Loan Portfolio of $1.13 billion, up 18%
Net Charge-Off Rate of 10%, down 350 bps
Adjusted Diluted Earnings per Share of $1.89, up 50%
Total Liquidity of $260 million, up 30%

MISSISSAUGA, Ontario, Aug. 12, 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 second quarter ended June 30, 2020.
               
Second Quarter Results

During the quarter, the Company generated record financial results, driven by strong credit performance and prudent expense controls, leading to an increase in cash flows and liquidity.

The effects of the COVID-19 pandemic, which included stay at home orders, increased government subsidies and reduced living expenses for consumers, served to temporarily reduce overall demand. As such, the Company generated $171 million in total loan originations, down 38% from the $276 million in the second quarter of 2019. The lower level of originations, combined with the Company’s focus on managing its existing consumer loan book, led to a reduction in the loan portfolio of -$31.6 million during the quarter, which finished at $1.13 billion, up 18% from $960 million as of June 30, 2019.  Revenue for the second quarter, which was partially impacted by lower commissions on ancillary products primarily related to higher levels of loan protection insurance claims, was $151 million, up 2% 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, increased government subsidies, 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 second quarter was a record low 10%, compared to 13.5% in the second quarter of 2019 and 13.2% in the first quarter of 2020. Although there remains uncertainty about the exact timing and pace of an economic recovery, improvements in underlying credit performance and the general macroeconomic environment, resulted in the Company holding its allowance for future credit losses broadly flat at 10.05%.

Reduced operating expenses and record low credit losses led to operating income of $54 million, up 32% from $40.9 million in the second quarter of 2019, while the operating margin expanded to 35.8%, up from 27.7% in the prior year. During the quarter, the Company also recorded a $4 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.

Net income in the second quarter was a record $32.5 million, up 66% from $19.6 million in 2019, which resulted in diluted earnings per share of $2.11, up 67% from the $1.26 in the second quarter of 2019. Return on equity was a record 37%, up from 25.2% in the second quarter of 2019. After adjusting for the increase in the carrying value of the Company’s minority equity investment, net income was a record $29.1 million and diluted earnings per share was $1.89, an increase of 49% and 50% respectively, while return on equity was 33.1%.

“As we continued to prioritize the safety and well-being of our team, customers, and communities throughout the pandemic, the second quarter also highlighted the unique strength and resiliency of our business model. Record low credit losses and reduced originations combined to produce excess cash flows, which lifted our total liquidity to $260 million during the quarter and enabled us to repurchase an additional $20 million of our shares at an attractive return level,” said Jason Mullins, goeasy’s President and Chief Executive Officer, “During the quarter we also recognized a gain on our investment in PayBright, as their annualized revenues have now increased by over 85% since we arranged our equity position. Together with the strong operating results and prudent expense controls, we were pleased to produce record earnings in the quarter.”

Other Key Second Quarter Highlights

easyfinancial

  • Secured loan portfolio grew to $126 million, up 42%
  • 49% of net loan advances in the quarter were issued to new customers, down from 66%
  • 42% of applications acquired online, down from 46%
  • Aided brand awareness of 84%, up from 83%
  • Average loan book per branch improved to $3.6 million, an increase of 11%
  • The delinquency rate on the final Saturday of the quarter was a record low 3.7%, down from 4.3%
  • Operating income of $60.1 million, up 28%
  • Operating margin of 51.9%, up from 41.4%

easyhome

  • Revenue of $34.9 million, up 1%
  • Same store revenue growth of 2.1%
  • Consumer lending portfolio within easyhome stores increased to $40.4 million, up 37%
  • Revenue from consumer lending increased to $5.1 million, up 32%
  • Operating income of $7.5 million, up 34%
  • Operating margin of 21.4%, up from 16.1%

Overall

  • 41st consecutive quarter of same store sales growth
  • 76th 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 1.1%
  • Record return on equity of 37% in the quarter, up from 25.2%
  • Fully drawn weighted average cost of borrowing reduced to 5.1%, down from 6.8%
  • Net external debt to net capitalization of 70% on June 30, 2020, in line with the Company’s target leverage ratio of 70%
  • Repurchased 375,185 common shares at a weighted average price of $53.31 through the Company’s Normal Course Issuer Bid, bringing total share repurchases year to date to 579,335
  • No reduction of personnel during COVID-19

