goeasy Ltd. Reports Record Results for the Third Quarter

Loan Originations of $839 million, up 16% from $722 million
Loan Growth of $255 million, up 11% from $230 million
Loan Portfolio of $4.39 billion, up 28% from $3.43 billion
Revenue of $383 million, up 19% from $322 million
Diluted EPS of $4.88; Adjusted Diluted EPS1 of $4.32, up 13% from $3.81

MISSISSAUGA, ON, Nov. 7, 2024 /CNW/ - goeasy Ltd. (TSX: GSY), ("goeasy" or the "Company"), one of Canada's leading consumer lenders focused on delivering a full suite of financial services to Canadians with non-prime credit, today reported results for the third quarter ended September 30, 2024.

Third Quarter Results

During the quarter, the Company generated a record $839 million in loan originations, up 16% compared to $722 million produced in the third quarter of 2023. The increase in lending was driven by continued strength in the volume of applications for credit, which was up 22% over the prior year. The Company experienced strong performance across several product and acquisition channels, including unsecured lending, home equity lending, point-of-sale and automotive financing.

The increase in loan originations led to record third quarter growth in the loan portfolio of $255 million, which was up 11% from $230 million of loan book growth in the third quarter of 2023. At quarter end, the consumer loan portfolio was $4.39 billion, up 28% from $3.43 billion in the third quarter of 2023. The growth in consumer loans led to an increase in revenue, which was a record $383 million in the quarter, up 19% from $322 million in the third quarter of last year.

During the quarter, the Company continued to experience stable credit and payment performance, driven by ongoing enhancements to the Company's credit models and underwriting practices, and an increase in the proportion of secured loans, which lifted to 45% at quarter-end. The annualized net charge off rate was 9.2%, up slightly from 8.8% in the same quarter of the prior year, and in line with the Company's forecasted range of between 8.75% and 9.75% for the quarter. The Company's allowance for future credit losses increased slightly to 7.38%, compared to 7.31% in the second quarter.

Operating income for the third quarter of 2024 was a record $160 million, up 26% from $127 million in the third quarter of 2023. Operating margin for the third quarter was a record 41.7%, up from 39.3% in the same period last year. After adjusting for unusual and non-recurring items, the Company reported record adjusted operating income2 of $163 million, an increase of 25% compared to $130 million in the third quarter of 2023. Adjusted operating margin1 for the third quarter was a record 42.6%, up from 40.4% in the same period in 2023. The efficiency ratio1 for the third quarter of 2024 was a record 23.1%, an improvement of 550 bps from 28.6% in the third quarter of 2023, reflecting an increase in operating leverage.

Net income in the third quarter was $84.9 million, up 28% from $66.3 million in the same period of 2023, which resulted in diluted earnings per share of $4.88, up 26% from the $3.87 reported in the third quarter of 2023. After adjustments, adjusted net income2 was a record $75.1 million, up 15% from $65.2 million in the third quarter of 2023. Adjusted diluted earnings per share1 was a record $4.32, up 13% from $3.81 in the third quarter of 2023. Return on equity during the quarter was 29.1%, compared to 27.0% in the third quarter of 2023. Adjusted return on equity1 was 25.7% in the quarter, compared to 26.6% in the same period of 2023.

"Our third quarter results continued to demonstrate the resilience of our business model during periods of macro-economic stress, with record loan originations, stable credit losses, and record adjusted diluted EPS which increased 13%," said Jason Mullins, goeasy's President and Chief Executive Officer, "We were also pleased to make additional enhancements to our balance sheet, lifting our total funding capacity to over $1.8 billion. With the heightened level of liquidity and declining leverage profile, we also repurchased approximately $9 million in shares subsequent to quarter-end," Mr. Mullins concluded, "We are pleased to remain on track to achieving all of our forecasted metrics for 2024, as we continue on our journey to become Canada's leading non-prime consumer lender and help over 60% of our customers graduate back to prime."

