GreenSky, Inc.

Good morning and welcome to GreenSky's fourth quarter and full year 2020 financial results conference call. As a reminder, this event is streaming live on the GreenSky Investor Relations website and a replay will be available on the same site approximately two hours after the completion of the call. We will begin with opening remarks and introductions. At this time, I would like to turn the call over to Tom Morabito, Vice President of Investor Relations. Mr. Morabito, you may begin.

Thank you, Natalia, and good morning, everyone. Thank you all for joining us. Earlier this morning, GreenSky issued a press release announcing results for its fourth quarter and full year 2020 ended December 31st, 2020. You can access this press release on the investor relations section of the GreenSky website. In addition, we have posted our fourth quarter and full year 2020 earnings presentation, which we will refer to in today's call. Today you will hear prepared remarks from David Zalek, our Chairman and Chief Executive Officer, and Andrew Kang, our Executive Vice President and Chief Financial Officer. We are also joined by Jerry Benjamin, our Vice Chairman and Chief Administrative Officer. Before we begin, let me remind you that our presentation and discussions will include forward-looking statements. These are statements that are based on current assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those projected. We disclaim any obligation to update any forward-looking statements, except as required by law. Information about these risks and uncertainties is included in our press release issued this morning, as well as in our filings with regulators. We also will be discussing non-GAAP financial measures on today's call. These non-GAAP measures are not intended to be considered in isolation from, a substitute for, or superior to our GAAP results, and we encourage you to consider all measures when analyzing GreenSky's performance. These non-GAAP measures are described and reconciled to their GAAP counterparts in the presentation materials, the press release dated March 10, 2021, and on the Investor Relations page of our website. At this time, I will turn the call over to David.