Six Months Results

For the first six months of 2020, goeasy produced revenues of $318 million, up 11% compared with $288 million in the same period of 2019. Operating income for the period was $98.2 million compared with $79.7 million in the first six months of 2019, an increase of $18.5 million or 23%. Net income for the first six months of 2020 was $54.5 million and diluted earnings per share was $3.51 compared with $37.8 million or $2.44 per share, increases of 44%. After adjusting for the increase in the carrying value of the Company’s minority equity investment, net income for the first six months of 2020 was $51.1 million and diluted earnings per share was $3.29, increases of 35%, while return on equity was 29.6%.

Balance Sheet and Liquidity

Total assets were $1.35 billion as of June 30, 2020, an increase of 21% from $1.12 billion as of June 30, 2019, driven by the growth in the consumer loan portfolio.

On June 29, 2020, the Company issued a notice of its intention to redeem all 5.75% convertible unsecured subordinated debentures maturing on July 31, 2022 (the “Convertible Debentures”) that are issued and outstanding on July 31, 2020 (the “Redemption Date”). The Convertible Debentures are 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 $83.4 million during the quarter, an increase of 24% from $67.3 million in the second 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 $260 million in total funding capacity, which it estimates is sufficient to fund its growth through the fourth quarter of 2022. At quarter-end, the Company’s fully drawn weighted average cost of borrowing reduced to 5.1%, down from 6.8% 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 June 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 begun 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. In April, during the peak period of the economic shutdown, loan originations were $38 million, down -56% year-over-year. In May, loan origination volume improved to $51 million, down -50%, followed by $83 million in June, down only -8%. In July, demand elevated further, as loan originations climbed to approximately $97 million, down only -7% compared to the same period of the prior year, and the highest month year to date in 2020.
     
  • 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. At the peak period in April, approximately $7.8 million of claims payments were made to easyfinancial on behalf of its customers. In May the total claims paid reduced slightly to $7.7 million, while in June they reduced further to $6.2 million. In the month of July claims paid have subsequently declined to $4.4 million and more than half of all customers who previously submitted an insurance claim have returned to making their regularly scheduled payments.
     
  • 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. In May the portion of borrowers utilizing a form of support reduced to below pre-COVID levels at approximately 6.3%, followed by 6% in June. In July, the portion of customers that used support continued to remain below pre-COVID levels at approximately 6.8%. 
     
  • Strong Customer Payment Performance: The Company has continued to observe a strong level of true overall payment performance. In the month of April, the Company collected 93% of the customer payments it would collect under normal conditions, relative to the size of its consumer loan portfolio. In May this figure increased to 95%, rising further to 100% in June. In July, the Company collected 102% of the customer payment volume it would normally collect prior to the pandemic, highlighting the condition of the consumer to meet their debt obligations.

“We remain optimistic that the worst of the health and economic crisis is behind us and have begun to see many positive trends emerge in the business. After experiencing moderate growth in the loan portfolio in both June and July, consumer demand for credit appears to be gradually rebuilding and we expect to grow the loan portfolio by approximately 3% to 5% in the third quarter, improving further thereafter. We also continue to experience record low credit losses, with the net charge-off rate expected to finish at, or below, 10% in the third quarter,” Mr. Mullins concluded, “Thanks to the passion and commitment of our goeasy team members, we have been able to support our customers through this difficult period, while demonstrating the strength of our business model. With gradually improving operating results, stable credit performance and sufficient liquidity to fund our organic business growth for several years into the future, we are well positioned to execute on our strategy and pursue the many new growth opportunities that lie ahead.”

