depreciation and amortization   186,844 50,428 39,301   276,573  
               
Depreciation and amortization            
  Depreciation and amortization of lease assets, property and equipment and intangible assets   5,484 27,903 2,590   35,977  
  Depreciation of right-of-use-assets   5,691 5,595 708   11,994  
      11,175 33,498 3,298   47,971  
               
Segment operating income (loss)   175,362 22,396 (42,599 ) 155,159  
               
Other income         5,700  
               
Finance costs            
  Interest expense and amortization of deferred financing charges         39,624  
  Interest expense on lease liabilities         2,025  
            41,649  
               
Income before income taxes         119,210  
               
Income taxes         31,616  
               
Net Income         87,594  
               
Diluted earnings per share         5.64  
               
Summary of Financial Results and Key Performance Indicators            
             
($ in 000’s except earnings per share and percentages) Three Months Ended Variance Variance    
September 30, 2021 September 30, 2020 $ / bps % change    
Summary Financial Results            
Revenue 219,762   161,824   57,938   35.8 %    
Operating expenses before depreciation and amortization2 117,687   88,853   28,834   32.5 %    
EBITDA1 116,693   65,970   50,723   76.9 %    
EBITDA margin1 53.1 % 40.8 % 1,230 bps   30.1 %    
Depreciation and amortization expense2 20,723   16,025   4,698   29.3 %    
Operating income 81,352   56,946   24,406   42.9 %    
Operating margin1 37.0 % 35.2 % 180 bps   5.1 %    
Other income2,3 23,219   1,700   21,519   1,265.8 %    
Finance costs 21,686   13,233   8,453   63.9 %    
Effective income tax rate 23.3 % 27.2 % (390 bps)   (14.3 %)    
Net income 63,540   33,073   30,467   92.1 %    
Diluted earnings per share 3.66   2.09   1.57   75.1 %    
Return on assets1 10.3 % 9.7 % 60 bps   6.2 %    
Return on equity1 32.7 % 34.7 % (200 bps)   (5.8 %)    
Return on tangible common equity1 58.3 % 39.1 % 1,920 bps   49.1 %    
             
Adjusted Financial Results1,2,3            
Adjusted operating income 85,818   56,946   28,872   50.7 %    
Adjusted operating margin 39.1 % 35.2 % 390 bps   11.1 %    
Adjusted net income 46,748   31,598   15,150   47.9 %    
Adjusted diluted earnings per share 2.70   2.00   0.70   35.0 %    
Adjusted return on assets 7.6 % 9.3 % (170 bps)   (18.3 %)    
Adjusted return on equity 24.0 % 33.1 % (910 bps)   (27.5 %)    
Adjusted return on tangible common equity 42.9 % 37.3 % 560 bps   15.0 %    
             
Key Performance Indicators1        
Same store revenue growth (overall) 15.4 % 3.1 % 1,230 bps   396.8 %    
Same store revenue growth (easyhome) 5.6 % 7.2 % (160 bps)   (22.2 %)    
             
Segment Financials            
easyfinancial revenue 182,119   125,856   56,263   44.7 %    
easyfinancial operating margin 49.7 % 50.7 % (100 bps)   (2.0 %)    
easyhome revenue 37,643   35,968   1,675   4.7 %    
easyhome operating margin 26.7 % 21.9 % 480 bps   21.9 %    
             
Portfolio Indicators            
Gross consumer loans receivable 1,896,716   1,182,801   713,915   60.4 %    
Growth in consumer loans receivable 100,872   48,319   52,553   108.8 %    
Gross loan originations 436,194   286,583   149,611   52.2 %    
Total yield on consumer loans (including ancillary products) 40.8 % 45.1 % (430 bps)   (9.5 %)    
Net charge offs as a percentage of average gross consumer loans receivable 8.3 % 7.8 % 50 bps   6.4 %    
Cash provided by operating activities before net growth in gross consumer loans receivable 89,240   63,578   25,662   40.4 %    
Potential monthly lease revenue 8,160   8,256   (96 ) (1.2 %)    
             
1 See description in sections “Portfolio Analysis” and “Key Performance Indicators and Non-IFRS Measures” in September 30, 2021 Management’s Discussion and Analysis.
2 During the third quarter of 2021, the Company had a total of -$18.8 million before-tax (-$16.8 million after-tax) of adjusting items which include:
Adjusting items related to the LendCare Acquisition
• Transaction costs of $0.3 million (non-tax deductible) which include advisory and consulting costs, legal costs, and other direct transaction related to the Acquisition of LendCare reported under Operating expenses before depreciation and amortization;
• Integration costs related to advisory and consulting costs, employee incentives, representation and warranty insurance cost, and other integration costs related to the Acquisition of LendCare reported under Operating expenses before depreciation and amortization amounting to $1.0 million before-tax ($0.7 million after-tax); and
• Amortization of $131 million intangible asset related to the Acquisition of LendCare with an estimated useful life of ten years amounting to $3.3 million before-tax ($2.4 million after-tax).
Adjusting item related to other income
• Realized and unrealized fair value gains mainly on investments in Affirm and TRS amounting to $23.2 million before-tax ($20.1 million after-tax).
3 During the third quarter of 2020, the Company’s adjusting item includes:
• Unrealized fair value gain on investment in PayBright amounting to $1.7 million before-tax ($1.5 million after-tax).
   
