goeasy Q4 Earnings Call Highlights

Key Points

• LendCare credit deterioration drove a major hit to Q4 profitability — management recorded a CAD 72 million increase to the allowance for credit losses, CAD 178 million of incremental charge-offs and a CAD 160 million goodwill impairment tied to LendCare, even as the consumer loan portfolio grew to about CAD 5.5 billion (~20% YoY).
• Six-point remediation plan: goeasy is refocusing growth on its easyfinancial direct channels, significantly tightening and reducing LendCare originations, unifying operations, appointed new LendCare leadership, implemented ~9% workforce cuts to save ~CAD 30 million annually, and suspended dividends/share buybacks while negotiating covenant amendments to shore up liquidity.
• Near-term outlook: management expects Q1 ending loans of CAD 5.3–5.4 billion, consumer loan yields of 27–28%, and net charge-offs of 17.5–18.5%, with loans forecast to decline before resuming growth and net charge-offs to average in the mid-teens through 2026.

goeasy TSE: GSY executives used the company’s fourth-quarter 2025 earnings call to address a sharp deterioration in credit performance at its LendCare business, outline steps taken since disclosing the issue in March, and provide near-term guidance that reflects elevated charge-offs and a smaller loan book in early 2026.

Patrick Ens, on his first call as chief executive officer, said the company’s prior strategy of growing secured loans through LendCare’s merchant channels “with certain expectations of returns and credit performance” has fallen short. “Based on what we are observing now, those expectations are not being met,” Ens said. He told listeners management is “taking decisive action to pull back where we see the weakest performance” and refocus on direct-to-consumer lending.

LendCare-driven charges weighed on fourth-quarter profitability

Ens said fourth-quarter profitability was “significantly impacted” by a CAD 72 million net change in allowance for credit losses, CAD 178 million of incremental charge-offs, and a CAD 160 million goodwill impairment charge, all tied to LendCare.

Despite those items, he pointed to continued demand for credit. The consumer loan portfolio ended 2025 at CAD 5.5 billion, up nearly 20% year-over-year.

CFO Felix Wu said the company posted “strong” top-line performance in 2025, with nearly 20% portfolio growth and double-digit revenue growth, but net income and return on equity were negatively affected by fourth-quarter measures taken at LendCare, including a “significant charge-off of late-stage receivables,” an increased allowance for credit losses, and the goodwill impairment.

Wu also highlighted pressure on portfolio yield. Total yield on consumer loans declined to 26.6% in Q4 2025 from 32.6% a year earlier, driven primarily by higher interest and fee receivable charge-offs related to LendCare, the impact of Canada’s new 35% maximum allowable interest rate cap on unsecured lending introduced at the start of 2025, and a shift toward larger-balance loans with lower ancillary product pricing.

Six-point action plan: tightening LendCare, emphasizing easyfinancial

Ens said the company has already begun executing a six-point action plan first disclosed March 10. He framed the plan as both a near-term stabilization effort and a foundation for future profitable growth.

• Focus growth on easyfinancial channels: Management said it “reoptimized” unsecured personal loan credit criteria and is prioritizing products where it has a long track record.
• Reduce LendCare originations: Ens said the company has “significantly tightened credit standards” and reduced exposure in auto lending, powersports, and other merchant channels, while maintaining a smaller presence where performance is better.
• Integrate functions under a unified model: The company has unified easyfinancial and LendCare loan processing teams under shared leadership to remove duplication and standardize practices.
• Deliver cost efficiencies: A March workforce reduction affecting about 9% of employees is expected to generate about CAD 30 million in annualized run-rate savings, with the deepest cuts in LendCare.
• New leadership at LendCare: Ens noted the appointment of Farhan Ali Khan as head of LendCare.
• Strengthen balance sheet and liquidity: Dividends and share repurchases have been suspended and the company negotiated covenant amendments with secured lenders.

Ens emphasized that easyfinancial’s direct channels continued to perform “as expected” and that the elevated losses were concentrated in LendCare. He said LendCare represents about 43% of the portfolio, while direct channels and other lending represent 57%.

Credit metrics: sharp divergence between LendCare and direct lending

Wu and Ens both highlighted the contrast between credit performance in LendCare and easyfinancial. Wu said that excluding the incremental CAD 178 million, the net charge-off rate was 11% due to weakness in the LendCare portfolio that emerged in Q4 2025.

