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goeasy Ltd. Reports Record Results for the Second Quarter

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.


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