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goeasy Ltd. Reports Record Results for the Third Quarter

goeasy Ltd.
·25 min read

Loan Portfolio of $1.18 billion, up 14%
Net Charge-Off Rate of 7.8%, down 540 bps
Adjusted Diluted Earnings per Share of $2.00, up 56%
Total Liquidity of $250 million, up 16%

MISSISSAUGA, Ontario, Nov. 03, 2020 (GLOBE NEWSWIRE) -- goeasy Ltd. (TSX: GSY), (“goeasy” or the “Company”), a leading full-service provider of goods and alternative financial services, announced its results for the third quarter ended September 30, 2020.

Third Quarter Results

During the quarter, the Company experienced an improved level of loan originations and a reduction in credit losses, leading to record financial results.

Gradual re-opening of the economy and a reduction in the stay-at-home orders originally caused by the COVID-19 pandemic, served to improve overall demand. As such, the Company generated $287 million in total loan originations, flat to the $286 million produced in the third quarter of 2019. The improved originations led to growth in the loan portfolio of $48.3 million during the quarter, which finished at $1.18 billion, up 14% from $1.03 billion as of September 30, 2019. Revenue for the third quarter, which was partially impacted by lower commissions related to higher levels of loan protection insurance claims, was $162 million, up 4% over the same period in 2019.

The Company also continued to experience strong credit and payment performance. Use of the Company’s loan protection insurance program, the continuation of government relief programs, assistance provided by banks and other lenders such as payment deferral programs and reduced living expenses, combined with previous credit model enhancements, resulted in an improvement to credit losses. The net charge-off rate for the third quarter was a record low 7.8%, compared to 13.2% in the third quarter of 2019. Although there remains uncertainty about the exact timing and pace of an economic recovery, the improvement in underlying credit performance and the general macroeconomic environment resulted in the Company holding its allowance for future credit losses broadly flat at 10.03%.

Reduced operating expenses and record low credit losses led to operating income of $56.9 million, up 34% from $42.6 million in the third quarter of 2019, while the operating margin expanded to 35.2%, up from 27.3% in the prior year. During the quarter, the Company also recorded a $1.7 million pre-tax increase to the carrying value of its minority equity investment in PayBright, a Canadian payments platform focused on instant point-of-sale consumer financing and buy-now-pay-later programs. PayBright has continued to grow revenues at over 80% on an annualized basis and onboard new major brand partners.

Net income in the third quarter was a record $33.1 million, up 67% from $19.8 million in 2019, which resulted in diluted earnings per share of $2.09, up 63% from the $1.28 in the third quarter of 2019. Return on equity was 34.7%, up from 24.1% in the third quarter of 2019. After adjusting for the increase in the carrying value of the Company’s minority equity investment, net income was a record $31.6 million and diluted earnings per share was $2.00, an increase of 59% and 56% respectively, while return on equity was 33.1%.

“During the quarter we continued to prioritize the safety and well-being of our team, while also producing further improvements in operating performance. As credit losses fell to another record low of 7.8%, we experienced a gradual improvement in demand, lifting originations to prior year levels and leading to loan growth of nearly $50 million in the quarter,” said Jason Mullins, goeasy’s President and Chief Executive Officer, “The resiliency of our business model continued to be highlighted by record earnings and strong cash flows. In addition to funding the organic loan growth during the quarter, we have also repurchased over $12 million worth of additional shares throughout the last several months, while liquidity remains strong at $250 million of total funding capacity.”

Other Key Third Quarter Highlights

easyfinancial

  • Secured loan portfolio grew to $141.6 million, up 40%

  • 50% of net loan advances in the quarter were issued to new customers, down from 65%

  • 44% of applications were acquired online, down slightly from 45%

  • Aided brand awareness of 85%, up from 84%

  • Average loan book per branch improved to $3.7 million, an increase of 6%

  • The delinquency rate on the final Saturday of the quarter was 4.3%, down from 4.6%

  • Operating income of $63.8 million, up 34%

  • Operating margin of 50.7%, up from 38.9%

easyhome

  • Revenue of $36 million, up 6%

  • Same store revenue growth of 7.2%

  • Consumer loan portfolio within easyhome stores increased to $44.9 million, up 34%

  • Revenue from consumer lending increased to $5.5 million, up 21%

  • Record operating income of $7.9 million, up 40%

  • Record operating margin of 21.9%, up from 16.6%

Overall

  • 42nd consecutive quarter of same store sales growth

  • 77th consecutive quarter of positive net income

  • 16th consecutive year of paying dividends and 6th consecutive year of dividend increases

