GSY Goeasy Ltd

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, 2023.

Third Quarter Results

During the quarter, the Company generated a record $722 million in loan originations, up 13% compared to $641 million produced in the third quarter of 2022. The increase in lending was driven by a record volume of applications for credit, which were up 30% over the prior year, leading to record loan originations across several of the Company’s products and acquisition channels.

The increase in loan originations led to record growth in the loan portfolio of $230 million, which was up 5% from $219 million of loan book growth in the third quarter of 2022. At quarter end, the consumer loan portfolio was $3.43 billion, up 33% from $2.59 billion in the third quarter of 2022. The growth in consumer loans led to an increase in revenue, which was a record $322 million in the quarter, up 23% from $262 million in the third quarter of last year.

During the quarter, the Company once again continued to experience stable credit and payment performance. The net charge off rate in the third quarter was 8.8%, down from 9.3% in the third quarter of 2022, and at the lower end of the Company’s forecasted range of between 8.5% and 9.5%. The stable credit performance reflects the improved credit and product mix of the loan portfolio and proactive credit and underwriting enhancements made since the fourth quarter of 2021. The Company’s allowance for future credit losses reduced slightly to 7.37%, compared to 7.42% in the second quarter.

Operating income for the third quarter of 2023 was a record $127 million, up 39% from $91 million in the third quarter of 2022. Operating margin for the third quarter was a record 39.3%, up from 34.8% in the same period last year. After adjustments, including unusual items and non-recurring expenses, the Company reported record adjusted operating income2 of $130 million, an increase of 37% compared to $95 million in the third quarter of 2022. Adjusted operating margin1 for the third quarter was a record 40.4%, up from 36.2% in the same period in 2022. The efficiency ratio1 for the third quarter of 2023 was a record 28.6%, an improvement of 400 bps from 32.6% in the third quarter of 2022, reflecting an increase in operating leverage.

Net income in the third quarter was $66.3 million, up 41% from $47.2 million in the same period of 2022, which resulted in diluted earnings per share of $3.87, up 35% from the $2.86 reported in the third quarter of 2022. After adjusting for non-recurring and unusual items on an after-tax basis in both periods, adjusted net income2 was a record $65.2 million, up 34% from $48.6 million in the third quarter of 2022. Adjusted diluted earnings per share1 was a record $3.81, up 29% from $2.95 in the third quarter of 2022. Return on equity during the quarter was 27.0%, compared to 24.2% in the third quarter of 2022. Adjusted return on equity1 was 26.6% in the quarter, an increase of 170 bps from 24.9% in the same period of 2022.

“During the quarter we continued to execute on our strategy to build Canada’s leading provider of non-prime consumer credit, while putting everyday Canadians on the path to a better tomorrow by helping them increase their credit score and graduate to lower rates,” said Jason Mullins, goeasy’s President and Chief Executive Officer, “Record growth and reduced credit losses contributed to record earnings, with adjusted diluted EPS increasing 29% over the same quarter last year,” Mr. Mullins continued, “With the weighted average credit score of our originations increasing for eight consecutive quarters, and this past quarter having the highest weighted average score in our history, we continue to improve the credit quality of our portfolio. Looking forward, we remain confident that we will meet, or exceed, all of our commercial forecasts. Despite higher borrowing costs, the benefits of scale are serving to produce meaningful operating leverage and protect margins, enabling us to grow earnings and produce a return on equity above 20%.”

Other Key Third Quarter Highlights

easyfinancial

• Record revenue of $284 million, up 26%
• 41% of the loan portfolio secured, up from 38%
• Record volume of applications for credit, up 30%
• Record new customer volume at 42,700
• 68% of net loan advances1 in the quarter were issued to new customers, up from 64%
• Record volume of originations in automotive financing
• Average loan book per branch3 improved to a record $5.5 million, an increase of 20%
• Weighted average interest rate3 on consumer loans of 30.1%, down from 31.0%
• Record operating income of $140 million, up 38%
• Operating margin of 49.4%, up from 45.3%

easyhome

• Revenue of $38.1 million, up 2%
• Consumer loan portfolio within easyhome stores increased to $102.6 million, up 24%
• Financial revenue2 from consumer lending increased to $12.2 million, up 19%
• Operating income of $9.2 million, up 19%
• Operating margin of 24.2%, up from 20.9%

Overall

• 89th consecutive quarter of positive net income
• 2023 marks the 19th consecutive year of paying dividends and the 9th consecutive year of a dividend increase
• 54th consecutive quarter of same store revenue growth
• Total customers served over 1.3 million
• Acquired and organically originated over $12.1 billion in loans
• Adjusted return on equity1 of 26.6%, up from 24.9%
• Adjusted return on tangible common equity1 of 35.9%, down from 37.7%
• Fully drawn weighted average cost of borrowing at 6.2%, up from 5.3%
• Net debt to net capitalization4 of 72% on September 30, 2023, in line with the Company’s target leverage profile

Nine Months Results

For the first nine months of 2023, the Company funded $2.00 billion in loan originations, up 15% from $1.75 billion in 2022. The consumer loan receivable portfolio finished at $3.43 billion, up 33% from $2.59 billion as of September 30, 2022.

For the first nine months of 2023, the Company produced record revenues of $912 million, up 22% compared to $746 million in the same period of 2022. Operating income for the period was a record $339 million compared with $257 million in the first nine months of 2022, an increase of $83 million or 32%. Adjusted operating income2 for the first nine months of 2023 was a record $351 million, 30% higher compared to $270 million in the same period of 2022. Efficiency ratio1 for the first nine months of 2023 was 30.9%, an improvement of 320 bps from 34.1% in the same period of 2022.

