GreenSky, Inc.

Good morning and welcome to GreenSky's first quarter 2021 financial results conference call. As a reminder, this event is being streamed live on GreenSky Investor Relations website. And the 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 conference over to Brinker Daly of Investor Relations. Mr. Daly, you may begin.

Thank you and good morning, everybody. Thank you all for joining us. Yesterday, GreenSky issued a press release announcing results of its first quarter 2021, ended March 31st, 2021. You can access this press release on the Investor Relations section of the GreenSky website. In addition, we have posted our first quarter 2021 earnings presentation which we will refer to during 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 also are joined by Jeremy 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 statement, except that's required by law. Information about these risks and uncertainties is included in our press release issued yesterday, 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 May 4th, 2021, and our investor relations page of our website. At this time, I will turn the call over to David.

Thank you, Brinker. Good morning everyone and thank you for joining us. It's good to be with you today to review our first quarter 2021 results. The first quarter was another solid quarter for GreenSky in a very strong start to the year. We have built on the momentum generated at the end of last year and are witnessing outstanding application volume growth across our markets that we believe will further propel our business in 2021. GreenSky posted a company record first quarter adjusted EBITDA of $35 million with a higher adjusted EBITDA margin of 28%. Our outstanding year-over-year profitability was in the face of still ongoing merchant supply chain difficulties related to the continued impacts of the pandemic. First quarter pro forma net income adjusting for non-recurring fees exceeded 2020 first quarter results by $24 million. A driver of the company's strong performance was the outstanding performance of our service portfolio. For the quarter, the 30-plus day delinquency rate, which is a leading indicator of credit performance, was 0.76%, marking a strong improvement compared to the previous quarter and to the first quarter of 2020. The strong credit performance has positive implications on our cost of revenue and other areas that impact our profitability, which Andrew will discuss in more detail shortly. Andrew will also go into more detail on our funding efforts in a moment, but I would highlight that during the first 120 days of the year, we completed over $2.3 billion in new funding initiatives across a diverse set of sources, which included a new forward flow agreement, additional loan sales, and the increased commitment of a longstanding bank partner. The rapid success of diversifying our funding model has been a strength for GreenSky, and I'm thrilled with the progress we've made since we announced the strategy last year. These efforts and successes have directly resulted in a lower cost of funds in Q1 and will allow us to continue optimizing our cost of revenue to further increase profitability going forward. Turning now to the results, transaction volume for the quarter was $1.3 billion, which puts us solidly on pace to meet our transaction volume guidance for the year, taking into account the typical seasonality of originations. From February to March, total company transaction volume increased 28% month over month, showing strong momentum as a result of the investments we've made in new and existing merchant relationships. This compares favorably to growth in the same period in 2020 of 5%, and in 2019 of 21%. Our servicing portfolio ended the quarter at $9.3 billion. Similar to what we and others are seeing in the broader consumer market, our servicing portfolio experienced higher prepayment rates compared to historical levels. While higher prepayment rates can result in slightly lower servicing fee revenue, we benefit from lower bank waterfall costs through saved bank margin and lower future credit losses. Simply put, earlier prepayments boost lifetime loan profitability for the majority of our portfolio. Despite these recent market trends, we expect our transaction volumes will outpace prepayments in future quarters, resulting in strong and sustainable servicing portfolio growth. Turning to credit quality, the performance and composition of our servicing portfolio remained exceptional during the first quarter. We believe that many consumers are choosing to use their increased disposable income and stimulus checks to pay off their debt, which benefits the credit performance of our servicing portfolio. Our 30-plus-day delinquency rate equaled just 0.76% of our overall servicing portfolio at the end of March, an improvement of 47 basis points from a year ago, an improvement of 23 basis points from the end of 2020. Delinquency rates continue to outperform due to the high credit quality of our program borrowers who have demonstrated resiliency despite last year's unprecedented challenges. Importantly, while some consumers are repaying their loans more rapidly, transaction volume is originating at a faster pace as we continue to see strong demand in home improvement. In fact, March approvals represented the single largest month of approved credit lines in company history. Next, as we've done in the past, I'd like to provide an update on the status of our COVID-19 disaster assistance program. Green Sky program borrowers are continuing to exit payment deferral at a faster rate than those requesting new enrollments. And at the end of March, approximately 0.2% of loans, or $20 million, of our servicing portfolio were in deferral status. Of the loans that had previously received a deferral, approximately 0.4% were greater than 30 days delinquent at the end of the quarter. While we are cautiously optimistic that we will continue to see improving trends, our total exposure to borrowers that were impacted by the pandemic has declined substantially since the end of 2020. Turning to slide six of the presentation, After our strong first quarter results, we are seeing real tailwinds for the remainder of the year in our home improvement and elective healthcare businesses as broader macroeconomic trends continue to improve. We believe that improved consumer balance sheets and more time at home translates into continued and accelerating demand for home improvement projects. In elective healthcare, as states begin reopening in the final months of 2020, we've seen an upward trend in our patient solution volume. And as we sit here today, the majority of states are once again fully open for business, and we see medical providers expanding both their office staff and hours to work through patient backlogs. We anticipate increasing transaction volume within our elective healthcare business as the year progresses. Our merchants are the key to our transaction volume, so let's turn to some updates on that front. As previously mentioned, we recently renewed our partnership with the Home Depot and have further built on that success, solidifying our market-leading position in the home improvement space. During the quarter, we also expanded the strategic relationship with one of our largest sponsors and enhanced our agreement with one of our top three windows and doors merchants, whereby we expect to see a material increase in their annual transaction volume in the coming year. Other key wins in the windows and doors space include a $20 million annual transaction volume merchant and two regional $15 million annual transaction volume merchant wins from our competitors. In addition to the great progress in windows and doors, we also won a $30 million a year transaction volume HVAC merchant from a competitor, increasing GreenSky's market share in the HVAC category, our second largest segment. Coming off of the turbulent 2020, these wins strengthen our position as the leader and the largest consumer finance platform in home improvement as we optimize our relationships with existing merchants and win share with new partners. In our elective healthcare business, our transaction volume is a percentage of our total company volume, increased in the first quarter as we continue to build momentum. We shared previously that we completed a strategic alliance with Clear Blue Smiles, a cutting-edge orthodontic provider, and also significantly expanded our relationship with the nation's largest provider of dental implants. Furthermore, we successfully completed integration work and launched our universal credit application within our elective healthcare business. As a reminder, the universal credit application, which was rolled out within our home improvement business in 2019, is a tool that increases merchants' approval rates without a degradation of Green Sky's credit quality through our partnership with Second Look Lenders and fosters a better consumer experience through a streamlined application process. Based on these key wins and those in the pipeline, I'm excited that we are not only taking market share, we are also growing volumes with our existing merchant relationships. As illustrated on slide seven, we have a demonstrated track record helping our merchants grow transaction volumes on our platform for multiple years and believe that the recent wins with existing and new merchants will further build on that success. I will now turn it over to Andrew to discuss our quarter's financial highlights.