In the news release, Propel Reports Record Quarterly Results and Announces Dividend Increase, issued 08-May-2024 by Propel Holdings Inc. over CNW, the numbers in the four tables in the "Selected Financial Information" and "Reconciliation of Non-IFRS Financial Measures" sections were incorrectly formatted and transmitted by CNW. The complete, corrected release follows:
TORONTO, May 8, 2024 /CNW/ - Propel Holdings Inc. ("Propel" or the "Company") (TSX: PRL), the fintech facilitating access to credit for underserved consumers, today reported record financial results for the three months ended March 31, 2024 ("Q1 2024"). Propel also announced that its Board of Directors has approved a further increase to its dividend from C$0.48 to C$0.52 per share on an annualized basis, effective Q2 2024. This represents an increase of 8% and the Company's fourth dividend increase since the beginning of 2023. All amounts are expressed in U.S. dollars unless otherwise stated.
Financial and Operational Highlights for Q1 2024 (Shown in U.S. Dollars)
Comparable metrics relative to Q1 2023, respectively
Management Commentary
"We have had an exceptionally strong start to the year and are proud to deliver another quarter of record results including record Revenue, Adjusted EBITDA1, Net Income, Adjusted Net Income1 and Ending CLAB1.
This quarter was marked by strong credit performance across the loan portfolio. At the same time, we and our Bank Partners observed very strong demand and originated record Q1 volume, in what is also typically our slowest demand quarter. The strong start to the year reflects both the economic health and resilience of the underserved consumer, particularly in the United States, and our industry-leading AI technology platform that continues to bring more consumers ? overlooked by traditional financial institutions ? into the credit market, while driving strong credit performance. We expect these factors will continue to fuel our growth throughout 2024.
Looking ahead, we remain confident for the remainder of the year. We have a robust business development pipeline, a passionate and focused team, industry-leading technology and we are well capitalized. There are 70 million underserved consumers in North America and hundreds of millions more globally and Propel is exceptionally well positioned to serve them. There is much more to come," said Clive Kinross, Chief Executive Officer.
Discussion of Financial Results and Business Strategy
Note: | |
(1) | See "Non-IFRS Financial Measures and Industry Metrics" and "Reconciliation of Non-IFRS Financial Measures" below. See also "Key Components of Results of Operations" in the accompanying Q1 2024 MD&A for further details concerning the non-IFRS financial measures and industry metrics used in this press release including definitions and reconciliations to the relevant reported IFRS measure. |
(2) | Results converted from USD to CAD assuming an exchange rate of USD/CAD $1.349 and USD/CAD $1.353 for the three-month periods ending March 31, 2024 and March 31, 2023, respectively. |
(3) | See "Supplemental Financial Measures" in the accompanying Q1 2024 MD&A for further details concerning certain financial metrics used in this press release including definitions. |
Dividend Increase
Propel also announced today that its board of directors has approved an increase to its dividend that represents an increase from C$0.48 per common share to C$0.52 per common share on an annualized basis. This 8% increase is the Company's fourth dividend increase since the beginning of 2023. The board declared a dividend of C$0.13 per common share, payable on June 5, 2024 to shareholders of record as of the close of business on May 16, 2024. The Company has designated this dividend as an eligible dividend within the meaning of the Income Tax Act (Canada).
Conference Call Details
The Company will be hosting a conference call and webcast tomorrow morning with a presentation by Clive Kinross, Chief Executive Officer, and Sheldon Saidakovsky, Chief Financial Officer.
Conference call details are as follows:
Date: | Thursday, May 9, 2024 |
Time: | 8:30 a.m. EDT |
Toll-free North America: | 1-888-664-6383 |
Local Toronto: | 1-416-764-8650 |
Webcast: | |
Replay: | 1-888-390-0541 or 1-416-764-8677 (PIN: 045046 #) |
About Propel
Propel Holdings (TSX: PRL) is the fintech company building a new world of financial opportunity for consumers, partners, and investors. Propel's operating brands ? Fora Credit, CreditFresh and MoneyKey ? and our Lending-as-a-Service product line facilitate access to credit for consumers underserved by traditional financial institutions. Through its groundbreaking AI-driven platform, Propel evaluates customers in a more comprehensive way than traditional credit scores can. The result is better products and an expanded credit market for consumers while creating sustainable, profitable growth for Propel. Our revolutionary fintech platform has already helped consumers access over one million loans and lines of credit and over one billion dollars in credit. At Propel, we are here to change the way customers, partners and investors succeed together. Learn more at propelholdings.com
Non-IFRS Financial Measures and Industry Metrics
This press release makes reference to certain non-IFRS financial measures and industry metrics. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. Such measures include "Adjusted Diluted EPS", "Adjusted EBITDA", "Adjusted Net Income", "Adjusted Net Income Margin", "Adjusted Return on Equity", "EBITDA" and "Ending CLAB". This press release also includes references to industry metrics such as "Annualized Revenue Yield", "Return on Equity" and "Total Originations Funded" which are supplementary measures under applicable securities laws.
