Loan Originations of $628 million, up 66% from $379 million
Organic Loan Growth of $216 million, up 191% from $74 million
Loan Portfolio of $2.37 billion, up 32% from $1.80 billion
Quarterly Diluted Earnings per Share of $2.32, up 100% from $1.16
Adjusted Quarterly Diluted Earnings per Share1 of $2.83, up 8% from $2.61
MISSISSAUGA, Ontario, Aug. 10, 2022 (GLOBE NEWSWIRE) -- goeasy Ltd. (TSX: GSY), (“goeasy” or the “Company”), one of Canada’s leading non-prime consumer lenders, today reported results for the second quarter ended June 30, 2022.
Second Quarter Results
During the quarter, the Company experienced record loan originations of $628 million, up 66% compared to the $379 million produced in the second quarter of 2021. The increase in lending was driven by a record volume of applications for credit, which were up 51% over the prior year, leading to a record level of loan originations across several of the company’s products and acquisition channels.
The improved loan originations led to record organic growth in the loan portfolio of $216 million, which was up 191% from $74 million of organic loan growth in the second quarter of 2021. At quarter end, the gross consumer loan receivable portfolio was $2.37 billion, up 32% from $1.80 billion in the second quarter of 2021. The growth in consumer loans led to an increase in revenue, which was a record $252 million in the quarter, up 24% over the same period last year.
During the quarter, the Company also continued to experience stable credit and payment performance. The net charge off rate in the second quarter was 9.3%, in line with the Company’s target range of between 8.5% and 10.5% on an annualized basis, and up from 8.2% in the second quarter of 2021, a period which benefited from pandemic related government support and reduced consumer expenses. The Company’s allowance for future credit losses decreased slightly to 7.68% from 7.78% in the first quarter of 2022, primarily due to the improved product and credit mix of the loan portfolio.
Operating income for the second quarter of 2022 was a record $85.2 million, up 52% from $56.1 million in the second quarter of 2021. Operating margin for the second quarter was 33.8%, up from 27.7% in the prior year. After adjustments for items related to the acquisition of LendCare Holdings Inc. (“LendCare”), the Company reported record adjusted operating income2 of $88.7 million, up $8.9 million or an increase of 11% compared to $79.9 million in the second quarter of 2021. Adjusted operating margin1 for the second quarter was 35.3%, down from 39.5% in the prior year, primarily due to a higher level of loan loss provision expense compared to the prior year.
Net income in the second quarter was $38.3 million, up 97% from $19.5 million in the same period of 2021, which resulted in diluted earnings per share of $2.32, up 100% from the $1.16 reported in the second quarter of 2021. After adjusting for non-recurring and unusual items on an after-tax basis, including $2.4 million in amortization of acquired intangible assets and a $5.9 million fair value loss on investments, adjusted net income2 was $46.8 million, up 7% from $43.7 million in 2021. Adjusted diluted earnings per share1 was a record $2.83, up 8% from $2.61 in the second quarter of 2021. Return on equity during the quarter was 20.2%, compared to 12.0% in the second quarter of 2021. After adjusting for non-recurring and unusual items, adjusted return on equity1 was 24.7% in the quarter, compared to 26.9% in the same period of 2021.
“We are delighted to report record organic loan growth of $216 million in the quarter, complemented by stable credit performance. While the increase in loan growth over last year resulted in approximately $0.48 cents of incremental loan loss provision expense on an after-tax per share basis in the quarter, it will contribute to the long-term earnings growth of the company. Growth in our secured lending products, such as home equity, powersports and automotive financing, lifted meaningfully, while also helping improve the credit mix of our portfolio. The annualized net charge-off rate in the quarter was 9.3%, directly in line with our target range, and down meaningfully from the 13.3% we reported prior to the pandemic in 2019, due to the significant structural improvements we have made to the business. All combined, we delivered record adjusted earnings per share1 of $2.83,” said Jason Mullins, goeasy’s President and Chief Executive Officer. “As a result of the strength in the business, we have updated our forecast to reflect recent trends. We now expect the loan portfolio to approach nearly $4 billion in 2024, with a stable outlook for credit performance, driven by a disciplined approach to growth and credit risk management. With all our major initiatives working together, we remain on our journey to be the leading non-prime lender in Canada,” Mr. Mullins concluded.
Other Key Second Quarter Highlights
easyfinancial
- Revenue of $214 million, up 30%
- 36% of the loan portfolio secured, up from 33%
- 65% of net loan advances in the quarter were issued to new customers, consistent year over year
- Record net customer growth during the quarter of 12,157
- Record home equity originations, which increased 169%
- Record powersports financing originations, which increased 59%
- Record automotive financing originations of $50 million, which increased 451%
- Average loan book per branch3 improved to $4.3 million, an increase of 14%
- Weighted average interest rate3 on consumer loans of 31.7%, down from 33.7%
- Record operating income of $95.6 million, up 28%
- Operating margin of 44.6%, down from 45.4%
easyhome
- Revenue of $37.5 million, broadly flat year over year
- Same store revenue growth3 of 2.8%
- Consumer loan portfolio within easyhome stores increased to $77.1 million, up 35%
- Financial revenue1 from consumer lending increased to $9.9 million, up 35% from $7.3 million
- Operating income of $8.7 million, down 6%
- Operating margin of 23.3%, down from 24.9%
Overall
- 49th consecutive quarter of same store revenue growth3
- 84th consecutive quarter of positive net income
- 2022 marks the 18th consecutive year of paying dividends and the 8th consecutive year of a dividend increase
- Total same store revenue growth3 of 16.8%
- Total customers served over 1.2 million
- Record adjusted return on tangible common equity1 of 38.0%, up from 34.8% in the second quarter of 2021
- Fully drawn weighted average cost of borrowing at 4.9%
- Net debt to net capitalization4 of 70% on June 30, 2022, up from 64% in the prior year and in line with the Company’s target leverage ratio
Six Months Results
For the first six months of 2022, the Company produced record revenues of $484 million, up 30% compared with $373 million in the same period of 2021. Operating income for the period was a record $165 million compared with $120 million in the first six months of 2021, an increase of $45.1 million or 38%. Net income for the first six months of 2022 was $64.4 million and diluted earnings per share was $3.86, compared with $131.4 million or $8.10 per share. Excluding the effects of the adjusting items related to the acquisition of LendCare, corporate development costs and fair value mark-to-market impact on investments, adjusted net income2 for the first six months of 2022 was a record $92.6 million and adjusted diluted earnings per share1 was a record $5.55 compared with $80.4 million or $4.95 per share, increases of 15% and 12%, respectively. Reported return on equity was 16.7%, while adjusted return on equity1 was 24.1%, down from 27.7% in 2021.
Balance Sheet and Liquidity
Total assets were $2.90 billion as of June 30, 2022, an increase of 18% from $2.45 billion as of June 30, 2021, primarily driven by growth in the consumer loan portfolio and partially offset by the decrease in investments mainly due to the disposal of the non-contingent portion of the equity investment in Affirm Holdings Inc. (“Affirm”).
During the quarter, the Company entered into a strategic commercial partnership and agreed to make a minority equity investment of $40 million in Canada Drives, Canada’s largest 100% online car shopping and to-your-door delivery platform. As of June 30, 2022, the Company invested $15 million in convertible notes and committed to purchase an additional $25 million in convertible notes on or before January 1, 2023. The convertible notes mature on June 15, 2025, bear interest at 5% annually and are convertible into preferred shares on defined terms. Through the new strategic partnership, goeasy’s automotive and point-of-sale financing brand, LendCare, will become a preferred non-bank financing provider within Canada Drives’ online automotive retail platform. goeasy will provide automotive financing to a committed portion of the non-prime borrowers who purchase and finance a vehicle through Canada Drives’ platform.
