Increases Dividend 44% to $0.72 Per Share
Introduces Accelerated Growth Plan
MISSISSAUGA, ONTARIO--(Marketwired - Feb. 15, 2017) - goeasy Ltd. (TSX:GSY) ("goeasy" or the "Company"), a leading full service provider of goods and alternative financial services that improve the lives of everyday Canadians, today announced its results for the fourth quarter and year ended December 31, 2016. The Company also announced a 44% increase in its annual dividend from $0.50 to $0.72 per share.
Q4 2016 Results
Revenue for the fourth quarter of 2016 increased to $91.3 million, an increase of 10.2% from $82.9 million in the fourth quarter of 2015. On a comparative basis, revenue and operating income for the fourth quarter of 2016 were reduced by $1.0 million due to the transition of the Company's creditor life insurance product to a new provider. Total same store sales growth in the quarter was 12.6%. The growth was driven primarily by the expansion of easyfinancial and the related growth of its consumer loans receivable portfolio which reached $370.5 million by quarter's end, up 28.0% from December 31, 2015. Loan book growth in the fourth quarter of 2016 was $26.8 million.
Operating income for the quarter was $17.2 million, up $2.2 million or 14.6% compared to operating income of $15.0 million in the fourth quarter of 2015. Net income for the quarter was $8.3 million, up $0.8 million or 10.8% from $7.5 million in the fourth quarter of 2015. Diluted earnings per share for the quarter was $0.60, up $0.06 or 11.1% from $0.54 in the fourth quarter of 2015.
"The fourth quarter rounded out a record year for our Company which resulted in financial success and the accomplishment of many of our strategic goals," said David Ingram, goeasy's President and Chief Executive Officer. "We were particularly pleased with the record level of originations, reduction in delinquencies and our customer satisfaction ratings in excess of 95%. Customer demand remains strong as our new risk‐adjusted pricing product and merchant financing programs reach an expanding audience between traditional banks and expensive payday lenders."
Other highlights for the fourth quarter of 2016 include:
easyfinancial
easyhome
Overall
Full Year Results
For the full year, goeasy recorded revenues of $347.5 million, up 14.2% compared with $304.3 million in 2015.
Operating income for 2016 was $62.5 million, while net income was $31.0 million and diluted earnings per share was $2.23. The 2016 results included a $3.0 million gain on the sale of an investment and $6.4 million in transaction advisory costs that were not routine and non‐recurring. Excluding these items, adjusted operating income for the year was $65.9 million compared with $48.1 million in 2015, an increase of $17.8 million or 37.1%; adjusted net income was $33.2 million compared with $23.7 million in 2015, an increase of $9.4 million or 39.7%; and adjusted diluted earnings per share was $2.38 compared with $1.69 for 2015, an increase of $0.69 or 40.8%.
In addition to the strong financial performance during 2016, the Company also made significant progress on its strategic initiatives:
"2016 was a productive and record setting year," said Mr. Ingram. "Over the past 15 years, on a normalized basis, we have achieved compound annual growth rates of 11.7% for revenue, 22.0% for operating income and 19.3% for earnings per share. 2016 continued the Company's trend of 62 consecutive quarters of positive net income and 27 quarters of positive same store sales growth. As importantly, we have seen improvements to employee engagement, customer satisfaction and brand awareness. My sincere thanks to our entire team who continue to work tirelessly to meet and exceed the needs of all our customers who are underserviced by traditional financial organizations."
Balance Sheet and Liquidity
Total assets were $503.1 million as at December 30, 2016, an increase of 20.2% from $418.5 million as at December 31, 2015 and driven by the $81.1 million growth in the gross consumer loans receivable portfolio. As at December 31, 2016, the Company had $57.4 million in cash and committed facilities available to support future growth.
The Company believes that its cash and committed facilities, coupled with the cash flows provided by operations, will be sufficient to fund the planned growth until the end of the third quarter of 2017.
Outlook and Corporate Strategy
Throughout 2016, the Company completed an in‐depth strategic review, gaining a greater understanding of available opportunities within the non‐prime market for consumer lending in Canada. The resulting insights confirmed that the Company's corporate strategy continues to be appropriate and will guide the tactics employed by the Company to achieve its goals in the future.
goeasy's corporate strategy is unchanged from the prior years. Its strategic imperatives will be to i) evolve its delivery channels, ii) expand the easyfinancial footprint, iii) enhance its product offering and iv) execute with efficiency and effectiveness.
Over the past several years, the Company made significant investments in its processes, systems and infrastructure to support long‐term sustainable growth. Although these investments will continue, the Company is now well placed to take advantage of positive market conditions and accelerate its rate of growth. Specific initiatives in 2017 to achieve this are as follows:
The successful implementation of these specific initiatives is dependent upon additional financing being secured. Although the details of such additional financing have not yet been determined, the Company is confident that it will continue to have access to additional and appropriate capital to fund the growth of its business into the future. There is no certainty that these long‐term sources of additional capital will be available or at terms favourable to the Company.
