COVID-19 Update

Financial News

goeasy Ltd. Reports Record Results for the Third Quarter

Loan Portfolio of $1.18 billion, up 14%
Net Charge-Off Rate of 7.8%, down 540 bps
Adjusted Diluted Earnings per Share of $2.00, up 56%
Total Liquidity of $250 million, up 16%

MISSISSAUGA, Ontario, Nov. 03, 2020 (GLOBE NEWSWIRE) -- goeasy Ltd. (TSX: GSY), (“goeasy” or the “Company”), a leading full-service provider of goods and alternative financial services, announced its results for the third quarter ended September 30, 2020.
               
Third Quarter Results

During the quarter, the Company experienced an improved level of loan originations and a reduction in credit losses, leading to record financial results.

Gradual re-opening of the economy and a reduction in the stay-at-home orders originally caused by the COVID-19 pandemic, served to improve overall demand. As such, the Company generated $287 million in total loan originations, flat to the $286 million produced in the third quarter of 2019. The improved originations led to growth in the loan portfolio of $48.3 million during the quarter, which finished at $1.18 billion, up 14% from $1.03 billion as of September 30, 2019.  Revenue for the third quarter, which was partially impacted by lower commissions related to higher levels of loan protection insurance claims, was $162 million, up 4% over the same period in 2019.

The Company also continued to experience strong credit and payment performance. Use of the Company’s loan protection insurance program, the continuation of government relief programs, assistance provided by banks and other lenders such as payment deferral programs and reduced living expenses, combined with previous credit model enhancements, resulted in an improvement to credit losses. The net charge-off rate for the third quarter was a record low 7.8%, compared to 13.2% in the third quarter of 2019. Although there remains uncertainty about the exact timing and pace of an economic recovery, the improvement in underlying credit performance and the general macroeconomic environment resulted in the Company holding its allowance for future credit losses broadly flat at 10.03%.

Reduced operating expenses and record low credit losses led to operating income of $56.9 million, up 34% from $42.6 million in the third quarter of 2019, while the operating margin expanded to 35.2%, up from 27.3% in the prior year. During the quarter, the Company also recorded a $1.7 million pre-tax increase to the carrying value of its minority equity investment in PayBright, a Canadian payments platform focused on instant point-of-sale consumer financing and buy-now-pay-later programs. PayBright has continued to grow revenues at over 80% on an annualized basis and onboard new major brand partners.

Net income in the third quarter was a record $33.1 million, up 67% from $19.8 million in 2019, which resulted in diluted earnings per share of $2.09, up 63% from the $1.28 in the third quarter of 2019. Return on equity was 34.7%, up from 24.1% in the third quarter of 2019. After adjusting for the increase in the carrying value of the Company’s minority equity investment, net income was a record $31.6 million and diluted earnings per share was $2.00, an increase of 59% and 56% respectively, while return on equity was 33.1%.

“During the quarter we continued to prioritize the safety and well-being of our team, while also producing further improvements in operating performance. As credit losses fell to another record low of 7.8%, we experienced a gradual improvement in demand, lifting originations to prior year levels and leading to loan growth of nearly $50 million in the quarter,” said Jason Mullins, goeasy’s President and Chief Executive Officer, “The resiliency of our business model continued to be highlighted by record earnings and strong cash flows. In addition to funding the organic loan growth during the quarter, we have also repurchased over $12 million worth of additional shares throughout the last several months, while liquidity remains strong at $250 million of total funding capacity.”

Other Key Third Quarter Highlights

easyfinancial

  • Secured loan portfolio grew to $141.6 million, up 40%
  • 50% of net loan advances in the quarter were issued to new customers, down from 65%
  • 44% of applications were acquired online, down slightly from 45%
  • Aided brand awareness of 85%, up from 84%
  • Average loan book per branch improved to $3.7 million, an increase of 6%
  • The delinquency rate on the final Saturday of the quarter was 4.3%, down from 4.6%
  • Operating income of $63.8 million, up 34%
  • Operating margin of 50.7%, up from 38.9%             

easyhome

  • Revenue of $36 million, up 6%
  • Same store revenue growth of 7.2%
  • Consumer loan portfolio within easyhome stores increased to $44.9 million, up 34%
  • Revenue from consumer lending increased to $5.5 million, up 21%
  • Record operating income of $7.9 million, up 40%
  • Record operating margin of 21.9%, up from 16.6%             

