Company announces new, flexible unsecured line of credit offering backed by new credit facility with CWB Maxium Financial Inc. and Bastion Management

TORONTO, ON, November 21, 2022 – Propel Holdings Inc. (“Propel”) (TSX: PRL), an innovative fintech company dedicated to credit inclusion, announced today that it has entered the Canadian market with its new brand, Fora CreditTM (“Fora”) – a convenient online credit solution for underserved Canadian consumers.

Nearly 25 per cent of Canadians are either unserved or underserved in the credit market , in many cases, due to a lack of access to credit through traditional financial institutions. In line with Propel’s mission of credit inclusion, Fora was created to provide Canadians with access to a fair, transparent and flexible credit solution.

Rooted in Propel’s existing flexible, scalable technology infrastructure and capabilities in artificial intelligence (“AI”), Fora enables consumers to apply online for personal lines of credit of up to C$10,000 through a seamless digital application experience backed by extraordinary customer service. Fora is currently available in Alberta and Ontario and Propel has plans to roll out Fora into additional provinces across the country in the coming months.

Key features of Fora include:

To support the growth of this new Canadian portfolio, Propel announced it has secured a revolving credit facility with an aggregate initial capacity of approximately C$26 million shared between senior lender CWB Maxium Financial Inc., a part of the Canadian Western Bank Financial Group of companies (“CWB”), and junior lender Bastion Management and affiliates thereof (“Bastion”), an existing lender to Propel.

“Consumers across the United States have trusted Propel and its operating brands for more than a decade to deliver flexible credit solutions and we are delighted to bring our offering home to Canadians. We fully expect that Fora will become a leading solution for the 25 per cent of Canadians who are unable to access credit through traditional financial institutions,” said Clive Kinross, Propel’s Chief Executive Officer. “We are pleased to partner with CWB and Bastion on a credit facility for our Canadian business and are looking forward to advancing on our strategic plan through this opportunity for geographic expansion and serving lower-risk markets. Our ability to execute on new programs and work with highly skilled, sophisticated and reputable partners is a cornerstone of our success as a leading fintech company. I could not be prouder of the Propel team who has been working with tremendous energy and excitement to launch Fora ahead of schedule. We are excited to bring our proven expertise in online lending and our outstanding service teams to our home market after many years of operating programs successfully for U.S. consumers. We are looking forward to providing further updates as the program develops.”

About Propel
Propel (TSX: PRL) is an innovative financial technology (“fintech”) company, committed to credit inclusion by facilitating fair, fast and transparent access to credit through its proprietary, industry-leading online lending platform. Understanding the challenge faced by millions of people without adequate access to credit, Propel, through its operating brands, is dedicated to bringing appropriate credit solutions to consumers in Canada and the United States. For more than a decade, Propel has leveraged its expertise in consumer lending, its robust capabilities in artificial intelligence and underwriting, and its steadfast dedication to a superior customer experience to facilitate approximately one million loans and lines of credit to consumers in need. For more information, please visit propelholdings.com.

Forward-Looking Information

Certain statements made in this press release may constitute forward-looking information under applicable securities laws. These statements may relate to the planned roll-out of Fora to additional provinces in the coming months, the technology and features of the Fora products and platform, our ability to become a Canadian market leader to underserved consumers and our ability to execute on new programs and execute on our strategy. 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 21, 2022 for the year ended December 31, 2021 (the “AIF”). A copy of the AIF and the Company’s other publicly filed documents can be accessed under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com.

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.


1 https://newsroom.transunion.ca/more-than-9-million-canadians-are-either-credit-unserved-or-underserved—approximately-14-migrate-to-being-credit-active-every-two-years/

For further information, please contact:
Sarika Ahluwalia
Senior Vice President, Corporate Affairs & Chief Compliance Officer
(647) 776-5468
IR@propelholdings.com

Revenue increased by 82% to $59.7 million in Q3 2022, and increased by 86% to $164.3 million for year-to-date through Q3 2022, representing record performance for both periods

Net income increased by 570% to $4.2 million in Q3 2022, and increased by 15% to $10.1 million for year-to-date through Q3 2022, representing record performance for a nine-month period ending Q3

Total Originations Funded1 increased by 75% to $97.7 million, representing record quarterly originations

Loans and advances receivable and Ending CLAB1 increased by 121% and 115%, increasing to $166.3 million and $208.4 million, respectively, both record ending balances

Canadian entry launch date accelerated to Q4 2022

Declares dividend of C$0.095 per share

TORONTO, ON, November 10, 2022 – Propel Holdings Inc. (“Propel” or the “Company”) (TSX: PRL) today reported its financial results for the three months ended September 30, 2022 (“Q3 2022”) and declared a dividend for the fourth quarter of 2022. The Company has designated this dividend as an eligible dividend within the meaning of the Income Tax Act (Canada). All amounts are expressed in U.S. dollars unless otherwise stated.

Management Commentary

“Propel delivered another successful quarter with record originations and revenue in Q3 2022, as well as record earnings for a nine-month period ending Q3. We have also made excellent progress on our strategy, including continuing to facilitate the graduation of consumers up the credit spectrum, serving lower-risk markets, expanding to new jurisdictions and exploring potential opportunities for new services and products. In addition to our core business, we recently announced a transformational agreement to become Pathward’s primary lending-as-a-service (“LaaS”) partner which will allow us to facilitate access to credit to lower risk consumers across the United States. We have also announced today that we will be launching our Canadian business before the end of 2022, ahead of schedule, which, in addition to being our home market, will also allow us to tap into a new and underserved market. These new initiatives, together with the strong profitable growth we are experiencing in our existing business provide us with an excellent foundation as we close out 2022 and head into 2023. As the macroeconomic environment remains uncertain and high inflation persists, we are continuing to focus on maintaining profitable growth. We are encouraged by consumers’ resiliency through this challenging economic environment and remain as committed as ever to delivering a best-in-class experience for consumers and strong returns for our investors in the months and years to come,” said Clive Kinross, Chief Executive Officer

Financial and Operational Highlights for Q3 2022

Comparable metrics relative to Q3 2021


Discussion of Financial Results

Notwithstanding an uncertain macroeconomic environment, Propel observed strong consumer demand for credit as the economy continued to return to a more normalized state post-COVID. The Company also continued to see a resilience among the subprime consumer who adjusted quickly to current market conditions. As expected, the general tightening of credit throughout the financial services sector has also continued. In continuing with the proactive steps taken beginning in Q1 of this year, Propel and its Bank Partners similarly maintained a conservative approach to underwriting during the quarter. As a result, and notwithstanding record quarterly Total Originations Funded1, the Company experienced slower CLAB1 and revenue growth than otherwise would have been expected in a more normalized macroeconomic environment, albeit with strong credit quality across the portfolio. Propel continues to operate the business with a focus on increasing profitability, which will continue to expand through several factors, including continued revenue growth, ongoing efficiencies in its acquisition and data expense, one of Propel’s primary operating costs, the prudent management of discretionary expenses such as headcount, and the inherent operating leverage within the business model.