  • Total same store revenue growth of 3.1%

  • Return on equity of 34.7% in the quarter, up from 24.1%

  • Fully drawn weighted average cost of borrowing reduced to 5%, down from 6.7%

  • Net external debt to net capitalization of 66% on September 30, 2020, down from 69% in the prior year and below the Company’s target leverage ratio of 70%

  • Repurchased 108,660 common shares during the quarter at a weighted average price of $63.55, including an additional 76,440 shares subsequent to quarter-end at a weighted average price of $68.39, through the Company’s Normal Course Issuer Bid, bringing total share repurchases year to date to 764,435

  • No reduction of personnel during COVID-19, including a 10% reduction in year-to-date employee turnover

  • Annual employee engagement score improved to record level of 83%, up 2% over the prior year

Nine Months Results

For the first nine months of 2020, goeasy produced revenues of $480 million, up 8% compared with $444
million in the same period of 2019. Operating income for the period was $155 million compared with $122 million in the first nine months of 2019, an increase of $32.8 million or 27%. Net income for the first nine months of 2020 was $87.6 million and diluted earnings per share was $5.64 compared with $57.7 million or $3.72 per share, increases of 52%. After adjusting for the increase in the carrying value of the Company’s minority equity investment, net income for the first nine months of 2020 was $82.6 million and diluted earnings per share was $5.33, increases of 43%, while return on equity was 30.5%.

Balance Sheet and Liquidity

Total assets were $1.37 billion as of September 30, 2020, an increase of 10% from $1.24 billion as of September 30, 2019, driven by the growth in the consumer loan portfolio.

During the quarter, the Company redeemed all its 5.75% convertible unsecured subordinated debentures (the “Convertible Debentures”) that were outstanding on July 31, 2020 (the “Redemption Date”), which were due to mature on July 31, 2022. The Convertible Debentures were redeemable at a redemption price equal to their principal amount, plus accrued and unpaid interest thereon up to, but excluding, the Redemption Date. As of the close of business on June 28, 2020, there was $43,806,000 principal amount of Convertible Debentures issued and outstanding, of which the holders of approximately $41,379,000 aggregate principal amount elected to convert their Convertible Debentures into approximately 954,302 common shares prior to the Redemption Date. On the Redemption Date, the Company redeemed the $2,427,000 aggregate principal amount of Convertible Debentures that remained unconverted on that date.

Cash provided by operating activities before the net issuance of consumer loans receivable and purchase of lease assets was $96.7 million during the quarter, an increase of 20% from $80.9 million in the third quarter of 2019.

Based on the cash on hand at the end of the quarter and the borrowing capacity under the Company’s revolving credit facility, goeasy had approximately $250 million in total funding capacity, which it estimates is sufficient to fund its growth through the second quarter of 2022. At quarter-end, the Company’s fully drawn weighted average cost of borrowing reduced to 5.0%, down from 6.7% in the prior year, with incremental draws on its senior secured revolving credit facility bearing a rate of approximately 3.6% due to the lower interest rate environment.

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 $150 million per year solely from internal cash flows. The Company also estimates that as of September 30, 2020, 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 $2 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 18 months.

COVID-19 & Future Outlook

Due to the current uncertainty relating to the impacts of COVID-19, the Company intends to re-publish a 3-year forecast when the economic conditions and outlook stabilize. However, the Company remains confident that it is well positioned to navigate through the current economic downturn and has continued to see conditions gradually improve. Recent trends include:

  • Improving Consumer Demand: The effects of the pandemic, which included stay-at-home orders, increased government subsidies and reduced expenses for consumers, led to temporarily reduced demand. During the second quarter, total loan originations were down 38% from the prior year. In the third quarter, loan originations improved to be broadly flat to 2019.

  • Declining Loan Protection Insurance Claims: The majority of easyfinancial customers have Loan Protection Insurance, offered by Assurant Inc., a global provider of risk-management solutions, which covers a borrower’s full loan payment for a period of 6 consecutive months in the event of unemployment. During the second quarter, total loan protection claims payments made on behalf of borrowers was $21.7 million. In the third quarter, claims payments declined by 33% to $14.6 million, with a further decline in the trend subsequent to quarter-end.

  • Solutions to Support Borrowers Below Pre-COVID Levels: easyfinancial has a suite of loan amendment solutions that it can offer borrowers to support them through a difficult financial period. These include temporarily deferring loan payments or extending the term of a loan to reduce the regular payment obligation. In April approximately 12% of customers utilized a form of support, as compared to approximately 7%-8% in a typical month prior to the pandemic. However, since May the portion of borrowers utilizing a form of support has fallen to below pre-COVID levels and has remained below 7% for each month since.