Dividend

The Board of Directors has approved a quarterly dividend of $0.45 per share payable on October 9, 2020 to the holders of common shares of record as at the close of business on September 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 over $4.4 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” and goeasy’s convertible debentures are traded on the TSX under the trading symbol “GSY-DB”.  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 AtAs At
 June 30,December 31,
 20202019
   
ASSETS   
Cash54,76546,341 
Amounts receivable7,28618,482 
Prepaid expenses4,0887,077 
Consumer loans receivable, net1,057,3371,040,552 
Investment38,30034,300 
Lease assets44,53848,696 
Property and equipment, net27,86823,007 
Deferred tax assets6,91214,961 
Derivative financial assets23,585- 
Intangible assets, net21,07717,749 
Right-of-use assets, net45,15346,147 
Goodwill21,31021,310 
TOTAL ASSETS1,352,2191,318,622 
   
LIABILITIES AND SHAREHOLDERS' EQUITY  
Liabilities  
Revolving credit facility102,934112,563 
Accounts payable and accrued liabilities37,48141,350 
Income taxes payable11,5754,187 
Dividends payable6,2824,448 
Unearned revenue9,1318,082 
Derivative financial liabilities-16,435 
Lease liabilities51,43952,573 
Accrued interest4,1884,358 
Convertible debentures41,02040,656 
Notes payable734,824701,549 
TOTAL LIABILITIES998,874986,201 
   
Shareholders' equity  
Share capital142,061141,956 
Contributed surplus17,70220,296 
Accumulated other comprehensive income (loss)4,824(915)
Retained earnings188,758171,084 
TOTAL SHAREHOLDERS' EQUITY353,345332,421 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY1,352,2191,318,622 
   


goeasy Ltd.    
     
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME   
(Unaudited)    
(expressed in thousands of Canadian dollars except earnings per share)    
     
     
 Three Months EndedSix Months Ended
 June 30,June 30,June 30,June 30,
 2020201920202019
     
REVENUE    
Interest income100,86682,560200,966159,290
Lease revenue28,00228,35255,81657,834
Commissions earned19,34833,35254,62663,432
Charges and fees2,4613,5906,4717,158
 150,677147,854317,879287,714
     
EXPENSES BEFORE DEPRECIATION AND AMORTIZATION    
Salaries and benefits34,12430,43065,82659,107
Stock-based compensation1,7712,1893,8694,076
Advertising and promotion4,5046,93610,81812,786
Bad debts24,66635,76573,28470,159
Occupancy5,8055,02311,48710,003
Technology costs3,3133,0196,6825,757
Other expenses6,4597,56615,75413,767
 80,64290,928187,720175,655
     
DEPRECIATION AND AMORTIZATION    
Depreciation of lease assets9,0659,37818,08919,028
Depreciation of right-of-use assets3,9443,6777,9417,468
Depreciation of property and equipment1,4251,5493,0373,050
Amortization of intangible assets1,6071,3912,8792,772
 16,04115,99531,94632,318
     
TOTAL OPERATING EXPENSES96,683106,923219,666207,973
     
OPERATING INCOME53,99440,93198,21379,741
     
OTHER INCOME    
Unrealized fair value gain on investment4,000-4,000-
     
FINANCE COSTS    
Interest expense and amortization of deferred financing charges13,40513,24427,08126,142
Interest expense on lease liabilities6675921,3351,195
 14,07213,83628,41627,337
     
INCOME BEFORE INCOME TAXES43,92227,09573,79752,404
     
INCOME TAX EXPENSE    
Current6,0016,49713,29813,854
Deferred5,3791,0305,978709
 11,3807,52719,27614,563
     
NET INCOME32,54219,56854,52137,841
     
BASIC EARNINGS PER SHARE2.251.343.742.58
DILUTED EARNINGS PER SHARE2.111.263.512.44
     


Segmented Reporting     
      
  Three Months Ended June 30, 2020
($ in 000's except earnings per share)  easyfinancialeasyhomeCorporateTotal
      
Revenue     
Interest income 96,8464,020- 100,866
Lease revenue -28,002- 28,002
Commissions earned 17,3462,002- 19,348
Charges and fees 1,545916- 2,461
  115,73734,940- 150,677
      
Total operating expenses before depreciation and amortization 51,99916,18112,462 80,642
      
Depreciation and amortization     
Depreciation and amortization of lease assets, property and equipment and intangible assets 1,7709,441886 12,097
Depreciation of right-of-use assets 1,8651,827252 3,944
  3,63511,2681,138 16,041
      
