Propel Holdings, Inc. · TSX:PRL
Propel — IPO Roadshow (October 2021)
43 slides from Propel's IPO roadshow presentation, Oct 13, 2021
Slide 1: October 13, 2021
October 13, 2021 This presentation is dated October 13, 2021. A final prospectus dated October 13, 2021 containing important information relating to the securities described in this document has been filed with the securities regulatory authorities in each of the provinces and territories of Canada.
Slide 2: Disclaimer
Disclaimer Prospective investors should rely only on information contained in the final prospectus dated October 13, 2021 (the “prospectus”). This presentation is qualified in its entirety by reference to, and must be read in conjunction with, the information contained in the prospectus. Neither Pro
Slide 3: Select Leadership Team
Select Leadership Team Experienced and proven team with deep industry knowledge Innovative, transparent product and services, including 3 transformational Clive Kinross Gary Edelstein Noah Buchman Sheldon Saidakovsky Dr. Jonathan Goler bank programs Co-Founder and President Co-Founder and Co-Founder
Slide 4: Our Mission
OUR MISSION Inclusion Evolution Experience Every individual deserves Help consumers evolve to better Provide a best-in-class access to credit credit products over time consumer experience We are committed to facilitating access to credit for underserved consumers and being a part of their credit jou
Slide 5: More than 25% of U.S. adults are unable to afford a $400 emergency expense
More than 25% of U.S. adults 3 in 10 U.S. adults are unable to afford a experience hardships due to $400 emergency expense income volatility Despite regulatory encouragement, +60M U.S. adults lack access to traditional credit from mainstream credit providers, making even a small unexpected expense a
Slide 6: Propel: the fintech platform for underserved consumers
PROPEL: the fintech platform for underserved consumers focused on helping 25% of U.S. adults get access to the credit they need 6
Slide 7: Financial Inclusion for the Underserved Population
Financial Inclusion for the Underserved Population Mainstream Bank Credit Products Legacy Products Online, scalable fintech offering convenient, fair and transparent access to credit with potential to build credit and NO surprise fees, DECLINED origination fees, late fees or prepayment penalties Tie
Slide 8: Propel Today
Propel Today 100% online At Scale Fintech Profitable ~$515M ~7M <10 second 92% in originations unique applications per year* initial credit decisions average annualized return on equity** since 2019 758,000 20,000+ ~88% 61% funded loans and unique applications per of applications YOY growth in reven
Slide 9: Proven Track Record of Success, Poised for Exceptional Growth
Proven Track Record of Success, Poised for Exceptional Growth $514M Bank partner launch of additional lower fee products Propel launches AI-powered on Propel platform underwriting models Propel closes US$15M Series 2011: Funded Business with B round led by Raptor Group Commencement of $433M $4M in e
Slide 10: Products
PRODUCTS Inclusive Transparent Evolving “MoneyKey was there for me when no one else was. They help give me the money for bills I did [not] have a clue if I could pay. I’m really thankful that they came through for me.” ~ Christopher, MoneyKey Customer 10
Slide 11: Product Offerings
Product Offerings Unsecured Fully Amortizing Unsecured Open-Ended Installment Loans Lines of Credit Term: 6 – 18 months Term: Open-Ended 77 state licenses obtained over 10 years 1) *Direct Lender – 7 States 1) *Direct Lender – 2 States Propel is subject to, and 2) *Credit Services Organization (CSO)
Slide 12: Serving a Vast and Diverse Market
Serving a Vast and Diverse Market Active State Count Direct Lender, CSO and Bank Partner and Sub-Servicer Bank Servicer 25 Unsecured Fully Amortizing 23 Unsecured Open-Ended Product Type Installment Loans and Lines of Credit Open-Ended Lines of Credit* 16 Loan Amount Range $200 - $2,000 $500 - $5,00
Slide 13: Putting the Customer First
Putting the Customer First OUR TYPICAL CONSUMER: Employed Consistently Lowered Graduation Ability to Improve Financial Wellness Cost of Credit Over Time Programs* Low-Moderate Income Credit Score and Education • Reduced fees and/or • Graduate existing • Opportunity to • Financial literacy interest r
Slide 14: Diverse Suite of Products and Services