These non-IFRS financial measures and industry metrics are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We believe that securities analysts, investors and other interested parties frequently use non-IFRS financial measures and industry metrics in the evaluation of issuers. The Company's management also uses non-IFRS financial measures and industry metrics in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts, and to determine components of management and executive compensation. The key performance indicators used by the Company may be calculated in a manner different than similar key performance indicators used by other similar companies.
Definitions and reconciliations of non-IFRS financial measures to the relevant reported measures can be found in our accompanying MD&A available on SEDAR+. Such reconciliations can also be found in this press release under the heading "Reconciliation of Non-IFRS Financial Measures" below.
Forward-Looking Information
Certain statements made in this press release may constitute forward-looking information under applicable securities laws. These statements may relate to our dividend scheduled for June 5, 2024, the factors fueling our growth throughout 2024, our business development pipeline, our ability to serve underserved consumers in North America and globally. As the context requires, this may include certain targets as disclosed in the prospectus for our initial public offering, which are based on the factors and assumptions, and subject to the risks, as set out therein and herein. Often but not always, forward-looking statements can be identified by the use of forward-looking terminology such as "may", "will", "expect", "believe", "estimate", "plan", "could", "should", "would", "outlook", "forecast", "anticipate", "foresee", "continue" or the negative of these terms or variations of them or similar terminology.
Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the factors discussed in the "Risk Factors" section of the Company's annual information form dated March 12, 2024 for the year ended December 31, 2023 (the "AIF"). A copy of the AIF and the Company's other publicly filed documents can be accessed under the Company's profile on SEDAR+ at www.sedarplus.ca.
The Company cautions that the list of risk factors and uncertainties described in the AIF is not exhaustive and other factors could also adversely affect its results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. The forward-looking information contained in this press release represents our expectations as of the date of this press release (or as the date they are otherwise stated to be made), and are subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws.
Selected Financial Information
Three Months Ended Mar 31, | ||||
(US$) | 2024 | 2023 | ||
Revenue | 96,503,606 | 65,617,332 | ||
Provision for loan losses and other liabilities | 42,361,627 | 31,136,673 | ||
Operating expenses | ||||
Acquisition and data | 11,496,889 | 6,896,837 | ||
Salaries, wages and benefits | 9,396,722 | 7,164,215 | ||
General and administrative | 2,475,417 | 2,325,676 | ||
Processing and technology | 3,633,968 | 2,228,981 | ||
Total operating expenses | 27,002,996 | 18,615,709 | ||
Operating income | 27,138,983 | 15,864,949 | ||
Other expenses (income) | ||||
Interest and fees on credit facilities | 7,104,827 | 4,856,533 | ||
Interest expense on lease liabilities | 72,521 | 85,467 | ||
Amortization of internally developed software | 949,783 | 785,889 | ||
Depreciation of property and equipment | 51,632 | 47,778 | ||
Amortization of right-of-use assets | 188,685 | 161,712 | ||
Foreign exchange loss (gain) | 74,210 | 22,631 | ||
Unrealized loss (gain) on derivative financial instruments | 536,309 | 26,032 | ||
Total other expenses (income) | 8,977,967 | 5,986,042 | ||
Income before transaction costs and income tax | 18,161,016 | 9,878,907 | ||
Income tax expense (recovery) | ||||
Current | 6,249,475 | 1,885,374 | ||
Deferred | (1,210,312) | 578,356 | ||
Net Income for the period | 13,121,853 | 7,415,178 | ||