Thanks, Tom. Good morning, everyone, and thank you for joining us to review our fourth quarter and full year 2020 results. 2020 was a year where we witnessed the durability in the home improvement market, demonstrated the strength in which we operate in that market, and reinforced underlying resiliency of GreenSky's people and proprietary financial technology platform to service that market. GreenSky ended the year strong in transaction volume trends, and despite the unprecedented impacts of the pandemic, we delivered results in line with the prior year. Importantly, our fourth quarter results, as well as the solid start to the new year, lead me to be optimistic about achieving our goals in 2021. Not without the challenges in 2020, we were able to grow our servicing portfolio to over $9.5 billion while maintaining the strength of GreenSky's consumer base. Both full-year 2020 transaction volume and top-line revenues were in line with the prior year despite the significant headwinds of the nationwide shutdown in business activities and the tremendous toll it took on everyday life. 2020 was also a pivotal year for us in which we set out on a critical strategy to diversify our funding. As a result, we now have increased capacity and multiple sources of liquidity, which allows us to support our growth objectives, optimize profitability, and help manage liquidity risk into the future. In 2020, we completed over $1 billion of new funding initiatives, and since year end, that momentum has continued with the recent completion of a new $1 billion forward flow sale agreement with the leading life insurance company earlier this month. The agreement brings yet another new funding partner to our ecosystem and supports our ability to grow transaction volumes into 2022. Included in the agreement was an initial sale of approximately $135 million in assets, which was incremental to four one-year commitments. Andrew will provide additional details on our overall state of funding, but I'm delighted that our funding is the strongest and most diverse it has ever been in the history of our company. On slide four, GreenSky has enabled $28 billion of transactions for over 3.7 million consumers, and 2020 transaction volumes of $5.5 billion reflect the resilience of our business during the past year, despite the impacts and the restrictions related to our elective healthcare businesses. In 2020, we were pleased to be able to increase the average ticket size of our transactions by over 10% compared to the prior year, which also helped drive the growth in our year-end servicing portfolio by over 30% from what it was two years ago. Turning to slide five of the presentation, we continue to believe our high-quality program consumers and their strong credit performance is a key differentiator for GreenSky. Our weighted average FICO score of borrowers at the time of application was 781 in Q4. Thirty-day-plus delinquencies observed at the end of the fourth quarter were just under 1%, compared to 1.38% at the end of fourth quarter of 2019, reflecting a nearly 40 basis point improvement compared to a year ago and an improvement compared to the third quarter of 2020, outperforming typical seasonal trends. These metrics reflect the positive credit nature of our consumers who represent homeowners actively pursuing the improvement of their highest valued asset. and the performance of our service portfolio reflects the investments GreenSky has made in technology, process, and operations that allow us to differentiate credit quality at time of origination and as we service the portfolio throughout the life of the Loves. As we've shared with you before, I'd like to update you on the small portion of our portfolio that continues to receive COVID-19 disaster assistance. As of the end of the year, approximately 0.8% of the total loans serviced on our platform remained in payment deferral status related to COVID-19. Some of the borrowers that were impacted by this hardship did result in a loss, but with a peak of 4% who received disaster assistance, less than 0.3% charged off in 2020. Although the overall impact of these losses is yet to be determined in 2021, we continue to see positive trends. Our borrowers are continuing to exit payment deferral at a faster rate than those requesting new enrollments, and less than 0.5% of loans in our servicing portfolio remain in deferral at the end of February. We are optimistic that the assistance our consumers receive through continuing federal stimulus support and the hopeful expeditious reopening of our economy will prevent meaningful opportunity on our performance for the remainder of the year. Turning to slide six, GreenSky has demonstrated a proven track record of maintaining a very high-quality consumer base for many years, and we have achieved a greater than 30% CAGR on transaction volumes and revenues prior to 2020 without sacrificing on quality. At the end of the fourth quarter, 80% of borrowers at time of application had a weighted average FICO score in excess of 700, and 40% had scores in excess of 780. Not only have we shown strong credit performance historically, but we've also been successful in maintaining the quality of new originations in a challenging 2020 without sacrificing credit. While GreenSky has limited actual exposure to credit risk, our originations benefits our business as we earn incentive payments in our bank waterfall when loans perform better than expected. Additionally, the quality of loans originated on GreenSky's platform remain important to our funding partners, which has allowed us to maintain and expand existing relationships and add new banks and institutional investors to the GreenSky program. On slide seven, the size of the target addressable market for our core domestic home improvement and elective health care verticals exceeds $600 billion per year. This combined with the superior consumer experience and seamless technology platform we provide to our merchants are key differentiators, making GreenSky the market leader in our core home improvement business and a strong disruptor in elective healthcare financing. Focusing on home improvement, we recently renewed our partnership with the Home Depot and have added a significant number of new merchants to our platform. By way of example, The Q4 merchant additions included a $25 million a year regional HVAC contractor, two regional roofing contractors who combined annual revenue in excess of $85 million, and a new $30 million a year regional window and door contractor, and many others. Of the new relationships added in Q4, approximately 75% of those merchants represent a migration from our competitors and an increase in GreenSky's market share. Overall, our home improvement business was resilient through the fourth quarter, despite ongoing supply chain disruptions, which increased cycle times for many larger home improvement projects. However, I believe that we will begin to see improvements in these delays and disruptions and a return to more normal project timelines as the pace of business normalizes in 2021. Our Green Sky Patient Solutions business also continues to be well-positioned to benefit from a significant recovery in pent-up demand in the coming year. Although the fourth quarter and full-year transaction volumes were still adversely impacted by COVID-19-related shutdowns in elective healthcare procedures, we expect to see solid growth in our patient solution business as the year progresses. Our growth strategy is focused on specific high-growth verticals such as non-invasive cosmetics, large-ticket dentistry, and LASIK vision corrections. One such early win already this year was successfully establishing an integrated financing solution with LaserAway, a leader in aesthetic dermatology, with 67 clinics nationwide. As a technology-driven operator, they were delighted with GreenSky's API capabilities to deliver a seamless financing experience for their patients, and we expect partnerships like these will support the growth and recovery of our elective healthcare business in 2021. Turning to slide eight, GreenSky continues to generate outstanding lifetime value to customer acquisition cost metrics due to our focus on larger merchants and maintaining the lowest account acquisition costs among our FinTech competitors. The chart on the left shows that we have achieved a 53% CAGR in the number of merchants with over 10 million of annual transaction volume since 2015. On the right, you can see that our transaction volume include merchants that have been with us for many years. As trusted partners, we have shared in their successful growth of their business and in GreenSky's transaction volume over the years. During the fourth quarter alone, we added over 1,000 new merchants to the GreenSky platform, many of whom left our competitors and came to GreenSky via inbound inquiries as they seek to gain access to our patented proprietary platform. Throughout 2020, we talked with you about our focus on increasing merchant productivity, and in Q4, our average merchant ticket size increased by 10% compared to the prior year, while we also observed meaningful growth in the average monthly transaction volume per merchant originated on our platform. This is another important example of the disciplined execution of our team on key strategic goals to increase the scale and resiliency of our transaction volumes. Before I turn the call over to Andrew to go through the details of our fourth quarter and full year 2020 performance, as well as to update you on our 2021 guidance, let me briefly recap our 10x9x30 plan that we shared with you at our Investor Day in early January. Our strategic plan calls for transaction volumes approaching $10 billion, revenues of approximately $900 million, and a long-term sustainable adjusted EBITDA margin targeting an excess of 30% by 2025. We believe this plan has upside as it does not include additional platform innovations and strategic projects in our pipeline. We will periodically be updating our plan for additional stair steps in growth as we launch new initiatives coming out of successful pilots and sharing specific details supporting such incremental growth expectations. Thank you for your interest in GreenSky, and I'll now turn the call over to Andrew.