goeasy Ltd. Reports Record Results for the Third Quarter

Loan Portfolio Increased from $750 million to $1.04 billion, up 38%
Revenue Increased from $130 million to $156 million, up 20%
Net Income Increased from $14.3 million to $19.8 million, up 38%
Quarterly Earnings Per Share Increased from $0.97 to $1.28, up 32%

MISSISSAUGA, Ontario, Nov. 04, 2019 (GLOBE NEWSWIRE) -- goeasy Ltd. (TSX: GSY), (“goeasy” or the “Company”), a leading full-service provider of goods and alternative financial services, announced its results for the third quarter ended September 30, 2019.
               
Third Quarter Results

During the quarter the Company generated a record $286 million of total loan originations, up 29% from the $221 million in the third quarter of 2018. The increased originations led to growth in the loan portfolio of $75.9 million, which reached $1.04 billion at the end of the current quarter, up 38% from $750 million as at September 30, 2018.

Revenue for the third quarter increased to $156 million, up 20% over the same period in 2018, driven by the expansion of the consumer loan portfolio. The net charge-off rate for the quarter was 13.2%, up slightly from 12.9% in the third quarter of 2018, down sequentially from 13.5% in the second quarter of 2019 and within the Company’s targeted range of 11.5% to 13.5% for 2019.

Growing revenues and continued improvements in operating leverage led to elevated margins, with record net income and earnings per share. Operating income grew to $42.6 million, up 29% from $32.9 million in the third quarter of 2018, while the operating margin expanded to 27% up from 25%. Net income in the third quarter was $19.8 million, up 38% from $14.3 million in 2018, which resulted in diluted earnings per share of $1.28, up 32% from the $0.97 in 2018.

“We saw positive momentum from our new branded media campaign, which drove a 25% increase in loan application volume and a second straight quarter of record new customers, resulting in a 20% increase in loan growth over the prior year,” said Jason Mullins, goeasy’s President & Chief Executive Officer. “Credit performance also began to improve, as the annualized net charge-off rate for the quarter reduced sequentially by 30-bps, from 13.5% to 13.2%, while the risk-adjusted yield held flat. The strong revenue growth combined with continued operating leverage led to another quarter of record net income and earnings per share.”

“The last several months have also been highlighted by several major accomplishments on our journey to become Canada’s top non-prime consumer lender,” Mr. Mullins continued. “Our progress to improve the future credit quality of our portfolio, expand our channels of distribution through the strategic partnership and investment in PayBright, and strengthen our balance sheet with $120 million of increased capacity and reduce borrowing costs, provides further confidence to achieve our targets for 2019 and beyond. With the successful amendment of our revolving credit facility now completed, we will focus on exploring the opportunity to refinance our high yield notes and add new sources of capital that can further increase liquidity and optimize our balance sheet.”

Other Key Third Quarter Highlights

easyfinancial

• Total application volume increased 25%
• Revenue grew to $122 million, up 28%
• Secured loan portfolio grew to $101 million, up from $41 million
• 65% of net loan advances in the quarter were issued to new customers, up slightly from 63%
• 46% of applications acquired online, up from 37%
• Aided brand awareness of 84%, up from 80%
• Average loan book per branch improved to $3.5 million, an increase of 35%
• The delinquency rate on the final Saturday of the quarter was 4.6%, up slightly from 4.4%
• Operating income of $47.5 million, up 26%
• Operating margin of 39%, consistent with the third quarter of 2018             

easyhome

• Revenue of $33.9 million, down slightly from $34.2 million
• Same store revenue growth of 2.4%
• Consumer lending portfolio within easyhome stores increased to $33.5 million, up from $17.2 million
• Revenue from consumer lending increased to $4.6 million, up from $2.2 million
• Operating income of $5.6 million, down slightly from $5.9 million
• Operating margin of 16.6%, down slightly from the 17.2% reported in the third quarter of 2018
• Acquired and merged 6 stores and the associated consumer leasing portfolios from Aarons Inc.

