MISSISSAUGA, ONTARIO - (Marketwired - May 2, 2017) - goeasy Ltd. (TSX:GSY), ("goeasy" or the "Company"), a leading full service provider of goods and alternative financial services that improve the lives of everyday Canadians, today announced its results for the first quarter ended March 31, 2017.
Revenue for the first quarter of 2017 increased to $94.7 million, an increase of 15.0% from $82.3 million in the first quarter of 2016. Total same store sales growth in the quarter was 17.9%. The growth was driven by the expansion of easyfinancial and the related growth of its consumer loans receivable portfolio which reached $387.1 million by quarter's end, up 27.3% from March 31, 2016. Loan book growth in the first quarter of 2017 was $16.5 million compared with $14.7 million in 2016.
Operating income for the three month period ended March 31, 2017 was $20.4 million, an increase of $5.2 million or 34.0% when compared to the normalized operating income in the first quarter of 2016. The 2016 results have been normalized to exclude $0.5 million in transaction advisory costs. Net income for the quarter was $10.3 million, up $2.7 million or 35.1% from the normalized net income of $7.6 million in the first quarter of 2016. Diluted earnings per share for the quarter was $0.73, up $0.21 or 40.4% from the reported diluted earnings per share of $0.52 in the first quarter of 2016 and up $0.19 or 35.2% from the normalized diluted earnings per share of $0.54 in the first quarter of 2016.
"We are off to a great start in 2017 with both revenue and earnings expansion," said David Ingram, goeasy's President and Chief Executive Officer. "Our results for the first quarter of 2017 benefited from the implementation of enhanced collection strategies which led to our lowest annualized charge off rate for eight quarters. We also positioned ourselves for future growth and record earnings by increasing the penetration of our risk adjusted loans and preparing ourselves for both our launch into Quebec and the introduction of our easyfinancial loan products into our easyhome stores which occurred early in the second quarter of 2017."
Other highlights for the first quarter of 2017 include:
Total assets were $526.5 million as at March 31, 2017, an increase of 20.4% from $437.1 million as at March 31, 2016 and driven by the $82.9 million growth in the gross consumer loans receivable portfolio. As at March 31, 2017, the Company had $44.2 million in cash and committed facilities available to support future growth.
goeasy currently has a long-term funding structure that was originally put in place in 2014 and has been expanded and enhanced on several occasions since that time. The Company's current credit facilities consist of a $280 million term loan provided by a syndicate of U.S.- based private debt funds and a $20 million revolving operating facility provided by a large Canadian bank. Details of the terms of these facilities are disclosed in the company's financial filings. goeasy does not fund any of its consumer loans receivable or its operations from customer deposits.
The Company believes that its cash and committed facilities, coupled with the cash flows provided by operations, will be sufficient to fund the planned growth until the end of the third quarter of 2017.
The market for non-prime lending in Canada, excluding mortgages, is approximately $165 billion. The supply, however, is fragmented by both product and credit segments. It is satisfied by a large number of diverse lenders with each focusing on a relatively narrow range of products. Opportunities for growth exist for those lenders who are able to effectively offer multiple products spanning the non-prime consumer credit spectrum across various distribution channels.
David Ingram commented, "We are confident that our growth plans for easyfinancial will enable us to achieve our loan book target of $475 - $500 million by the end of 2017. The strategic growth initiatives that we announced earlier this year are on track, enabling us to capture an even greater share of the market opportunity that is available." Specific details on these growth initiatives are detailed as follows.
These strategic growth initiatives will provide significant growth in the Company's loan book, revenues and profitability in the years to come. During the second quarter of this year, however, the drag associated with launching these new initiatives as well as incurring operating costs before the portfolio generates sufficient revenue will moderate operating income growth at easyfinancial. Additionally, the Company anticipates spending an incremental $2.2 million in advertising expenditures in support of these initiatives in the second quarter of 2017 when compared to the first quarter of 2017.
On June 22, 2016, the Company renewed its Normal Course Issuer Bid (the "NCIB") allowing it to purchase for cancellation up to 986,105 Common Shares over the following 12 months. Since commencement of this NCIB on June 27, 2016 until March 31, 2017, the Company repurchased and cancelled 94,500 of its common shares.
The Board of Directors has approved a quarterly dividend of $0.18 per share payable on July 14, 2017 to the holders of common shares of record as at the close of business on June 30, 2017.
This press release includes forward-looking statements about goeasy, including, but not limited to, its business operations, strategy and expected financial performance and condition. Forward- looking statements include, but are not limited to, those with respect to the estimated number of new locations to be opened, targets for growth of the consumer loans receivable portfolio, annual revenue growth targets, strategic initiatives, new product offerings and new delivery channels, anticipated cost savings, planned capital expenditures, anticipated capital requirements, liquidity of the Company, plans and references to future operations and results and critical accounting estimates. In certain cases, forward-looking statements are statements that are predictive in nature, depend upon or refer to future events or conditions, and/or can be identified by the use of words such as 'expects', 'anticipates', 'intends', 'plans', 'believes', 'budgeted', 'estimates', 'forecasts', 'targets' or negative versions thereof and similar expressions, and/or state that certain actions, events or results 'may', 'could', 'would', 'might' or 'will' be taken, occur or be achieved.