Net income for the first nine months of 2023 was $173 million and diluted earnings per share was $10.14, compared with $112 million or $6.71 per share. Adjusted net income2 for the first nine months of 2023 was $174 million and adjusted diluted earnings per share1 was $10.19 compared with $141 million or $8.50 per share, increases of 23% and 20%, respectively. Reported return on equity was 24.7%, while adjusted return on equity1 was 24.9%, up from 24.3% in the same period of 2022.

Balance Sheet and Liquidity

Total assets were $3.94 billion as of September 30, 2023, an increase of 26% from $3.13 billion as of September 30, 2022, primarily driven by growth in the consumer loan portfolio.

During the quarter, the Company increased the size of its existing revolving securitization warehouse facility collateralized by automotive consumer loans (the “Automotive Securitization Facility”) from $200 million to $375 million, with the addition of Wells Fargo Bank as a new lender to the syndicate, which is led by Bank of Montreal. The facility continues to bear interest on advances payable at the rate of 1-month Canadian Dollar Offered Rate (“CDOR”) plus 185 bps. Based on the current 1-month CDOR rate of 5.43% as of November 1, 2023, the interest rate would be 7.28%. The Company will continue to utilize an interest rate swap agreement to generate fixed rate payments on the amounts drawn to assist in mitigating the impact of increases in interest rates.

During the quarter, the Company recognized net investment income of $4.1 million, due to fair value change in the Company’s minority investment in Affirm Holdings Inc. (“Affirm”).

Free cash flow from operations before net growth in gross consumer loans receivable2 in the quarter was $134 million, up 40% from $96 million in the third quarter of 2022. Based on the cash on hand at the end of the quarter and the borrowing capacity under the Company’s existing revolving credit facilities, the Company had approximately $933 million in total funding capacity as of September 30, 2023. The Company remains confident that the capacity available under its existing funding facilities, and its ability to raise additional debt financing, is sufficient to fund its organic growth forecast.

At quarter-end, the Company’s weighted average cost of borrowing was 5.9%, and the fully drawn weighted average cost of borrowing was 6.2%. The Company estimates that it could currently grow the consumer loan portfolio by approximately $250 million per year solely from internal cash flows, without utilizing external debt. The Company also estimates that once its existing and available sources of debt are fully utilized, it could continue to grow the loan portfolio by approximately $400 million per year solely from internal cash flows. The Company also estimates that if it were to run-off its consumer loan and leasing portfolios, the value of the total cash repayments paid to the Company over the remaining life of its contracts would be approximately $4.2 billion. If, during such a run-off scenario with reasonable cost reductions, all excess cash flows were applied directly to debt, the Company estimates it would extinguish all external debt within 16 months.

Dividend

The Board of Directors has approved a quarterly dividend of $0.96 per share payable on January 12, 2024 to the holders of common shares of record as at the close of business on December 29, 2023.

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 and expected financial performance and condition. Forward-looking statements include, but are not limited to, statements with respect to forecasts for growth of the consumer loans receivable, annual revenue growth forecasts, strategic initiatives, new product offerings and new delivery channels, anticipated cost savings, planned capital expenditures, anticipated capital requirements and the Company’s ability to secure sufficient capital, liquidity of the Company, plans and references to future operations and results, critical accounting estimates, expected future yields and net charge off rates on loans, the estimated number of new locations to be opened, the dealer relationships, the size and characteristics of the Canadian non-prime lending market and the continued development of the type and size of competitors in the market. In certain cases, forward-looking 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 “expect”, “continue”, “anticipate”, “intend”, “aim”, “plan”, “believe”, “budget”, “estimate”, “forecast”, “foresee”, “target” 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. 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. Some important factors that could cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to, goeasy’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, offer 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, compete, 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. These and other factors could cause actual results to differ materially from our expectations expressed in the forward-looking statements, and further details and descriptions of these and other factors are disclosed in the Company’s Management’s Discussion and Analysis (“MD&A”), including under the section entitled “Risk Factors”.

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. is a Canadian company, headquartered in Mississauga, Ontario, that provides non-prime leasing and lending services through its easyhome, easyfinancial and LendCare brands. Supported by approximately 2,400 employees, the Company offers a wide variety of financial products and services including unsecured and secured instalment loans, merchant financing through a variety of verticals and lease-to-own merchandise. Customers can transact seamlessly through an omnichannel model that includes online and mobile platforms, over 400 locations across Canada, and point-of-sale financing offered in the retail, powersports, automotive, home improvement and healthcare verticals, through over 9,100 merchant partners across Canada. Throughout the Company’s history, it has acquired and organically served over 1.3 million Canadians and originated over $12.1 billion in loans.

Accredited by the Better Business Bureau, goeasy is the proud recipient of several awards in recognition of its exceptional culture and continued business growth including Waterstone Canada’s Most Admired Corporate Cultures, ranking on the 2022 Report on Business Women Lead Here executive gender diversity benchmark, placing on the Report on Business ranking of Canada’s Top Growing Companies, ranking on the TSX30, Greater Toronto Top Employers Award and has been certified as a Great Place to Work®. The Company is represented by a diverse group of team members from 78 nationalities who believe strongly in giving back to communities in which it operates. To date, goeasy has raised and donated over $5.2 million to support its long-standing partnerships with BGC Canada 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.

For more information about goeasy and our business units, visit www.goeasy.com, www.easyfinancial.com, www.lendcare.ca,  www.easyhome.ca.

