ECN Capital Corp.

Thank you for standing by. This is the conference operator. Welcome to the ECN Capital fourth quarter 2021 results conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. I would now like to turn the conference over to Mr. John Wimsatt. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone. First, I want to thank everyone for joining this call. Joining us today are Stephen Hudson, Chief Executive Officer, and Michael Lepore, Chief Financial Officer. The news release summarizing these results was issued this afternoon and the financial statements and MD&A for the three-month and year-end period ended December 31st, 2021 have been filed with CDAR. These documents are available on our website at www.ecncapitalcorp.com. Presentation slides to be referenced during the call are accessible on the website as well in PDF format under the presentation section of the website. Before we begin, I want to remind our listeners that some of the information we are sharing with you today includes forward-looking statements. These statements are based on assumptions that are subject to significant risks and uncertainties. I refer you to the cautionary statement section of the MD&A for a description of such risks, uncertainties, and assumptions. Although management believes that the expectations reflected in these statements are reasonable, we can obviously give no assurance that the expectation of any forward-looking statements will prove to be correct. You should note that the company's earnings release, financial statements, MD&A, and today's call include references to a number of non-IFRS measures, which we believe help to present the company and its operations in ways that are useful to investors. A reconciliation of these non-IFRS measures to IFRS measures can be found in our MD&A. All figures are presented in U.S. dollars unless explicitly noted, and with these introductory remarks complete, I'll now turn the call over to Stephen Hudson, Chief Executive Officer.

Thanks, John, and good evening, and welcome to ECN's fourth quarter earnings call. Turning to slide six, we're happy to add source one to our operating partner banner. Welcome aboard. Turning to slide seven, slide from our recent Investor Day. As I mentioned, at Investor Day, we have three core components of our robust business model, first of which is our deep origination platforms. We have 5,000 nationwide dealers between Triad and SourceOne, and Kessler Group has the background and history of 6,000 affinity credit cards created by KG. Beside the origination of platforms are our committed loan partnerships, which we continue to expand and broaden these partnerships. As we'll highlight shortly in the Triad section, we've got great news to report on these expanded partnerships. And underpinning the first and second component is our robust and industry-leading servicing advisory and portfolio management platforms. This is a significant source of recurring revenue for ECN. Turning to slide eight, a slide you've seen before, we've completed a service finance sale for $2 billion in cash, represents a 6.5 return on investment in four years. Turning to source one, a new addition to the ECN partnership and family, of SOURCE's prime RV and marine loans for consumers. It's 100% consistent with ECN's proven model of prime credit assets, asset light, no recourse obligations on behalf of banks and credit union partners. And finally, and probably most important, it's accreted to both 21 and 22 operating rooms. Turning to page nine, our tuck-in strategy. Acquisition strategy led by John Wimsatt is underway. SOURCE 1 marks the first strategy, which we will continue to roll out in 2022 and 2023. It's really important to us as we look at these opportunities that they be accretive to the ECM, that they be asset-light and fee-orientated business within our scope of competency. Third, that the high-quality credit assets are in demand by our existing institutional partners, our funding partners, and that be non-recourse, and that we have very limited integration risk. We think Source 1 scores well on each one of those components. Turning to page, to slide 10, a little bit on the fourth quarter, which we'll get through in a moment. Happy to report six cents of EPS this quarter, one cent is from the sale of our credit card portfolio, and service finance is reported as discontinued operations in the fourth quarter. We are reiterating our guidance for 22 and 23 from our investor day, and as I mentioned at that investor day, I'm guiding you to the high end of that range, and I'll speak to that in a moment. January and February have been strong in the business, tried it at the high end of its origination for those months. Those two months don't make a year, but they certainly underpin the first quarter. We're quite confident. I think our past execution and strength of these businesses gives us a high degree of confidence in our earnings forecast. Source one is above our expectations, so it's above the high end. and CAGs at the high end. So I think the first quarter will put us in great shape. Triad's continued results are strong. The fourth quarter had a 51% increase in originations. We are fully funded through 22 and 23. We're pleased to announce our multi-year partnership with Blackstone, and we'll speak to that in a moment. CAG front adjusted earnings came in at pre-tax earnings at $17.2 million. And we mentioned earlier our specialty lending company, which is an affiliate of Blackstone, which we launched with a $450 million credit card portfolio purchase in the fourth quarter. We feel that KG has delivered on its promise to prove to the financial markets that we can successfully introduce institutional investors into acquiring and managing credit card portfolios. Turning to the operating highlights on slide 12 with respect to Triad. Happy to report operating adjusted earnings of $13.9 million, up 56% year-over-year. Originations are up 52%, and our floor plan assets stood at $182 million. Also happy to report that we added 15 new funding partners, institutional investors who purchase our loans. and 21, and we are about to announce the Blackstone partnership. We're maintaining our guidance of 1.4 to 1.6, and again, I would guide you to the high end of that range. Turning to slide 13 is a slide we provided at Investor Day. I wouldn't comment on it other than say it's a good slide, but the very bottom part of that slide, the last bullet, I think is very important and very significant. We're pleased to announce our new multi-year funding partnership with Blackstone in the first quarter. It's a two-year plus commitment to purchase up to $1.25 billion of manufactured home loans, sorry, both chattels and land home and bronze and silver. It goes across the entire menu of products. This is really the third chapter of our partnership with Blackstone. It started with a very successful service finance program for $1.5 billion. It's followed on by a multi-billion dollar partnership commitment with respect to credit cards, and this is the third chapter. We're very happy with this partnership. We see lots of runway going forward. Slide 14, I won't speak to, again, this was a slide yesterday. Originations on 15 are as presented, the originations of 50% growth continue to demonstrate the robust nature of the triad platform. The origination bridge on slide 16, I'll just take a moment and highlight the, I'm not sure the color blue is showing up on your screen, but the light blue, the aqua blue, which is land home for 2022. And if you think about land home in the industry, land home's market size is three times the size of chattel. Our chattel business stands at about $1 billion of forecasted originations for 2022. That means our land home opportunity is approximately $3 billion. So a forecast of $300 million indicates it's a $2.7 billion opportunity over the next several years. We feel confident about the continued origination growth and profitability of Tri-Ed. Turning to slide 17, again, a re-edited slide from Investor Day. I would guide you to the high end of $70 million. Turning to source one, John.