Overall

  • 42nd consecutive quarter of same store sales growth
  • 77th consecutive quarter of positive net income
  • 16th consecutive year of paying dividends and 6th consecutive year of dividend increases
  • Total same store revenue growth of 3.1%
  • Return on equity of 34.7% in the quarter, up from 24.1%
  • Fully drawn weighted average cost of borrowing reduced to 5%, down from 6.7%
  • Net external debt to net capitalization of 66% on September 30, 2020, down from 69% in the prior year and below the Company’s target leverage ratio of 70%
  • Repurchased 108,660 common shares during the quarter at a weighted average price of $63.55, including an additional 76,440 shares subsequent to quarter-end at a weighted average price of $68.39, through the Company’s Normal Course Issuer Bid, bringing total share repurchases year to date to 764,435
  • No reduction of personnel during COVID-19, including a 10% reduction in year-to-date employee turnover
  • Annual employee engagement score improved to record level of 83%, up 2% over the prior year

Nine Months Results

For the first nine months of 2020, goeasy produced revenues of $480 million, up 8% compared with $444
million in the same period of 2019. Operating income for the period was $155 million compared with $122 million in the first nine months of 2019, an increase of $32.8 million or 27%. Net income for the first nine months of 2020 was $87.6 million and diluted earnings per share was $5.64 compared with $57.7 million or $3.72 per share, increases of 52%. After adjusting for the increase in the carrying value of the Company’s minority equity investment, net income for the first nine months of 2020 was $82.6 million and diluted earnings per share was $5.33, increases of 43%, while return on equity was 30.5%.

Balance Sheet and Liquidity

Total assets were $1.37 billion as of September 30, 2020, an increase of 10% from $1.24 billion as of September 30, 2019, driven by the growth in the consumer loan portfolio.

During the quarter, the Company redeemed all its 5.75% convertible unsecured subordinated debentures (the “Convertible Debentures”) that were outstanding on July 31, 2020 (the “Redemption Date”), which were due to mature on July 31, 2022. The Convertible Debentures were redeemable at a redemption price equal to their principal amount, plus accrued and unpaid interest thereon up to, but excluding, the Redemption Date. As of the close of business on June 28, 2020, there was $43,806,000 principal amount of Convertible Debentures issued and outstanding, of which the holders of approximately $41,379,000 aggregate principal amount elected to convert their Convertible Debentures into approximately 954,302 common shares prior to the Redemption Date. On the Redemption Date, the Company redeemed the $2,427,000 aggregate principal amount of Convertible Debentures that remained unconverted on that date.

Cash provided by operating activities before the net issuance of consumer loans receivable and purchase of lease assets was $96.7 million during the quarter, an increase of 20% from $80.9 million in the third quarter of 2019.

Based on the cash on hand at the end of the quarter and the borrowing capacity under the Company’s revolving credit facility, goeasy had approximately $250 million in total funding capacity, which it estimates is sufficient to fund its growth through the second quarter of 2022. At quarter-end, the Company’s fully drawn weighted average cost of borrowing reduced to 5.0%, down from 6.7% in the prior year, with incremental draws on its senior secured revolving credit facility bearing a rate of approximately 3.6% due to the lower interest rate environment.

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 $150 million per year solely from internal cash flows. The Company also estimates that as of September 30, 2020, 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 $2 billion. If during such a run-off scenario all excess cash flows were applied directly to debt, the Company estimates it would extinguish all external debt within 18 months.

COVID-19 & Future Outlook

Due to the current uncertainty relating to the impacts of COVID-19, the Company intends to re-publish a 3-year forecast when the economic conditions and outlook stabilize. However, the Company remains confident that it is well positioned to navigate through the current economic downturn and has continued to see conditions gradually improve. Recent trends include:

  • Improving Consumer Demand: The effects of the pandemic, which included stay-at-home orders, increased government subsidies and reduced expenses for consumers, led to temporarily reduced demand. During the second quarter, total loan originations were down 38% from the prior year. In the third quarter, loan originations improved to be broadly flat to 2019.  
     
  • Declining Loan Protection Insurance Claims: The majority of easyfinancial customers have Loan Protection Insurance, offered by Assurant Inc., a global provider of risk-management solutions, which covers a borrower’s full loan payment for a period of 6 consecutive months in the event of unemployment. During the second quarter, total loan protection claims payments made on behalf of borrowers was $21.7 million. In the third quarter, claims payments declined by 33% to $14.6 million, with a further decline in the trend subsequent to quarter-end.
     