During the quarter, the Company increased its existing revolving securitization warehouse facility (“Securitization Facility”) by $500 million to a total facility of $1.4 billion. The amendment to the Securitization Facility incorporates key modifications including improved eligibility criteria for consumer loans, as well as pool concentration limits, resulting in increased funding capacity. The lending syndicate for the Securitization Facility continues to consist of National Bank Financial Markets, Bank of Montreal and Royal Bank of Canada, and 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 2.94% as of August 8, 2022, the interest rate would be 4.79%. The Company also continues utilizing 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 second quarter of 2022, the Company recognized a $6.8 million pre-tax net fair value loss on its investments, which was mainly related to the unhedged contingent shares of its investment in Affirm. The unrealized fair value loss in Affirm during the period was partially offset by the realized fair value gain in the related total return swaps (“TRS”). Since the initial shares of Affirm were obtained on January 1, 2021, the Company has recognized a realized gain on the non-contingent portion of the investment in Affirm and its related TRS of $66.3 million, a realized gain on the TRS related to the contingent portion of the investment in Affirm of $25.4 million, and an unrealized fair value loss on the contingent portion of the investment in Affirm of $4.5 million. Including the cash received on the initial sale of PayBright Inc. (“PayBright”) to Affirm, the total realized and unrealized gains amount to $109 million, relative to the initial investment of $34 million made in 2019, or approximately 3.2 times the initial investment.
Free cash flow from operations before net growth in gross consumer loans receivable2 in the quarter was $56.9 million, up 18% from $48.2 million in the second quarter of 2021. Based on the cash on hand at the end of the quarter and the borrowing capacity under the Company’s revolving credit facilities, goeasy has approximately $1.09 billion in total funding capacity, which it estimates is sufficient to fund its organic growth through the second quarter of 2025. At quarter-end, the Company’s fully drawn weighted average cost of borrowing was at 4.9%. The Company also estimates that once its existing and available sources of capital are fully utilized, it could continue to grow the loan portfolio by approximately $250 million per year solely from internal cash flows. The Company also estimates that if it were to run-off its consumer loan and consumer leasing portfolios, the value of the total cash repayments paid to the Company over the remaining life of its contracts would be approximately $3.3 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 15 months.
Updated Outlook
On February 16, 2022, the Company provided a 3-year forecast for the years 2022 through 2024. The Company has since experienced accelerated growth in its consumer loans receivable portfolio and consequently, the Company has revised its forecast for the years 2022 through 2024 to reflect the most recent outlook. The Company continues to pursue a long-term strategy that includes expanding its product range, developing its channels of distribution and leveraging risk-based pricing to reduce the cost of borrowing for its consumers and extend the life of its customer relationships. As such, the total yield earned on its consumer loan portfolio1 will gradually decline, while net charge off rates remain stable and operating margins expand. The forecasts outlined below contemplate the Company’s expected domestic organic growth plan and do not include the impact of any future mergers or acquisitions, or the associated gains or losses associated with its investments.
| Forecasts for 2022 | Forecasts for 2023 | Forecasts for 2024 | |
| Gross consumer loans receivable at year end | $2.6 - $2.8 billion | $3.2 - $3.4 billion | $3.8 - $4.0 billion |
| New easyfinancial locations to be opened during the year | 10 - 15 | 10 - 15 | 5 |
| Total Company revenue | $1.00 - $1.04 billion | $1.14 - $1.20 billion | $1.30 - $1.38 billion |
| Total yield on consumer loans (including ancillary products)1 | 36.5% - 38.5% | 35.0% - 37.0% | 34.0% - 36.0% |
| Net charge offs as a percentage of average gross consumer loans receivable | 8.5% - 10.5% | 8.5% - 10.5% | 8.0% - 10.0% |
| Total Company Operating Margin | 35% + | 36% + | 37% + |
| Return on Equity | 22% + | 22% + | 22% + |
Dividend
The Board of Directors has approved a quarterly dividend of $0.91 per share payable on October 14, 2022 to the holders of common shares of record as at the close of business on September 30, 2022.
Forward-Looking Statements
All figures reported above with respect to outlook are targets established by the Company and are subject to change as plans and business conditions vary. Accordingly, investors are cautioned not to place undue reliance on the foregoing guidance. Actual results may differ materially.
This press release includes forward-looking statements about goeasy, including, but not limited to, its business operations, strategy, expected financial performance and condition, the estimated number of new locations to be opened, targets for growth of the consumer loans receivable portfolio, annual revenue growth targets, strategic initiatives, new product offerings and new delivery channels, anticipated cost savings, planned capital expenditures, anticipated capital requirements, liquidity of the Company, plans and references to future operations and results and critical accounting estimates. In certain cases, forward-looking statements are statements that are predictive in nature, depend upon or refer to future events or conditions, and/or can be identified by the use of words such as ‘expects’, ‘anticipates’, ‘intends’, ‘plans’, ‘believes’, ‘budgeted’, ‘estimates’, ‘forecasts’, ‘targets’ or negative versions thereof and similar expressions, and/or state that certain actions, events or results ‘may’, ‘could’, ‘would’, ‘might’ or ‘will’ be taken, occur or be achieved.
Forward-looking statements are based on certain factors and assumptions, including expected growth, results of operations and business prospects and are inherently subject to, among other things, risks, uncertainties and assumptions about the Company’s operations, economic factors and the industry generally, as well as those factors referred to in the Company’s most recent Annual Information Form and Management’s Discussion and Analysis, as available on www.sedar.com, in the section entitled “Risk Factors”. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those expressed or implied by forward-looking statements made by the Company, due to, but not limited to, important factors such as the Company’s ability to enter into new lease and/or financing agreements, collect on existing lease and/or financing agreements, open new locations on favourable terms, purchase products which appeal to customers at a competitive rate, respond to changes in legislation, react to uncertainties related to regulatory action, raise capital under favourable terms, manage the impact of litigation (including shareholder litigation), control costs at all levels of the organization and maintain and enhance the system of internal controls. The Company cautions that the foregoing list is not exhaustive.
The reader is cautioned to consider these, and other factors carefully and not 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., a Canadian company, headquartered in Mississauga, Ontario, provides non-prime leasing and lending services through its easyhome, easyfinancial and LendCare brands. Supported by more than 2,300 employees, the Company offers a wide variety of financial products and services including unsecured and secured instalment loans. Customers can transact seamlessly through an omni-channel model that includes an online and mobile platform, over 400 locations across Canada, and point-of-sale financing offered in the retail, powersports, automotive, home improvement and healthcare verticals, through more than 5,000 merchants across Canada. Throughout the Company’s history, it has acquired and organically served over 1.2 million Canadians and originated over $8.8 billion in loans, with one in three easyfinancial customers graduating to prime credit and 60% increasing their credit score within 12 months of borrowing.
Accredited by the Better Business Bureau, goeasy is the proud recipient of several awards including Waterstone Canada’s Most Admired Corporate Cultures, Glassdoor Top CEO Award, Achievers Top 50 Most Engaged Workplaces in North America, Greater Toronto Top Employers Award, the Digital Finance Institute’s Canada’s Top 50 FinTech Companies, ranking on the TSX30 and placing on the Report on Business ranking of Canada’s Top Growing Companies, honoured by The Globe and Mail’s Women Lead Here executive gender diversity benchmark and has been certified as a Great Place to Work®. The company is represented by a diverse group of team members from over 75 nationalities who believe strongly in giving back to the communities in which it operates. To date, goeasy has raised and donated over $4.39 million to support its long-standing partnerships with BGC Canada, Habitat for Humanity 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. Visit www.goeasy.com.
