Propel Holdings, Inc. · TSX:PRL
Propel — Investor Presentation (March 2023)
28 slides from Propel's investor presentation, Mar 22, 2023
Slide 1: Investor Presentation
INVESTOR PRESENTATION TSX:PRL March 22, 2023
Slide 2: Disclaimer
Disclaimer FORWARD-LOOKING INFORMATION Certain statements made in this presentation may constitute forward-looking information under applicable securities laws. These statements may relate to our financial and operating targets for fiscal 2023, the expansion of Fora Credit into other geographies in
Slide 3: Investment Highlights
Investment Highlights 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 programs and Lending as a Service (LaaS) partnership Profita
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 facilitate access to credit for underserved consumers through our belief that every individual deserves credi
Slide 5: Financial Inclusion for the Underserved Population
Financial Inclusion for the Underserved Population 32% 30% 25% 54% U.S. adults are Americans Canadians are Canadians say unable to afford a experience unserved or they’re living $400 emergency hardships due to underserved in paycheque to expense1 income volatility2 the credit market3 paycheque4 Inac
Slide 6: Propel Today
Propel Today 100% online At Scale Profitable $1.05B ~7.0M Fiscal 2022 Fiscal 2021 in originations* unique applications Revenue $226.9M $129.6M per year** 974,000 ~17,000 Adjusted EBITDA*** $40.8M $25.4M funded loans and unique applications lines of credit* per day Net $15.1M $6.6M Income 400+ 2 Empl
Slide 7: Products
PRODUCTS Inclusive Transparent Evolving “This loan was painless and straight forward. The costumer service was like talking to a family member. There was no judgment on me but very understanding and helpful.” ~ Valene, Fora Credit customer 7
Slide 8: Products and Services
Products and Services Lending-as-a-Service Partnership Product/Service Fully amortizing installment loans Open-ended lines of Open-ended lines of Open-ended lines of Consumer Product credit credit credit Open-ended lines of credit State-licensed direct lender Credit services Lending-as-a-service org
Slide 9: Latest Developments
Latest Developments Currently offered in Alberta, British Columbia and Expected to launch in first half of 2023 Ontario with plans to roll out into additional provinces throughout 2023 End-to-end solution for Pathward’s <36% APR lending product Personal Lines of Credit from $1,000 - $10,000 Seamless
Slide 10: Putting Consumers First
Putting Consumers 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 • Over the last two • Propel platform • Some programs • Financial literacy years, the cost of
Slide 11: Platform to Succeed
Platform to Succeed Convenient Seamless Mobile “The representative I worked with was great and extremely professional. They made the process easy and explained all the details well. I was impressed.” ~ Theresa, CreditFresh customer 11
Slide 12: Industry-Leading Proprietary Technology Designed for Consumer Needs
Industry-Leading Proprietary Technology Designed for Consumer Needs 69 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) $18.4M • invested to date
Slide 13: Looking Beyond Traditional Credit Scores
Looking Beyond Traditional Credit Scores Our sophisticated AI-powered engine with machine learning algorithms provides opportunities for creditworthy consumers Reducing Risk as we Scale 1,000+ Attributes Evaluate Credit Worthiness $600,000,000 Fund More 16% 14% $500,000,000 Alternative Credit Bureau
Slide 14: World Class Operations Team
World Class Operations Team Relentless focus on service and performance “The application process was simple and quick. The customer service representative was professional, courteous, and very knowledgeable.” ~ Tawanna, MoneyKey customer Excellent 4.6 ratings from thousands of consumers 24 / 7 7 day
Slide 15: Financial Overview
FINANCIAL OVERVIEW Profitable Diversified Resilient “Excellent customer service and support. From start to finish they help you along the way!” ~ Shannon, CreditFresh Customer 15
Slide 16: Q4 2022 Financial Performance