Despite the dynamics discussed above, loans and advances receivable increased by 121% to $166.3 million as at September 30, 2022, compared to $75.4 million as at September 30, 2021. The growth in these balances was driven by: 1) the growth in the Bank Programs under the CreditFresh brand; 2) facilitating the expansion of Bank Programs into additional states over fiscal year 2021; 3) strong consumer demand for credit driven by the general opening up of the economy following the easing of COVID-19 related restrictions as well as other macroeconomic factors; 4) the expansion of originations through newly established marketing partners and channels; 5) the successful launch and subsequent expansion of variable pricing and graduation capabilities; and 6) at a macro level, the continuing industry-wide transition from brick-and-mortar to online lending, and tightening across the credit supply chain, which has increased application volume and quality across Propel’s platform. Ending CLAB1 increased by 115% to $208.4 million, which the Company attributes to the factors above, as well as the significant growth in the MoneyKey Bank Service Program.

Revenue increased by 82% to a record $59.7 million in Q3 2022, compared to $32.7 million in Q3 2021. This growth was primarily the result of the growth in Average CLAB1, offset by a decrease in Annualized Revenue Yield1 to 120% in Q3 2022 from 143% in Q3 2021. The decrease in Annualized Revenue Yield1 is a result of a higher concentration of originations in the Bank Programs relative to legacy products, the general lower cost of credit across products facilitated over Propel’s platform and the introduction of variable pricing and graduation capabilities. The evolving portfolio composition is consistent with the Company’s strategy and is expected to result in higher portfolio growth and lower defaults across the portfolio over time.

Net income increased by 570% to $4.2 million in Q3 2022 from $0.6 million in Q3 2021. Adjusted Net Income1 increased by 71% to $3.8 million in Q3 2022 from $2.2 million in Q3 2021. The increase in net income in Q3 2022 relative to Q3 2021 is primarily a result of the following factors: 1) overall growth of the business; 2) a substantial reduction in our Cost Per Funded Origination1; and 3) effective and prudent cost management and operating leverage. The increase in Adjusted Net Income1 and Adjusted EBITDA1 are attributable to the same factors as the increase in net income.

Updated Launch Date for Entry into Canadian Market

Propel updated its previous guidance for its entry into the Canadian market today to confirm that the Company will be launching a new consumer credit product in Canada in Q4 2022, ahead of schedule. The product will be offered under a new brand through Propel’s existing proprietary AI and technology infrastructure. Further details are expected to be released imminently.

Operating and Financial Targets

Given the uncertainty in the current macroeconomic environment, and in line with the Company’s commitment to delivering value through profitable growth, a deliberately cautious stance towards credit risk and resultantly, growth, is important for long-term success. Consequently, while the Company anticipates continued growth in Total Originations Funded1 in Q4 2022, the highest seasonal quarter for demand, such growth is expected to be lower than it would otherwise be in a normalized macroeconomic environment. As a result, the Company anticipates that the Ending CLAB1 growth rate for 2022 will come in slightly lower than the 80% to 90% range provided earlier this year in our initial operating and financial outlook for 2022. Propel continues to expect to be in line with the financial targets provided for revenue, net income margin, Adjusted EBITDA Margin1, and Adjusted Net Income Margin1 for 2022. The Company’s 2023 guidance remains unchanged, however, as further clarity on launch timing and overall volume roll-out plans for new initiatives, including the LaaS program with Pathward and the Canadian program, become apparent, the Company will update its 2023 outlook accordingly.


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 Q3 2022 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.

Declaration of Q4 2022 Dividend

Propel also announced today that its board of directors has declared a dividend of C$0.095 per common share, payable on December 2, 2022 to shareholders of record as of the close of business on November 17, 2022. 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 later this morning with a presentation by Clive Kinross, Chief Executive Officer, Sheldon Saidakovsky, Chief Financial Officer and Noah Buchman, President of Propel’s CreditFresh brand.

Conference call details are as follows:

Date: November 10, 2022
Time: 8:30AM ET
Conference ID: 15640463
Toll free dial-in:  (888) 886-7786
International dial-in: (416) 764-8659
Webcast:  Click here
Replay: (877) 674-7070 or (416) 764-8692 (PIN: 640463)

About Propel

Propel is an innovative, online financial technology (“fintech”) company, committed to credit inclusion by providing and facilitating fair, fast and transparent access to credit with exceptional service using its proprietary online lending platform. Through its operating brands, Propel is focused on providing access to credit to underserved consumers who struggle to access credit from mainstream credit providers. Propel’s revenue growth and profitability have accelerated significantly over the past two years as Propel has been able to facilitate access to credit for an increasing number of consumers, helping them move forward in their credit journeys.

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 EBITDA”, “Adjusted Net Income”, “EBITDA” and “Ending CLAB”. This press release also includes references to industry metrics such as “Annualized Revenue Yield” 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 ability to profitably grow our business and facilitate access to credit to more and more underserved consumers, the launch of the Pathward partnership and the anticipated benefits derived therefrom, the launch into Canada in Q4 2022, the impact on the macroeconomic environment on our consumers. Particularly, information regarding our expectations of future results, targets, performance achievements, prospects or opportunities is forward-looking information and for which we refer readers to the assumptions set out in our March 21, 2022 press release providing such targets. 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 21, 2022 for the year ended December 31, 2021 (the “AIF”). A copy of the AIF and the Company’s other publicly filed documents can be accessed under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com.

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.