Other Key Third Quarter Highlights

easyfinancial

• Record revenue of $346 million, up 22%
• New customer volume at 48,600, up 14%
• 72% of net loan advances1 in the quarter were issued to new customers, up from 68%
• Record volume of originations in automotive financing, up 60%
• Average loan book per branch3 improved to a record $6.6 million, an increase of 18%
• Weighted average interest rate3 on consumer loans of 29.3%, down slightly from 30.1%
• Record operating income of $173 million, up 23%

easyhome

• Revenue of $37.7 million, down slightly from $38.1 million
• Consumer loan portfolio within easyhome stores increased to $112.5 million, up 10%
• Financial revenue2 from consumer lending increased to $12.8 million, up 5%
• Operating income of $11.4 million, up 23%

Overall

• Ranked on the 2024 Report on Business magazine's list of Canada's Top Growing Companies, based on three-year cumulative revenue growth
• 93rd consecutive quarter of positive net income
• 2024 marks the 20th consecutive year of paying dividends and the 10th consecutive year of a dividend increase
• 58th consecutive quarter of same store revenue growth
• Total customers served approximately 1.5 million
• Acquired and organically originated over $15.1 billion in loans
• Adjusted return on equity1 of 25.7%, down from 26.6%
• Fully drawn weighted average cost of borrowing at 6.6%, up from 6.2%
• Net debt to net capitalization4 of 73% on September 30, 2024, in line with the Company's target leverage profile

Nine Months Results

For the first nine months of 2024, the Company funded $2.35 billion in loan originations, up 17% from $2.00 billion in the same period of 2023. The consumer loan receivable portfolio finished at $4.39 billion, up 28% from $3.43 billion as of September 30, 2023.

For the first nine months of 2024, the Company produced record revenues of $1.12 billion, up 23% compared to $912 million in the same period of 2023. Operating income for the period was a record $445 million compared with $339 million in the first nine months of 2023, an increase of $105 million or 31%. Adjusted operating income2 for the first nine months of 2024 was a record $460 million, 31% higher compared to $351 million in the same period of 2023. Efficiency ratio1 for the first nine months of 2024 was 25.8%, an improvement of 510 bps from 30.9% in the same period of 2023.

Net income for the first nine months of 2024 was $209 million and diluted earnings per share was $12.06, compared with $173 million or $10.14 per share. Adjusted net income2 for the first nine months of 2024 was $213 million and adjusted diluted earnings per share1 was $12.26 compared with $174 million or $10.19 per share, increases of 22% and 20%, respectively. Reported return on equity was 24.8%, while adjusted return on equity1 was 25.2%, up from 24.9% in the same period of 2023.

Balance Sheet and Liquidity

Total assets were $4.89 billion as of September 30, 2024, an increase of 24% from $3.94 billion as of September 30, 2023, primarily driven by growth in the consumer loan portfolio.

Subsequent to quarter-end, the Company issued US$400 million aggregate principal amount of 6.875% senior unsecured notes due 2030 (the "USD 2030 Notes") and $150 million aggregate principal amount of 6.000% senior unsecured notes due 2030 (together with the USD 2030 Notes, the "2030 Notes"). In connection with the offering, the Company entered into a Currency Swap to reduce the Canadian dollar equivalent cost of borrowing on the USD 2030 Notes to 5.977% per annum. The Company used the net proceeds from the sale of the 2030 Notes to fund a cash tender offer (the "Tender Offer") to purchase any and all of its outstanding 4.375% senior unsecured notes due 2026 (the "2026 Notes"), partially repay indebtedness under its secured facilities and for general corporate purposes.

In October 2024, the Company announced the expiration of the Tender Offer and accepted for purchase US$255.4 million combined aggregate principal amount of 2026 Notes under the Tender Offer, representing 79.8% of the US$320 million aggregate principal amount of 2026 Notes outstanding.

During the quarter, the Company recognized an unrealized net investment gain of $4.2 million, mainly due to fair value changes in the Company's investments.