For further information contact:

Jason MullinsPresident & Chief Executive Officer(905) 272-2788

Farhan Ali KhanSenior Vice President, Chief Corporate Development Officer(905) 272-2788

Notes:

1 These are non-IFRS ratios. Refer to “Non-IFRS Measures and Other Financial Measures” section in this press release. 2 These are non-IFRS measures. Refer to “Non-IFRS Measures and Other Financial Measures” section in this press release. 3 These are supplementary financial measures. Refer to “Non-IFRS Measures and Other Financial Measures” section in this press release.4 These are capital management measures. Refer to “Non-IFRS Measures and Other Financial Measures” section in this press release.5 Non-IFRS ratios, non-IFRS measures, supplementary financial measures and capital management measures are not determined in accordance with IFRS, do not have standardized meanings and may not be comparable to similar financial measures presented by other companies.

goeasy Ltd.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
(Expressed in thousands of Canadian dollars)
			As At	As At
			September 30,	December 31,
			2023	2022
ASSETS
Cash			84,062	62,654
Accounts receivable			27,474	25,697
Prepaid expenses			10,987	8,334
Income taxes recoverable			-	2,323
Consumer loans receivable, net			3,236,211	2,627,357
Investments			62,723	57,304
Lease assets			43,176	48,437
Property and equipment, net			34,260	35,856
Derivative financial assets			63,532	49,444
Intangible assets, net			128,706	138,802
Right-of-use assets, net			63,915	65,758
Goodwill			180,923	180,923
TOTAL ASSETS			3,935,969	3,302,889
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Revolving credit facility			176,700	148,646
Accounts payable and accrued liabilities			67,542	51,136
Income taxes payable			16,599	-
Dividends payable			15,906	14,965
Unearned revenue			28,214	28,661
Accrued interest			25,207	10,159
Deferred tax liabilities, net			20,307	24,692
Lease liabilities			72,799	74,328
Secured borrowings			131,409	105,792
Revolving securitization warehouse facilities			1,194,617	805,825
Notes payable			1,174,229	1,168,997
TOTAL LIABILITIES			2,923,529	2,433,201
Shareholders' equity
Share capital			425,411	419,046
Contributed surplus			21,760	21,499
Accumulated other comprehensive income			13,260	2,776
Retained earnings			552,009	426,367
TOTAL SHAREHOLDERS' EQUITY			1,012,440	869,688
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY			3,935,969	3,302,889

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,
	2023		2022		2023		2022
REVENUE
Interest income	229,269		180,695		644,260		506,830
Lease revenue	24,540		25,369		75,157		78,195
Commissions earned	61,527		50,569		172,975		145,770
Charges and fees	6,396		5,583		19,565		15,215
	321,732		262,216		911,957		746,010
OPERATING EXPENSES
BAD DEBTS	89,539		72,551		250,069		194,636
OTHER OPERATING EXPENSES
Salaries and benefits	49,886		44,838		151,595		130,710
Stock-based compensation	3,262		2,642		9,260		7,432
Advertising and promotion	6,476		7,234		22,715		26,127
Occupancy	6,096		6,265		19,136		18,828
Technology costs	7,244		5,274		20,992		15,974
Underwriting and collections	4,255		3,702		12,333		10,324
Other expenses	6,676		7,352		21,816		23,392
	83,895		77,307		257,847		232,787
DEPRECIATION AND AMORTIZATION
Depreciation of lease assets	8,415		8,371		25,328		25,031
Amortization of intangible assets	5,656		5,249		16,447		15,377
Depreciation of right-of-use assets	5,323		5,071		15,840		14,911
Depreciation of property and equipment	2,341		2,289		7,145		6,742
	21,735		20,980		64,760		62,061
TOTAL OPERATING EXPENSES	195,169		170,838		572,676		489,484
OPERATING INCOME	126,563		91,378		339,281		256,526
OTHER INCOME (LOSS)	4,148		1,294		8,461		(23,050	)
FINANCE COSTS	(40,875	)	(28,497	)	(112,754	)	(76,421	)
INCOME BEFORE INCOME TAXES	89,836		64,175		234,988		157,055
INCOME TAX EXPENSE (RECOVERY)
Current	24,819		17,822		67,815		54,443
Deferred	(1,293	)	(836	)	(6,123	)	(8,973	)
	23,526		16,986		61,692		45,470
NET INCOME	66,310		47,189		173,296		111,585
BASIC EARNINGS PER SHARE	3.93		2.92		10.29		6.88
DILUTED EARNINGS PER SHARE	3.87		2.86		10.14		6.71