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 | |
| June 30, | December 31, | |
| 2022 | 2021 | |
| ASSETS | ||
| Cash | 95,900 | 102,479 |
| Accounts receivable | 22,877 | 20,769 |
| Prepaid expenses | 8,651 | 8,018 |
| Income taxes recoverable | 3,357 | - |
| Consumer loans receivable, net | 2,223,563 | 1,899,631 |
| Investments | 36,618 | 64,441 |
| Lease assets | 45,378 | 47,182 |
| Property and equipment, net | 34,811 | 35,285 |
| Derivative financial assets | 26,291 | 20,634 |
| Intangible assets, net | 157,871 | 159,651 |
| Right-of-use assets, net | 59,507 | 57,140 |
| Goodwill | 180,923 | 180,923 |
| TOTAL ASSETS | 2,895,747 | 2,596,153 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Liabilities | ||
| Revolving credit facility | 143,331 | - |
| Accounts payable and accrued liabilities | 46,992 | 57,134 |
| Income taxes payable | - | 27,859 |
| Dividends payable | 14,407 | 10,692 |
| Unearned revenue | 20,592 | 11,354 |
| Accrued interest | 7,972 | 8,135 |
| Deferred tax liabilities, net | 29,923 | 38,648 |
| Lease liabilities | 68,168 | 65,607 |
| Secured borrowings | 138,378 | 173,959 |
| Revolving securitization warehouse facility | 526,095 | 292,814 |
| Derivative financial liabilities | 23,048 | 34,132 |
| Notes payable | 1,108,363 | 1,085,906 |
| TOTAL LIABILITIES | 2,127,269 | 1,806,240 |
| Shareholders' equity | ||
| Share capital | 357,377 | 363,514 |
| Contributed surplus | 18,630 | 22,583 |
| Accumulated other comprehensive income | 12,452 | 8,567 |
| Retained earnings | 380,019 | 395,249 |
| TOTAL SHAREHOLDERS' EQUITY | 768,478 | 789,913 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 2,895,747 | 2,596,153 |
| goeasy Ltd. | ||||||||
| INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||
| (Unaudited) | ||||||||
| (expressed in thousands of Canadian dollars except earnings per share) | ||||||||
| Three Months Ended | Six Months Ended | |||||||
| June 30, | June 30, | June 30, | June 30, | |||||
| 2022 | 2021 | 2022 | 2021 | |||||
| REVENUE | ||||||||
| Interest income | 169,311 | 128,483 | 326,135 | 233,977 | ||||
| Lease revenue | 25,948 | 28,348 | 52,826 | 56,785 | ||||
| Commissions earned | 51,343 | 42,435 | 95,201 | 75,772 | ||||
| Charges and fees | 5,050 | 3,090 | 9,632 | 5,996 | ||||
| 251,652 | 202,356 | 483,794 | 372,530 | |||||
| EXPENSES BEFORE DEPRECIATION AND AMORTIZATION | ||||||||
| Salaries and benefits | 43,908 | 43,804 | 85,872 | 79,210 | ||||
| Stock-based compensation | 2,490 | 1,901 | 4,790 | 3,987 | ||||
| Advertising and promotion | 9,383 | 7,172 | 18,893 | 13,064 | ||||
| Bad debts | 67,936 | 48,873 | 122,085 | 78,147 | ||||
| Occupancy | 6,184 | 5,753 | 12,563 | 11,277 | ||||
| Technology costs | 5,460 | 4,017 | 10,700 | 7,821 | ||||
| Other expenses | 10,799 | 15,409 | 22,662 | 22,504 | ||||
| 146,160 | 126,929 | 277,565 | 216,010 | |||||
| DEPRECIATION AND AMORTIZATION | ||||||||
| Depreciation of lease assets | 8,195 | 8,843 | 16,660 | 18,086 | ||||
| Amortization of intangible assets | 4,915 | 4,134 | 10,128 | 5,880 | ||||
| Depreciation of right-of-use assets | 4,971 | 4,422 | 9,840 | 8,766 | ||||
| Depreciation of property and equipment | 2,228 | 1,938 | 4,453 | 3,766 | ||||
| 20,309 | 19,337 | 41,081 | 36,498 | |||||
| TOTAL OPERATING EXPENSES | 166,469 | 146,266 | 318,646 | 252,508 | ||||
| OPERATING INCOME | 85,183 | 56,090 | 165,148 | 120,022 | ||||
| OTHER (LOSS) INCOME | (6,819 | ) | (4,086 | ) | (24,344 | ) | 83,286 | |
| FINANCE COSTS | ||||||||
| Interest expense and amortization of deferred financing charges | 23,590 | 20,066 | 46,233 | 33,561 | ||||
| Interest expense on lease liabilities | 855 | 756 | 1,691 | 1,497 | ||||
| 24,445 | 20,822 | 47,924 | 35,058 | |||||
| INCOME BEFORE INCOME TAXES | 53,919 | 31,182 | 92,880 | 168,250 | ||||
| INCOME TAX EXPENSE (RECOVERY) | ||||||||
| Current | 20,325 | 15,811 | 36,621 | 32,808 | ||||
| Deferred | (4,706 | ) | (4,096 | ) | (8,137 | ) | 4,000 | |
| 15,619 | 11,715 | 28,484 | 36,808 | |||||
| NET INCOME | 38,300 | 19,467 | 64,396 | 131,442 | ||||
| BASIC EARNINGS PER SHARE | 2.37 | 1.20 | 3.96 | 8.39 | ||||
| DILUTED EARNINGS PER SHARE | 2.32 | 1.16 | 3.86 | 8.10 | ||||
| Segmented Reporting | ||||||
| Three Months Ended June 30, 2022 | ||||||
| ($ in 000's except earnings per share) | easyfinancial | easyhome | Corporate | Total | ||
| Revenue | ||||||
| Interest income | 162,140 | 7,171 | - | 169,311 | ||
| Lease revenue | - | 25,948 | - | 25,948 | ||
| Commissions earned | 47,897 | 3,446 | - | 51,343 | ||
| Charges and fees | 4,077 | 973 | - | 5,050 | ||
| 214,114 | 37,538 | - | 251,652 | |||
| Total operating expenses before depreciation and amortization | 110,158 | 18,327 | 17,675 | 146,160 | ||
| Depreciation and amortization | ||||||
| Depreciation and amortization of lease assets, property and equipment and intangible assets | 5,626 | 8,485 | 1,227 | 15,338 | ||
| Depreciation of right-of-use assets | 2,748 | 1,988 | 235 | 4,971 | ||
| 8,374 | 10,473 | 1,462 | 20,309 | |||
| Segment operating income (loss) | 95,582 | 8,738 | (19,137 | ) | 85,183 | |
| Other loss | (6,819 | ) | ||||
| Finance costs | ||||||
| Interest expense and amortization of deferred financing charges | 23,590 | |||||
| Interest expense on lease liabilities | 855 | |||||
| 24,445 | ||||||
| Income before income taxes | 53,919 | |||||
| Income taxes | 15,619 | |||||
| Net Income | 38,300 | |||||
| Diluted earnings per share | 2.32 | |||||
| Three Months Ended June 30, 2021 | ||||||
| ($ in 000's except earnings per share) | easyfinancial | easyhome | Corporate | Total | ||
| Revenue | ||||||
| Interest income | 123,036 | 5,447 | - | 128,483 | ||
| Lease revenue | - | 28,348 | - | 28,348 | ||
| Commissions earned | 39,665 | 2,770 | - | 42,435 | ||
| Charges and fees | 2,187 | 903 | - | 3,090 | ||
| 164,888 | 37,468 | - | 202,356 | |||
| Total operating expenses before depreciation and amortization | 83,291 | 17,066 | 26,572 | 126,929 | ||
| Depreciation and amortization | ||||||
| Depreciation and amortization of lease assets, property and equipment and intangible assets | 4,458 | 9,165 | 1,292 | 14,915 | ||
| Depreciation of right-of-use-assets | 2,288 | 1,918 | 216 | 4,422 | ||
| 6,746 | 11,083 | 1,508 | 19,337 | |||
| Segment operating income (loss) | 74,851 | 9,319 | (28,080 | ) | 56,090 | |
| Other loss | (4,086 | ) | ||||
| Finance costs | ||||||
| Interest expense and amortization of deferred financing charges | 20,066 | |||||
| Interest expense on lease liabilities | 756 | |||||
| 20,822 | ||||||
| Income before income taxes | 31,182 | |||||
| Income taxes | 11,715 | |||||