   
   
   
   
   
   
             
             
($ in 000’s except earnings per share and percentages) Nine Months Ended Variance Variance    
September 30, 2021 September 30, 2020 $ / bps % change    
Summary Financial Results        
Revenue 592,292   479,703   112,589   23.5 %    
Operating expenses before depreciation and amortization2 333,697   276,573   57,124   20.7 %    
EBITDA1 338,413   182,040   156,373   85.9 %    
EBITDA margin1 57.1 % 37.9 % 1,920 bps   50.7 %    
Depreciation and amortization expense2 57,221   47,971   9,250   19.3 %    
Operating income 201,374   155,159   46,215   29.8 %    
Operating margin1 34.0 % 32.3 % 170 bps   5.3 %    
Other income2,3 106,505   5,700   100,805   1,768.5 %    
Finance costs2 56,744   41,649   15,095   36.2 %    
Effective income tax rate 22.4 % 26.5 % (410 bps)   (15.5 %)    
Net income 194,982   87,594   107,388   122.6 %    
Diluted earnings per share 11.75   5.64   6.11   108.3 %    
Return on assets1 12.9 % 8.6 % 430 bps   50.0 %    
Return on equity1 40.8 % 32.3 % 850 bps   26.3 %    
Return on tangible common equity1 58.7 % 36.5 % 2,220 bps   60.8 %    
             
Adjusted Financial Results1,2,3            
Adjusted operating income 230,299   155,159   75,140   48.4 %    
Adjusted operating margin 38.9 % 32.3 % 660 bps   20.4 %    
Adjusted net income 127,114   82,649   44,465   53.8 %    
Adjusted diluted earnings per share 7.66   5.33   2.33   43.7 %    
Adjusted return on assets 8.4 % 8.1 % 30 bps   3.7 %    
Adjusted return on equity 26.6 % 30.5 % (390 bps)   (12.8 %)    
Adjusted return on tangible common equity 38.3 % 34.5 % 380 bps   11.0 %    
             
Key Performance Indicators1        
Same store revenue growth (overall) 12.1 % 7.8 % 430 bps   55.1 %    
Same store revenue growth (easyhome) 6.1 % 3.2 % 290 bps   90.6 %    
             
Segment Financials            
easyfinancial revenue 480,336   373,381   106,955   28.6 %    
easyfinancial operating margin 49.4 % 47.0 % 240 bps   5.1 %    
easyhome revenue 111,956   106,322   5,634   5.3 %    
easyhome operating margin 25.4 % 21.1 % 430 bps   20.4 %    
             
Portfolio Indicators            
Gross consumer loans receivable 1,896,716   1,182,801   713,915   60.4 %    
Growth in consumer loans receivable4 649,876   72,168   577,708   800.5 %    
Gross loan originations 1,087,627   699,028   388,599   55.6 %    
Total yield on consumer loans (including ancillary products) 42.4 % 45.2 % (280 bps)   (6.2 %)    
Net charge offs as a percentage of average gross consumer loans receivable 8.5 % 10.3 % (180 bps)   (17.5 %)    
Cash provided by operating activities before net growth in gross consumer loans receivable 200,652   169,639   31,013   18.3 %    
Potential monthly lease revenue 8,160   8,256   (96 ) (1.2 %)    
             
1 See description in sections “Portfolio Analysis” and “Key Performance Indicators and Non-IFRS Measures” in September 30, 2021 Management’s Discussion and Analysis.
2 During the nine-month period ended September 30, 2021, the Company had a total of -$75.9 million before-tax (-$67.9 million after-tax) adjusting items which include:
Adjusting items related to the LendCare Acquisition
• Transaction costs of $9.3 million before-tax ($8.9 million after-tax) which include advisory and consulting costs, legal costs, and other direct transaction costs related to the Acquisition of LendCare reported under Operating expenses before depreciation and amortization amounting to $7.6 million which are non tax-deductible and loan commitment fees related to the Acquisition of LendCare reported under Finance costs amounting to $1.7 million before-tax ($1.3 million after-tax);
• Integration costs related to advisory and consulting costs, employee incentives, representation and warranty insurance cost, and other integration costs related to the Acquisition of LendCare reported under Operating expenses before depreciation and amortization amounting to $1.6 million before-tax ($1.2 million after-tax);
• Bad debt expense related to the day one loan loss provision on the acquired loan portfolio from LendCare amounting to $14.3 million before-tax ($10.5 million after-tax); and
• Amortization of $131 million intangible asset related to the Acquisition of LendCare with an estimated useful life of ten years amounting to $5.5 million before-tax ($4.0 million after-tax).
Adjusting item related to other income
• Realized and unrealized fair value gains mainly on investments in Affirm and TRS amounting to $106.5 million before-tax ($92.4 million after-tax).
3 During the nine-month period ended September 30, 2020, the Company’s adjusting item includes:
• Unrealized fair value gain on investment in PayBright amounting to $5.7 million before-tax ($4.9 million after-tax).
4 Growth in consumer loan receivable during the period includes gross loan purchased through the LendCare Acquisition amounting to $444.5 million.
     
   
   
   
   
   
   
   
   


Source link

Share.

About Author

Leave A Reply