  • Strong Customer Payment Performance: The Company has continued to observe a strong level of true overall payment performance. During the second quarter, the Company collected an average of 96% of the payment volume it would normally collect prior to the pandemic. In the third quarter, customer payment volume relative to the outstanding consumer loan portfolio was at, or above, 100% of the levels it would normally collect prior to the pandemic.

“While there remains some uncertainty about the broader economic environment, we are seeing positive trends in the business and we are confident in our ability to navigate through a second wave. Consumer demand for credit continues to slowly recover and we expect growth in the loan portfolio of approximately 5% to 6% during the upcoming quarter. Credit and payment performance continue to perform well, and we project the annualized net charge-off rate will be approximately 10% in the fourth quarter. Lastly, we continue to make great progress on finalizing a new securitized funding facility. This important next step in the evolution of our balance sheet will further lower our funding costs and provide a material increase to our total liquidity,” Mr. Mullins concluded, “Our business is thriving during a challenging time and I want to once again thank all 2,000 goeasy team members for their unwavering commitment to stand by our customers. The fundamentals of our business, and the confidence in our strategy to provide everyday Canadians with a path to a better tomorrow, are stronger than ever.”

Dividend

The Board of Directors has approved a quarterly dividend of $0.45 per share payable on January 8, 2021 to the holders of common shares of record as at the close of business on December 25, 2020.

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 and easyfinancial divisions. With a wide variety of financial products and services including unsecured and secured instalment loans, goeasy aspires to help put Canadians on a path to a better financial future, as they rebuild their credit and graduate to prime lending. Customers can transact seamlessly with easyhome and easyfinancial through an omni-channel model that includes online and mobile, as well as over 400 leasing and lending locations across Canada supported by more than 2,000 employees. Throughout the company’s history, it has served over 1 million Canadians and originated $4.7 billion in loans, with one in three customers graduating to prime credit and 60% increasing their credit score within 12 months of borrowing.

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. The company and its employees believe strongly in giving back to the communities in which it operates and has raised over $3 million to support its long-standing partnerships with the Boys & Girls Clubs of Canada and Habitat for Humanity.

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

David Ingram
Executive Chairman of the Board
(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,

2020

2019

ASSETS

Cash

39,477

46,341

Amounts receivable

5,779

18,482

Prepaid expenses

4,057

7,077

Consumer loans receivable, net

1,100,998

1,040,552

Investment

40,000

34,300

Lease assets

46,351

48,696

Property and equipment, net

28,905

23,007

Deferred tax assets

7,323

14,961

Derivative financial assets

3,455

-

Intangible assets, net

22,677

17,749

Right-of-use assets, net

46,943

46,147

Goodwill

21,310

21,310

TOTAL ASSETS

1,367,275

1,318,622

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Revolving credit facility

98,221

112,563

Accounts payable and accrued liabilities

47,564

41,350

Income taxes payable

7,837

4,187

Dividends payable

6,713

4,448

Unearned revenue

8,952

8,082

Derivative financial liabilities

-

16,435

Lease liabilities

53,056

52,573

Accrued interest

13,417

4,358

Convertible debentures

-

40,656

Notes payable

721,292

701,549

TOTAL LIABILITIES

957,052

986,201

Shareholders' equity

Share capital

182,524

141,956

Contributed surplus

17,744

20,296

Accumulated other comprehensive income (loss)

412

(915

)