In conjunction with the specific initiatives the Company has established the following targets for 2017:
The Company has also established a number of three‐year targets that it is working to achieve by the end of 2019.
Normal Course Issuer Bid and Dividend Increase
On June 22, 2016, the Company renewed its Normal Course Issuer Bid (the "NCIB") allowing it to purchase for cancellation up to 986,105 Common Shares over the following 12 months which commenced on June 27, 2016. During the year ended December 31, 2016, the Company repurchased and cancelled 435,800 of its common shares at an average price of $18.21 per share. The Company intends to continue purchasing shares for cancellation under this NCIB.
Based on its 2016 earning and the Company's confidence in its continued growth and access to capital going forward, the Board of Directors has approved an increase to the annual dividend from $0.50 per share to $0.72 per share, an increase of 44%. As such, the Board of Directors has approved a quarterly dividend of $0.18 per share payable on April 13, 2017 to the holders of common shares of record as at the close of business on March 31, 2017.
Forward‐Looking Statements
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, those with respect to 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 December 31, 2016 Management Discussion and Analysis 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
As at December 31, 2016, the Company operated 208 easyfinancial locations (including 46 kiosks located within easyhome stores) and 176 easyhome stores (including 28 franchises and 2 consolidated franchise locations).
goeasy Ltd. is a leading full service provider of goods and alternative financial services that improve the lives of everyday Canadians. Today, goeasy Ltd. serves its customers through two key operating divisions, easyfinancial and easyhome. easyfinancial is a non‐prime consumer lender that bridges the gap between traditional financial institutions and costly payday lenders. It is supported by a strong central credit adjudication process and industry leading risk analytics. easyfinancial also operates an indirect lending channel, offering loan products to consumers at the point‐of‐sale of third party merchants. easyhome is Canada's largest lease‐to‐own company, offering brand‐name household furniture, appliances and electronics to consumers under weekly or monthly leasing agreements through both corporate and franchise stores. Both operating divisions of goeasy Ltd. offer the highest level of customer service and enable customers to transact through a national store and branch network of over 200 easyfinancial and 175 easyhome locations across Canada and through its online and mobile eCommerce enabled platforms.
goeasy Ltd. is listed on the TSX under the symbol 'GSY'. For more information, visit www.goeasy.com.
goeasy Ltd. |
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
(expressed in thousands of Canadian dollars) |
As At | As At | |
December 31, | December 31, | |
2016 | 2015 | |
ASSETS | ||
Cash | 24,928 | 11,389 |
Amounts receivable | 7,857 | 9,480 |
Prepaid expenses | 1,909 | 2,446 |
Consumer loans receivable | 354,499 | 274,481 |
Lease assets | 55,288 | 60,753 |
Property and equipment | 16,103 | 18,689 |
Deferred tax assets | 6,856 | 5,913 |
Intangible assets | 14,312 | 14,041 |
Goodwill | 21,310 | 21,310 |
TOTAL ASSETS | 503,062 | 418,502 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Liabilities | ||
Accounts payable and accrued liabilities | 31,879 | 22,196 |
Income taxes payable | 2,874 | 700 |
Dividends payable | 1,666 | 1,341 |
Deferred lease inducements | 1,506 | 1,922 |
Unearned revenue | 5,204 | 3,982 |
Provisions | 608 | 582 |
Term loan | 263,294 | 211,720 |
TOTAL LIABILITIES | 307,031 | 242,443 |
Shareholders' equity | ||
Share capital | 82,598 | 81,725 |
Contributed surplus | 9,943 | 9,852 |
Accumulated other comprehensive income | 880 | 969 |
Retained earnings | 102,610 | 83,513 |
TOTAL SHAREHOLDERS' EQUITY | 196,031 | 176,059 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 503,062 | 418,502 |
goeasy Ltd. |
CONSOLIDATED STATEMENTS OF INCOME |
(expressed in thousands of Canadian dollars except earnings per share) |
Three Months Ended | Year Ended | ||||||
December 31, | December 31, | December 31, | December 31, | ||||