Forward-looking statements are based on certain factors and assumptions, including expected growth, results of operations and business prospects and are inherently subject to, among other things, risks, uncertainties and assumptions about the Company's operations, economic factors and the industry generally, as well as those factors referred to in the Company's December 31, 2016 Management Discussion and Analysis in the section entitled "Risk Factors". There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those expressed or implied by forward-looking statements made by the Company, due to, but not limited to, important factors such as the Company's ability to enter into new lease and/or financing agreements, collect on existing lease and/or financing agreements, open new locations on favourable terms, purchase products which appeal to customers at a competitive rate, respond to changes in legislation, react to uncertainties related to regulatory action, raise capital under favourable terms, manage the impact of litigation (including shareholder litigation), control costs at all levels of the organization and maintain and enhance the system of internal controls. The Company cautions that the foregoing list is not exhaustive.
The reader is cautioned to consider these and other factors carefully and not place undue reliance on forward-looking statements, which may not be appropriate for other purposes. The Company is under no obligation (and expressly disclaims any such obligation) to update or alter the forward- looking statements whether as a result of new information, future events or otherwise, unless required by law.
As at March 31, 2017, the Company operated 209 easyfinancial locations (including 44 kiosks located within easyhome stores) and 174 easyhome stores (including 27 franchises and 2 consolidated franchise locations).
goeasy Ltd. is a leading full service provider of goods and alternative financial services that improve the lives of everyday Canadians. Today, goeasy Ltd. serves its customers through two key operating divisions, easyfinancial and easyhome. easyfinancial is a non-prime consumer lender that bridges the gap between traditional financial institutions and costly payday lenders. It is supported by a strong central credit adjudication process and industry leading risk analytics. easyfinancial also operates an indirect lending channel, offering loan products to consumers at the point-of-sale of third party merchants. easyhome is Canada's largest lease-to-own company, offering brand-name household furniture, appliances and electronics to consumers under weekly or monthly leasing agreements through both corporate and franchise stores. Both operating divisions of goeasy Ltd. offer the highest level of customer service and enable customers to transact through a national store and branch network of over 200 easyfinancial and 170 easyhome locations across Canada and through its online and mobile eCommerce enabled platforms.
goeasy Ltd. is listed on the TSX under the symbol 'GSY'. For more information, visit www.goeasy.com.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(expressed in thousands of Canadian dollars)
|As At||As At|
|March 31,||December 31,|
|Consumer loans receivable||371,662||354,499|
|Property and equipment||15,737||16,103|
|Deferred tax assets||7,985||6,856|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Accounts payable and accrued liabilities||31,581||31,879|
|Income taxes payable||6,160||2,874|
|Deferred lease inducements||1,373||1,506|
|Accumulated other comprehensive income||866||880|
|TOTAL SHAREHOLDERS' EQUITY||203,565||196,031|
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY||526,461||503,062|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(expressed in thousands of Canadian dollars except earnings per share)
|Three Months Ended|
|March 31,||March 31,|
|EXPENSES BEFORE DEPRECIATION AND AMORTIZATION|
|Salaries and benefits||23,822||22,457|
|Stock based compensation||1,066||1,007|
|Advertising and promotion||3,900||2,485|
|Transaction advisory costs||-||476|
|DEPRECIATION AND AMORTIZATION|
|Depreciation of lease assets||10,722||11,446|
|Depreciation of property and equipment||1,324||1,383|
|Amortization of intangible assets||1,202||974|
|Total operating expenses||74,300||67,572|
|Income before income taxes||14,588||9,932|
|Income tax expense (recovery)|
|Basic earnings per share||0.76||0.54|
|Diluted earnings per share||0.73||0.52|
|Three Months Ended March 31, 2017|
|($ in 000's except earnings per share)||easyfinancial||easyhome||Corporate||Total|
|Total operating expenses before depreciation and amortization||33,790||18,199||9,063||61,052|
|Depreciation and amortization||1,688||11,325||235||13,248|
|Operating income (loss)||24,543||5,168||(9,298)||20,413|
|Income before income taxes||14,588|
|Net Income for the period||10,270|
|Diluted earnings per share||0.73|
|Three Months Ended March 31, 2016|
|($ in 000's except earnings per share)||easyfinancial||easyhome||Corporate||Total|
|Total operating expenses before depreciation and amortization and transaction advisory costs||27,760||18,835||6,698||53,293|
|Transaction advisory costs||-||-||476||476|
|Depreciation and amortization||1,545||12,096||162||13,803|
|Operating income (loss)||15,698||6,391||(7,336)||14,753|
|Income before income taxes||9,932|
|Net Income for the period||7,252|
|Diluted earnings per share||0.52|
President and Chief Executive Officer
Executive Vice President and Chief Financial Officer
SOURCE goeasy Ltd.