  • Solutions to Support Borrowers Below Pre-COVID Levels: easyfinancial has a suite of loan amendment solutions that it can offer borrowers to support them through a difficult financial period. These include temporarily deferring loan payments or extending the term of a loan to reduce the regular payment obligation. In April approximately 12% of customers utilized a form of support, as compared to approximately 7%-8% in a typical month prior to the pandemic. However, since May the portion of borrowers utilizing a form of support has fallen to below pre-COVID levels and has remained below 7% for each month since.
     
  • Strong Customer Payment Performance: The Company has continued to observe a strong level of true overall payment performance. During the second quarter, the Company collected an average of 96% of the payment volume it would normally collect prior to the pandemic. In the third quarter, customer payment volume relative to the outstanding consumer loan portfolio was at, or above, 100% of the levels it would normally collect prior to the pandemic.

“While there remains some uncertainty about the broader economic environment, we are seeing positive trends in the business and we are confident in our ability to navigate through a second wave. Consumer demand for credit continues to slowly recover and we expect growth in the loan portfolio of approximately 5% to 6% during the upcoming quarter. Credit and payment performance continue to perform well, and we project the annualized net charge-off rate will be approximately 10% in the fourth quarter. Lastly, we continue to make great progress on finalizing a new securitized funding facility. This important next step in the evolution of our balance sheet will further lower our funding costs and provide a material increase to our total liquidity,” Mr. Mullins concluded, “Our business is thriving during a challenging time and I want to once again thank all 2,000 goeasy team members for their unwavering commitment to stand by our customers. The fundamentals of our business, and the confidence in our strategy to provide everyday Canadians with a path to a better tomorrow, are stronger than ever.”

Dividend

The Board of Directors has approved a quarterly dividend of $0.45 per share payable on January 8, 2021 to the holders of common shares of record as at the close of business on December 25, 2020.

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 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 and easyfinancial divisions. With a wide variety of financial products and services including unsecured and secured instalment loans, goeasy aspires to help put Canadians on a path to a better financial future, as they rebuild their credit and graduate to prime lending. Customers can transact seamlessly with easyhome and easyfinancial through an omni-channel model that includes online and mobile, as well as over 400 leasing and lending locations across Canada supported by more than 2,000 employees. Throughout the company’s history, it has served over 1 million Canadians and originated $4.7 billion in loans, with one in three customers graduating to prime credit and 60% increasing their credit score within 12 months of borrowing.

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. The company and its employees believe strongly in giving back to the communities in which it operates and has raised over $3 million to support its long-standing partnerships with the Boys & Girls Clubs of Canada and Habitat for Humanity.

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

David Ingram
Executive Chairman of the Board
(905) 272-2788


goeasy Ltd.        
         
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION    
(Unaudited)        
(expressed in thousands of Canadian dollars)        
         
         
    As At As At  
    September 30, December 31,  
    2020 2019  
         
ASSETS         
Cash   39,477 46,341    
Amounts receivable   5,779 18,482    
Prepaid expenses   4,057 7,077    
Consumer loans receivable, net   1,100,998 1,040,552    
Investment   40,000 34,300    
Lease assets   46,351 48,696    
Property and equipment, net   28,905 23,007    
Deferred tax assets   7,323 14,961    
Derivative financial assets   3,455 -    
Intangible assets, net   22,677 17,749    
Right-of-use assets, net   46,943 46,147    
Goodwill   21,310 21,310    
TOTAL ASSETS   1,367,275 1,318,622    
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
Liabilities        
Revolving credit facility   98,221 112,563    
Accounts payable and accrued liabilities   47,564 41,350    
Income taxes payable   7,837 4,187    
Dividends payable   6,713 4,448    
Unearned revenue   8,952 8,082    
Derivative financial liabilities   - 16,435    
Lease liabilities   53,056 52,573    
Accrued interest   13,417 4,358    
Convertible debentures   - 40,656    
Notes payable   721,292 701,549    
TOTAL LIABILITIES   957,052 986,201    
         
Shareholders' equity        
Share capital   182,524 141,956    
Contributed surplus   17,744 20,296    
Accumulated other comprehensive income (loss)   412 (915 )  
Retained earnings   209,543 171,084    
TOTAL SHAREHOLDERS' EQUITY   410,223 332,421    
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   1,367,275 1,318,622    
         

 

goeasy Ltd.            
             