Retained earnings

209,543

171,084

TOTAL SHAREHOLDERS' EQUITY

410,223

332,421

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

1,367,275

1,318,622

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,

2020

2019

2020

2019

REVENUE

Interest income

101,833

90,304

302,799

249,594

Lease revenue

28,416

27,134

84,232

84,968

Commissions earned

28,540

34,909

83,166

98,341

Charges and fees

3,035

3,786

9,506

10,944

161,824

156,133

479,703

443,847

EXPENSES BEFORE DEPRECIATION AND AMORTIZATION

Salaries and benefits

36,457

30,141

102,283

89,248

Stock-based compensation

1,718

1,752

5,587

5,828

Advertising and promotion

7,377

6,425

18,195

19,211

Bad debts

27,221

43,326

100,505

113,485

Occupancy

5,639

5,086

17,126

15,089

Technology costs

3,817

3,314

10,499

9,071

Other expenses

6,624

7,737

22,378

21,504

88,853

97,781

276,573

273,436

DEPRECIATION AND AMORTIZATION

Depreciation of lease assets

8,701

9,023

26,790

28,051

Depreciation of right-of-use assets

4,053

3,798

11,994

11,266

Depreciation of property and equipment

1,451

1,607

4,488

4,657

Amortization of intangible assets

1,820

1,355

4,699

4,127

16,025

15,783

47,971

48,101

TOTAL OPERATING EXPENSES

104,878

113,564

324,544

321,537

OPERATING INCOME

56,946

42,569

155,159

122,310

OTHER INCOME

Unrealized fair value gain on investment

1,700

-

5,700

-

FINANCE COSTS

Interest expense and amortization of deferred financing charges

12,543

14,208

39,624

40,350

Interest expense on lease liabilities

690

613

2,025

1,808

13,233

14,821

41,649

42,158

INCOME BEFORE INCOME TAXES

45,413

27,748

119,210

80,152

INCOME TAX EXPENSE (RECOVERY)

Current

9,990

8,097

23,288

21,951

Deferred

2,350

(174

)

8,328

535

12,340

7,923

31,616

22,486

NET INCOME

33,073

19,825

87,594

57,666

BASIC EARNINGS PER SHARE

2.20

1.35

5.95

3.94

DILUTED EARNINGS PER SHARE

2.09

1.28

5.64

3.72

Segmented Reporting

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

Unrealized fair value gain on investment

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

Three Months Ended September 30, 2019

($ in 000's except earnings per share)

easyfinancial

easyhome

Corporate

Total

Revenue

Interest income

87,087

3,217

-

90,304

Lease revenue

-

27,134

-

27,134

Commissions earned

32,706

2,203

-

34,909

Charges and fees

2,463

1,323

-

3,786

122,256

33,877

-

156,133

Total operating expenses before

depreciation and amortization

71,283

16,854

9,644

97,781

Depreciation and amortization

Depreciation and amortization of lease assets,
property and equipment and intangible assets

1,794

9,453

738

11,985

Depreciation of right-of-use-assets

1,672

1,951

175

3,798

3,466

11,404

913

15,783

Segment operating income (loss)

47,507

5,619

(10,557

)

42,569

Finance costs

Interest expense and amortization of
deferred financing charges

14,208

Interest expense on lease liabilities

613

14,821

Income before income taxes

27,748

Income taxes

7,923

Net Income

19,825

Diluted earnings per share

1.28

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

Unrealized fair value gain on investment

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

Nine Months Ended September 30, 2019

($ in 000's except earnings per share)

easyfinancial

easyhome

Corporate

Total

Revenue

Interest income

241,321

8,273

-

249,594

Lease revenue

-

84,968

-

84,968

Commissions earned

92,029

6,312

-

98,341

Charges and fees

6,853

4,091

-

10,944

340,203

103,644

-

443,847

Total operating expenses before

depreciation and amortization

194,294

49,944

29,198

273,436

Depreciation and amortization

Depreciation and amortization of lease assets,
property and equipment and intangible assets

5,389

29,383

2,063

36,835

Depreciation of right-of-use-assets

4,728

5,978

560

11,266

10,117

35,361

2,623

48,101

Segment operating income (loss)

135,792

18,339

(31,821

)

122,310

Finance costs

Interest expense and amortization of
deferred financing charges

40,350

Interest expense on lease liabilities

1,808

42,158

Income before income taxes

80,152

Income taxes

22,486

Net Income

57,666

Diluted earnings per share

3.72

Summary of Financial Results and Key Performance Indicators

($ in 000’s except earnings per share and percentages)

Three Months Ended

Variance

Variance

September 30, 2020

September 30, 2019

$ / bps

% change

Summary Financial Results

Revenue

161,824

156,133

5,691

3.6

%

Operating expenses before depreciation and amortization

88,853

97,781

(8,928

)

(9.1

%)

EBITDA

65,970

49,329

16,641

33.7

%

EBITDA margin

40.8

%

31.6

%

920 bps

29.1

%

Depreciation and amortization expense

16,025

15,783

242

1.5

%

Operating income

56,946

42,569

14,377

33.8

%

Operating margin

35.2

%

27.3

%

790 bps

28.9

%

Other income1

1,700

-

1,700

100.0

%

Finance costs

13,233

14,821

(1,588

)

(10.7

%)

Effective income tax rate

27.2

%

28.6

%

(140 bps)

(4.9

%)