| Net Income | 19,467 | |||||
| Diluted earnings per share | 1.16 | |||||
| Six Months Ended June 30, 2022 | ||||||
| ($ in 000's except earnings per share) | easyfinancial | easyhome | Corporate | Total | ||
| Revenue | ||||||
| Interest income | 312,289 | 13,846 | - | 326,135 | ||
| Lease revenue | - | 52,826 | - | 52,826 | ||
| Commissions earned | 88,754 | 6,447 | - | 95,201 | ||
| Charges and fees | 7,681 | 1,951 | - | 9,632 | ||
| 408,724 | 75,070 | - | 483,794 | |||
| Total operating expenses before depreciation and amortization | 205,810 | 35,775 | 35,980 | 277,565 | ||
| Depreciation and amortization | ||||||
| Depreciation and amortization of lease assets, property and equipment and intangible assets | 11,536 | 17,255 | 2,450 | 31,241 | ||
| Depreciation of right-of-use assets | 5,471 | 3,931 | 438 | 9,840 | ||
| 17,007 | 21,186 | 2,888 | 41,081 | |||
| Segment operating income (loss) | 185,907 | 18,109 | (38,868 | ) | 165,148 | |
| Other loss | (24,344 | ) | ||||
| Finance costs | ||||||
| Interest expense and amortization of deferred financing charges | 46,233 | |||||
| Interest expense on lease liabilities | 1,691 | |||||
| 47,924 | ||||||
| Income before income taxes | 92,880 | |||||
| Income taxes | 28,484 | |||||
| Net Income | 64,396 | |||||
| Diluted earnings per share | 3.86 | |||||
| Six Months Ended June 30, 2021 | ||||||
| ($ in 000's except earnings per share) | easyfinancial | easyhome | Corporate | Total | ||
| Revenue | ||||||
| Interest income | 223,540 | 10,437 | - | 233,977 | ||
| Lease revenue | - | 56,785 | - | 56,785 | ||
| Commissions earned | 70,575 | 5,197 | - | 75,772 | ||
| Charges and fees | 4,102 | 1,894 | - | 5,996 | ||
| 298,217 | 74,313 | - | 372,530 | |||
| Total operating expenses before depreciation and amortization | 140,617 | 33,391 | 42,002 | 216,010 | ||
| Depreciation and amortization | ||||||
| Depreciation and amortization of lease assets, property and equipment and intangible assets | 6,543 | 18,740 | 2,449 | 27,732 | ||
| Depreciation of right-of-use-assets | 4,509 | 3,826 | 431 | 8,766 | ||
| 11,052 | 22,566 | 2,880 | 36,498 | |||
| Segment operating income (loss) | 146,548 | 18,356 | (44,882 | ) | 120,022 | |
| Other income | 83,286 | |||||
| Finance costs | ||||||
| Interest expense and amortization of deferred financing charges | 33,561 | |||||
| Interest expense on lease liabilities | 1,497 | |||||
| 35,058 | ||||||
| Income before income taxes | 168,250 | |||||
| Income taxes | 36,808 | |||||
| Net Income | 131,442 | |||||
| Diluted earnings per share | 8.10 | |||||
| Summary of Financial Results and Key Performance Indicators | ||||||||
| ($ in 000’s except earnings per share and percentages) | Three Months Ended | Variance | Variance | |||||
| June 30, 2022 | June 30, 2021 | $ / bps | % change | |||||
| Summary Financial Results | ||||||||
| Revenue | 251,652 | 202,356 | 49,296 | 24.4 | % | |||
| Operating expenses before depreciation and amortization2,3 | 146,160 | 126,929 | 19,231 | 15.2 | % | |||
| EBITDA1 | 90,478 | 62,498 | 27,980 | 44.8 | % | |||
| EBITDA margin1 | 36.0 | % | 30.9 | % | 510 bps | 16.5 | % | |
| Depreciation and amortization expense2 | 20,309 | 19,337 | 972 | 5.0 | % | |||
| Operating income | 85,183 | 56,090 | 29,093 | 51.9 | % | |||
| Operating margin | 33.8 | % | 27.7 | % | 610 bps | 22.0 | % | |
| Other loss2,3 | (6,819 | ) | (4,086 | ) | (2,733 | ) | (66.9 | %) |
| Finance costs3 | 24,445 | 20,822 | 3,623 | 17.4 | % | |||
| Effective income tax rate | 29.0 | % | 37.6 | % | (860 bps) | (22.9 | %) | |
| Net income | 38,300 | 19,467 | 18,833 | 96.7 | % | |||
| Diluted earnings per share | 2.32 | 1.16 | 1.16 | 100.0 | % | |||
| Return on assets | 5.5 | % | 3.8 | % | 170 bps | 44.7 | % | |
| Return on equity | 20.2 | % | 12.0 | % | 820 bps | 68.3 | % | |
| Return on tangible common equity1 | 33.0 | % | 16.8 | % | 1620 bps | 96.4 | % | |
| Adjusted Financial Results1,2,3 | ||||||||
| Adjusted operating income | 88,740 | 79,870 | 8,870 | 11.1 | % | |||
| Adjusted operating margin | 35.3 | % | 39.5 | % | (420 bps) | (10.6 | %) | |
| Adjusted net income | 46,830 | 43,687 | 3,143 | 7.2 | % | |||
| Adjusted diluted earnings per share | 2.83 | 2.61 | 0.22 | 8.4 | % | |||
| Adjusted return on assets | 6.7 | % | 8.6 | % | (190 bps) | (22.1 | %) | |
| Adjusted return on equity | 24.7 | % | 26.9 | % | (220 bps) | (8.2 | %) | |
| Adjusted return on tangible common equity | 38.0 | % | 34.8 | % | 320 bps | 9.2 | % | |
| Key Performance Indicators | ||||||||
| Same store revenue growth (overall)1 | 16.8 | % | 20.2 | % | (340 bps) | (16.8 | %) | |
| Same store revenue growth (easyhome)1 | 2.8 | % | 7.9 | % | (510 bps) | (64.6 | %) | |
| Segment Financials | ||||||||
| easyfinancial revenue | 214,114 | 164,888 | 49,226 | 29.9 | % | |||
| easyfinancial operating margin | 44.6 | % | 45.4 | % | (80 bps) | (1.8 | %) | |
| easyhome revenue | 37,538 | 37,468 | 70 | 0.2 | % | |||
| easyhome operating margin | 23.3 | % | 24.9 | % | (160 bps) | (6.4 | %) | |
| Portfolio Indicators | ||||||||
| Gross consumer loans receivable | 2,369,843 | 1,795,844 | 573,999 | 32.0 | % | |||
| Growth in consumer loans receivable4 | 215,543 | 518,553 | (303,010 | ) | (58.4 | %) | ||
| Gross loan originations | 628,189 | 379,082 | 249,107 | 65.7 | % | |||
| Total yield on consumer loans (including ancillary products)1 | 39.0 | % | 42.8 | % | (380 bps) | (8.9 | %) | |
| Net charge offs as a percentage of average gross consumer loans receivable | 9.3 | % | 8.2 | % | 110 bps | 13.4 | % | |
| Free cash flows from operation before net growth in gross consumer loans receivable1 | 56,918 | 48,246 | 8,672 | 18.0 | % | |||
| Potential monthly lease revenue1 | 7,634 | 8,322 | (688 | ) | (8.3 | %) | ||