Segment operating income (loss) 60,1037,491(13,600)53,994
      
Other income     
Unrealized fair value gain on investment    4,000
      
Finance costs     
Interest expense and amortization of deferred financing charges    13,405
Interest expense on lease liabilities    667
     14,072
      
Income before income taxes    43,922
      
Income taxes    11,380
      
Net Income    32,542
      
Diluted earnings per share    2.11
      
  Three Months Ended June 30, 2019
($ in 000's except earnings per share)  easyfinancialeasyhomeCorporateTotal
      
Revenue     
Interest income 79,8172,743- 82,560
Lease revenue -28,352- 28,352
Commissions earned 31,2772,075- 33,352
Charges and fees 2,2421,348- 3,590
  113,33634,518- 147,854
       
Total operating expenses before depreciation and amortization 63,08517,17210,671 90,928
      
Depreciation and amortization     
Depreciation and amortization of lease assets, property and equipment and intangible assets 1,7779,829712 12,318
Depreciation of right-of-use-assets 1,5391,945193 3,677
  3,31611,774905 15,995
      
Segment operating income (loss) 46,9355,572(11,576)40,931
      
Finance costs     
Interest expense and amortization of deferred financing charges    13,244
Interest expense on lease liabilities    592
     13,836
      
Income before income taxes    27,095
      
Income taxes    7,527
      
Net Income    19,568
      
Diluted earnings per share    1.26
      
      
  Six Months Ended June 30, 2020
($ in 000's except earnings per share)  easyfinancialeasyhomeCorporateTotal
      
Revenue     
Interest income 192,9408,026- 200,966
Lease revenue -55,816- 55,816
Commissions earned 50,3114,315- 54,626
Charges and fees 4,2742,197- 6,471
  247,52570,354- 317,879
      
Total operating expenses before depreciation and amortization 128,75533,22025,745 187,720
      
Depreciation and amortization     
Depreciation and amortization of lease assets, property and equipment and intangible assets 3,47018,8521,683 24,005
Depreciation of right-of-use assets 3,7143,771456 7,941
  7,18422,6232,139 31,946
      
Segment operating income (loss) 111,58614,511(27,884)98,213
      
Other income     
Unrealized fair value gain on investment    4,000
      
Finance costs     
Interest expense and amortization of deferred financing charges    27,081
Interest expense on lease liabilities    1,335
     28,416
      
Income before income taxes    73,797
      
Income taxes    19,276
      
Net Income    54,521
      
Diluted earnings per share    3.51
      
  Six Months Ended June 30, 2019
($ in 000's except earnings per share)  easyfinancialeasyhomeCorporateTotal
      
Revenue     
Interest income 154,2345,056- 159,290
Lease revenue -57,834- 57,834
Commissions earned 59,3234,109- 63,432
Charges and fees 4,3902,768- 7,158
  217,94769,767- 287,714
      
Total operating expenses before depreciation and amortization 123,01133,09019,554 175,655
      
Depreciation and amortization     
Depreciation and amortization of lease assets, property and equipment and intangible assets 3,59519,9301,325 24,850
Depreciation of right-of-use-assets 3,0564,027385 7,468
  6,65123,9571,710 32,318
      
Segment operating income (loss) 88,28512,720(21,264)79,741
      
Finance costs     
Interest expense and amortization of deferred financing charges    26,142
Interest expense on lease liabilities    1,195
     27,337
      
Income before income taxes    52,404
      
Income taxes    14,563
      
Net Income    37,841
      
Diluted earnings per share    2.44
      


Summary of Financial Results and Key Performance Indicators    
     
($ in 000’s except earnings per share and percentages)Three Months EndedVarianceVariance
June 30, 2020June 30, 2019$ / bps% change
Summary Financial Results    
Revenue150,677 147,854 2,823 1.9%
Operating expenses before depreciation and amortization80,642 90,928 (10,286)(11.3%)
EBITDA64,970 47,548 17,422 36.6%
EBITDA margin43.1%32.2%1,090 bps 33.9%
Depreciation and amortization expense16,041 15,995 46 0.3%
Operating income53,994 40,931 13,063 31.9%
Operating margin35.8%27.7%810 bps 29.2%
Other income14,000 - 4,000 100.0%
Finance costs14,072 13,836 236 1.7%
Effective income tax rate25.9%27.8%(190 bps)(6.8%)
Net income32,542 19,568 12,974 66.3%
Diluted earnings per share2.11 1.26 0.85 67.5%
Return on equity37.0%25.2%1,180 bps 46.8%
     