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME        
(Unaudited)            
(expressed in thousands of Canadian dollars except earnings per share)        
             
             
    Three Months Ended Nine Months Ended  
    September 30, September 30, September 30, September 30,  
    2020 2019 2020 2019  
             
REVENUE            
Interest income    101,833 90,304    302,799 249,594  
Lease revenue    28,416 27,134    84,232 84,968  
Commissions earned    28,540 34,909    83,166 98,341  
Charges and fees    3,035 3,786    9,506 10,944  
     161,824 156,133    479,703 443,847  
             
EXPENSES BEFORE DEPRECIATION AND AMORTIZATION            
Salaries and benefits    36,457 30,141    102,283 89,248  
Stock-based compensation    1,718 1,752    5,587 5,828  
Advertising and promotion    7,377 6,425    18,195 19,211  
Bad debts    27,221 43,326    100,505 113,485  
Occupancy    5,639 5,086    17,126 15,089  
Technology costs    3,817 3,314    10,499 9,071  
Other expenses    6,624 7,737    22,378 21,504  
     88,853 97,781    276,573 273,436  
             
DEPRECIATION AND AMORTIZATION            
Depreciation of lease assets    8,701 9,023    26,790 28,051  
Depreciation of right-of-use assets    4,053 3,798    11,994 11,266  
Depreciation of property and equipment    1,451 1,607    4,488 4,657  
Amortization of intangible assets    1,820 1,355    4,699 4,127  
     16,025 15,783    47,971 48,101  
             
TOTAL OPERATING EXPENSES    104,878 113,564    324,544 321,537  
             
OPERATING INCOME    56,946 42,569    155,159 122,310  
             
OTHER INCOME            
Unrealized fair value gain on investment    1,700 -    5,700 -  
             
FINANCE COSTS            
Interest expense and amortization of deferred financing charges  12,543 14,208    39,624 40,350  
Interest expense on lease liabilities    690 613    2,025 1,808  
     13,233 14,821    41,649 42,158  
             
INCOME BEFORE INCOME TAXES    45,413 27,748    119,210 80,152  
             
INCOME TAX EXPENSE (RECOVERY)            
Current    9,990 8,097    23,288 21,951  
Deferred    2,350 (174 )  8,328 535  
     12,340 7,923    31,616 22,486  
             
NET INCOME    33,073 19,825    87,594 57,666  
             
BASIC EARNINGS PER SHARE    2.20 1.35    5.95 3.94  
DILUTED EARNINGS PER SHARE    2.09 1.28    5.64 3.72  
             

 

Segmented Reporting            
               
      Three Months Ended September 30, 2020  
($ in 000's except earnings per share)    easyfinancial easyhome Corporate Total  
               
Revenue             
  Interest income    97,543  4,290  -     101,833  
  Lease revenue    -   28,416  -     28,416  
  Commissions earned    26,474  2,066  -     28,540  
  Charges and fees    1,839  1,196  -     3,035  
       125,856  35,968  -     161,824  
               
Total operating expenses before            
       depreciation and amortization    58,089  17,208  13,556    88,853  
               
Depreciation and amortization            
  Depreciation and amortization of lease assets,
    property and equipment and intangible assets
   2,014  9,051  907    11,972  
  Depreciation of right-of-use assets    1,977  1,824  252    4,053  
       3,991  10,875  1,159    16,025  
               
Segment operating income (loss)    63,776  7,885  (14,715 )  56,946  
               
Other income            
  Unrealized fair value gain on investment          1,700  
               
Finance costs            
  Interest expense and amortization of
    deferred financing charges
         12,543  
  Interest expense on lease liabilities          690  
             13,233  
               
Income before income taxes          45,413  
               
Income taxes          12,340  
               
Net Income          33,073  
               
Diluted earnings per share          2.09  
               
      Three Months Ended September 30, 2019  
($ in 000's except earnings per share)    easyfinancial easyhome Corporate Total  
               
Revenue             
  Interest income   87,087 3,217 -   90,304  
  Lease revenue   - 27,134 -   27,134  
  Commissions earned   32,706 2,203 -   34,909  
  Charges and fees   2,463 1,323 -   3,786  
      122,256 33,877 -   156,133  
Total operating expenses before            
       depreciation and amortization   71,283 16,854 9,644   97,781  
               