For further information, please contact:
Sarika Ahluwalia
Senior Vice President, Corporate Affairs & Chief Compliance Officer
(647) 776-5468
IR@propelholdings.com

Selected Financial Information
  Three Months Ended Sept 30, Nine Months Ended Sept 30,
(US$ ) 2022 2021 2022 2021
Revenue 59,738,072 32,742,895 164,335,709 88,471,249
Provision for loan losses and other liabilities 32,553,505 15,420,843 87,265,435 33,175,000
 
Operating expenses
Acquisition and data 6,186,628 6,201,683 21,900,406 14,684,904
Salaries, wages and benefits 6,870,706 5,240,934 19,337,967 14,630,381
General and administrative 2,045,216 1,184,597 6,055,527 2,860,520
Processing and technology 2,561,008 1,571,133 7,452,001 4,148,219
Total operating expenses 17,663,558 14,198,347 54,745,901 36,324,024
Operating income 9,521,009 3,123,705 22,324,373 18,972,225
 
Other income (expenses)
Interest and fees on credit facilities (2,714,756) (1,212,845) (5,737,791) (3,273,909)
Interest on term loan (886,852)
Interest expense on lease liabilities (92,240) (106,564) (292,845) (334,008)
Amortization of internally developed software (607,419) (493,375) (1,804,475) (1,529,846)
Depreciation of property and equipment (44,844) (25,186) (111,657) (87,191)
Amortization of right-of-use assets (149,187) (159,629) (463,649) (502,129)
Foreign exchange gain (loss) 39,669 197,830 156,653 224,826
Unrealized gain (loss) on derivative financial instruments (299,984) (148,960) (407,812) (314,841)
Total other income (expenses) (3,868,761) (1,948,729) (8,661,576) (6,667,950)
Income before transaction costs and income tax 5,652,248 1,174,976 13,662,797 12,304,275
 
Transaction costs 323,216 364,821
 
Income tax expense (recovery)
Current 2,781,087 638,246 5,702,002 4,152,089
Deferred (1,322,470) (412,530) (2,122,467) (988,133)
Net Income for the period 4,193,631 626,044 10,083,262 8,775,498
 
Earnings per share(1)
Basic 0.12 0.02 0.29 0.35
Diluted 0.12 0.02 0.28 0.34
 
Dividends(1)
Dividends 2,484,108 672,913 7,626,807 5,525,692
Dividends per share 0.072 0.024 0.222 0.228

(1) All per share amounts prior to Q4 2021 have been restated to reflect the 2:1 share split that occurred as part of the reorganization completed in connection with our initial public offering. Please see the accompanying Q3 2022 MD&A for further details.

 

Reconciliation of Non-IFRS Financial Measures

The following table provides a reconciliation of our net income to EBITDA1 and Adjusted EBITDA1:

  Three Months Ended Sept 30, Nine Months Ended Sept 30,
(US$ other than percentages) 2022 2021 2022 2021
Net Income 4,193,631 626,044 10,083,262 8,775,498
Interest on Debt 2,714,756 1,212,845 5,737,791 4,124,761
Interest on lease liabilities 92,240 106,564 292,845 334,008
Amortization of internally developed software 607,419 493,375 1,804,475 1,529,846
Depreciation of property and equipment 44,844 25,186 111,657 87,191
Amortization of right-of-use assets 149,187 159,629 463,649 502,129
Income Tax Expense (Recovery) 1,458,617 225,716 3,579,535 3,163,956
EBITDA1 9,260,694 2,849,359 22,073,214 18,517,389
EBITDA margin1 as a % of revenue 16% 9% 13% 21%
Transaction Costs and Financing Costs 323,216 364,821
Provision for credit losses on current status accounts2 1,023,894 1,194,979 5,203,747 2,627,786
Provisions for CSO Guarantee liabilities and Bank Service Program liabilities (1,531,659) 640,496 (279,142) 1,238,627
Adjusted EBITDA1 8,752,929 5,008,050 26,997,819 22,748,623
Adjusted EBITDA margin1 as a % of revenue 15% 15% 16% 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 “Critical Account Policies and Estimates — Loans and advances receivable” in the accompanying Q3 2022 MD&A).

 

The following table provides a reconciliation of our Net Income to Adjusted Net Income1 and Adjusted Net Income margin1:

  Three Months Ended Sept 30, Nine Months Ended Sept 30,
(US$ other than percentages) 2022 2021 2022 2021
Net Income 4,193,631 626,044 10,083,262 8,775,498
Transaction Costs and Financing Costs net of taxes2 239,826 270,697
Provision for credit losses on current status accounts net of taxes2 759,730 886,675 3,831,921 1,949,817
Provisions for CSO Guarantee liabilities and Bank Service Program liabilities net of taxes2 (1,136,491) 475,248 (215,890) 919,062
Adjusted Net Income1 for the period 3,816,870 2,227,793 13,699,292 11,915,074
Adjusted Net Income Margin1 6% 7% 8% 13%

(1) See “Non-IFRS Financial Measures and Industry Metrics”.

(2) Each item is adjusted for after-tax impact. Please see the accompanying Q3 2022 MD&A for further details.

 

The following table provides a reconciliation of our Ending CLAB1 to loans and advances receivable:

  As at Sept 30, As at Dec 31,
(US$) 2022 2021 2021
Ending Combined Loan and Advance balances1 208,380,159 96,841,777 134,843,170
Less: Loan and Advance balances owned by third party lenders pursuant to CSO program (3,171,971) (3,204,174) (4,260,648)
Less: Loan and Advance balances owned by a NBFI pursuant to the MoneyKey Bank Service program (20,571,558) (9,519,178) (17,782,252)
Loan and Advance owned by the Company 184,636,630 84,118,425 112,800,270
Less: Allowance for Credit Losses (39,632,397) (19,809,595) (23,700,774)
Add: Fees and interest receivable 18,304,278 9,076,161 12,034,604
Add: Acquisition transaction costs 2,960,475 1,988,957 2,715,724
Loans and advances receivable 166,298,986 75,373,948 103,849,824
 

(1) See “Non-IFRS Financial Measures and Industry Metrics”.

TORONTO, ON, November 1, 2022 – Propel Holdings Inc. (“Propel”) (TSX: PRL), an innovative fintech company dedicated to credit inclusion, announced today that Peter Anderson has been appointed to its board of directors, effective immediately. As an independent director, Mr. Anderson will serve on the nomination, governance and compensation committee.

As former Chief Executive Officer of CI Financial Inc, Mr. Anderson led the Canadian asset and wealth management company with operations in Canada, the United States, Hong Kong and Australia. Through Mr. Anderson’s leadership at CI Financial, the team successfully implemented its strategic plan, completed five acquisitions and expanded its offering with new products and platforms.

Throughout his career, Mr. Anderson held a number of senior leadership roles, including at Aston Hill Financial and ScotiaMcLeod. He has a degree from the University of New Brunswick, as well as the designation from the Institute of Corporate Directors (ICD.D). Mr. Anderson has extensive governance experience, including with CI Financial, St. Andrew’s College, Toronto Symphony Orchestra, Waterloo Brewing, Aston Hill Financial and Langdon Equity Partners.