Net income

33,073

19,825

13,248

66.8

%

Diluted earnings per share

2.09

1.28

0.81

63.3

%

Return on equity

34.7

%

24.1

%

1,060 bps

44.0

%

Adjusted (Normalized) Financial Results1

Adjusted EBITDA

64,270

49,329

14,941

30.3

%

Adjusted EDITDA margin

39.7

%

31.6

%

810 bps

25.6

%

Adjusted net income

31,598

19,825

11,773

59.4

%

Adjusted diluted earnings per share

2.00

1.28

0.72

56.3

%

Adjusted return on equity

33.1

%

24.1

%

900 bps

37.3

%

Key Performance Indicators

Same store revenue growth (overall)

3.1

%

20.4

%

(1,730 bps)

(84.8

%)

Same store revenue growth (easyhome)

7.2

%

2.4

%

480 bps

200.0

%

Segment Financials

easyfinancial revenue

125,856

122,256

3,600

2.9

%

easyfinancial operating margin

50.7

%

38.9

%

1,180 bps

30.3

%

easyhome revenue

35,968

33,877

2,091

6.2

%

easyhome operating margin

21.9

%

16.6

%

530 bps

31.9

%

Portfolio Indicators

Gross consumer loans receivable

1,182,801

1,035,596

147,205

14.2

%

Growth in consumer loans receivable

48,319

75,888

(27,569

)

(36.3

%)

Gross loan originations

286,583

286,068

515

0.2

%

Total yield on consumer loans (including ancillary products)

45.1

%

50.1

%

(500 bps)

(10.0

%)

Net charge-offs as a percentage of average gross consumer
loans receivable

7.8

%

13.2

%

(540 bps)

(40.9

%)

Potential monthly lease revenue

8,256

8,432

(176

)

(2.1

%)

1During the third quarter of 2020, the Company recognized an unrealized fair value gain before-tax of $1.7 million on its investment in PayBright.

($ in 000’s except earnings per share and percentages)

Nine Months Ended

Variance

Variance

September 30, 2020

September 30, 2019

$ / bps

% change

Summary Financial Results

Revenue

479,703

443,847

35,856

8.1

%

Operating expenses before depreciation and amortization

276,573

273,436

3,137

1.1

%

EBITDA

182,040

142,360

39,680

27.9

%

EBITDA margin

37.9

%

32.1

%

580 bps

18.1

%

Depreciation and amortization expense

47,971

48,101

(130

)

(0.3

%)

Operating income

155,159

122,310

32,849

26.9

%

Operating margin

32.3

%

27.6

%

470 bps

17.0

%

Other income1

5,700

-

5,700

100.0

%

Finance costs

41,649

42,158

(509

)

(1.2

%)

Effective income tax rate

26.5

%

28.1

%

(160 bps)

(5.7

%)

Net income

87,594

57,666

29,928

51.9

%

Diluted earnings per share

5.64

3.72

1.92

51.6

%

Return on equity

32.3

%

24.5

%

780 bps

31.8

%

Adjusted (Normalized) Financial Results1

Adjusted EBITDA

176,340

142,360

33,980

23.9

%

Adjusted EBITDA margin

36.8

%

32.1

%

470 bps

14.6

%

Adjusted net income

82,649

57,666

24,983

43.3

%

Adjusted diluted earnings per share

5.33

3.72

1.61

43.3

%

Adjusted return on equity

30.5

%

24.5

%

600 bps

24.5

%

Key Performance Indicators

Same store revenue growth (overall)

7.8

%

19.8

%

(1,200 bps)

(60.6

%)

Same store revenue growth (easyhome)

3.2

%

3.4

%

(20 bps)

(5.9

%)

Segment Financials

easyfinancial revenue

373,381

340,203

33,178

9.8

%

easyfinancial operating margin

47.0

%

39.9

%

710 bps

17.8

%

easyhome revenue

106,322

103,644

2,678

2.6

%

easyhome operating margin

21.1

%

17.7

%

340 bps

19.2

%

Portfolio Indicators

Gross consumer loans receivable

1,182,801

1,035,596

147,205

14.2

%

Growth in consumer loans receivable

72,168

201,817

(129,649

)

(64.2

%)

Gross loan originations

699,028

781,861

(82,833

)

(10.6

%)

Total yield on consumer loans (including ancillary products)

45.2

%

50.2

%

(500 bps)

(10.0

%)

Net charge-offs as a percentage of average gross consumer
loans receivable

10.3

%

13.3

%

(300 bps)

(22.6

%)

Potential monthly lease revenue

8,256

8,432

(176

)

(2.1

%)

1During the nine-month period ended September 30, 2020, the Company recognized an unrealized fair value gain before-tax of $5.7 million on its investment in PayBright.