Depreciation and amortization            
  Depreciation and amortization of lease assets,
    property and equipment and intangible assets
  1,794 9,453 738   11,985  
  Depreciation of right-of-use-assets   1,672 1,951 175   3,798  
      3,466 11,404 913   15,783  
               
Segment operating income (loss)   47,507 5,619 (10,557 ) 42,569  
               
Finance costs            
  Interest expense and amortization of
    deferred financing charges
        14,208  
  Interest expense on lease liabilities         613  
            14,821  
               
Income before income taxes         27,748  
               
Income taxes         7,923  
               
Net Income         19,825  
               
Diluted earnings per share         1.28  
               
               
      Nine Months Ended September 30, 2020  
($ in 000's except earnings per share)    easyfinancial easyhome Corporate Total  
               
Revenue             
  Interest income    290,483  12,316  -     302,799  
  Lease revenue    -   84,232  -     84,232  
  Commissions earned    76,785  6,381  -     83,166  
  Charges and fees    6,113  3,393  -     9,506  
       373,381  106,322  -     479,703  
               
Total operating expenses before            
       depreciation and amortization    186,844  50,428  39,301    276,573  
               
Depreciation and amortization            
  Depreciation and amortization of lease assets,
    property and equipment and intangible assets
   5,484  27,903  2,590    35,977  
  Depreciation of right-of-use assets    5,691  5,595  708    11,994  
       11,175  33,498  3,298    47,971  
               
Segment operating income (loss)    175,362  22,396  (42,599 )  155,159  
               
Other income            
  Unrealized fair value gain on investment          5,700  
               
Finance costs            
  Interest expense and amortization of
    deferred financing charges
         39,624  
  Interest expense on lease liabilities          2,025  
             41,649  
               
Income before income taxes          119,210  
               
Income taxes          31,616  
               
Net Income          87,594  
               
Diluted earnings per share          5.64  
               
      Nine Months Ended September 30, 2019  
($ in 000's except earnings per share)    easyfinancial easyhome Corporate Total  
               
Revenue             
  Interest income   241,321 8,273 -   249,594  
  Lease revenue   - 84,968 -   84,968  
  Commissions earned   92,029 6,312 -   98,341  
  Charges and fees   6,853 4,091 -   10,944  
      340,203 103,644 -   443,847  
               
Total operating expenses before            
       depreciation and amortization   194,294 49,944 29,198   273,436  
               
Depreciation and amortization            
  Depreciation and amortization of lease assets,
    property and equipment and intangible assets
  5,389 29,383 2,063   36,835  
  Depreciation of right-of-use-assets   4,728 5,978 560   11,266  
      10,117 35,361 2,623   48,101  
               
Segment operating income (loss)   135,792 18,339 (31,821 ) 122,310  
               
Finance costs            
  Interest expense and amortization of
    deferred financing charges
        40,350  
  Interest expense on lease liabilities         1,808  
            42,158  
               
Income before income taxes         80,152  
               
Income taxes         22,486  
               
Net Income         57,666  
               
Diluted earnings per share         3.72  
               

 

Summary of Financial Results and Key Performance Indicators        
         
($ in 000’s except earnings per share and percentages) Three Months Ended Variance Variance
September 30, 2020 September 30, 2019 $ / bps % change
Summary Financial Results        
Revenue  161,824                 156,133                 5,691   3.6 %
Operating expenses before depreciation and amortization  88,853                   97,781               (8,928 ) (9.1 %)
EBITDA  65,970                   49,329              16,641   33.7 %
EBITDA margin 40.8 % 31.6 %  920 bps  29.1 %
Depreciation and amortization expense  16,025                   15,783                    242   1.5 %
Operating income  56,946                   42,569              14,377   33.8 %
Operating margin 35.2 % 27.3 %  790 bps  28.9 %
Other income1  1,700                            -                   1,700   100.0 %
Finance costs  13,233                   14,821               (1,588 ) (10.7 %)
Effective income tax rate 27.2 % 28.6 %  (140 bps)  (4.9 %)
Net income  33,073                   19,825              13,248   66.8 %
Diluted earnings per share  2.09                        1.28                   0.81   63.3 %
Return on equity 34.7 % 24.1 %  1,060 bps  44.0 %
         
Adjusted (Normalized) Financial Results1        
Adjusted EBITDA  64,270                   49,329              14,941   30.3 %
Adjusted EDITDA margin 39.7 % 31.6 %  810 bps  25.6 %
Adjusted net income  31,598                   19,825              11,773   59.4 %
Adjusted diluted earnings per share  2.00                        1.28                   0.72   56.3 %
Adjusted return on equity 33.1 % 24.1 %  900 bps  37.3 %
         