| 1 EBITDA, 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, adjusted operating margin, adjusted diluted earnings per share, adjusted return on equity, adjusted return on asset, reported and adjusted return on tangible common equity and total yield on consumer loans (including ancillary products) are non-IFRS ratios. Same store revenue growth (overall), same store revenue growth (easyhome) and potential monthly leasing revenue are supplementary financial measures. See description in “Key Performance Indicators and Non-IFRS Measures” section in this press release. 2 During the three-month period ended June 30, 2022, the Company had a total of $10.4 million before-tax ($8.5 million after-tax) of adjusting items which include: Adjusting items related to the acquisition of LendCare • Integration costs related to consulting costs, employee incentives, representation and warranty insurance cost, and other integration costs related to the acquisition of LendCare. Integration costs amounting to $0.3 million before-tax ($0.2 million after-tax) were reported under Operating expenses before depreciation and amortization; • Amortization of $131 million intangible asset related to the acquisition of LendCare with an estimated useful life of ten years amounting to $3.3 million before-tax ($2.4 million after-tax); and Adjusting item related to other loss • Fair value losses mainly on investments in Affirm and its related TRS amounting to $6.8 million before-tax ($5.9 million after-tax). 3 During the three-month period ended June 30, 2021, the Company had a total of $29.6 million before-tax ($24.2 million after-tax) of adjusting items which include: Adjusting items related to the acquisition of LendCare • Transaction costs of $8.4 million before-tax ($8.0 million after-tax) which include advisory and consulting costs, legal costs, and other transaction costs related to the acquisition of LendCare reported under Operating expenses before depreciation and amortization. Amounting to $6.7 million which are non tax-deductible and loan commitment fee related to the acquisition of LendCare reported under Finance costs amounting to $1.7 million before-tax ($1.3 million after-tax); • Integration costs related to advisory and consulting costs, employee incentives, representation and warranty insurance cost, and other integration costs related to the acquisition of LendCare reported under Operating expense before depreciation and amortization amounting to $0.6 million before-tax ($0.5 million after-tax); • Bad debt expense related to the day one loan loss provision on the acquired loan portfolio from the LendCare amounting to $14.3 million before-tax ($10.5 million after-tax). Adjusting item related to other income • Fair value loss mainly on investments in Affirm and its related TRS amounting to $4.1 million before-tax ($3.5 million after-tax). 4 Growth in consumer loans receivable for the three-month period ended June 30, 2021 includes $444.5 million of gross loans purchased through the acquisition of LendCare. | ||||||||
| ($ in 000’s except earnings per share and percentages) | Six Months Ended | Variance | Variance | |||||
| June 30, 2022 | June 30, 2021 | $ / bps | % change | |||||
| Summary Financial Results | ||||||||
| Revenue | 483,794 | 372,530 | 111,264 | 29.9 | % | |||
| Operating expenses before depreciation and amortization2 | 277,565 | 216,010 | 61,555 | 28.5 | % | |||
| EBITDA1 | 165,225 | 221,720 | (56,495 | ) | (25.5 | %) | ||
| EBITDA margin1 | 34.2 | % | 59.5 | % | (2,530 bps) | -42.5 | % | |
| Depreciation and amortization expense2 | 41,081 | 36,498 | 4,583 | 12.6 | % | |||
| Operating income | 165,148 | 120,022 | 45,126 | 37.6 | % | |||
| Operating margin | 34.1 | % | 32.2 | % | 190 bps | 5.9 | % | |
| Other income2,3 | (24,344 | ) | 83,286 | (107,630 | ) | (129.2 | %) | |
| Finance costs3 | 47,924 | 35,058 | 12,866 | 36.7 | % | |||
| Effective income tax rate | 30.7 | % | 21.9 | % | 880 bps | 40.2 | % | |
| Net income | 64,396 | 131,442 | (67,046 | ) | (51.0 | %) | ||
| Diluted earnings per share | 3.86 | 8.10 | (4.24 | ) | (52.3 | %) | ||
| Return on assets | 4.7 | % | 14.2 | % | (950 bps) | (66.9 | %) | |
| Return on equity | 16.7 | % | 45.3 | % | (2,860 bps) | (63.1 | %) | |
| Return on tangible common equity1 | 27.6 | % | 56.0 | % | (2,840 bps) | (50.7 | %) | |
| Adjusted Financial Results1,2,3 | ||||||||
| Adjusted operating income | 174,801 | 144,481 | 30,320 | 21.0 | % | |||
| Adjusted operating margin | 36.1 | % | 38.8 | % | (270 bps) | (7.0 | %) | |
| Adjusted net income | 92,609 | 80,366 | 12,243 | 15.2 | % | |||
| Adjusted diluted earnings per share | 5.55 | 4.95 | 0.60 | 12.1 | % | |||
| Adjusted return on assets | 6.8 | % | 8.7 | % | (190 bps) | (21.8 | %) | |
| Adjusted return on equity | 24.1 | % | 27.7 | % | (360 bps) | (13.0 | %) | |
| Adjusted return on tangible common equity | 36.9 | % | 33.8 | % | 310 bps | 9.2 | % | |
| Key Performance Indicators | ||||||||
| Same store revenue growth (overall)1 | 15.1 | % | 10.4 | % | 470 bps | 45.2 | % | |
| Same store revenue growth (easyhome)1 | 2.8 | % | 6.4 | % | (360 bps) | (56.3 | %) | |
| Segment Financials | ||||||||
| easyfinancial revenue | 408,724 | 298,217 | 110,507 | 37.1 | % | |||
| easyfinancial operating margin | 45.5 | % | 49.1 | % | (360 bps) | (7.3 | %) | |
| easyhome revenue | 75,070 | 74,313 | 757 | 1.0 | % | |||
| easyhome operating margin | 24.1 | % | 24.7 | % | (60 bps) | (2.4 | %) | |
| Portfolio Indicators | ||||||||
| Gross consumer loans receivable | 2,369,843 | 1,795,844 | 573,999 | 32.0 | % | |||
| Growth in consumer loans receivable4 | 339,504 | 549,004 | (209,500 | ) | (38.2 | %) | ||
| Gross loan originations | 1,104,732 | 651,433 | 453,299 | 69.6 | % | |||
| Total yield on consumer loans (including ancillary products)1 | 38.9 | % | 43.4 | % | (450 bps) | (10.4 | %) | |
| Net charge-offs as a percentage of average gross consumer loans receivable | 9.1 | % | 8.6 | % | 50 bps | 5.8 | % | |
| Free cash flows from operation before net growth in gross consumer loans receivable1 | 96,846 | 111,412 | (14,566 | ) | (13.1 | %) | ||
| Potential monthly lease revenue1 | 7,634 | 8,322 | (688 | ) | (8.3 | %) | ||
| 1 EBITDA, 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, adjusted operating margin, adjusted diluted earnings per share, adjusted return on equity, adjusted return on asset, reported and adjusted return on tangible common equity and total yield on consumer loans (including ancillary products) are non-IFRS ratios. Same store revenue growth (overall), same store revenue growth (easyhome) and potential monthly lease revenue are supplementary financial measures. Non-IFRS measures, non-IFRS ratios and supplemental financial 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. See description in “Key Performance Indicators and Non-IFRS Measures” section in this press release. 