Free cash flow from operations before net growth in gross consumer loans receivable2 in the quarter was $126 million compared to $134 million in the third quarter of 2023. Based on the cash on hand at the end of the quarter and the borrowing capacity under the Company's existing revolving credit facilities, including the aforementioned balance sheet enhancements implemented following the quarter, the Company has approximately $1.8 billion in total funding capacity as of November 4, 2024 and a net debt to net capitalization ratio of 73%, in line with the Company's desired level of financial leverage. 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 6.7%, and the fully drawn weighted average cost of borrowing was 6.6%. The Company estimates that it could currently grow the consumer loan portfolio by approximately $300 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 $500 million per year solely from internal cash flows.

Leadership Transition & Interim CEO Update

In July 2024, the Company announced that Mr. Mullins will transition out of his role as President and Chief Executive Officer at year-end, while remaining as a director on the Board. The Board of Directors has a global search underway for a seasoned and experienced executive and is currently assessing candidates.

The Board of Directors also announced today that David Ingram, goeasy's Executive Chairman and former Chief Executive Officer, will assume the role of Interim Chief Executive Officer effective January 1, 2025, until such time that a new CEO is appointed. Mr. Ingram assumed the role of Executive Chairman of the Board on January 1, 2019, prior to which he was goeasy's Chief Executive Officer from 2001 to 2018.

Dividend

The Board of Directors has approved a quarterly dividend of $1.17 per share payable on January 10, 2025 to the holders of common shares of record as at the close of business on December 27, 2024.

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 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 over 2,500 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 omni-channel 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 10,500 merchant partners across Canada. Throughout the Company's history, it has acquired and organically served approximately 1.5 million Canadians and originated over $15.1 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 2024 Best Workplaces™ in Financial Services & Insurance, Waterstone Canada's Most Admired Corporate Cultures, ranking on the 2022 Report on Business Women Lead Here executive gender diversity benchmark, placing on the 2024 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 over 70 nationalities who believe strongly in giving back to communities in which it operates. To date, goeasy has raised and donated over $6.0 million to support its long-standing partnerships with BGC Canada and many other local charities. In 2023, the Company announced a 3-year, $1.4 million commitment to BGC Canada's Food Fund.

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

Farhan Ali Khan
Executive Vice President & Chief Strategy and 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.

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.sedarplus.ca.

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, 2024. Items used to calculate adjusted net income and adjusted earnings per share for the three and nine-month periods ended September 30, 2024 and 2023 include those indicated in the chart below:

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, 2024. Items used to calculate adjusted other operating expenses and efficiency ratio for the three and nine-month periods ended September 30, 2024 and 2023 include those indicated in the chart below:

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, 2024. Items used to calculate adjusted operating income and adjusted operating margins for the three and nine-month periods ended September 30, 2024 and 2023 include those indicated in the chart below:

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, 2024. Items used to calculate EBITDA and EBITDA margin for the three and nine-month periods ended September 30, 2024 and 2023 include those indicated in the chart below:

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, 2024. 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, 2024 and 2023 include those indicated in the chart below:

Adjusted Return on Receivables

Adjusted return on receivables 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, 2024. Items used to calculate adjusted return on receivables for the three and nine-month periods ended September 30, 2024 and 2023 include those indicated in the chart below:

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, 2024. Items used to calculate adjusted return on assets for the three and nine-month periods ended September 30, 2024 and 2023 include those indicated in the chart below:

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, 2024. Items used to calculate adjusted return on equity for the three and nine-month periods ended September 30, 2024 and 2023 include those indicated in the chart below:

Reported and Adjusted 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, 2024. Items used to calculate reported and adjusted return on tangible common equity for the three and nine-month periods ended September 30, 2024 and 2023 include those indicated in the chart below:

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, 2024 and 2023 include those indicated in the chart below:

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 20 of the Company's MD&A for the three and nine-month periods ended September 30, 2024. 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, 2024 and 2023 include those indicated in the chart below:

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 20 of the Company's MD&A for the three and nine-month periods ended September 30, 2024. 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 and nine-month periods ended September 30, 2024 and 2023 include those indicated in the chart below:

Net Debt to Net Capitalization

Net debt to net capitalization is a capital management measure. Refer to "Financial Condition" section on page 43 of the Company's MD&A for the three and nine-month periods ended September 30, 2024.

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.

SOURCE goeasy Ltd

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