Diverse Suite of Products and Services Originations by State Originations by Program January 1 – June 30, 2021 January 1 – June 30, 2021 MoneyKey CSO First Electronic Lender Texas Bank 7% 18% 8% All other CC Bank 25 states: Florida 15% 13% CBW Bank 62% 52% Ohio 7% MoneyKey States 18% Largest state o
Slide 15: Platform to Succeed
Platform to Succeed Convenient Seamless Mobile “I would like to thank this company for helping me through this tough time. […] I would like for you to know that they see the best in you and will help in your time of need thank you so much.” ~ TyJuan, MoneyKey Customer 15
Slide 16: Industry-Leading Proprietary Technology
Industry-Leading Proprietary Technology Designed for Consumer Needs 30-person Major subsystems: in-house tech team proven 6-week Agile delivery cycle • Acquisition and underwriting engine (AI-powered) • Loan management system • Customer self-service portal (mobile optimized) + US$12M invested to dat
Slide 17: Looking Beyond Traditional Credit Scores
Looking Beyond Traditional Credit Scores Our sophisticated AI-powered engine with machine learning algorithms provides opportunities for creditworthy consumers 1,000+ Attributes Evaluate Credit Worthiness $600,000,000 Fund More 16% 14% $500,000,000 Alternative Credit Bureau Data Sub-10 second, Misse
Slide 18: Diversified Marketing Strategy
Diversified Marketing Strategy Driving growth in products and new markets Diversification by Partner and Channel for New Customer Acquisitions Cumulative Unique Applications January 1 – June 30, 2021 16,000,000 14,000,000 12,000,000 28% Direct Mail 10,000,000 SEO Other 25 8,000,000 Partners and
Slide 19: World Class Operations Team
World Class Operations Team Relentless focus on service and performance “I believe CreditFresh helped me out in a very difficult time. They were enthusiastic, supportive, interested in my personal needs… Thank you CreditFresh!!” ~ Joseph, CreditFresh Customer Excellent 4.6 and 4.7 ratings from thous
Slide 20: Financial Overview
FINANCIAL OVERVIEW Profitable Diversified Resilient “CreditFresh accepted me when no one else would. The process was quick and easy. The loan was very helpful. Thank you.” ~ Benjamin, CreditFresh Customer 20
Slide 21: Recent Financial Performance
Recent Financial Performance Track Record of Profitable Growth Revenue Net Income Adjusted EBITDA and Margin** US$M US$M US$M $15 92% Avg. Annualized ROE since 20% 2019* 114% $95 $28 CAGR CAGR $13 92% YOY $73 $11 61% $10 32% $68 $20 30% YOY $60 $9 $8 27% $18 $56 $7 27% $7 $6 $35 $5 $9 $8 $3 12% $2 $
Slide 22: Recent Financial Performance: Loan Balances
Recent Financial Performance Robust Portfolio Performance Driving Strong Free Cash Flow Ending Combined Loan and Advance Loan and Advance Receivables Balances Facilitated over the Propel Platform* US$M US$M $80 $67 56% CAGR 91% $63 CAGR $52 $37 $26 $26 $13 2018 2019 2020 Jun-21 2018 2019 2020 Jun-21
Slide 23: Recent Financial Performance: Credit Losses and Free Cash Flow
Recent Financial Performance Robust Portfolio Performance Driving Strong Free Cash Flow Provisions for Loan Losses and Other Liabilities as a % Total Funded* Net Charge-Offs as % Total Funded* Free Cash Flow** US$M Significant 37% 41% Improvement Significant Dividends Paid Improvement 33% $1.7 $0.6
Slide 24: Ample Debt Capacity to Put to Work
Ample Debt Capacity to Put to Work Propel has significant debt capacity to redeploy into its bank programs and fund future growth Outstanding Debt Maturities (in US$M ) Syndicate of long-standing debt capital partners MoneyKey (Capacity) $120.0 MoneyKey facility in process of being MoneyKey (U
Slide 25: Target Operating Metrics
Target Operating Metrics FY ‘19 – ‘20 Target CAGR 2018 – LTM Short-Term Target YoY Growth Ending Combined Loan and Advance Balances Facilitated 56% 69% 100% over the Propel Platform* Target Metric 2020 LTM Short-Term Target Revenue Yield** 190% 165% 140% - 150% Adj. EBITDA Margin* 27% 30% 22% - 26%
Slide 26: Ready for Tomorrow
READY FOR TOMORROW Poised Focused Strategic “Excellent staff, outstanding services, affordable payment rates, very customer-friendly – CreditFresh is the best…!” ~ Linus, CreditFresh Customer 26
Slide 27: Evolving into a Diversified Online Global Fintech Company
Evolving into a Diversified Online Global Fintech Company Adjacent products • Design, deliver and cross-sell Geographic complementary products expansion aligned • Expansion into with Propel’s core new states and purpose Serving lower risk jurisdictions markets Graduating • Extension of existing cons