Key Performance Indicators    
Same store revenue growth (overall) 3.1 % 20.4 %  (1,730 bps)  (84.8 %)
Same store revenue growth (easyhome) 7.2 % 2.4 %  480 bps  200.0 %
         
Segment Financials        
easyfinancial revenue  125,856                 122,256                 3,600   2.9 %
easyfinancial operating margin 50.7 % 38.9 %  1,180 bps  30.3 %
easyhome revenue  35,968                   33,877                 2,091   6.2 %
easyhome operating margin 21.9 % 16.6 %  530 bps  31.9 %
         
Portfolio Indicators        
Gross consumer loans receivable  1,182,801             1,035,596            147,205   14.2 %
Growth in consumer loans receivable  48,319                   75,888             (27,569 ) (36.3 %)
Gross loan originations  286,583                 286,068                    515   0.2 %
Total yield on consumer loans (including ancillary products) 45.1 % 50.1 %  (500 bps)  (10.0 %)
Net charge-offs as a percentage of average gross consumer
   loans receivable
7.8 % 13.2 %  (540 bps)  (40.9 %)
Potential monthly lease revenue  8,256                     8,432                  (176 ) (2.1 %)
         
1During the third quarter of 2020, the Company recognized an unrealized fair value gain before-tax of $1.7 million on its investment in PayBright.
         
($ in 000’s except earnings per share and percentages) Nine Months Ended Variance Variance
September 30, 2020 September 30, 2019 $ / bps % change
Summary Financial Results    
Revenue  479,703                 443,847              35,856   8.1 %
Operating expenses before depreciation and amortization  276,573                 273,436                 3,137   1.1 %
EBITDA  182,040                 142,360              39,680   27.9 %
EBITDA margin 37.9 % 32.1 %  580 bps  18.1 %
Depreciation and amortization expense  47,971                   48,101                  (130 ) (0.3 %)
Operating income  155,159                 122,310              32,849   26.9 %
Operating margin 32.3 % 27.6 %  470 bps  17.0 %
Other income1  5,700                            -                   5,700   100.0 %
Finance costs  41,649                   42,158                  (509 ) (1.2 %)
Effective income tax rate 26.5 % 28.1 %  (160 bps)  (5.7 %)
Net income  87,594                   57,666              29,928   51.9 %
Diluted earnings per share  5.64                        3.72                   1.92   51.6 %
Return on equity 32.3 % 24.5 %  780 bps  31.8 %
         
Adjusted (Normalized) Financial Results1        
Adjusted EBITDA  176,340                 142,360              33,980   23.9 %
Adjusted EBITDA margin 36.8 % 32.1 %  470 bps  14.6 %
Adjusted net income  82,649                   57,666              24,983   43.3 %
Adjusted diluted earnings per share  5.33                        3.72                   1.61   43.3 %
Adjusted return on equity 30.5 % 24.5 %  600 bps  24.5 %
         
Key Performance Indicators    
Same store revenue growth (overall) 7.8 % 19.8 %  (1,200 bps)  (60.6 %)
Same store revenue growth (easyhome) 3.2 % 3.4 %  (20 bps)  (5.9 %)
         
Segment Financials        
easyfinancial revenue  373,381                 340,203              33,178   9.8 %
easyfinancial operating margin 47.0 % 39.9 %  710 bps  17.8 %
easyhome revenue  106,322                 103,644                 2,678   2.6 %
easyhome operating margin 21.1 % 17.7 %  340 bps  19.2 %
         
Portfolio Indicators        
Gross consumer loans receivable  1,182,801             1,035,596            147,205   14.2 %
Growth in consumer loans receivable  72,168                 201,817          (129,649 ) (64.2 %)
Gross loan originations  699,028                 781,861             (82,833 ) (10.6 %)
Total yield on consumer loans (including ancillary products) 45.2 % 50.2 %  (500 bps)  (10.0 %)
Net charge-offs as a percentage of average gross consumer
   loans receivable
10.3 % 13.3 %  (300 bps)  (22.6 %)
Potential monthly lease revenue  8,256                     8,432                  (176 ) (2.1 %)
         
1During the nine-month period ended September 30, 2020, the Company recognized an unrealized fair value gain before-tax of $5.7 million on its investment in PayBright.
         

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