SEGMENT REPORTING
(Expressed in thousands of Canadian dollars, except earnings per share)
	Three Months Ended September 30, 2023
	easyfinancial	easyhome	Corporate		Total
Revenue
Interest income	219,995	9,274	-		229,269
Lease revenue	-	24,540	-		24,540
Commissions earned	57,991	3,536	-		61,527
Charges and fees	5,636	760	-		6,396
	283,622	38,110	-		321,732
Operating expenses
Bad debts	85,674	3,865	-		89,539
Other operating expenses	48,201	14,454	21,240		83,895
Depreciation and amortization	9,622	10,562	1,551		21,735
	143,497	28,881	22,791		195,169
Operating income (loss)	140,125	9,229	(22,791	)	126,563
Other income					4,148
Finance costs					(40,875	)
Income before income taxes					89,836
Income taxes					23,526
Net income					66,310
Diluted earnings per share					3.87
	Three Months Ended September 30, 2022
	easyfinancial	easyhome	Corporate		Total
Revenue
Interest income	173,145	7,550	-		180,695
Lease revenue	-	25,369	-		25,369
Commissions earned	47,236	3,333	-		50,569
Charges and fees	4,537	1,046	-		5,583
	224,918	37,298	-		262,216
Operating expenses
Bad debts	69,633	2,918	-		72,551
Other operating expenses	44,658	15,970	16,679		77,307
Depreciation and amortization	8,815	10,628	1,537		20,980
	123,106	29,516	18,216		170,838
Operating income (loss)	101,812	7,782	(18,216	)	91,378
Other income					1,294
Finance costs					(28,497	)
Income before income taxes					64,175
Income taxes					16,986
Net income					47,189
Diluted earnings per share					2.86
	Nine Months Ended September 30, 2023
	easyfinancial	easyhome	Corporate		Total
Revenue
Interest income	618,086	26,174	-		644,260
Lease revenue	-	75,157	-		75,157
Commissions earned	162,348	10,627	-		172,975
Charges and fees	16,918	2,647	-		19,565
	797,352	114,605	-		911,957
Operating expenses
Bad debts	240,120	9,949	-		250,069
Other operating expenses	144,825	45,280	67,742		257,847
Depreciation and amortization	28,133	31,840	4,787		64,760
	413,078	87,069	72,529		572,676
Operating income (loss)	384,274	27,536	(72,529	)	339,281
Other income					8,461
Finance costs					(112,754	)
Income before income taxes					234,988
Income taxes					61,692
Net income					173,296
Diluted earnings per share					10.14
	Nine Months Ended September 30, 2022
	easyfinancial	easyhome	Corporate		Total
Revenue
Interest income	485,434	21,396	-		506,830
Lease revenue	-	78,195	-		78,195
Commissions earned	135,990	9,780	-		145,770
Charges and fees	12,218	2,997	-		15,215
	633,642	112,368	-		746,010
Operating expenses
Bad debts	186,773	7,863	-		194,636
Other operating expenses	133,328	46,800	52,659		232,787
Depreciation and amortization	25,822	31,814	4,425		62,061
	345,923	86,477	57,084		489,484
Operating income (loss)	287,719	25,891	(57,084	)	256,526
Other loss					(23,050	)
Finance costs					(76,421	)
Income before income taxes					157,055
Income taxes					45,470
Net income					111,585
Diluted earnings per share					6.71