2016 | 2015 | 2016 | 2015 | ||||
REVENUE | |||||||
Interest income | 37,477 | 29,534 | 138,782 | 100,814 | |||
Lease revenue | 33,832 | 36,563 | 137,849 | 146,692 | |||
Other | 19,985 | 16,778 | 70,874 | 56,767 | |||
91,294 | 82,875 | 347,505 | 304,273 | ||||
Other income | - | - | 3,000 | - | |||
EXPENSES BEFORE DEPRECIATION AND AMORTIZATION | |||||||
Salaries and benefits | 23,014 | 22,097 | 91,557 | 85,658 | |||
Stock-based compensation | 1,190 | 1,149 | 4,323 | 4,753 | |||
Advertising and promotion | 4,242 | 2,620 | 13,457 | 10,689 | |||
Bad debts | 15,936 | 13,473 | 55,668 | 41,933 | |||
Occupancy | 8,324 | 7,961 | 32,867 | 31,545 | |||
Other expenses | 7,996 | 6,513 | 29,398 | 25,547 | |||
Transaction advisory costs | - | - | 6,382 | - | |||
60,702 | 53,813 | 233,652 | 200,125 | ||||
DEPRECIATION AND AMORTIZATION | |||||||
Depreciation of lease assets | 10,789 | 11,901 | 44,230 | 47,407 | |||
Depreciation of property and equipment | 1,384 | 1,580 | 5,606 | 5,545 | |||
Amortization of intangible assets | 1,127 | 674 | 4,205 | 3,138 | |||
Impairment, net | 117 | (84 | ) | 296 | 6 | ||
13,417 | 14,071 | 54,337 | 56,096 | ||||
Total operating expenses | 74,119 | 67,884 | 287,989 | 256,221 | |||
Operating income | 17,175 | 14,991 | 62,516 | 48,052 | |||
Finance costs | 5,702 | 4,605 | 21,048 | 15,334 | |||
Income before income taxes | 11,473 | 10,386 | 41,468 | 32,718 | |||
Income tax expense (recovery) | |||||||
Current | 2,045 | 3,159 | 11,362 | 8,157 | |||
Deferred | 1,086 | (305 | ) | (943 | ) | 833 | |
3,131 | 2,854 | 10,419 | 8,990 | ||||
Net income | 8,342 | 7,532 | 31,049 | 23,728 | |||
Basic earnings per share | 0.62 | 0.56 | 2.29 | 1.75 | |||
Diluted earnings per share | 0.60 | 0.54 | 2.23 | 1.69 |
Segmented Reporting
Three Months Ended December 31, 2016 | |||||
($ in 000's except earnings per share) | easyfinancial | easyhome | Corporate | Total | |
Revenue | 55,999 | 35,295 | - | 91,294 | |
Total operating expenses before depreciation and amortization | 34,772 | 18,244 | 7,686 | 60,702 | |
Depreciation and amortization | 1,675 | 11,558 | 184 | 13,417 | |
Operating income (loss) | 19,552 | 5,493 | (7,870 | ) | 17,175 |
Finance costs | 5,702 | ||||
Income before income taxes | 11,473 | ||||
Income taxes | 3,131 | ||||
Net Income for the period | 8,342 | ||||
Diluted earnings per share | 0.60 | ||||
Three Months Ended December 31, 2015 | |||||
($ in 000's except earnings per share) | easyfinancial | easyhome | Corporate | Total | |
Revenue | 44,826 | 38,049 | - | 82,875 | |
Total operating expenses before depreciation and amortization | 28,616 | 18,520 | 6,677 | 53,813 | |
Depreciation and amortization | 1,449 | 12,489 | 133 | 14,071 | |
Operating income (loss) | 14,761 | 7,040 | (6,810 | ) | 14,991 |
Finance costs | 4,605 | ||||
Income before income taxes | 10,386 | ||||
Income taxes | 2,854 | ||||
Net Income for the period | 7,532 | ||||
Diluted earnings per share | 0.54 |
Year Ended December 31, 2016 | |||||
($ in 000's except earnings per share) | easyfinancial | easyhome | Corporate | Total | |
Revenue | 204,076 | 143,429 | - | 347,505 | |
Other Income | - | - | 3,000 | 3,000 | |
Total operating expenses before depreciation and amortization and transaction advisory costs | 122,843 | 74,708 | 29,719 | 227,270 | |
Transaction advisory costs | - | - | 6,382 | 6,382 | |
Depreciation and amortization | 6,479 | 47,184 | 674 | 54,337 | |
Operating income (loss) | 74,754 | 21,537 | (33,775 | ) | 62,516 |
Finance costs | 21,048 | ||||
Income before income taxes | 41,468 | ||||
Income taxes | 10,419 | ||||
Net Income for the period | 31,049 | ||||
Diluted earnings per share | 2.23 | ||||
Year Ended December 31, 2015 | |||||
($ in 000's except earnings per share) | easyfinancial | easyhome | Corporate | Total | |
Revenue | 151,668 | 152,605 | - | 304,273 | |
Total operating expenses before depreciation and amortization | 99,607 | 77,724 | 22,794 | 200,125 | |
Depreciation and amortization | 5,289 | 50,214 | 593 | 56,096 | |
Operating income (loss) | 46,772 | 24,667 | (23,387 | ) | 48,052 |
Finance costs | 15,334 | ||||
Income before income taxes | 32,718 | ||||
Income taxes | 8,990 | ||||
Net Income for the period | 23,728 | ||||
Diluted earnings per share | 1.69 |
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