“On behalf of Propel and its board of directors, we are pleased to welcome Peter Anderson as a member of our board. Peter brings a wealth of experience in financial services, strategic leadership and organizational growth. His core values align with ours and we know Peter will support our mission to facilitate access to credit for underserved consumers. We are fortunate to have Peter on our board and eager to work closely with him in our collective efforts to further advance our strategy,” said Clive Kinross, Chief Executive Officer.

About Propel
Propel is an innovative, online financial technology (“fintech”) company, committed to credit inclusion by providing and facilitating fair, fast and transparent access to credit with exceptional service using its proprietary online lending platform. Through its operating brands, Propel is focused on providing access to credit to underserved consumers who struggle to access credit from mainstream credit providers. Propel’s revenue growth and profitability have accelerated significantly over the past two years as Propel has been able to facilitate access to credit for an increasing number of consumers, helping them move forward in their credit journeys.

For further information, please contact:
Sarika Ahluwalia
Senior Vice President, Corporate Affairs & Chief Compliance Officer
(647) 776-5468
IR@propelholdings.com

TORONTO, ON, October 27, 2022 – Propel Holdings Inc. (“Propel”) (TSX: PRL), an innovative fintech company dedicated to credit inclusion, announced today that it will be reporting financial results for the period ending September 30, 2022 (“Q3 2022”) prior to market open on Thursday, November 10, 2022. Propel will be hosting a conference call and webcast with a presentation by Clive Kinross, Chief Executive Officer, and Sheldon Saidakovsky, Chief Financial Officer.

Conference details are as follows:

Date: Thursday, November 10, 2022
Time: 8:30 a.m. ET
Toll-free dial-in: 1-888-886-7786
International dial-in: 1-416-764-8659
Conference ID: 15640463
Webcast: Click here
Replay: 877-674-7070 or 416-764-8692 (PIN: 640463)

About Propel
Propel is an innovative, online financial technology (“fintech”) company, committed to credit inclusion by providing and facilitating fair, fast and transparent access to credit with exceptional service using its proprietary online lending platform. Through its operating brands, Propel is focused on providing access to credit to underserved consumers who struggle to access credit from mainstream credit providers. Propel’s revenue growth and profitability have accelerated significantly over the past two years as Propel has been able to facilitate access to credit for an increasing number of consumers, helping them move forward in their credit journeys.

For further information, please contact:
Sarika Ahluwalia
Senior Vice President, Corporate Affairs & Chief Compliance Officer
(647) 776-5468
IR@propelholdings.com

Propel partners with Pathward to power nationwide credit solution for Pathward partners

TORONTO, ON, October 17, 2022 – Propel Holdings Inc. (“Propel”) (TSX: PRL), an innovative fintech company dedicated to credit inclusion, and Pathward, N.A. (“Pathward”), a leading financial empowerment company, announced today that the two companies have entered into an agreement for Propel to become Pathward’s primary consumer lending as a service (“LaaS”) fintech partner.

Powered by Propel’s industry-leading, proprietary fintech platform, Pathward will provide credit solutions through this LaaS capability through its partners. In line with Propel and Pathward’s shared mission of financial inclusion, these credit products will be offered through a seamless online integration into the Propel platform.

For many years, Pathward, formerly MetaBank, has focused on increasing financial access through innovative banking as a service, which includes payment, tax, and commercial finance solutions. Under its new name, the company continues to focus on its purpose of powering financial inclusion for all.

The five-year renewable agreement contemplates fee income for Propel by providing white labelled technology and service solutions for Pathward’s consumer lending capabilities, including customer acquisition services, loan management software, licensing of proprietary artificial intelligence-powered, risk and response scores, and credit servicing capabilities. This partnership accelerates Propel’s strategic plan to expand and diversify its current product and service offerings and geographic reach as an adjacent business to its legacy business lines. Propel expects the program to launch by Q1 2023 and be accretive to revenue and net income in 2023, with financial impact growing into 2024. The company will release more details in future financial outlook.

“Propel’s successful bid to become Pathward’s primary lending as a service fintech partner is a testament to our incredible team, as well as our world-class proprietary technology, operational excellence and artificial intelligence capabilities. We are excited to expand on our current product and service offerings and believe that this new LaaS business will leverage our existing capabilities and complement our robust core business lines, all while providing credit solutions to even more consumers. We are looking forward to developing this program in partnership with the Pathward team with whom we have already fostered an excellent relationship and shares Propel’s mission to facilitate access to credit for more consumers,” said Clive Kinross, Chief Executive Officer of Propel.

“We were impressed with their outstanding technology capabilities and highly experienced team. Our relationship with the Propel team is based on shared values, which gives us confidence in this new partnership and the potential long-term benefit to our customers. This partnership will allow Pathward to provide access to credit while limiting risk, similar to our other consumer lending programs,” said Pathward President Anthony Sharett.

About Propel
Propel is an innovative, online financial technology (“fintech”) company, committed to credit inclusion by providing and facilitating fair, fast and transparent access to credit with exceptional service using its proprietary online lending platform. Through its operating brands, Propel is focused on providing access to credit to underserved consumers who struggle to access credit from mainstream credit providers. Propel’s revenue growth and profitability have accelerated significantly over the past two years as Propel has been able to facilitate access to credit for an increasing number of consumers, helping them move forward in their credit journeys.

About Pathward
Pathward, N.A., a national bank, is a subsidiary of Pathward Financial, Inc. (Nasdaq: CASH). Pathward is a U.S.-based financial empowerment company driven by its purpose to power financial inclusion for all. Pathward strives to increase financial availability, choice and opportunity across our Banking as a Service and Commercial Finance business lines. The strategic business lines provide end-to-end support to individuals and businesses. Learn more at Pathward.com.

Forward-Looking Information
Certain statements made in this press release may constitute forward-looking information under applicable securities laws. These statements may relate to the program launch date, expected results and benefits from the agreement with Pathward, the services provided to Pathward under the term of the agreement and the anticipated acceleration of Propel’s strategic plan. Particularly, information regarding our expectations of future results including the agreement’s contribution to revenue and net income in 2023 and 2024 is forward-looking information. 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 21, 2022 for the year ended December 31, 2021 (the “AIF”). A copy of the AIF and the Company’s other publicly filed documents can be accessed under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com.

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.

