goeasy Ltd.

Good day and thank you for standing by and welcome to the GoEC's first quarter 2022 financial results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone or touchtone key. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Farhan Ali Khan. Thank you. Please go ahead.

Thank you, operator, and good morning, everyone. My name is Farhan Ali Khan, the company's Senior Vice President and Chief Corporate Development Officer, and thank you for joining us to discuss GoEasy Limited's results for the first quarter ended March 31, 2022. The news release, which was issued yesterday after the close of market, is available on Globe Newswire and on the GoEasy website. Today, Jason Mullins, GoEasy's President and Chief Executive Officer, will review the results for the first quarter and provide an outlook for the business. Hal Khoury, the company's Chief Financial Officer, will also provide an overview of our capital and liquidity position. Jason Appel, the company's Chief Risk Officer, is also on the call. After the prepared remarks, we will then open the lines for questions from investors. Before we begin, I remind you that this conference call is open to all investors and is being webcast through the company's investor website and supplemented by a quarterly earnings presentation. For those dialing in directly by phone, the presentation can also be found directly on our investor site. All shareholders, analysts, and portfolio managers are welcome to ask questions over the phone after management has finished their prepared remarks. The operator will pull up your questions and will provide instructions at the appropriate time. Business media are welcome to listen to this call and to use management's comments and responses to questions in any coverage. However, we would ask that they do not quote callers unless that individual has granted their consent. Today's discussion may contain forward-looking statements. I'm not going to read the full statement, but will direct you to the caution regarding forward-looking statements included in the NDNA. I will now turn the call over to Jason Mullins.

Thanks, Farhan, and welcome to the call, everyone. Today I will recap the highlights from the quarter and the progress we have made on our strategic initiatives and then pass it over to Hal to provide an update on our capital position and funding capacity. I will then spend some time talking about why we are confident our business is well positioned to perform through the current and projected economic conditions before wrapping up with an update on our outlook. The first quarter continued to highlight the growth potential of our business model. as all products and channels experienced a lift in origination volume, leading to a material increase in loan growth during a typically seasonally slower period. During the quarter, we continued to experience healthy consumer demand, as Canadians have largely adjusted to life with COVID-19 and borrowing and payment behavior has returned to more normal levels. Combined across all channels, we received a record number of applications for credit at over 330,000, a 62% increase year over year. The increase in application volume led to loan originations in the quarter of $476 million, an increase of 75% over the first quarter of 2021. With elevated lending activity, the consumer loan portfolio grew $124 million during the quarter, a record level of first quarter loan growth, and a 300% increase over the $30.5 million of net growth in the first quarter of last year, a strong signal that our business strategy is proving effective. The growth in the quarter resulted in an ending consumer loan portfolio of $2.15 billion, up 65% from the prior year. Of note, we experienced performance that exceeded our expectations in several key areas. Auto lending activity in the quarter continued to scale up as we increased our automotive business development team to 17 reps, who have done a remarkable job increasing our active dealer network from 1,400 to over 1,700 today. In total, 7% of all the customers we acquired in the quarter were issued an auto loan. We also experienced strong performance in our home equity loan product, producing $50 million in loan originations, nearly double the volume from the prior year. This product has an excellent credit profile, with the customers typically living in suburban and rural communities and an average home value of under $500,000. Inclusive of our home equity loan, the average loan-to-value ratios on this portfolio are approximately 65%. This product has always carried the lowest level of credit risk in our portfolio. Lastly, we continue to see strong cross-selling activity across our customer base, a key synergy identified in the acquisition of LendCare. While our cross-selling activity remains only a fraction of the future potential, our data continues to show that when we make offers to active customers, between 10% and 30% of them will convert into a subsequent loan product after 12 months, depending on the initial loan product they took. This performance is proving that our strategy to become the one-stop provider of all forms of credit for the non-prime consumer is beginning to prove out. By graduating our borrowers to lower priced products, we continue to bring down the weighted average interest rate for our customers. During the quarter, the weighted average interest rate on the portfolio declined to 33.3%, down from 37.8% last year. Combined with ancillary revenue sources, the total portfolio yield finished within our forecasted range at 38.7%. Total revenue in the quarter was a record $234 million, up 35% over the same period in 2020. We also continued to experience stable credit performance, with the annualized net charge-off rate finishing at 8.8% in the quarter within our target range of 8.5% to 10.5% in 2022. With credit performance performing well, our loan loss provision rate was broadly flat at 7.78%, down nine basis points from 7.87% in the fourth quarter of 2021. We believe this level of provisioning reflects the new structural credit risk of the portfolio and sufficiently contemplates potential deterioration in the overall economic environment based on probability-weighted economic scenarios. Operating income for the first quarter of 2022 was $80 million, up 25% from $63.9 million in the first quarter of 2021. Operating margin for the first quarter was 34.4%, down from 37.6% in the prior year. After adjustments, including items related to the acquisition of LendCare, an unrealized fair value loss on investments and corporate development costs recorded in the quarter, we reported adjusted operating income of $86.1 million, up $21.5 million, or an increase of 33%, compared to $64.6 million in the first quarter of 2021. Adjusted operating margin for the first quarter was 37.1%, down slightly from 38% in the prior year. Net income in the first quarter was $26.1 million, which resulted in diluted earnings per share of $155 compared to $714 in the first quarter of 2021. However, in the first quarter of the prior year, we recorded an unrealized gain on investments of approximately $75 million, while in the current period we recorded an unrealized loss on investments of approximately $15 million related to the mark-to-market of our remaining unhedged shares in Affirm. Notwithstanding the mark-to-market adjustments, this has been an excellent investment, including the cash received on the initial sale of Paybrite to Affirm. The total realized and unrealized gains amount to nearly $120 million relative to the initial investment of $34 million made in 2019, or approximately three and a half times our initial investment. After adjusting for these non-recurring and unusual items on an after-tax basis, adjusted net income was $45.8 million, up 25% from $36.7 million in 2021. Adjusted dilute earnings per share was $2.72, up 16% from $2.34 in the first quarter of 2021. As previously noted, we experienced accelerated growth in the quarter of $124 million, or $34 million above the midpoint of our original expectations. As a result, we incurred the additional loan loss provision expense that is required to be taken on the growth in our receivables. This additional expense ultimately reduced our earnings by an estimate of approximately 12 cents in earnings per share during the quarter. However, as we have said in the past, allocating capital to organic growth generates the strongest long-term return for shareholders. Carrying an additional $34 million in additional receivables produces approximately 21 cents in earnings per share in future years. Before passing it back to Hal, I also want to thank and acknowledge all our incredible women across Go Easy. This past quarter, we were proud to have been recognized on the Globe and Mail's Women Lead Here list, an editorial benchmark to identify best-in-class executive gender diversity in corporate Canada, which includes some of Canada's largest and best-performing organizations. We have worked hard to create a culture of diversity and inclusion that sets the tone from the top, with a highly diverse board and executive team. Ranking on the list is a testament to the steps we have taken to level the playing field, such as achieving gender pay equity in 2019 and increasing the female representation in our C-suite to nearly 30%. Although we are proud of the progress, we remain committed to challenging biases and creating a culture that advances gender equality at all levels of the organization. With that, I'll now pass it over to Hal to discuss our balance sheet and capital position before providing some comments on our outlook.