SUMMARY OF FINANCIAL RESULTS AND KEY PERFORMANCE INDICATORS
(Expressed in thousands of Canadian dollars, except earnings per share and percentages)
	Three Months Ended
	September 30,		September 30,		Variance		Variance
	2023		2022		$ / bps		% change
Summary Financial Results
Revenue	321,732		262,216		59,516		22.7%
Bad debts	89,539		72,551		16,988		23.4%
Other operating expenses	83,895		77,307		6,588		8.5%
EBITDA1	144,031		105,281		38,750		36.8%
EBITDA margin1	44.8%		40.2%		460 bps		11.4%
Depreciation and amortization	21,735		20,980		755		3.6%
Operating income	126,563		91,378		35,185		38.5%
Operating margin	39.3%		34.8%		450 bps		12.9%
Other income	4,148		1,294		2,854		220.6%
Finance costs	40,875		28,497		12,378		43.4%
Effective income tax rate	26.2%		26.5%		(30 bps)		(1.1%)
Net income	66,310		47,189		19,121		40.5%
Diluted earnings per share	3.87		2.86		1.01		35.3%
Return on assets	7.0%		6.3%		70 bps		11.1%
Return on equity	27.0%		24.2%		280 bps		11.6%
Return on tangible common equity1	37.8%		38.5%		(70 bps)		(1.8%)
Adjusted Financial Results1
Other operating expenses	92,144		85,508		6,636		7.8%
Efficiency ratio	28.6%		32.6%		(400 bps)		(12.3%)
Operating income	130,004		94,823		35,181		37.1%
Operating margin	40.4%		36.2%		420 bps		11.6%
Net income	65,241		48,626		16,615		34.2%
Diluted earnings per share	3.81		2.95		0.86		29.2%
Return on assets	6.9%		6.5%		40 bps		6.2%
Return on equity	26.6%		24.9%		170 bps		6.8%
Return on tangible common equity	35.9%		37.7%		(180 bps)		(4.8%)
Key Performance Indicators
Segment Financials
easyfinancial revenue	283,622		224,918		58,704		26.1%
easyfinancial operating margin	49.4%		45.3%		410 bps		9.1%
easyhome revenue	38,110		37,298		812		2.2%
easyhome operating margin	24.2%		20.9%		330 bps		15.8%
Portfolio Indicators
Gross consumer loans receivable	3,430,276		2,588,656		841,620		32.5%
Growth in consumer loans receivable	230,063		218,813		11,250		5.1%
Gross loan originations	721,917		640,519		81,398		12.7%
Total yield on consumer loans (including ancillary products)1	35.3%		37.4%		(210 bps)		(5.6%)
Net charge offs as a percentage of average gross consumer loans receivable	8.8%		9.3%		(50 bps)		(5.4%)
Free cash flows from operations before net growth in gross consumer loans receivable1	133,575		95,588		37,987		39.7%
Potential monthly leasing revenue1	7,411		7,623		(212)		(2.8%)
1 EBITDA, adjusted other operating expenses, adjusted operating income, adjusted net income and free cash flows from operations before net growth in gross consumer loans receivable are non-IFRS measures. EBITDA margin, efficiency ratio, adjusted operating margin, adjusted diluted earnings per share, adjusted return on equity, adjusted return on assets, reported and adjusted return on tangible common equity and total yield on consumer loans (including ancillary products) are non-IFRS ratios. Refer to “Non-IFRS Measures and Other Financial Measures” section in this press release.
	Nine Months Ended
	September 30,		September 30,		Variance		Variance
	2023		2022		$ / bps		% change
Summary Financial Results
Revenue	911,957		746,010		165,947		22.2%
Bad debts	250,069		194,636		55,433		28.5%
Other operating expenses	257,847		232,787		25,060		10.8%
EBITDA1	387,174		270,506		116,668		43.1%
EBITDA margin1	42.5%		36.3%		620 bps		17.1%
Depreciation and amortization	64,760		62,061		2,699		4.3%
Operating income	339,281		256,526		82,755		32.3%
Operating margin	37.2%		34.4%		280 bps		8.1%
Other income (loss)	8,461		(23,050)		31,511		136.7%
Finance costs	112,754		76,421		36,333		47.5%
Effective income tax rate	26.3%		29.0%		(270 bps)		(9.3%)
Net income	173,296		111,585		61,711		55.3%
Diluted earnings per share	10.14		6.71		3.43		51.1%
Return on assets	6.4%		5.3%		110 bps		20.8%
Return on equity	24.7%		19.2%		550 bps		28.6%
Return on tangible common equity1	35.6%		31.2%		440 bps		14.1%
Adjusted Financial Results1
Other operating expenses	281,764		254,545		27,219		10.7%
Efficiency ratio	30.9%		34.1%		(320 bps)		(9.4%)
Operating income	350,517		269,624		80,893		30.0%
Operating margin	38.4%		36.1%		230 bps		6.4%
Net income	174,214		141,235		32,979		23.4%
Diluted earnings per share	10.19		8.50		1.69		19.9%
Return on assets	6.4%		6.7%		(30 bps)		(4.5%)
Return on equity	24.9%		24.3%		60 bps		2.5%
Return on tangible common equity	34.3%		37.1%		(280 bps)		(7.5%)
Key Performance Indicators
Segment Financials
easyfinancial revenue	797,352		633,642		163,710		25.8%
easyfinancial operating margin	48.2%		45.4%		280 bps		6.2%
easyhome revenue	114,605		112,368		2,237		2.0%
easyhome operating margin	24.0%		23.0%		100 bps		4.3%
Portfolio Indicators
Gross consumer loans receivable	3,430,276		2,588,656		841,620		32.5%
Growth in consumer loans receivable	635,582		558,317		77,265		13.8%
Gross loan originations	2,004,319		1,745,251		259,068		14.8%
Total yield on consumer loans (including ancillary products)1	35.4%		38.3%		(290 bps)		(7.6%)
Net charge offs as a percentage of average gross consumer loans receivable	8.9%		9.1%		(20 bps)		(2.2%)
Free cash flows from operations before net growth in gross consumer loans receivable1	292,149		192,434		99,715		51.8%
Potential monthly leasing revenue1	7,411		7,623		(212)		(2.8%)
1 EBITDA, adjusted other operating expenses, adjusted operating income, adjusted net income and free cash flows from operations before net growth in gross consumer loans receivable are non-IFRS measures. EBITDA margin, efficiency ratio, adjusted operating margin, adjusted diluted earnings per share, adjusted return on equity, adjusted return on assets, reported and adjusted return on tangible common equity and total yield on consumer loans (including ancillary products) are non-IFRS ratios. Refer to “Non-IFRS Measures and Other Financial Measures” section in this press release.

 

Non-IFRS Measures and Other Financial Measures

The Company uses a number of financial measures to assess its performance. Some of these measures are not calculated in accordance with International Financial Reporting Standards (IFRS) as issued by International Accounting Standards Board (IASB), are not identified by IFRS and do not have standardized meanings that would ensure consistency and comparability among companies using these measures. The Company believes that non-IFRS measures are useful in assessing ongoing business performance and provide readers with a better understanding of how management assesses performance. These non-IFRS measures are used throughout this press release and listed below. An explanation of the composition of non-IFRS measures and other financial measures can be found in the Company’s MD&A, available on www.sedar.com.

Adjusted Net Income and Adjusted Diluted Earnings Per Share

Adjusted net income is a non-IFRS measure, while adjusted diluted earnings per share is a non-IFRS ratio. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 31 of the Company’s MD&A for the three and nine-month periods ended September 30, 2023. Items used to calculate adjusted net income and adjusted earnings per share for the three and nine-month periods ended September 30, 2023 and 2022 include those indicated in the chart below:

	Three Months Ended				Nine Months Ended
($ in 000’s except earnings per share)	September 30,2023		September 30,2022		September 30,2023		September 30,2022
Net income as stated	66,310		47,189		173,296		111,585
Impact of adjusting items
Other operating expenses
Contract exit fee1	-		-		934		-
Integration costs2	166		170		477		959
Corporate development costs4	-		-		-		2,314
Depreciation and amortization
Amortization of acquired intangible assets3	3,275		3,275		9,825		9,825
Other (income) loss5	(4,148)		(1,294)		(8,461)		23,050
Total pre-tax impact of adjusting items	(707)		2,151		2,775		36,148
Income tax impact of above adjusting items	(362)		(714)		(1,857)		(6,498)
After-tax impact of adjusting items	(1,069)		1,437		918		29,650
Adjusted net income	65,241		48,626		174,214		141,235
Weighted average number of diluted shares outstanding	17,144		16,510		17,090		16,619
Diluted earnings per share as stated	3.87		2.86		10.14		6.71
Per share impact of adjusting items	(0.06)		0.09		0.05		1.79
Adjusted diluted earnings per share	3.81		2.95		10.19		8.50