For further information, please contact:
Sarika Ahluwalia
Senior Vice President, Corporate Affairs & Chief Compliance Officer
(647) 776-5468
IR@propelholdings.com

Revenue increased by 90% to $54.1 million, representing record quarterly revenue

Total Originations Funded1 increased by 115% to $97.5 million, representing record quarterly originations

Loans and advances receivable and Ending CLAB1 increased by 115% and 123%, increasing to $140.8 million and $179.0 million respectively, both record ending balances

Declares dividend of C$0.095 per share

TORONTO, ON, August 9, 2022 – Propel Holdings Inc. (“Propel” or the “Company”) (TSX: PRL) today reported its financial results for the three months ended June 30, 2022 (“Q2 2022”) and declared a dividend for the third quarter of 2022. All amounts are expressed in U.S. dollars unless otherwise stated.

Management Commentary

“Propel delivered record originations and revenue in Q2 2022. Notwithstanding the tightening of credit criteria implemented by Propel and its partners, we are experiencing strong demand for consumer credit in general and higher quality applications, which we attribute to the normalization of demand coming out of the COVID-19 pandemic and the broad based tightening of credit criteria across the financial services sector. Amidst the exceptional growth, we have maintained profitability which we attribute to our operating discipline, a variable cost structure and the execution of our strategy. We remain as committed as ever to our long-term strategy of graduating customers to new and better credit products, serving lower risk markets through our platform, expanding into new jurisdictions and delivering outstanding service to consumers. Our team is energized, our balance sheet remains strong, and we are making meaningful and impactful investments into our business to continue our trajectory of long-term profitable growth,” said Clive Kinross, Chief Executive Officer.

Financial and Operational Highlights for Q2 2022

Comparable metrics relative to Q2 2021

 

Discussion of Financial Results

Loans and advances receivable increased by 115% to $140.8 million as at June 30, 2022, compared to $65.5 million as at June 30, 2021. The growth in these balances was driven by: 1) the growth in the Bank Programs under our CreditFresh brand; 2) the roll-out of 10 new states by our bank partners over fiscal year 2021; 3) the general economic recovery and return of demand as a result of easing of COVID-19-related restrictions; 4) the expansion of originations through newly-established marketing partners and channels; 5) the successful launch and expansion of variable pricing and graduation capabilities in the third quarter of 2021; and 6) at a macro level, the continuing industrywide transition from brick-and-mortar to online lending, and tightening across the credit supply chain which has increased application volume and quality across our platform. Ending CLAB1 increased by 123% to $179.0 million which we attribute to the factors above, as well as the significant growth in the MoneyKey Bank Service Program.

Revenue increased by 90% to $54.1 million in Q2 2022, compared to $28.4 million in Q2 2021. This growth was the result of the growth in Ending CLAB1, offset by a decrease in Annualized Revenue Yield1 to 127% in Q2 2022 from 154% in Q2 2021. The decrease in Annualized Revenue Yield1 is a result of a higher concentration of growth of the Bank Programs relative to legacy products, the general lower cost of credit across products facilitated over Propel’s platform and the introduction of variable pricing and graduation capabilities. The evolving portfolio composition is consistent with the Company’s strategy and is expected to result in higher portfolio growth and lower defaults across the portfolio over time.

Net income decreased by 19% to $2.0 million in Q2 2022 from $2.5 million in Q2 2021. Adjusted Net Income1 increased by 9% to $4.3 million in Q2 2022 from $3.9 million in Q2 2021. The reduction in net income in Q2 2022 relative to Q2 2021 is the result of the following factors: 1) the investment and increased expenses incurred to support the Company’s significant Ending CLAB1 growth, as well as greater investment in future strategic initiatives; 2) an increased provision for loan losses and other liabilities due to the post-COVID-19 normalization of credit conditions and associated growth in Q2 2022; 3) the uncharacteristically strong credit quality in Q2 2021 as a result of COVID-19 related factors; and 4) the addition of costs related to our operations as a public company. The increase in Adjusted Net Income1 is attributable to the same factors as the increase in revenue and decrease in net income, excluding $1.9 million in after-tax non-cash provisions for credit losses related to newly originated and current status accounts. These are also the primary factors that led to the changes in EBITDA1 and Adjusted EBITDA1.


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 Q2 2022 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.

Declaration of Q3 2022 Dividend

Propel also announced today that its board of directors has declared a dividend of C$0.095 per common share, payable on September 8, 2022 to shareholders of record as of the close of business on August 18, 2022. 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 later this morning with a presentation by Clive Kinross, Chief Executive Officer, and Sheldon Saidakovsky, Chief Financial Officer.

Conference call details are as follows:
Date: August 9, 2022
Time: 8:30AM ET
Conference ID: 7257144
Toll free dial-in: (888) 550-4423
International dial-in: (438) 801-4067
Webcast: Click here
Replay: (800) 770-2030 or (647) 362-9199

About Propel

Propel is an innovative, online financial technology (“fintech”) company, committed to credit inclusion by providing and facilitating fair, fast and transparent access to credit with exceptional service using its proprietary online lending platform. Through its operating brands, MoneyKey and CreditFresh, Propel is focused on providing access to credit to underserved consumers who struggle to access credit from mainstream credit providers. Propel’s revenue growth and profitability have accelerated significantly over the past two years as Propel has been able to facilitate access to credit for an increasing number of consumers, helping them move forward in their credit journeys.

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 EBITDA”, “Adjusted Net Income”, “EBITDA” and “Ending CLAB”. This press release also includes references to industry metrics such as “Annualized Revenue Yield” 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 ability to profitably grow our business and facilitate access to credit to more and more underserved consumers, the expected higher portfolio growth and lower defaults resulting from the Company’s portfolio composition. Particularly, information regarding our expectations of future results, targets, performance achievements, prospects or opportunities is forward-looking information. 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 21, 2022 for the year ended December 31, 2021 (the “AIF”). A copy of the AIF and the Company’s other publicly filed documents can be accessed under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com.

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.