Slide 28: Use of Proceeds
Use of Proceeds Portfolio Expansion C$25M – C$30M Geographic Expansion, Acquisitions, and Adjacent Products C$15M – C$20M General Corporate Purposes C$5M – C$10M Assuming no exercise of the over-allotment option 28
Slide 29: Investment Highlights
Investment Highlights Experienced and proven team with deep industry knowledge Consumer-focused fintech lending platform Leading-edge, AI-driven, agile tech infrastructure unlocking credit market opportunity Innovative, transparent products and services, including 3 transformational bank pro
Slide 30: Capitalization Table
Capitalization Table (US$ millions, unless otherwise indicated) C$ / Share Issue Price $9.75 USD:CAD Exchange Rate 0.79 US$ / Share Issue Price $7.70 Shares Outstanding (mm) 27.1 Pre-Money Equity Valuation $209 Equity Raised $47 Post-Money Equity Value $256 Add: Debt $48 Less: Unrestricted Cash $50
Slide 31: Summary Terms of Offering
Summary Terms of Offering Issuer Propel Holdings Inc. Offering Common Shares (100% Treasury) Issue Price C$9.75 per Common Share Amount C$60,937,500 The Company intends to use the net proceeds from the Offering to expand our product offerings, expand our business into new Use of Proceeds markets and
Slide 32: Comparables
Comparables In accordance with Section 13.7(4) of National Instrument 41-101 – General Prospectus Requirements, all the information relating to Propel’s comparables and any disclosure relating to the comparables, which is contained in the presentation to be provided to potential investors, has been
Slide 33: October 13, 2021
pIPROPEL HOLDINGS October 13, 2021
Slide 34: Appendix A
Appendix A Oe s!PROPEL HOLDIN
Slide 35: Our Management Team
Our Management Team Clive Kinross Gary Edelstein Noah Buchman Sheldon Saidakovsky Sarika Ahluwalia Co-Founder and President Co-Founder and Co-Founder and Vice President, Chief Executive Officer Executive Vice President; Executive Vice President; Chief Compliance Officer President of CreditFresh Chie
Slide 36: Board of Directors
Board of Directors Michael Stein Clive Kinross Peter Monaco Poonam Puri* Geoff Greenwade* Karen Martin* Yousry Bissada* Mr. Stein is the founder, Co-Founder and CEO Mr. Monaco is Managing Ms. Puri is a professor of Mr. Greenwade was the Ms. Martin was the Mr. Bissada is President Chairman and CEO of
Slide 37: Financial Summary
Financial Summary (US$M) 12 months ended 6 Months YTD Q2 2018 2019 2020 LTM 2020 2021 Revenue $60.2 $68.0 $73.5 $94.6 $34.6 $55.7 Loan Losses 29.7 28.8 24.8 33.6 8.9 17.8 % of Revenue 49% 42% 34% 35% 26% 32% Marketing 9.1 10.2 12.9 16.6 4.8 8.5 % of Revenue 15% 15% 18% 18% 14% 15% Strong Other Opera
Slide 38: Resilient Credit Performance During COVID-19
Resilient Credit Performance During COVID-19 The non-prime customer is more consistent following economic disruption % Change in Delinquency from Before to Time of Economic Stress Despite a drop in demand from economic Prime Near-Prime Subprime restrictions and government stimulus, 220 Propel remain
Slide 39: Appendix B
Appendix B Oe s!PROPEL HOLDIN
Slide 40: IFRS Reconciliation: EBITDA & Adjusted EBITDA
IFRS Reconcilation: EBITDA & Adjusted EBITDA (US$ other than percentages) Three Months Ended June 30, Six Months Ended June 30, Year Ended December 31, 2021 2020 2021 2020 2020 2019 2018 Net income (Loss) 2,477,074 4,175,679 8,149,454 5,896,424 7,332,388 1,994,849 (198,735) Interest on debt 1,422,80
Slide 41: IFRS Reconciliation: Free Cash Flow
IFRS Reconciliation: Free Cash Flow (US$) 3 Months Ended Jun 30, 6 Months Ended Jun 30, Fiscal Year ended Dec 31, 2021 2020 2021 2020 2020 2019 2018 Net Income (Loss) 2,477,074 4,175,679 8,149,454 5,896,424 7,332,388 1,994,849 (198,735) Adjustments: Provision for credit losses on current status acco
Slide 42: IFRS Reconciliation: Ending Combined Loan and Advance Balances
IFRS Reconciliation: Ending Combined Loan and Advance Balances (US$) Six Months Ended June 30, Year Ended December 31, 2021 2020 2020 2019 2018 Ending Combined Loan and Advance balances 80,369,458 27,991,009 62,643,735 37,339,842 26,400,192 Less: Loan and Advance balances owned by third party lender
Slide 43: IFRS Reconciliation: Net Charge-Offs
IFRS Reconciliation: Net Charge-Offs (US$) Three Months Ended June 30, Six Months Ended June 30, Year Ended December 31, 2021 2020 2021 2020 2020 2019 2018 Charge-Offs (8,718,101) (7,516,186) (17,170,406) (17,130,613) (26,059,774) (30,146,501) (30,588,475) Recoveries 1,266,324 1,311,209 2,418,706 2,