Goeasy sets new sales record

MISSISSAUGA, Ontario – GoEasy, parent of this country’s largest big ticket leasing merchant, reported record sales and earnings for 2015, all of it driven by its consumer loans segment as the performance of its core furniture, appliance and electronics business declined for the fifth consecutive year.

Revenue for the three months ending December 31, 2015 was $83 million, an 18.3% jump from the $70 million for the same period of 2014.

Total same store sales growth for the quarter was 16.5%, driven primarily by the expansion of the company’s Easyfinancial unit and its consumer loans receivable portfolio which stood at $289 million on December 31, 2015 – a substantial 51% leap from the $192 million a year earlier.

Net income was $7.5 million or 54 cents per diluted share, a 26% uptick over the $6.0 million or 43 cents per diluted share for the comparable period.

“We are very pleased to have once again achieved record financial performance in the quarter,” GoEasy president and chief executive officer David Ingram said. “Our strong fourth quarter was achieved through the continued growth of Easyfinancial and improvements in the operating margin of Easyhome Leasing.”

The company noted Easyhome recorded same store revenue growth of 5.0% for the quarter, which was offset by the store closures over the past 15 months and the resulting revenue decline of 3.4%.

For the year ending December 31, 2015, revenues were $304 million, up 17.4% from the $3259 million for 2014.

Total sale store sales were up 16.3% for the year. Excluding Easyfinancial, same store sales gained 4.7%.

Net income for the year was $23.7 million or 1.69 per diluted share, up 28% over the $18.6 million or 1.34 per diluted share.

Easyfinancial was easily the stronger of GoEasy’s two business segments. Its revenues for the year climbed 50.4% to $151.7 million, compared to $100.8 million in 2014. Easyfinancial specialises in providing personal loans – up to but not over $10,000 – to credit constrained consumers.

Meanwhile Easyhome revenue for the year was $152.6 million, a decline of 3.6% from the prior year’s $158.3 million. It was the fifth consecutive year sales had declined for Canada’s largest and only national big ticket leasing merchant.

Indeed, at least one analyst who regularly follows GoEasy is suggested Easyfinancial will be the larger of the two business segments before the end of 2017.

Ingram also noted the company has made significant progress on a number of fronts during 2015, including the acquisition of 45 locations from a now defunct Canadian payday loan operator as well as the acquisition of 14 Canadian leasing stores from the U.S.-based Rent-A-Center.

In addition, Easyfinancial increased its maximum loan size from $5,000 to $10,000 and entered in an agreement with Leon’s to provide a new point-of-sale financing alternative to its credit constrained customers.

“2015 was the fourteenth consecutive year of growing revenues and delivering profits,” Ingram said. “Since 2001, total revenue has seen a compounded annual growth rate of 11.5% while net income has grown from a loss of $1.9 million in 2001 to net income of $23.7 million in 2015.”

Looking ahead, GoEasy’s strategic focus will continue to be on expanding the size and scope of Easyfinancial.

“We are starting 2016 on exceptionally strong footing and expect continued growth,” Ingram said. “Economic conditions remain uncertain in several parts of the country. Although markets such as Alberta are likely to see negative impacts due to the difficulties in the oil sector, we are benefitting from our larger exposure in Ontario and British Colombia which are showing positive indications. Overall, we are confident that the prior investments we have made in technology, infrastructure, risk management and people will allow us to continue growing responsibly while proactively managing credit risk.”

GoEasy is planning to add as many as 20 new Easyfinancial locations to its network by the end of 2016 while growing its loan portfolio to $390 million. By the end of 2018, the company wants a portfolio valued at $500 million and a network of some 240 Easyfinancial outlets.

“The progress made on all fronts during the last few years has positioned the company for significant earnings expansion and unencumbered loan book growth for the next few years,” Ingram said. “Our plans for 2016 are focused on completing existing IT projects, accelerating new customer originations, particularly through the indirect channel, and achieving efficiency and effectiveness as the business continues to expand.”

As of December 31, 2015, GoEasy operated some 184 Easyhome leasing stores across Canada as well as 202 Easyfinancial locations.