For further information, please contact:
Sarika Ahluwalia
Senior Vice President, Corporate Affairs & Chief Compliance Officer
(647) 776-5468
IR@propelholdings.com

 

Selected Financial Information
  Three Months Ended June 30, Six Months Ended June 30,
(US$ ) 2022 2021 2022 2021
Revenue 54,080,680 28,431,463 104,597,637 55,728,354
Provision for loan losses and other liabilities 31,160,299 10,860,002 54,711,930 17,754,157
 
Operating expenses
Acquisition and data 7,066,697 4,644,465 15,713,778 8,483,222
Salaries, wages and benefits 6,011,422 4,868,834 12,467,261 9,389,447
General and administrative 1,755,553 920,051 4,010,311 1,717,528
Processing and technology 2,369,615 1,410,858 4,890,993 2,577,084
Total operating expenses 17,203,287 11,844,208 37,082,343 22,167,281
Operating income 5,717,094 5,727,253 12,803,364 15,806,916
 
Other income (expenses)
Interest and fees on credit facilities (1,729,758) (979,666) (3,023,035) (2,025,064)
Interest on term loan (443,136) (886,852)
Interest expense on lease liabilities (98,185) (113,493) (200,605) (227,445)
Amortization of internally developed software (632,603) (530,532) (1,197,056) (1,036,471)
Depreciation of property and equipment (44,006) (30,329) (66,813) (62,005)
Amortization of right-of-use assets (154,510) (172,280) (314,462) (342,501)
Foreign exchange gain (loss) 79,994 46,063 116,984 26,996
Unrealized gain (loss) on derivative financial instruments (329,721) (133,711) (107,828) (165,880)
Total other income (expenses) (2,908,789) (2,357,084) (4,792,815) (4,719,222)
Income before transaction costs and income tax 2,808,305 3,370,169 8,010,549 11,087,694
 
Income tax expense (recovery)
Current 1,542,644 1,602,571 2,920,915 3,513,843
Deferred (747,443) (709,476) (799,997) (575,603)
Net Income for the period 2,013,104 2,477,074 5,889,631 8,149,454
 
Earnings per share(1)
Basic 0.06 0.10 0.17 0.34
Diluted 0.06 0.09 0.17 0.32
 
Dividends(1)
Dividends 2,579,642 3,783,310 5,142,699 4,852,779
Dividends per share 0.075 0.152 0.150 0.200

(1) All per share amounts prior to Q4 2021 have been restated to reflect the 2:1 share split that occurred as part of the reorganization completed in connection with our initial public offering. Please see the accompanying Q2 2022 MD&A for further details.

 

Reconciliation of Non-IFRS Financial Measures

The following table provides a reconciliation of our net income to EBITDA1 and Adjusted EBITDA1

  Three Months Ended June 30, Six Months Ended June 30,
(US$ other than percentages) 2022 2021 2022 2021
Net Income 2,013,104 2,477,074 5,889,631 8,149,454
Interest on Debt 1,729,758 1,422,802 3,023,035 2,911,916
Interest on lease liabilities 98,185 113,493 200,605 227,445
Amortization of internally developed software 632,603 530,532 1,197,056 1,036,471
Depreciation of property and equipment 44,006 30,329 66,813 62,005
Amortization of right-of-use assets 154,510 172,280 314,462 342,501
Income Tax Expense (Recovery) 795,201 893,095 2,120,918 2,938,240
EBITDA1 5,467,367 5,639,605 12,812,520 15,668,032
EBITDA margin1 as a % of revenue 10% 20% 12% 28%
Transaction Costs and Financing Costs 41,605 41,605
Provision for credit losses on current status accounts2 2,624,603 1,171,107 4,179,852 1,426,380
Provisions for CSO Guarantee liabilities and Bank Service Program liabilities 423,972 715,537 1,252,518 598,131
Adjusted EBITDA1 8,515,941 7,567,854 18,244,890 17,734,148
Adjusted EBITDA margin1 as a % of revenue 16% 27% 17% 32%

(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 “Critical Account Policies and Estimates — Loans and advances receivable” in the accompanying Q2 2022 MD&A).

 

The following table provides a reconciliation of our Net Income to Adjusted Net Income1 and Adjusted Net Income margin1

  Three Months Ended June 30, Six Months Ended June 30,
(US$ other than percentages) 2022 2021 2022 2021
Net Income 2,013,104 2,477,074 5,889,631 8,149,454
Provision for credit losses on current status accounts net of taxes2 30,580 30,580
Provisions for CSO Guarantee liabilities and Bank Service Program liabilities net of taxes2 1,929,083 860,764 3,072,191 1,048,389
Service Program liabilities net of taxes2 311,619 525,920 920,600 439,626
Adjusted Net Income1 for the period 4,253,806 3,894,337 9,882,422 9,668,049
Adjusted Net Income Margin1 8% 14% 9% 17%

(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%.

 

The following table provides a reconciliation of our Ending CLAB1 to loans and advances receivable:

  As at June 30, As at Dec 31,
(US$) 2022 2021 2021
Ending Combined Loan and Advance balances1 178,968,408 80,369,458 134,843,170
Less: Loan and Advance balances owned by third party lenders pursuant to CSO program (3,971,770) (2,473,039) (4,260,648)
Less: Loan and Advance balances owned by a NBFI pursuant to the MoneyKey Bank Service program (22,900,712) (6,673,988) (17,782,252)
Loan and Advance owned by the Company 152,095,926 71,222,431 112,800,270
Less: Allowance for Credit Losses (32,805,238) (15,538,428) (23,700,774)
Add: Fees and interest receivable 18,403,343 7,913,228 12,034,604
Add: Acquisition transaction costs 3,085,561 1,893,175 2,715,724
Loans and advances receivable 140,779,592 65,490,406 103,849,824
 

(1) See “Non-IFRS Financial Measures and Industry Metrics”.

TORONTO, ON, August 4, 2022 – Propel Holdings Inc. (“Propel” or the “Company”) (TSX: PRL) announced today its participation in the Canaccord Genuity 42ND Annual Growth Conference, August 8-12, 2022 in Boston, MA.

Clive Kinross, Propel’s Co-founder and Chief Executive Officer, will be presenting an overview of the business and taking meetings with institutional investors on August 10 and 11, 2022.

Group presentation details are as follows:

Date:  Wednesday, August 10, 2022
Time:  1:30pm ET
Webcast Link:  https://wsw.com/webcast/canaccord76/prl.to/2793429

To arrange a meeting with the Propel team, please contact IR@propelholdings.com.

About Propel
Propel is an innovative, online financial technology (“fintech”) company, committed to credit inclusion by providing fair, fast and transparent access to credit with exceptional service using its proprietary online lending platform. Through its operating brands, MoneyKey and CreditFresh, Propel is focused on providing access to credit to the over 60 million underserved U.S. consumers who struggle to access credit from mainstream credit providers. Propel’s revenue growth and profitability have accelerated significantly over the past two years as Propel has been able to facilitate access to credit for an increasing number of consumers, helping them move forward in their credit journeys.

For further information, please contact:
Sarika Ahluwalia
Senior Vice President, Corporate Affairs & Chief Compliance Officer
(647) 776-5468
IR@propelholdings.com

TORONTO, ON, July 26, 2022 – Propel Holdings Inc. (“Propel” or the “Company”) (TSX: PRL) announced today that it will be reporting financial results for the period ending June 30, 2022 (“Q2 2022”) prior to market open on Tuesday, August 9, 2022. The Company will be hosting a conference call and webcast with a presentation by Clive Kinross, Chief Executive Officer, and Sheldon Saidakovsky, Chief Financial Officer.