2 During the six months ended June 30, 2022, the Company had a total of $34.0 million before-tax ($28.2 million after-tax) adjusting items which include: Adjusting items related to corporate development costs • Corporate development costs of $2.3 million ($1.7 million after-tax) are related to the exploration of a strategic acquisition opportunity, which the company elect not to undertake, including advisory, consulting and legal costs reported under Operating expenses before depreciation and amortization. Adjusting items relating to the acquisition of LendCare • Integration costs related to consulting costs, employee incentives, representation and warranty insurance cost, and other integration costs related to the acquisition of LendCare. Integration costs amounting to $0.8 million before-tax ($0.6 million after-tax) were reported under Operating expenses before depreciation and amortization; • Amortization of $131 million intangible asset related to the acquisition of LendCare with an estimated useful life of ten years amounting to $6.6 million before-tax ($4.8 million after-tax). Adjusting item related to other income • Fair value loss mainly on investments in Affirm and its related TRS amounting to $24.3 million before-tax ($21.1 million after-tax). 3 During the six months ended June 30, 2021, the Company had a total of $57.1 million before-tax ($51.1 million after-tax) of adjusting items which include: • Transaction costs of $9.1 million before-tax ($8.7 million after-tax) which include advisory and consulting costs, legal costs, and other direct transaction costs amounting to $7.4 million related to the acquisition of LendCare reported under Operating expense before depreciation and amortization which are not tax deductible and loan commitment fee under Finance costs amounting to $1.7 million before-tax ($1.3 million after-tax). • Bad debt expense related to the day one loan loss provision on the acquired loan portfolio from LendCare amounting to $14.3 million before-tax ($10.5 million after-tax). 4 Growth in consumer loans receivable for the six-month period ended June 30, 2021 includes $444.5 million of gross loans purchased through the acquisition of LendCare. | ||||||||
Non-IFRS Measures and Other Financial Measures
The Company uses a number of financial measures to assess its performance. Some of these measures are not calculated in accordance with International Financial Reporting Standards (IFRS) as issued by International Accounting Standards Board (IASB), are not identified by IFRS and do not have standardized meanings that would ensure consistency and comparability among companies using these measures. The Company believes that non-IFRS measures are useful in assessing ongoing business performance and provide readers with a better understanding of how management assesses performance. These non-IFRS measures are used throughout this press release and listed below. An explanation of the composition of non-IFRS measures and other financial measures can be found in the Company’s Management’s Discussion & Analysis (“MD&A”), available on www.sedar.com.
Adjusted Net Income and Adjusted Diluted Earnings Per Share
Adjusted net income is a non-IFRS measure, while adjusted diluted earnings per share is a non-IFRS ratio. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 37 of the Company’s MD&A for the three and six-month periods ended June 30, 2022. Items used to calculate adjusted net income and adjusted earnings per share for the three and six-month periods ended June 30, 2022 and 2021 include those indicated in the chart below:
| Three Months Ended | Six Months Ended | |||||||
($in 000’s except earnings per share) | June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | ||||
| Net income as stated | 38,300 | 19,467 | 64,396 | 131,442 | ||||
| Impact of adjusting items | ||||||||
| Operating expenses before depreciation and amortization | ||||||||
| Corporate development costs1 | - | - | 2,314 | - | ||||
| Integration costs3 | 282 | 648 | 789 | 648 | ||||
| Transaction costs2 | - | 6,679 | - | 7,359 | ||||
| Day one loan loss provision on the acquired loans 4 | - | 14,252 | - | 14,252 | ||||
| Amortization of intangible assets | ||||||||
| Amortization of acquired intangible assets 5 | 3,275 | 2,200 | 6,550 | 2,200 | ||||
| Other loss (income)6 | 6,819 | 4,086 | 24,344 | (83,286 | ) | |||
| Finance costs | ||||||||
| Transaction costs2 | - | 1,726 | - | 1,726 | ||||
| Total pre-tax impact of adjusting items | 10,376 | 29,591 | 33,997 | (57,101 | ) | |||
| Income tax impact of above adjusting items | (1,846 | ) | (5,371 | ) | (5,784 | ) | 6,025 | |
| After-tax impact of adjusting items | 8,530 | 24,220 | 28,213 | (51,076 | ) | |||
| Adjusted net income | 46,830 | 43,687 | 92,609 | 80,366 | ||||
| Weighted average number of diluted shares outstanding | 16,522 | 16,768 | 16,677 | 16,230 | ||||
| Diluted earnings per share as stated | 2.32 | 1.16 | 3.86 | 8.10 | ||||
| Per share impact of adjusting items | 0.51 | 1.45 | 1.69 | (3.15 | ) | |||
| Adjusted diluted earnings per share | 2.83 | 2.61 | 5.55 | 4.95 | ||||
Adjusting item related to corporate development costs
1 Corporate development costs are related to the exploration of a strategic acquisition opportunity, which the Company elected to not undertake, including advisory, consulting and legal costs reported under Operating expenses before depreciation and amortization.
Adjusting items related to the LendCare Acquisition
2 Transaction costs included advisory and consulting costs, legal costs, and other direct transaction costs related to the acquisition of LendCare reported under Operating expenses before depreciation and amortization and loan commitment fees related to the acquisition of LendCare reported under Finance costs.
3 Integration costs related to advisory and consulting costs, employee incentives, representation and warranty insurance cost, other integration costs related to the acquisition of LendCare. Integration costs were reported under Operating expenses before depreciation and amortization.
4 Bad debt expense related to the day one loan loss provision on the acquired loan portfolio from LendCare.
5 Amortization of $131 million intangible asset related to the acquisition of LendCare with an estimated useful life of ten years.
Adjusting item related to other income (loss)
6 For the three and six-month periods ended June 30, 2022 and 2021, fair value gains (losses) mainly related to investments in Affirm and its related TRS.
Adjusted Operating Income and Adjusted Operating Margin
Adjusted operating income is a non-IFRS measure, while adjusted operating margin is a non-IFRS ratio. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 37 of the Company’s MD&A for the three and six-month periods ended June 30, 2022. Items used to calculate adjusted operating income and adjusted operating margins for the three and six-month periods ended June 30, 2022 and 2021 include those indicated in the chart below:
| Three Months Ended | ||||||||
($in 000’s except percentages) | June 30, 2022 | June 30, 2022 (adjusted) | June 30, 2021 | June 30, 2021 (adjusted) | ||||