Earnings per share ($USD): | ||||
Basic | 0.38 | 0.22 | ||
Diluted | 0.35 | 0.20 | ||
Earnings per share ($CAD):1 | ||||
Basic | 0.52 | 0.29 | ||
Diluted | 0.48 | 0.28 | ||
Return on Equity2 | 49 % | 35 % | ||
Dividends: | ||||
Dividends | 3,030,807 | 2,402,353 | ||
Dividends per share | 0.088 | 0.070 | ||
(1) | Results converted from USD to CAD assuming an exchange rate of USD/CAD $1.349 and USD/CAD $1.353 for the three-month periods ending March 31, 2024 and March 31, 2023, respectively. |
(2) | See "Supplemental Financial Measures" in the accompanying Q1 2024 MD&A for further details concerning certain financial metrics used in this press release including definitions. |
Reconciliation of Non-IFRS Financial Measures
The following table provides a reconciliation of Propel's net income to EBITDA1 and Adjusted EBITDA1:
Three Months Ended Mar 31, | ||||
(US$ other than percentages) | 2024 | 2023 | ||
Net Income | 13,121,853 | 7,415,178 | ||
Interest and fees on credit facilities | 7,104,827 | 4,856,533 | ||
Interest expense on lease liabilities | 72,521 | 85,467 | ||
Amortization of internally developed software | 949,783 | 785,889 | ||
Depreciation of property and equipment | 51,632 | 47,778 | ||
Amortization of right-of-use assets | 188,685 | 161,712 | ||
Income Tax Expense (Recovery) | 5,039,163 | 2,463,729 | ||
EBITDA1 | 26,528,464 | 15,816,286 | ||
EBITDA margin1 as a % of revenue | 27 % | 24 % | ||
Provision for credit losses on current status accounts2 | 1,542,679 | 594,179 | ||
Provisions for CSO Guarantee liabilities and Bank Service | 1,454,824 | 634,985 | ||
Adjusted EBITDA1 | 29,525,967 | 17,045,451 | ||
Adjusted EBITDA margin1 as a % of revenue | 31 % | 26 % | ||
(1) | See "Non-IFRS Financial Measures and Industry Metrics". |
(2) | Provision included for (i) loan losses on good standing current principal (Stage 1 ? Performing) balances (see "Material Accounting Policies and Estimates ? Loans and advances receivable" in the accompanying Q1 2024 MD&A). |
The following table provides a reconciliation of Propel's Net Income to Adjusted Net Income1, Adjusted Return on Equity1 and Adjusted Net Income margin1:
Three Months Ended Mar 31, | ||||
(US$ other than percentages) | 2024 | 2023 | ||
Net Income | 13,121,853 | 7,415,178 | ||
Provision for credit losses on current status accounts net of | 1,133,869 | 445,635 | ||
Provisions for CSO Guarantee liabilities and Bank Service | 1,069,296 | 476,239 | ||
Adjusted Net Income1 for the period | 15,325,018 | 8,337,051 | ||
Multiplied by number of periods in year | x4 | x4 | ||
Divided by average shareholders' equity for the period | 106,662,964 | 84,374,589 | ||
Adjusted Return on Equity1 | 57 % | 40 % | ||
Adjusted Net Income Margin1 | 16 % | 13 % | ||
(1) | See "Non-IFRS Financial Measures and Industry Metrics". |
(2) | Each item is adjusted for after-tax impact, at an effective tax rate of 26.5% for the three months ended March 31, 2024 and the comparative 2023 period. |
The following table provides a reconciliation of Propel's Ending CLAB1 to loans and advances receivable:
As at Mar 31, | As at Dec 31, | ||||
(US$) | 2024 | 2023 | 2023 | ||
Ending Combined Loan and Advance balances1 | 349,228,416 | 248,051,240 | 337,282,804 | ||
Less: Loan and Advance balances owned by third party lenders pursuant to CSO program | (3,606,703) | (2,670,846) | (3,779,004) | ||
Less: Loan and Advance balances owned by a NBFI pursuant to theMoneyKey Bank Service | (41,080,010) | (22,562,194) | (36,736,938) | ||
Loan and Advance owned by the Company | 304,541,703 | 222,818,200 | 296,766,862 | ||
Less: Allowance for Credit Losses | (77,984,175) | (47,970,502) | (79,093,294) | ||
Add: Fees and interest receivable | 37,969,448 | 18,234,063 | 36,063,899 | ||
Add: Acquisition transaction costs | 6,700,303 | 2,706,527 | 5,575,769 | ||
Loans and advances receivable | 271,227,279 | 195,788,288 | 259,313,236 | ||
(1) See "Non-IFRS Financial Measures and Industry Metrics". |
SOURCE Propel Holdings Inc.
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