Conference details are as follows:

Date: August 9, 2022
Time: 8:30AM ET
Conference ID: 7257144
Toll free dial-in: (888) 550-4423
International dial-in: (438) 801-4067
Webcast: Click here
Replay: (800) 770-2030 or (647) 362-9199

About Propel

Propel is an innovative, online financial technology (“fintech”) company, committed to credit inclusion by providing and facilitating fair, fast and transparent access to credit with exceptional service using its proprietary online lending platform. Through its operating brands, MoneyKey and CreditFresh, Propel is focused on providing access to credit to underserved consumers who struggle to access credit from mainstream credit providers. Propel’s revenue growth and profitability have accelerated significantly over the past two years as Propel has been able to facilitate access to credit for an increasing number of consumers, helping them move forward in their credit journeys.

For further information, please contact:

Sarika Ahluwalia
Senior Vice President, Corporate Affairs & Chief Compliance Officer
(647) 776-5468
IR@propelholdings.com

TORONTO, ON, JUNE 24, 2022 – Propel Holdings Inc. (“Propel” or the “Company”) (TSX: PRL) today announced the voting results from its Annual General Meeting of the Shareholders (the “Meeting”), held on June 23, 2022. A total of 25,217,961 shares were represented in person or by proxy at the Meeting, constituting approximately 73.47% of the Company’s total issued and outstanding common shares as of the record date.

Each of the matters put forward before shareholders for consideration and approval at the Meeting, as described in the Management Information Circular, was duly approved by the requisite number of votes.

The voting results in relation to the election of directors, were as follows:

Nominee Votes For
%
Votes Withheld
%
Michael Stein 98.49 1.51
Clive Kinross 99.53 0.47
Peter Monaco 99.98 0.02
Poonam Puri 99.23 0.77
Geoff Greenwade 99.23 0.77
Karen Martin 99.23 0.77

The Company has filed a report of voting results on all resolutions voted on at the Meeting under its profile on www.sedar.com.

About Propel

Propel is an innovative, online financial technology (“fintech”) company, committed to credit inclusion by providing and facilitating fair, fast and transparent access to credit with exceptional service using its proprietary online lending platform. Through its operating brands, MoneyKey and CreditFresh, Propel is focused on providing access to credit to underserved consumers who struggle to access credit from mainstream credit providers. Propel’s revenue growth and profitability have accelerated significantly over the past two years as Propel has been able to facilitate access to credit for an increasing number of consumers, helping them move forward in their credit journeys.

For further information, please contact:
Sarika Ahluwalia
Senior Vice President, Corporate Affairs & Chief Compliance Officer
(647) 776-5468
IR@propelholdings.com

Revenue increased by 85%, representing record quarterly performance

Total Originations Funded1 increased by 156%

Loans and advances receivable and Ending CLAB1 increased by 120% and 134%, respectively

Declares dividend of C$0.095 per share

TORONTO, ON, May 10, 2022 – Propel Holdings Inc. (“Propel” or the “Company”) (TSX: PRL) today reported its financial results for the three months ended March 31, 2022 (“Q1 2022”) and declared a dividend for the second quarter of 2022. All amounts are expressed in U.S. dollars unless otherwise stated.

Management Commentary

“Propel’s Q1 2022 results demonstrate the impact that our team’s operational progress has had on delivering profitable growth. In the past year, we have added bank partners, expanded our geographical presence, invested in marketing channels and introduced variable pricing and graduation capabilities, which have all contributed towards record loan balances and revenue growth in Q1 2022. Additionally, as the economy continues to reopen, we are seeing a return to the demand for credit and the transition from brick and mortar to online lending remains firmly intact. Going forward, we continue to be focused on the profitable expansion of our business and we see many opportunities to facilitate access to credit for more and more underserved consumers,” said Clive Kinross, Chief Executive Officer.

Financial and Operational Highlights for Q1 2022

Comparable metrics relative to Q1 2021

 

Discussion of Financial Results

Loans and advances receivable increased by 120% to $124.8 million as at March 31, 2022, compared to $56.8 million as at March 31, 2021. The growth in these balances was driven by: 1) the growth in the Bank Programs under our CreditFresh brand which included the ramp-up of our new bank partnership with First Electronic Bank (launched in the second quarter of 2021); 2) the roll-out of 10 new states over the fiscal year 2021; 3) the general economic recovery and return of demand as a result of easing of COVID-19-related restrictions; 4) the expansion of originations through newly-established marketing partners and channels; 5) the successful launch and subsequent expansion of variable pricing and graduation capabilities in the third quarter of 2021; and 6) the industrywide transition from brick-and-mortar to online lending. These factors, along with the significant growth in the MoneyKey Bank Service Program, have also driven the increase in Ending CLAB1 and Average CLAB1.

Revenue increased by 85% to a record $50.5 million in Q1 2022, compared to $27.3 million in Q1 2021. This growth was the result of the 134% growth in CLAB1, offset by a decrease in Annualized Revenue Yield1 to 132% in Q1 2022 from 162% in Q1 2021. The decrease in Annualized Revenue Yield1 is a result of a higher concentration of growth of the Bank Programs relative to our legacy products and the general reduction of interest rates across products facilitated over our platform and the introduction of variable pricing and graduation capabilities. The change in portfolio composition is consistent with the Company’s strategy and is expected to result in higher portfolio growth and lower defaults across the portfolio over time.

Net income decreased by 32% to $3.9 million in Q1 2022 from $5.7 million in Q1 2021. Adjusted Net Income1 decreased by 3% to $5.6 million in Q1 2022 from $5.8 million in Q1 2021. Management believes Adjusted Net Income1 is a truer reflection of business performance as it removes the effect of the non-cash forward-looking credit loss provisions that are recorded on accounts that are otherwise in good standing with no past-due amounts owed and expenses that that are not indicative of continuing operations, on an after-tax basis. The reduction in net income and Adjusted Net Income1 relative to Q1 2021 is the result of: 1) the investment and increased expenses incurred to support the Company’s significant Ending CLAB1 growth in the quarter and recently launched initiatives; 2) the atypical credit environment that the Company experienced in Q1 2021 as a result of COVID-19 related factors; and 3) the addition of costs related to Propel operating as a public company. These are also the primary factors that led to the changes in EBITDA1 and Adjusted EBITDA1.

_________
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 2022 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.