Adjusting item related to a contract exit fee1 In the fourth quarter of 2022, the Company decided to terminate its agreement with a third-party technology provider that was contracted in 2020 to develop a new loan management system. After careful evaluation, the Company determined that the performance to date was unsatisfactory, and the additional investment necessary to complete the development was no longer economical, relative to the anticipated business value and other available options. In the first quarter of 2023, the Company settled its dispute with the third-party technology provider for $0.9 million, reported under Other operating expenses.Adjusting items related to the LendCare Capital Inc. (“LendCare”) Acquisition2 Integration costs related to advisory and consulting costs, employee incentives, representation and warranty insurance costs, and other integration costs related to the acquisition of LendCare as a result of the integration with LendCare. 3 Amortization of the $131 million intangible asset related to the acquisition of LendCare with an estimated useful life of ten years.Adjusting items related to the corporate development costs4 Corporate development costs in the first quarter of 2022 were related to the exploration of a strategic acquisition opportunity, which the Company elected to not pursue, including advisory, consulting and legal costs, reported under Other operating expenses.

Adjusting item related to other income (loss)5 For the three and nine-month periods ended September 30, 2023, net investment income was mainly due to fair value changes on the Company’s investment. For the three and nine-month periods ended September 30, 2022, net investment losses were mainly due to fair value changes on the Company’s investments.

Adjusted Other Operating Expenses and Efficiency Ratio

Adjusted other operating expenses is a non-IFRS measure, while efficiency ratio is a non-IFRS ratio. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 31 of the Company’s MD&A for the three and nine-month periods ended September 30, 2023. Items used to calculate adjusted other operating expenses and efficiency ratio for the three and nine-month periods ended September 30, 2023 and 2022 include those indicated in the chart below:

	Three Months Ended				Nine Months Ended
($ in 000’s except earnings per share)	September 30,2023		September 30,2022		September 30,2023		September 30,2022
Other operating expenses as stated	83,895		77,307		257,847		232,787
Impact of adjusting items1
Other operating expenses
Contract exit fee	-		-		(934)		-
Integration costs	(166)		(170)		(476)		(959)
Corporate development costs	-		-				(2,314)
Depreciation and amortization
Depreciation of lease assets	8,415		8,371		25,328		25,031
Total impact of adjusting items	8,249		8,201		23,918		21,758
Adjusted other operating expenses	92,144		85,508		281,765		254,545
Total revenue	321,732		262,216		911,957		746,010
Efficiency ratio	28.6%		32.6%		30.9%		34.1%

1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.

Adjusted Operating Income and Adjusted Operating Margin

Adjusted operating income is a non-IFRS measure, while adjusted operating margin is a non-IFRS ratio. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 31 of the Company’s MD&A for the three and nine-month periods ended September 30, 2023. Items used to calculate adjusted operating income and adjusted operating margins for the three and nine-month periods ended September 30, 2023 and 2022 include those indicated in the chart below:

	Three Months Ended
($ in 000’s except percentages)	September 30,2023		September 30,2023 (adjusted)		September 30,2022		September 30,2022 (adjusted)
easyfinancial
Operating income	140,125		140,125		101,812		101,812
Divided by revenue	283,622		283,622		224,918		224,918
easyfinancial operating margin	49.4%		49.4%		45.3%		45.3%
easyhome
Operating income	9,229		9,229		7,782		7,782
Divided by revenue	38,110		38,110		37,298		37,298
easyhome operating margin	24.2%		24.2%		20.9%		20.9%
Total
Operating income	126,563		126,563		91,378		91,378
Other operating expenses1
Integration costs	-		166		-		170
Depreciation and amortization1
Amortization of acquired intangible assets	-		3,275		-		3,275
Adjusted operating income	126,563		130,004		91,378		94,823
Divided by revenue	321,732		321,732		262,216		262,216
Total operating margin	39.3%		40.4%		34.8%		36.2%

1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.

	Nine Months Ended
($ in 000’s except percentages)	September 30,2023		September 30,2023 (adjusted)		September 30,2022		September 30,2022 (adjusted)
easyfinancial
Operating income	384,274		384,274		287,719		287,719
Divided by revenue	797,352		797,352		633,642		633,642
easyfinancial operating margin	48.2%		48.2%		45.4%		45.4%
easyhome
Operating income	27,536		27,536		25,891		25,891
Divided by revenue	114,605		114,605		112,368		112,368
easyhome operating margin	24.0%		24.0%		23.0%		23.0%
Total
Operating income	339,281		339,281		256,526		256,526
Other operating expenses1
Contract exit fee	-		934		-		-
Integration costs	-		477		-		959
Corporate development costs	-		-		-		2,314
Depreciation and amortization1
Amortization of acquired intangible assets	-		9,825		-		9,825
Adjusted operating income	339,281		350,517		256,526		269,624
Divided by revenue	911,957		911,957		746,010		746,010
Total operating margin	37.2%		38.4%		34.4%		36.1%

1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.

Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and EBITDA Margin

EBITDA is a non-IFRS measure, while EBITDA margin is a non-IFRS ratio. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 31 of the Company’s MD&A for the three and nine-month periods ended September 30, 2023. Items used to calculate EBITDA and EBITDA margin for the three and nine-month periods ended September 30, 2023 and 2022 include those indicated in the chart below:

	Three Months Ended				Nine Months Ended
($in 000’s except percentages)	September 30,2023		September 30,2022		September 30,2023		September 30,2022
Net income as stated	66,310		47,189		173,296		111,585
Finance cost	40,875		28,497		112,754		76,421
Income tax expense	23,526		16,986		61,692		45,470
Depreciation and amortization	21,735		20,980		64,760		62,061
Depreciation of lease assets	(8,415)		(8,371)		(25,328)		(25,031)
EBITDA	144,031		105,281		387,174		270,506
Divided by revenue	321,732		262,216		911,957		746,010
EBITDA margin	44.8%		40.2%		42.5%		36.3%

Free Cash Flow from Operations before Net Growth in Gross Consumer Loans Receivable

Free cash flow from operations before net growth in gross consumer loans receivable is a non-IFRS measure. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 31 of the Company’s MD&A for the three and nine-month periods ended September 30, 2023. Items used to calculate free cash flow from operations before net growth in gross consumer loans receivable for the three and nine-month periods ended September 30, 2023 and 2022 include those indicated in the chart below:

	Three Months Ended				Nine Months Ended
	September 30,2023		September 30,2022		September 30,2023		September 30,2022
Cash used in operating activities	(96,488)		(123,225)		(343,433)		(365,883)
Net growth in gross consumer loans receivable during the period	230,063		218,813		635,582		558,317
Free cash flows from operations before net growth in gross consumer loans receivable	133,575		95,588		292,149		192,434

Adjusted Return on Assets

Adjusted return on assets is a non-IFRS ratio. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 31 of the Company’s MD&A for the three and nine-month periods ended September 30, 2023. Items used to calculate adjusted return on assets for the three and nine-month periods ended September 30, 2023 and 2022 include those indicated in the chart below:

	Three Months Ended
($in 000’s except percentages)	September 30,2023		September 30,2023(adjusted)		September 30,2022		September 30,2022(adjusted)
Net income as stated	66,310		66,310		47,189		47,189
After-tax impact of adjusting items1	-		(1,069)		-		1,437
Adjusted net income	66,310		65,241		47,189		48,626
Multiplied by number of periods in a year	X 4		X 4		X 4		X 4
Divided by average total assets for the period	3,808,271		3,808,271		3,012,832		3,012,832
Return on assets	7.0%		6.9%		6.3%		6.5%

1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.

	Nine Months Ended
($in 000’s except percentages)	September 30,2023		September 30,2023(adjusted)		September 30,2022		September 30,2022(adjusted)
Net income as stated	173,296		173,296		111,585		111,585
After-tax impact of adjusting items1	-		918		-		29,650
Adjusted net income	173,296		174,214		111,585		141,235
Multiplied by number of periods in a year	X 4/3		X 4/3		X 4/3		X 4/3
Divided by average total assets for the period	3,603,372		3,603,372		2,827,534		2,827,534
Return on assets	6.4%		6.4%		5.3%		6.7%

1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.

Adjusted Return on Equity

Adjusted return on equity is a non-IFRS ratio. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 31 of the Company’s MD&A for the three and nine-month periods ended September 30, 2023. Items used to calculate adjusted return on equity for the three and nine-month periods ended September 30, 2023 and 2022 include those indicated in the chart below:

	Three Months Ended
($in 000’s except percentages)	September 30,2023		September 30,2023(adjusted)		September 30,2022		September 30,2022(adjusted)
Net income as stated	66,310		66,310		47,189		47,189
After-tax impact of adjusting items1	-		(1,069)		-		1,437
Adjusted net income	66,310		65,241		47,189		48,626
Multiplied by number of periods in a year	X 4		X 4		X 4		X 4
Divided by average shareholders’ equity for the period	982,871		982,871		780,215		780,215
Return on equity	27.0%		26.6%		24.2%		24.9%

1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.

	Nine Months Ended
($in 000’s except percentages)	September 30,2023		September 30,2023(adjusted)		September 30,2022		September 30,2022(adjusted)
Net income as stated	173,296		173,296		111,585		111,585
After-tax impact of adjusting items1	-		918		-		29,650
Adjusted net income	173,296		174,214		111,585		141,235
Multiplied by number of periods in a year	X 4/3		X 4/3		X 4/3		X 4/3
Divided by average shareholders’ equity for the period	934,383		934,383		775,414		775,414
Return on equity	24.7%		24.9%		19.2%		24.3%

1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.

Return on Tangible Common Equity

Reported and adjusted return on tangible common equity are non-IFRS ratios. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 31 of the Company’s MD&A for the three and nine-month periods ended September 30, 2023. Items used to calculate reported and adjusted return on tangible common equity for the three and nine-month periods ended September 30, 2023 and 2022 include those indicated in the chart below:

	Three Months Ended
($ in 000’s except percentages)	September 30,2023		September 30,2023(adjusted)		September 30,2022		September 30,2022(adjusted)
Net income as stated	66,310		66,310		47,189		47,189
Amortization of acquired intangible assets	3,275		3,275		3,275		3,275
Income tax impact of the above item	(868)		(868)		(868)		(868)
Net income before amortization of acquired intangible assets, net of income tax	68,717		68,717		49,596		49,596
Impact of adjusting items1
Other operating expenses
Integration costs	-		166		-		170
Other income	-		(4,148)		-		(1,294)
Total pre-tax impact of adjusting items	-		(3,982)		-		(1,124)
Income tax impact of above adjusting items	-		506		-		154
After-tax impact of adjusting items	-		(3,476)		-		(970)
Adjusted net income	68,717		65,241		49,596		48,626
Multiplied by number of periods in a year	X 4		X 4		X 4		X 4
Average shareholders’ equity	982,871		982,871		780,215		780,215
Average goodwill	(180,923)		(180,923)		(180,923)		(180,923)
Average acquired intangible assets2	(100,979)		(100,979)		(114,079)		(114,079)
Average related deferred tax liabilities	26,759		26,759		30,231		30,231
Divided by average tangible common equity	727,728		727,728		515,444		515,444
Return on tangible common equity	37.8%		35.9%		38.5%		37.7%

1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.2 Excludes intangible assets relating to software.