Adjusted (Normalized) Financial Results1    
Adjusted EBITDA60,970 47,548 13,422 28.2%
Adjusted EBITDA margin40.5%32.2%830 bps 25.8%
Adjusted net income29,072 19,568 9,504 48.6%
Adjusted diluted earnings per share1.89 1.26 0.63 50.0%
Adjusted return on equity33.1%25.2%790 bps 31.3%
     
Key Performance Indicators  
Same store revenue growth (overall)1.1%19.9%(1,880 bps)(94.5%)
Same store revenue growth (easyhome)2.1%3.8%(170 bps)(44.7%)
     
Segment Financials    
easyfinancial revenue115,737 113,336 2,401 2.1%
easyfinancial operating margin51.9%41.4%1,050 bps 25.4%
easyhome revenue34,940 34,518 422 1.2%
easyhome operating margin21.4%16.1%530 bps 32.9%
     
Portfolio Indicators    
Gross consumer loans receivable1,134,482 959,708 174,774 18.2%
Growth in consumer loans receivable(31,573)80,338 (111,911)(139.3%)
Gross loan originations170,842 276,355 (105,513)(38.2%)
Total yield on consumer loans (including ancillary products)42.6%50.4%(780 bps)(15.5%)
Net charge-offs as a percentage of average gross consumer loans receivable10.0%13.5%(350 bps)(25.9%)
Potential monthly lease revenue8,204 8,365 (161)(1.9%)
     
     
     
($ in 000’s except earnings per share and percentages)Six Months EndedVarianceVariance
June 30, 2020June 30, 2019$ / bps% change
Summary Financial Results  
Revenue317,879 287,714 30,165 10.5%
Operating expenses before depreciation and amortization187,720 175,655 12,065 6.9%
EBITDA116,070 93,031 23,039 24.8%
EBITDA margin36.5%32.3%420 bps 13.0%
Depreciation and amortization expense31,946 32,318 (372)(1.2%)
Operating income98,213 79,741 18,472 23.2%
Operating margin30.9%27.7%320 bps 11.6%
Other income14,000 - 4,000 100.0%
Finance costs28,416 27,337 1,079 3.9%
Effective income tax rate26.1%27.8%(170 bps)(6.1%)
Net income54,521 37,841 16,680 44.1%
Diluted earnings per share3.51 2.44 1.07 43.9%
Return on equity31.6%24.7%690 bps 27.9%
     
Adjusted (Normalized) Financial Results1    
Adjusted EBITDA112,070 93,031 19,039 20.5%
Adjusted EBITDA margin35.3%32.3%300 bps 9.3%
Adjusted net income51,051 37,841 13,210 34.9%
Adjusted diluted earnings per share3.29 2.44 0.85 34.8%
Adjusted return on equity29.6%24.7%490 bps 19.8%
     
Key Performance Indicators  
Same store revenue growth (overall)10.0%20.3%(1,030 bps)(50.7%)
Same store revenue growth (easyhome)3.3%4.2%(90 bps)(21.4%)
     
Segment Financials    
easyfinancial revenue247,525 217,947 29,578 13.6%
easyfinancial operating margin45.1%40.5%460 bps 11.4%
easyhome revenue70,354 69,767 587 0.8%
easyhome operating margin20.6%18.2%240 bps 13.2%
     
Portfolio Indicators    
Gross consumer loans receivable1,134,482 959,708 174,774 18.2%
Growth in consumer loans receivable23,849 125,929 (102,080)(81.1%)
Gross loan originations412,445 495,793 (83,348)(16.8%)
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 receivable11.6%13.4%(180 bps)(13.4%)
Potential monthly lease revenue8,204 8,365 (161)(1.9%)
     
1During the second quarter of 2020, the Company recognized an unrealized fair value gain before-tax of $4.0 million on its investment in PayBright.
     

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