Overall

• 38^th consecutive quarter of same store sales growth
• 73^rd consecutive quarter of positive net income
• Total same store revenue growth of 20.4%
• Return on equity of 24.1% in the quarter, up from 23.8%
• Net external debt to net capitalization of 69% as at September 30, 2019, below the Company’s target leverage ratio of 70%
• Cash provided by operating activities before the net issuance of consumer loans receivable and purchase of lease assets during the quarter was a record $80.9 million
• Repurchased 79,260 shares in the quarter under the Company’s Normal Course Issuer Bid, bringing total repurchases since November 2018 to 856,712 shares at a weighted average price of $41.19
• Ranked in the inaugural TSX30 program as one of the 30 top-performing TSX stocks over a three-year period based on dividend-adjusted share price appreciation
• Listed on the inaugural Report on Business list of Canada’s Top Growing Companies for its three-year cumulative revenue growth

Nine Months Results

For the first nine months of 2019, goeasy achieved revenues of $444 million, up 21% compared with $368 million in the same period of 2018. Operating income for the period was $122.3 million compared with $84.6 million in the first nine months of 2019, an increase of $37.7 million or 45%. Net income for the first nine months of 2019 was $57.7 million and diluted earnings per share was $3.72 compared with $37.2 million or $2.53 per share, increases of 55% and 47%, respectively.

Balance Sheet and Liquidity

Total assets were $1.24 billion as at September 30, 2019, an increase of 26% from $985 million as at September 30, 2018, driven by the growth in the consumer loan portfolio.

Cash provided by operating activities before the net issuance of consumer loans receivable and purchase of lease assets was $225 million during the first nine months of 2019, an increase of 32% from $170 million in the same period of 2018. 

Based on the cash on hand at the end of the quarter and the borrowing capacity under the Company’s amended revolving credit facility, goeasy had approximately $215 million in funding capacity, which will allow it to achieve its targets for the growth of its consumer loan portfolio through to the first quarter of 2021. The Company has historically been able to obtain the additional financing required to fund the growth of its business at steadily lower costs of borrowing, increasing rates of leverage and more favorable terms. The Company also estimates that once its existing and available sources of capital are fully utilized, it could continue to grow the loan portfolio by approximately $150 million per year solely from internal cash flows.

The Company also estimates that as of September 30, 2019 if it were to run-off its consumer loan and consumer leasing portfolios, the value of the total cash repayments paid to the Company over the remaining life of its contracts would be approximately $2.1 billion.

Future Outlook

The Company has provided 3-year commercial targets for 2019 through 2021. The Company continues to pursue a long-term strategy that includes expanding its product range, developing its channels of distribution and leveraging risk-based pricing offers, which increase the average loan size and extend the life of its customer relationships. As such, the total yield earned on its consumer loan portfolio will gradually decline, while net charge-off rates moderate and operating margins expand, resulting in an increase to return on equity. These targets remain unchanged and are as follows:

Dividend

The goeasy Board of Directors has approved a quarterly dividend of $0.31 per share payable on January 10, 2020, to the holders of common shares of record as at the close of business on December  27,  2019.

Forward-Looking Statements

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

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

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

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

About goeasy

goeasy Ltd., a Canadian company, headquartered in Mississauga, Ontario, provides non-prime leasing and lending services through its easyhome and easyfinancial divisions. With a wide variety of financial products and services including unsecured and secured instalment loans, goeasy aspires to help put Canadians on a path to a better financial future, as they rebuild their credit and graduate to prime lending. Customers can transact seamlessly with easyhome and easyfinancial through an omni-channel model that includes online and mobile, as well as over 400 leasing and lending locations across Canada supported by more than 1,900 employees.

Throughout the company’s history, it has served over 1 million Canadians and originated over $3.6 billion in loans, with one in three customers graduating to prime credit and 60% increasing their credit score within 12 months of borrowing.

goeasy is the proud recipient of several awards including Waterstone Canada’s Most Admired Corporate Cultures, Glassdoor Top CEO Award, Achievers Top 50 Most Engaged Workplaces in North America, the Digital Finance Institute’s Canada’s Top 50 FinTech Companies, ranking on the TSX30 and placing on the Report on Business ranking of Canada’s Top Growing Companies. The company and its employees believe strongly in giving back to the communities in which it operates and has raised over $2.7 million to support its long-standing partnerships with the Boys & Girls Clubs of Canada and Habitat for Humanity.

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

For further information contact:

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

David Ingram
Executive Chairman of the Board
(905) 272-2788