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.

 

Goeasy (TSX:GSY)
Historical Stock Chart
From Jan 2024 to Feb 2024 Click Here for more Goeasy Charts.
Goeasy (TSX:GSY)
Historical Stock Chart
From Feb 2023 to Feb 2024 Click Here for more Goeasy Charts.