Propel Holdings Inc.

Good morning, everyone. Welcome to the Propel Holdings fourth quarter and year end 2022 financial results conference call. As a reminder, this conference call is being recorded on March 22nd, 2023. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at the time for research analysts to queue up for questions. I will now turn the call over to Devin Galani. Please go ahead, Devin.

Thank you, Operator. Good morning, everyone, and thank you for joining us today. Propel's fourth quarter and year-end 2022 financial results were released this morning. The press release, financial statements, and MD&A are available on CDAR, as well as the company's website, propelholdings.com. Before we begin, I would like to remind all participants that our statements and comments today may include forward-looking statements within the meaning of applicable securities laws Forward-looking statements may include, but are not necessarily limited to, financial projections or other statements of the company's plans, objectives, expectations or intentions in the management's plans for future operations, or similar matters which are subject to certain risks and uncertainties. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. The company's actual results could differ materially from those projected or suggested in the forward-looking statements due to several important factors or assumptions, many of which are beyond the company's control, including those risks and uncertainties described in our annual information form for the year ended December 31, 2022, filed on CDR today. Any forward-looking statements we make today are only as of today's date. Except as required by political securities laws, we undertake no obligation to publicly update or review any forward-looking statements. Additionally, during the call, we may refer to non-IFRS measures. Participants are advised to review the section entitled Non-IFRS Financial Measures and Industry Metrics in the Company's Management Discussion and Analysis for the quarter and year ended December 31, 2022, the definitions of our non-IFRS measures, and the reconciliation of these measures to the most comparable IFRS measure. I am joined on call today by Clive Kinross, Founder and Chief Executive Officer, and Sheldon Sadikoski, Founder and Chief Financial Officer. I will now pass the call over to Clive.

Thank you, Devin, and welcome, everyone, to our Q4 and year-ended 2022 conference call. I'd like to begin today's call with a brief overview of how we have continued to navigate the challenging macroeconomic landscape, as well as what we are observing with consumers amidst that backdrop. I will then provide an overview of our record results and turn the call over to Sheldon for a more detailed look at our financials. Before we open up the call for questions, I'll provide an update on Propel's recent strategic initiatives and discuss our operating and financial targets for 2023. In the midst of the current macroeconomic environment characterized by a strong employment market, despite higher interest rates and elevated inflation, our business continued to experience robust, profitable growth in Q4, resulting in a very strong 2022. We saw strong consumer demand for credits, and our data tells a story of an incredible resilience amongst the underserved consumer population. On both sides of the border, we witnessed positive wage growth and a strong job market with the unemployment rate in both the U.S. and Canada remaining at near 50-year lows. Furthermore, the latest job report indicates that the U.S. and Canada added 311,000 and 22,000 jobs respectively last month. Industry data continues to paint a picture of resiliency with underserved consumers managing their budgets appropriately. Furthermore, non-prime consumers continue to have elevated savings from the pandemic even when adjusting for inflation. All of this is to say that we continue to observe strong credit performance in the non-prime consumer segments that we and our bank partners operate. We are incredibly proud of what our team accomplished in 2022. As we communicated on our Q3 earnings call, we entered Q4 with the same proactive, tightened, underwriting, and conservative credit policies that we and our bank partners implemented starting in Q1 of last year. In light of the ongoing macroeconomic headwinds, including high interest rates and elevated inflation, we and our bank partners felt that this was the most prudent approach to managing the business. These measures continue to result in excellent quality new customer applications with higher credit risk scores and income levels. We also benefited from the ongoing tightening of credit throughout the credit supply chain that we have mentioned previously. Consumers who at one time would have qualified for a loan at a traditional bank may no longer have that credit access due to a more conservative and risk-averse credit posture being taken across the financial services sector. This plan continues to be a driver for new and higher credit quality originations. The higher quality loan portfolio, coupled with the resilience we've observed in the consumer market, has led to continued improvement in delinquency and mispayment rates through the end of the year and into Q1 of 2023. We also expect that this higher quality loan portfolio will better position the company to withstand any further macroeconomic headwinds, should there be any. In addition, as we have discussed in previous calls, underserved consumers tend to perform well from a credit perspective during times of economic uncertainty. As our industry has seen during periods of economic stress over the past 25 years, delinquency rates for non-prime consumers typically increase less than those for prime consumers. And in some cases, our industry has seen subprime delinquency rates decline during these periods. Some of the reasons for this include the ability for the non-prime consumer to manage their budget in times of stress and the ability to replace lost income faster. Furthermore, the general tightening of lending standards during these times across the financial services sector benefits companies like Propel who ultimately provide access to higher credit quality consumers who have been turned away from traditional banks. Finally, our business model has a meaningful variable cost component that allows us to be more agile and perfect, if needed, with market dynamics. Sitting behind everything we do is our AR-powered underwriting platform and our proprietary technology. We are very fortunate that we have more than 11 years of data and have issued almost a million loans and lines of credit that have all contributed to our ability to navigate through the last several months with the urgency required to properly operate our growing business. Now onto some highlights for the year. Propel delivered record results for fiscal year 2022. As compared to 2021, total originations funded increased by 71% to over $386 million, bringing our total originations since inception to more than $1 billion. Furthermore, ending combined loan and advance balances increased by 84% to more than $247 million, and revenue increased by 75% to a record of $227 million. Propel also delivered record adjusted EBITDA in 2022 of more than $40 million, which is a 61% increase over fiscal 2021. record net income of more than $15 million, which is a 131% increase over fiscal 2021, and record adjusted net income of more than $20 million, which is a 58% increase over fiscal 2021. These records were a result of our significant growth, prudent risk management, and continued margin expansion through cost discipline, improving operational processes, and increasing automation through technology across our platforms. The growth we experienced over the course of 2022 was driven by, first of all, the growth and expansion of the bank programs, including new geographies. Secondly, strong consumer demand for credits. Third, the expansion of originations through growth with key marketing partners and channels. Fourth, the continued successful performance of graduation and variable pricing capabilities and And fifth, on a macro level, the continued focus on online lending versus traditional brick-and-mortar solutions of several of our peers, as well as the tightening of credit criteria across the financial sector, which has resulted in a broader, higher credit quality consumer base seeking credit across our platform. With that, I will now pass the call over to Shelton.