Q4 2022 Financial Performance US$M Total Originations Funded* +12% in Q4 2022 and +71% for FY 2022 Loans and Advances Receivable Revenue Adjusted EBITDA* $226.9 $40.8 $195.6 $25.4 $129.6 $103.8 $20.0 $73.5 $13.8 $49.8 $68.0 $62.5 $26.4 $41.2 $8.0 $2.6 2019 2020 2021 2022 2019 2020 2021 Q4 2021 Q4 20
Slide 17: Q4 2022 Financial Performance
Q4 2022 Financial Performance Revenue US$M Record Total Originations Funded*, Loans and Advances $226.9 Receivable and Ending Combined Loan and Advance Balances* Growth and expansion with 3 Bank Partners Expansion of variable pricing and graduation capabilities Origination growth with key ma
Slide 18: Q4 2022 Financial Performance
Q4 2022 Financial Performance Provision for loan losses and other liabilities (“Provision”) and Net Charge-offs* Q4 2022 Provision % Revenue reflects: The current risk level in the portfolio in addition to charge-offs from prior period originations 58% 49% 53% 54% 53% IFRS-9 requires high prov
Slide 19: Q4 2022 Financial Performance
Q4 2022 Financial Performance US$M Net Income Adjusted Net Income* All metrics represent growth over prior year $20.4 and record performance for a fiscal year period $15.1 Record growth in revenue $12.9 $7.3 $9.2 Notable cost efficiencies $6.6 $5.0 $6.7 Above is offset by: $2.0 $2.0 $1.0 H
Slide 20: Solid Financial Position
Solid Financial Position Company well funded for existing business, the recent launch Credit Capacity of Fora and soon to be launched Pathward program and to (in US$M) support dividend $90.0 Approximately $50 million in undrawn credit capacity as of CreditFresh December 31, 2022 Facility Upsize*
Slide 21: Growth Outlook: Operating and Financial Targets
Growth Outlook: Operating and Financial Targets Metric 2023 Target Ending Combined Loan and Advance 45% to 55% Balances* Year-Over-Year Growth Revenue $315 million to $345 million Adjusted EBITDA Margin* 23% to 28% Net Income Margin 8.5% to 12.5% Adjusted Net Income Margin* 11% to 15% *See "Disclaim
Slide 22: Evolving into a Diversified Online Global Fintech Company
Evolving into a Diversified Online Global Fintech Company Adjacent products • Design, deliver and cross-sell Geographic expansion complementary • Expansion into products aligned new states and with Propel’s core jurisdictions purpose Serving lower risk markets Graduating • Extension of existing cons
Slide 23: Ready for Tomorrow
READY FOR TOMORROW Poised Focused Strategic “My experience was great. Talking to the customer service agent was very easy and she did a great job explaining the process. Then getting approved for the funds was very easy. I will spread the word if my friends or family need money in the future to go w
Slide 24: Appendix
Appendix g2PROPEL HOLDINGS
Slide 25: Non-IFRS Measure Reconciliation
Non-IFRS Measure Reconciliation Three Months Ended Dec 31, Year Ended Dec 31, US$ 2022 2021 2022 2021 2020 2019 Net Income 5,044,185 (2,213,057) 15,127,447 6,562,442 7,332,388 1,994,849 Interest on Debt 4,047,068 1,193,162 9,784,859 5,317,923 4,052,783 2,851,941 Interest on lease liabilities 86,635
Slide 26: Non-IFRS Measure Reconciliation
Non-IFRS Measure Reconciliation Three Months Ended Dec 31, Year Ended Dec 31, US$ 2022 2021 2022 2021 2020 2019 Net Income 5,044,185 (2,213,057) 15,127,447 6,562,442 7,332,388 1,994,849 Transaction Costs and Financing Costs net of - 944,500 - 1,212,643 19,181 18,814 taxes 1 Provision for credit loss
Slide 27: Non-IFRS Measure Reconciliation
Non-IFRS Measure Reconciliation US$ As at December 31, 2022 2021 2020 2019 Ending Combined Loan and Advance balances 1 247,488,344 134,843,170 62,643,735 37,339,842 Less: Loan and Advance balances owned by third party lenders pursuant to CSO (2,988,636) (4,260,648) (2,487,802) (4,125,377) program Le
Slide 28: Non-IFRS Measure Reconciliation
Non-IFRS Measure Reconciliation US$ Three Months Ended Dec 31, Year Ended December 31, 2022 2021 2022 2021 2020 2019 Charge-offs (28,103,334) (17,360,239) (109,981,529) (46,898,488) (26,059,774) (30,146,501) Recoveries 5,758,698 2,593,659 16,675,403 6,909,063 3,874,018 3,804,778 Net charge-offs 1 (2