	Nine Months Ended
($ in 000’s except percentages)	September 30,2023		September 30,2023(adjusted)		September 30,2022		September 30,2022(adjusted)
Net income as stated	173,296		173,296		111,585		111,585
Amortization of acquired intangible assets	9,825		9,825		9,825		9,825
Income tax impact of the above item	(2,604)		(2,604)		(2,604)		(2,604)
Net income before amortization of acquired intangible assets, net of income tax	180,517		180,517		118,806		118,806
Impact of adjusting items1
Other operating expenses
Contract exit fee	-		934		-		-
Integration costs	-		477		-		959
Corporate development costs	-		-		-		2,314
Other (income) loss	-		(8,461)		-		23,050
Total pre-tax impact of adjusting items	-		(7,050)		-		26,323
Income tax impact of above adjusting items	-		747		-		(3,894)
After-tax impact of adjusting items	-		(6,303)		-		22,429
Adjusted net income	180,517		174,214		118,806		141,235
Multiplied by number of periods in a year	X 4/3		X 4/3		X 4/3		X 4/3
Average shareholders’ equity	934,383		934,383		775,414		775,414
Average goodwill	(180,923)		(180,923)		(180,923)		(180,923)
Average acquired intangible assets2	(104,254)		(104,254)		(117,354)		(117,354)
Average related deferred tax liabilities	27,627		27,627		31,099		31,099
Divided by average tangible common equity	676,833		676,833		508,236		508,236
Return on tangible common equity	35.6%		34.3%		31.2%		37.1%

1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.2 Excludes intangible assets relating to software.

easyhome Financial Revenue

easyhome financial revenue is a non-IFRS measure. It’s calculated as total company revenue less easyfinancial revenue and leasing revenue. The Company believes that easyhome financial revenue is an important measure of the performance of the easyhome segment. Items used to calculate easyhome financial revenue for the three-month periods ended September 30, 2023 and 2022 include those indicated in the chart below:

($in 000’s)	Three Months Ended
	September 30,2023		September 30,2022
Total company revenue	321,732		262,216
Less: easyfinancial revenue	(283,622)		(224,918)
Less: leasing revenue	(25,925)		(27,074)
easyhome financial revenue	12,185		10,224

Total Yield on Consumer Loans as a Percentage of Average Gross Consumer Loans Receivable

Total yield on consumer loans as a percentage of average gross consumer loans receivable is a non-IFRS ratio. See description in section “Portfolio Analysis” on page 21 of the Company’s MD&A for the three and nine-month periods ended September 30, 2023. Items used to calculate total yield on consumer loans as a percentage of average gross consumer loans receivable for the three and nine-month periods ended September 30, 2023 and 2022 include those indicated in the chart below:

	Three Months Ended				Nine Months Ended
($in 000’s except percentages)	September 30,2023		September 30,2022		September 30,2023		September 30,2022
Total Company revenue	321,732		262,216		911,957		746,010
Less: Leasing revenue	(25,925)		(27,074)		(79,689)		(83,281)
Financial revenue	295,807		235,142		832,268		662,729
Multiplied by number of periods in a year	X 4		X 4		X 4/3		X 4/3
Divided by average gross consumer loans receivable	3,354,550		2,516,122		3,135,118		2,304,371
Total yield on consumer loans as a percentage of average gross consumer loans receivable (annualized)	35.3%		37.4%		35.4%		38.3%

Net Principal Written and Percentage Net Principal Written to New Customers

Net principal written (Net loan advances) is a non-IFRS measure. See description in section “Portfolio Analysis” on page 21 of the Company’s MD&A for the three-month and nine-month periods ended September 30, 2023. The percentage of net loan advances to new customers is a non-IFRS ratio. It is calculated as loan originations to new customers divided by the net principal written. The Company uses percentage of net loan advances to new customers, among other measures, to assess the operating performance of its lending business. Items used to calculate the percentage of net loan advances to new customers for the three-month periods ended September 30, 2023 and 2022 include those indicated in the chart below:

	Three Months Ended
($ in 000’s)	September 30,2023		September 30,2022
Gross loan originations	721,917		640,519
Loan originations to new customers	358,330		298,810
Loan originations to existing customers	363,587		341,709
Less: Proceeds applied to repay existing loans	(195,725)		(174,746)
Net advance to existing customers	167,862		166,963
Net principal written	526,192		465,773
Percentage net advances to new customers	68.1%		64.2%

Net Debt to Net Capitalization

Net debt to net capitalization is a capital management measure. Refer to “Financial Condition” section on page 42 of the Company’s MD&A for the three and nine-month periods ended September 30, 2023.

Average Loan Book Per Branch

Average loan book per branch is a supplementary financial measure. It is calculated as gross consumer loans receivable held by easyfinancial branch locations divided by the number of total easyfinancial branch locations.

Weighted Average Interest Rate

Weighted average interest rate is a supplementary financial measure. It Is calculated as the sum of individual loan balance multiplied by interest rate divided by gross consumer loans receivable.