| easyfinancial | ||||||||
| Operating income | 95,582 | 95,582 | 74,851 | 74,851 | ||||
| Divided by revenue | 214,114 | 214,114 | 164,888 | 164,888 | ||||
| easyfinancial operating margin | 44.6 | % | 44.6 | % | 45.4 | % | 45.4 | % |
| easyhome | ||||||||
| Operating income | 8,738 | 8,738 | 9,319 | 9,319 | ||||
| Divided by revenue | 37,538 | 37,538 | 37,468 | 37,468 | ||||
| easyhome operating margin | 23.3 | % | 23.3 | % | 24.9 | % | 24.9 | % |
| Total | ||||||||
| Operating income | 85,183 | 85,183 | 56,090 | 56,090 | ||||
| Operating expenses before depreciation and amortization1 | ||||||||
| Integration costs | - | 282 | - | 648 | ||||
| Transaction costs | - | - | - | 6,679 | ||||
| Day one loan loss provision on the acquired loans | - | - | - | 14,252 | ||||
| Amortization of intangible assets1 | ||||||||
| Amortization of acquired intangible assets | - | 3,275 | - | 2,200 | ||||
| Adjusted operating income | 85,183 | 88,740 | 56,090 | 79,869 | ||||
| Divided by revenue | 251,652 | 251,652 | 202,356 | 202,356 | ||||
| Total operating margin | 33.8 | % | 35.3 | % | 27.7 | % | 39.5 | % |
1 For explanation of adjusting items, refer to the “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section above.
| Six Months Ended | ||||||||
($in 000’s except percentages) | June 30, 2022 | June 30, 2022 (adjusted) | June 30, 2021 | June 30, 2021 (adjusted) | ||||
| easyfinancial | ||||||||
| Operating income | 185,907 | 185,907 | 146,548 | 146,548 | ||||
| Divided by revenue | 408,724 | 408,724 | 298,217 | 298,217 | ||||
| easyfinancial operating margin | 45.5 | % | 45.5 | % | 49.1 | % | 49.1 | % |
| easyhome | ||||||||
| Operating income | 18,109 | 18,109 | 18,356 | 18,356 | ||||
| Divided by revenue | 75,070 | 75,070 | 74,313 | 74,313 | ||||
| easyhome operating margin | 24.1 | % | 24.1 | % | 24.7 | % | 24.7 | % |
| Total | ||||||||
| Operating income | 165,148 | 165,148 | 120,022 | 120,022 | ||||
| Operating expenses before depreciation and amortization1 | ||||||||
| Corporate development costs | - | 2,314 | - | - | ||||
| Integration costs | - | 789 | - | 648 | ||||
| Transaction costs | - | - | - | 7,359 | ||||
| Day one loan loss provision on the acquired loans | - | - | - | 14,252 | ||||
| Amortization of intangible assets1 | ||||||||
| Amortization of acquired intangible assets | - | 6,550 | - | 2,200 | ||||
| Adjusted operating income | 165,148 | 174,801 | 120,022 | 144,481 | ||||
| Divided by revenue | 483,794 | 483,794 | 372,530 | 372,530 | ||||
| Total operating margin | 34.1 | % | 36.1 | % | 32.2 | % | 38.8 | % |
1 For explanation of adjusting items, refer to the “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section above.
Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and EBITDA Margin
EBITDA is a non-IFRS measure, while EBITDA margin is a non-IFRS ratio. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 37 of the Company’s MD&A for the three and six-month periods ended June 30, 2022. Items used to calculate EBITDA and EBITDA margin for the three and six-month periods ended June 30, 2022 and 2021 include those indicated in the chart below:
| Three Months Ended | Six Months Ended | |||||||
| ($in 000’s except percentages) | June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | ||||
| Net income as stated | 38,300 | 19,467 | 64,396 | 131,442 | ||||
| Finance cost | 24,445 | 20,822 | 47,924 | 35,058 | ||||
| Income tax expense | 15,619 | 11,715 | 28,484 | 36,808 | ||||
| Depreciation and amortization | 20,309 | 19,337 | 41,081 | 36,498 | ||||
| Depreciation of lease assets | (8,195 | ) | (8,843 | ) | (16,660 | ) | (18,086 | ) |
| EBITDA | 90,478 | 62,498 | 165,225 | 221,720 | ||||
| Divided by revenue | 251,652 | 202,356 | 483,794 | 372,530 | ||||
| EBITDA margin | 36.0 | % | 30.9 | % | 34.2 | % | 59.5 | % |
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 37 of the Company’s MD&A for the three and six-month periods ended June 30, 2022. Items used to calculate free cash flow from operations before net growth in gross consumer loans receivable for the three and six-month periods ended June 30, 2022 and 2021 include those indicated in the chart below:
| Three Months Ended | Six Months Ended | |||||||
| June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||
| Cash (used in) provided by operating activities | (158,625 | ) | (25,787 | ) | (242,658 | ) | 6,928 | |
| Net growth in gross consumer loans receivable during the period1 | 215,543 | 74,033 | 339,504 | 104,484 | ||||
| Free cash flows from operations before net growth in gross consumer loans receivable | 56,918 | 48,246 | 96,846 | 111,412 | ||||
1 Excludes $444.5 million of gross loans purchased through the acquisition of LendCare in 2021.
Adjusted Return on Assets
Adjusted return on assets is a non-IFRS ratio. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 37 of the Company’s MD&A for the three and six-month periods ended June 30, 2022. Items used to calculate adjusted return on assets for the three and six-month periods ended June 30, 2022 and 2021 include those indicated in the chart below:
| Three Months Ended | ||||||||
| ($in 000’s except percentages) | June 30, 2022 | June 30, 2022 (adjusted) | June 30, 2021 | June 30, 2021 (adjusted) | ||||
| Net income as stated | 38,300 | 38,300 | 19,467 | 19,467 | ||||
| After-tax impact of adjusting items1 | - | 8,530 | - | 24,220 | ||||
| Adjusted net income | 38,300 | 46,830 | 19,467 | 43,687 | ||||
| Multiplied by number of periods in a year | X 4 | X 4 | X 4 | X 4 | ||||
| Divided by average total assets for the period | 2,792,034 | 2,792,034 | 2,031,583 | 2,031,583 | ||||
| Return on assets | 5.5 | % | 6.7 | % | 3.8 | % | 8.6 | % |
1 For explanation of adjusting items, refer to the “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section above.
| Six Months Ended | ||||||||
| ($in 000’s except percentages) | June 30, 2022 | June 30, 2022 (adjusted) | June 30, 2021 | June 30, 2021 (adjusted) | ||||
| Net income as stated | 64,396 | 64,396 | 131,442 | 131,442 | ||||
| After-tax impact of adjusting items1 | - | 28,213 | - | (51,076 | ) | |||
| Adjusted net income | 63,396 | 92,609 | 131,442 | 80,366 | ||||
| Multiplied by number of periods in a year | X 4/2 | X 4/2 | X 4/2 | X 4/2 | ||||
| Divided by average total assets for the period | 2,726,740 | 2,726,740 | 1,855,027 | 1,855,027 | ||||
| Return on assets | 4.7 | % | 6.8 | % | 14.2 | % | 8.7 | % |
1 For explanation of adjusting items, refer to the “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section above.
Adjusted Return on Equity
Adjusted return on equity is a non-IFRS ratio. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 37 of the Company’s MD&A for the three and six-month periods ended June 30, 2022. Items used to calculate adjusted return on equity for the three and six-month periods ended June 30, 2022 and 2021 include those indicated in the chart below:
| Three Months Ended | ||||||||
| ($in 000’s except percentages) | June 30, 2022 | June 30, 2022 (adjusted) | June 30, 2021 | June 30, 2021 (adjusted) | ||||
| Net income as stated | 38,300 | 38,300 | 19,467 | 19,467 | ||||
| After-tax impact of adjusting items1 | - | 8,530 | - | 24,220 | ||||
| Adjusted net income | 38,300 | 46,830 | 19,467 | 43,687 | ||||
| Multiplied by number of periods in a year | X 4 | X 4 | X 4 | X 4 | ||||
| Divided by average shareholders’ equity for the period | 759,896 | 759,896 | 649,529 | 649,529 | ||||
| Return on equity | 20.2 | % | 24.7 | % | 12.0 | % | 26.9 | % |
1 For explanation of adjusting items, refer to the “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section above.
| Six Months Ended | ||||||||
| ($in 000’s except percentages) | June 30, 2022 | June 30, 2022 (adjusted) | June 30, 2021 | June 30, 2021 (adjusted) | ||||
| Net income as stated | 64,396 | 64,396 | 131,442 | 131,442 | ||||
| After-tax impact of adjusting items1 | - | 28,213 | - | (51,076 | ) | |||
| Adjusted net income | 64,396 | 92,609 | 131,442 | 80,366 | ||||
| Multiplied by number of periods in a year | X 4/2 | X 4/2 | X 4/2 | X 4/2 | ||||
| Divided by average shareholders’ equity for the period | 769,902 | 769,902 | 580,856 | 580,856 | ||||