Declaration of Q2 2022 Dividend

Propel also announced today that its board of directors has declared a dividend of C$0.095 per common share, payable on June 2, 2022 to shareholders of record as of the close of business on May 19, 2022. 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 later this morning with a presentation by Clive Kinross, Chief Executive Officer, and Sheldon Saidakovsky, Chief Financial Officer.

Conference call details are as follows:

Date:May 10, 2022
Time: 8:30AM ET
Conference ID: 7257144
Toll free dial-in: (888) 550-4423
International dial-in: (438) 801-4067
Webcast: Click here
Replay: (800) 770-2030 or (647) 362-9199

About Propel

Propel is an innovative, online financial technology (“fintech”) company, committed to credit inclusion by providing and facilitating fair, fast and transparent access to credit with exceptional service using its proprietary online lending platform. Through its operating brands, MoneyKey and CreditFresh, Propel is focused on providing access to credit to underserved consumers who struggle to access credit from mainstream credit providers. Propel’s revenue growth and profitability have accelerated significantly over the past two years as Propel has been able to facilitate access to credit for an increasing number of consumers, helping them move forward in their credit journeys.

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 EBITDA”, “Adjusted EBITDA Margin”, “Adjusted Net Income”, “Adjusted Net Income Margin”, “EBITDA”, “EBITDA Margin” and “Ending CLAB” . This press release also includes references to industry metrics such as “Annualized Revenue Yield” 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 Fiscal 2021 MD&A. 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 ability to profitably grow our business and facilitate access to credit to more and more underserved consumers, the expected higher portfolio growth and lower defaults resulting from the Company’s portfolio composition. Particularly, information regarding our expectations of future results, targets, performance achievements, prospects or opportunities is forward-looking information. 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 21, 2022 for the year ended December 31, 2021 (the “AIF”). A copy of the AIF and the Company’s other publicly filed documents can be accessed under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com.

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.

For further information, please contact:
Sarika Ahluwalia
Senior Vice President, Corporate Affairs & Chief Compliance Officer
(647) 776-5468
IR@propelholdings.com

Selected Financial Information

Three Months Ended March 31,
(US$ other than percentages) 2022 2021
Revenue 50,516,957 27,296,891
Provision for loan losses and other liabilities 23,551,631 6,894,155
Operating Expenses
Acquisition and data 8,647,081 3,838,757
Salaries, wages and benefits 6,455,839 4,520,613
General and administrative 2,254,758 797,477
Processing and technology 2,521,378 1,166,226
Total operating expenses 19,879,056 10,323,073
Operating income 7,086,270 10,079,663
Other income (expenses)
Interest and fees on credit facilities (1,293,277) (1,045,398)
Interest on term loan (443,716)
Interest expense on lease liabilities (102,420) (113,952)
Amortization of internally developed software (564,453) (505,939)
Depreciation of property and equipment (22,807) (31,676)
Amortization of right-of-use assets (159,952) (170,220)
Foreign exchange gain (loss) 36,990 (19,067)
Unrealized gain (loss) on derivative financial instruments 221,893 (32,169)
Total other income (expenses) (1,884,026) (2,362,137)
Income before transaction costs and income tax 5,202,244 7,717,526
Transaction costs
Income tax expense (recovery)
Current 1,378,271 1,911,272
Deferred (52,554) 133,873
Net Income for the period 3,876,527 5,672,381
Earnings per share(1):
Basic 0.11 0.24
Diluted 0.11 0.23
Dividends(1):
Dividends 2,563,057 1,069,469
Dividends per share 0.08 0.05

(1) All per share amounts prior to Q4 2021 have been restated to reflect the 2:1 share split that occurred as part of the reorganization completed in connection with our initial public offering. Please see the accompanying Q1 2022 MD&A for further details.

 

Reconciliation of Non-IFRS Financial Measures

The following table provides a reconciliation of our net income to EBITDA1, EBITDA margin1, Adjusted EBITDA1 and Adjusted EBITDA margin1 for Q1 2022 and Q1 2021:

Three Months Ended March 31,
(US$ other than percentages) 2022 2021
Net Income 3,876,527 5,672,381
Interest on Debt 1,293,277 1,489,114
Interest on lease liabilities 102,420 113,952
Amortization of internally developed software 564,453 505,939
Depreciation of property and equipment 22,807 31,676
Amortization of right-of-use assets 159,952 170,220
Income Tax Expense (Recovery) 1,325,717 2,045,145
EBITDA1 7,345,153 10,028,427
EBITDA margin1 as a % of revenue 15% 37%
Transaction Costs and Financing Costs
Provision for credit losses on current status accounts2 1,555,249 255,834
Provisions for CSO Guarantee liabilities and Bank Service Program liabilities 828,546 (117,405)
Adjusted EBITDA1 9,728,948 10,166,856
Adjusted EBITDA margin1 as a % of revenue 19% 37%

(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 “Critical Account Policies and Estimates — Loans and advances receivable” in the accompanying Q1 2022 MD&A).

 

The following table provides a reconciliation of our Net Income to Adjusted Net Income1 and Adjusted Net Income margin1 for Q1 2022 and Q1 2021:

Three Months Ended March 31,
(US$ other than percentages) 2022 2021
Net Income 3,876,527 5,672,381
Provision for credit losses on current status accounts net of taxes2 1,143,108 188,038
Provisions for CSO Guarantee liabilities and Bank Service Program liabilities net of taxes2 608,981 (86,293)
Adjusted Net Income1 for the period 5,628,616 5,774,126
Adjusted Net Income Margin1 11% 21%

(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%.

The following table provides a reconciliation of our Ending CLAB1 to loans and advances receivable for periods ending March 31, 2022, March 31, 2021 and December 31, 2021:

As at March 31, As at Dec 31,
(US$ other than percentages) 2022 2021 2021
Ending Combined Loan and Advance balances1 158,151,577 67,462,965 134,843,170
Less: Loan and Advance balances owned by third party lenders pursuant to CSO program (3,752,500) (1,755,313) (4,260,648)
Less: Loan and Advance balances owned by a NBFI pursuant to the MoneyKey Bank Service program (22,199,374) (4,452,616) (17,782,252)
Loan and Advance owned by the Company 132,199,703 61,255,036 112,800,270
Less: Allowance for Credit Losses (27,099,543) (13,027,902) (23,700,774)
Add: Fees and interest receivable 16,657,696 7,080,040 12,034,604
Add: Acquisition transaction costs 3,031,759 1,506,790 2,715,724
Loans and advances receivable 124,789,615 56,813,964 103,849,824

(1) See “Non-IFRS Financial Measures and Industry Metrics”.