Management provided additional detail on net charge-offs by product. Wu said that in Q4 2025, net charge-offs were 40.6% in LendCare versus 12.1% for easyfinancial unsecured lending and 1% for easyfinancial’s home equity-secured business.

Wu also described a change in how the company assessed collectibility for certain delinquent loans, noting situations where unsecured loans could be beyond 90 days and secured loans beyond 180 days past due, including cases where collateral had been seized but sale proceeds were pending or where a loan modification agreement had been reached but not completed.

Chief Risk Officer Jason Appel said the reassessment of collectibility applied broadly, but that the fourth-quarter issue “pertained principally to the auto and powersports businesses of LendCare.”

Restatements, classification changes, and internal controls

Wu said the fourth-quarter financial statements incorporated a presentation change and multiple corrections.

First, the company reclassified consumer loan interest receivable write-offs, which were previously shown as an offset to interest income. Under the updated approach aligned with IFRS 9, those write-offs are now shown as a bad debt expense. Wu said this was “purely a reclassification” with no impact on net income, EPS, cash flow, or the balance sheet.

Second, Wu said the company restated prior periods to correct an error in the accounting treatment of certain customer payments initiated near period ends in Q4 2024 and the first three quarters of 2025. Although cash was accessible at period end, goeasy remained liable for reversals until settlement, and the company experienced “a meaningful number of payment returns.” The restatement affected gross loans receivable, interest and fees receivable, allowance for credit losses, and delinquency and staging disclosures. Wu also noted a correction related to over-accrual of interest income on Stage 3 loans.

Finally, Wu said goeasy identified a “LendCare-specific control deficiency” tied to the application of IFRS 9. While it did not prevent accurate restatement and credit-loss accounting, the company determined internal controls at LendCare “require enhancement,” and it is implementing additional controls and oversight.

Liquidity, funding access, and 2026 outlook

On liquidity, Wu said the lending business generates substantial cash flow, estimating about CAD 0.5 billion per quarter, or roughly CAD 2 billion per year before originations. He said the company can manage originations to control cash usage while it strengthens the balance sheet.

Wu said goeasy entered definitive agreements with lenders under a revolving credit facility, securitization facility, and loan purchase and sale agreement, which kept facilities available for future funding and waived certain covenant compliance related to Q4 2025. He said the company is in compliance with covenants after the amendments and that, under current assumptions, “new equity was not required” to comply with revised covenants. He added that goeasy expects to repay its May notes maturity using existing cash resources, with no other near-term maturities, and that its average coupon at year-end 2025 was 6.6%, reflecting low and mostly fixed hedged interest costs.

During Q&A, Wu said the revolver would be accessible as of July 1, while access to the securitization warehouse facility depends on completing an audit and changing a backup servicer, which he said the company expects to accomplish over the next “two, three months.” He said the servicer change is for a backup arrangement and that goeasy continues to service the loans.

For near-term performance, Ens provided expectations for when the company reports first-quarter results. Management expects:

• Ending loans receivable: CAD 5.3 billion to CAD 5.4 billion (down from CAD 5.5 billion at year-end 2025)
• Consumer loan yield: 27% to 28%
• Net charge-offs: 17.5% to 18.5%

Ens said goeasy is not providing its traditional three-year financial forecast this quarter, but offered directional commentary for 2026: gross loans receivable are expected to decline before resuming growth in the second half; yields are expected to improve as interest charge-offs decline; and net charge-offs are expected to average in the “mid-teens” with improvement as the year progresses.

Addressing questions about underwriting and allowances, Appel said the company conducted a “pretty thorough deep dive across the entire portfolio,” including both LendCare and easyfinancial, and used scenario analysis to model the back book and expected front-book originations. He also said the allowance for credit losses has multiple moving parts and includes forward-looking indicators outside management’s control, but that as charge-offs trend downward and the action plan progresses, management would “naturally expect” the allowance to reflect that trend over time.

In closing remarks, Ens said management is committed to executing the six-point plan and anchoring performance in the direct-to-consumer business, while working to stabilize and “right-size” LendCare.

About goeasy TSE: GSY

goeasy Ltd provides financial services to own furniture, electronics, computers, and appliances. It offers merchandise leasing of household furnishings, appliances, and home electronic products to consumers under weekly or monthly leasing agreements. The company also offers unsecured installment loans to consumers. Its reportable business segments include easyhome and easyfinancial, of which it derives maximum revenue from easyfinancial segment.

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