| Return on equity | 16.7 | % | 24.1 | % | 45.3 | % | 27.7 | % |
1 For explanation of adjusting items, refer to the “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section above.
Return on Tangible Common Equity
Reported and adjusted return on tangible common equity are non-IFRS ratios. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 37 of the Company’s MD&A for the three and six-month periods ended June 30, 2022. Items used to calculate reported and adjusted return on tangible common equity for the three and six-month periods ended June 30, 2022 and 2021 include those indicated in the chart below:
| Three Months Ended | ||||||||
| ($in 000’s except percentages) | June 30, 2022 | June 30, 2022 (adjusted) | June 30, 2021 | June 30, 2021 (adjusted) | ||||
| Net income as stated | 38,300 | 38,300 | 19,467 | 19,467 | ||||
| Amortization of acquired intangible assets | 3,275 | 3,275 | 2,200 | 2,200 | ||||
| Income tax impact of the above item | (868 | ) | (868 | ) | (583 | ) | (583 | ) |
| Net income before amortization of acquired intangible assets, net of income tax | 40,707 | 40,707 | 21,084 | 21,084 | ||||
| Impact of adjusting items1 | ||||||||
| Operating expenses before depreciation and amortization | ||||||||
| Integration costs | - | 282 | - | 648 | ||||
| Transaction costs | - | - | - | 6,679 | ||||
| Day one loan loss provision on the acquired loans | - | - | - | 14,252 | ||||
| Other loss | - | 6,819 | - | 4,086 | ||||
| Finance costs | ||||||||
| Transaction costs | - | - | - | 1,726 | ||||
| Total pre-tax impact of adjusting items | - | 7,101 | - | 27,391 | ||||
| Income tax impact of above adjusting items | - | (978 | ) | - | (4,789 | ) | ||
| After-tax impact of adjusting items | - | 6,123 | - | 22,602 | ||||
| Adjusted net income | 40,707 | 46,830 | 21,084 | 43,686 | ||||
| Multiplied by number of periods in a year | X 4 | X 4 | X 4 | X 4 | ||||
| Average shareholders’ equity | 759,896 | 759,896 | 649,529 | 649,529 | ||||
| Average goodwill | (180,923 | ) | (180,923 | ) | (100,573 | ) | (100,573 | ) |
| Average acquired intangible assets2 | (117,354 | ) | (117,354 | ) | (64,408 | ) | (64,408 | ) |
| Average related deferred tax liabilities | 31,099 | 31,099 | 17,068 | 17,068 | ||||
| Divided by average tangible common equity | 492,718 | 492,718 | 501,616 | 501,616 | ||||
| Return on tangible common equity | 33.0 | % | 38.0 | % | 16.8 | % | 34.8 | % |
1 For explanation of adjusting items, refer to the “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section above.
2 Excludes intangible assets relating to software.
| Six Months Ended | ||||||||
| ($in 000’s except percentages) | June 30, 2022 | June 30, 2022 (adjusted) | June 30, 2021 | June 30, 2021 (adjusted) | ||||
| Net income as stated | 64,396 | 64,396 | 131,442 | 131,442 | ||||
| Amortization of acquired intangible assets | 6,550 | 6,550 | 2,200 | 2,200 | ||||
| Income tax impact of the above item | (1,736 | ) | (1,736 | ) | (583 | ) | (583 | ) |
| Net income before amortization of acquired intangible assets, net of income tax | 69,210 | 69,210 | 133,059 | 133,059 | ||||
| Impact of adjusting items1 | ||||||||
| Operating expenses before depreciation and amortization | ||||||||
| Corporate development costs | - | 2,314 | - | - | ||||
| Integration costs | - | 789 | - | 648 | ||||
| Transaction costs | - | - | - | 7,359 | ||||
| Day one loan loss provision on the acquired loans | - | - | - | 14,252 | ||||
| Other loss (income) | - | 24,344 | - | (83,286 | ) | |||
| Finance costs | ||||||||
| Transaction costs | - | - | - | 1,726 | ||||
| Total pre-tax impact of adjusting items | - | 27,447 | - | (59,301 | ) | |||
| Income tax impact of above adjusting items | - | (4,048 | ) | - | 6,608 | |||
| After-tax impact of adjusting items | - | 23,399 | - | (52,693 | ) | |||
| Adjusted net income | 69,210 | 92,609 | 133,059 | 80,366 | ||||
| Multiplied by number of periods in a year | X 4/2 | X 4/2 | X 4/2 | X 4/2 | ||||
| Average shareholders’ equity | 769,902 | 769,902 | 580,856 | 580,856 | ||||
| Average goodwill | (180,923 | ) | (180,923 | ) | (74,152 | ) | (74,152 | ) |
| Average acquired intangible assets2 | (118,992 | ) | (118,992 | ) | (42,939 | ) | (42,939 | ) |
| Average related deferred tax liabilities | 31,533 | 31,533 | 11,380 | 11,380 | ||||
| Divided by average tangible common equity | 501,520 | 501,520 | 475,145 | 475,145 | ||||
| Return on tangible common equity | 27.6 | % | 36.9 | % | 56.0 | % | 33.8 | % |
1 For explanation of adjusting items, refer to the “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section above.
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 June 30, 2022 and 2021 include those indicated in the chart below:
| ($ in 000’s) | Three Months Ended | |||
| June 30, 2022 | June 30, 2021 | |||
| Total company revenue | 251,652 | 202,356 | ||
| Less: easyfinancial revenue | (214,114 | ) | (164,888 | ) |
| Less: leasing revenue | (27,641 | ) | (30,123 | ) |
| easyhome financial revenue | 9,897 | 7,345 | ||
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 26 of the Company’s MD&A for the three and six-month periods ended June 30, 2022. Items used to calculate total yield on consumer loans as a percentage of average gross consumer loans receivable for the three and six-month periods ended June 30, 2022 and 2021 include those indicated in the chart below:
| Three Months Ended | Six Months Ended | |||||||
| ($in 000’s except percentages) | June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | ||||
| Total Company revenue | 251,652 | 202,356 | 483,794 | 372,530 | ||||
| Less: Leasing revenue | (27,641 | ) | (30,123 | ) | (56,207 | ) | (60,366 | ) |
| Financial revenue | 224,011 | 172,233 | 427,587 | 312,164 | ||||
| Multiplied by number of periods in a year | X 4 | X 4 | X 4/2 | X 4/2 | ||||
| Divided by average gross consumer loans receivable | 2,295,232 | 1,611,479 | 2,198,495 | 1,438,099 | ||||
| Total yield on consumer loans as a percentage of average gross consumer loans receivable (annualized) | 39.0 | % | 42.8 | % | 38.9 | % | 43.4 | % |
Net Debt to Net Capitalization
Net debt to net capitalization is a capital management measure. Refer to “Financial Condition” section on page 47 of the Company’s MD&A for the three and six-month periods ended June 30, 2022.
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 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.
Same Store Revenue Growth
Same store revenue growth (easyhome) and same store revenue growth (overall) are supplementary financial measures. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 37 of the Company’s MD&A for the three and six-month periods ended June 30, 2022.
Potential Monthly Leasing Revenue
Potential monthly leasing revenue is a supplementary financial measure. Refer to “Portfolio Analysis” section on page 26 of the Company’s MD&A for the three and six-month periods ended June 30, 2022.
