Goeasy (OTC) ((TSE:GSY)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Goeasy (OTC) highlighted a balanced sentiment, characterized by robust financial achievements tempered by certain economic challenges. The company celebrated record revenue and successful financing endeavors, yet faced hurdles such as a decline in earnings per share (EPS) and macroeconomic headwinds.
Organic Loan Book Growth
The company reported an impressive organic loan book growth of $336 million, primarily driven by originations totaling $946 million. This growth elevated the receivables to $5.44 billion by the end of the quarter, showcasing the company’s ability to expand its lending operations effectively.
Record Quarterly Revenue
Goeasy achieved a record quarterly revenue of $440 million, marking a 15% increase from the third quarter of the previous year. This milestone underscores the company’s strong market position and its capacity to generate substantial income amidst a challenging economic environment.
Recognition and Awards
The company was recognized as one of the best places to work in Ontario and was listed among Canada’s top growing companies. These accolades reflect Goeasy’s commitment to fostering a positive workplace culture and its significant growth trajectory.
Successful Senior Unsecured Notes Offering
Goeasy successfully launched a senior unsecured notes offering, netting CAD 796 million in gross proceeds with a 6.1% coupon. This strategic financial move enhances the company’s liquidity and supports its growth initiatives.
EPS Decline
Despite strong revenue, the company’s EPS declined to $4.12, down from the same period in the previous year. This decrease was attributed to lower yields, an increased allowance for credit losses, and higher financing costs, reflecting the financial pressures faced by the company.
Increased Delinquencies
The earnings call highlighted higher early-stage delinquencies, which were linked to weak macroeconomic conditions. The allowance for credit losses increased from 7.9% to 8.1%, indicating a cautious approach to credit risk management.
Efficiency Ratio Increase
The efficiency ratio rose to 23.4%, a 30 basis point increase from the previous year. This metric suggests a slight decline in operational efficiency, which the company may need to address in future quarters.
Economic Challenges
Goeasy continues to navigate a challenging macroeconomic backdrop, characterized by high unemployment and negative GDP growth. These factors have impacted the company’s performance, necessitating a strategic focus on prudent underwriting practices.
Forward-Looking Guidance
Looking ahead, Goeasy remains focused on prudent underwriting amid challenging macroeconomic conditions. The company aims for Q4 loan book growth between CAD 250 million and CAD 275 million, with a yield outlook of 30.5% to 31.5%. This guidance reflects Goeasy’s strategic priorities and its efforts to sustain growth while managing risks.
In summary, Goeasy’s earnings call painted a picture of a company achieving significant financial milestones while grappling with economic challenges. The record revenue and successful financing efforts are promising, but the decline in EPS and increased delinquencies highlight areas for improvement. As Goeasy looks to the future, its focus on prudent underwriting and strategic growth will be crucial in navigating the current economic landscape.