Loan Originations of $722 million, up 13% from $641 million
Loan Portfolio of $3.43 billion, up 33% from $2.59 billion
Revenue of $322 million, up 23% from $262 million
Net Charge Off Rate of 8.8%, down 50 bps from 9.3%
Diluted EPS of $3.87, up 35%; Adjusted Diluted EPS1 of $3.81, up 29% from $2.95
MISSISSAUGA, Ontario, Nov. 07, 2023 (GLOBE NEWSWIRE) -- 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 Mullins
President & Chief Executive Officer
(905) 272-2788
Farhan Ali Khan
Senior 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 fee
1 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”) Acquisition
2 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 $131 million intangible asset related to the acquisition of LendCare with an estimated useful life of ten years.
Adjusting items related to the corporate development costs
4 Corporate development costs in the first quarter of 2022 were related to the exploration of a strategic acquisition opportunity, which the Company elected to not pursue, including advisory, consulting and legal costs, reported under Other operating expenses.
Adjusting item related to other income (loss)
5 For the three and nine-month periods ended September 30, 2023, net investment income was mainly due to fair value changes on the Company’s investment. For the three and nine-month periods ended September 30, 2022, net investment losses were mainly due to fair value changes on the Company’s investments.
Adjusted Other Operating Expenses and Efficiency Ratio
Adjusted other operating expenses is a non-IFRS measure, while efficiency ratio is a non-IFRS ratio. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 31 of the Company’s MD&A for the three and nine-month periods ended September 30, 2023. Items used to calculate adjusted other operating expenses and efficiency ratio for the three and nine-month periods ended September 30, 2023 and 2022 include those indicated in the chart below:
| Three Months Ended | Nine Months Ended | |||||||
($ 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.
