Mr. Clive Kinross reports

PROPEL REPORTS RECORD FIRST QUARTER RESULTS AND ANNOUNCES DIVIDEND INCREASE

Propel Holdings Inc. has released its financial results for the three months ended March 31, 2023 (Q1 2023), a testament to the company's commitment to profitable growth. Propel's board of directors has approved an increase to the annual dividend from 38 Canadian cents per share to 40 Canadian cents per share effective Q2 2023. This represents an increase of 5.3 per cent and the company's first dividend increase as a publicly traded company. All amounts are expressed in U.S. dollars unless otherwise stated.

Financial and operational highlights for Q1 2023

Comparable metrics relative to Q1 2022

• Loans and advances receivable: increased by 57 per cent in Q1 2023 to $195.8-million, a record ending balance;
• Ending combined loan and advance balances (CLAB): increased by 57 per cent in Q1 2023 to $248.1-million, a record ending balance;
• Total originations financed: decreased by 12 per cent to $79.0-million in Q1 2023;
• Revenue: increased by 30 per cent to $65.6-million in Q1 2023, representing record quarterly performance;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): increased by 75 per cent to $17.0-million in Q1 2023, representing record quarterly performance;
• Net income: increased by 91 per cent to $7.4-million in Q1 2023, representing record quarterly performance;
• Adjusted net income: increased by 48 per cent to $8.3-million in Q1 2023, representing record quarterly performance;
• Cost of debt capital: average effective interest rate increased to 12.9 per cent in Q1 2023 from 8.9 per cent in the comparative period in 2022;
• Dividend: paid a Q1 2023 dividend of 9.5 Canadian cents per share on March 7, 2023, representing a 5.8-per-cent dividend yield against Propel's closing share price on May 9, 2023.

Management commentary

"We are proud to announce another quarter of record results. Propel delivered record quarterly revenue with 30-per-cent growth over last year, and record net income and adjusted net income with 91-per-cent and 48-per-cent year-over-year growth, respectively. This growth was achieved amidst a dynamic economic environment. Our expanding profitability is a result of disciplined cost control, our growing portfolio and prudent underwriting with our bank partners. Given our strong results, the confidence we have in our business, our track record of profitable growth and solid financial position, we have made the decision to increase our dividend.

"We also continue to make excellent progress in executing our strategic growth plan and diversifying our business. We are continuing to grow across Canada; we are very close to launching our lending-as-a-service (LaaS) partnership with Pathward N.A.; and we are broadening our presence across the underserved consumer market while improving the credit quality of originations. Underpinning our progress and strong results are our AI and machine-learning capabilities, best-in-class technology platform, and our commitment to superior customer service.

"Our management team is excited about our prospects for the remainder of the year and beyond. Consumers in our segment of the market continue to be resilient and continued real wage growth and low unemployment are driving strong credit performance. We have never, in the history of our company, been stronger or better positioned for growth and there is so much more to come," said Clive Kinross, chief executive officer.

Discussion of financial results and business strategy

• Macroeconomic environment remains dynamic, but key economic indicators for the company's consumers remain robust:
  • Consumer resiliency supported by continued real wage growth and a robust labour market remaining at a 50-year low for unemployment, drove strong credit performance across the loan portfolio;
  • Propel and its bank partners experienced a more normalized tax season for the first time since the onset of the COVID-19 pandemic, contributing to lower loan originations as compared with last year.
• Loans and advances receivable grew by 57 per cent driven by industry trends and expansion of our product offerings:
  • Loans and advances receivable increased by 57 per cent to a record $195.8-million as at March 31, 2023, compared with $124.8-million as at March 31, 2022;
  • The growth in the balance was driven by: 1) the expansion of variable pricing and graduation capabilities; 2) the growth of the bank programs; 3) the expansion of originations through growth into Canada and with key marketing channels; and 4) at a macro level, strong consumer demand for credit driven by several factors including the continuing industry-wide transition from brick and mortar to on-line lending, and tightening across the credit supply chain, which has increased the quality and volume of applications on Propel's platform.
• Revenue increased by 30 per cent to reach new Q1 record:
  • Revenue increased by 30 per cent to a record of $65.6-million in Q1 2023, compared with $50.5-million in Q1 2022. This growth was the result of the 57-per-cent growth in CLAB, offset by a decrease in annualized revenue yield to 106 per cent in Q1 2023 from 138 per cent in Q1 2022;
  • The decrease in annualized revenue yield is a result of a reduction in the cost of credit across the portfolio as the company and its bank partners continued expanding the product offerings to a stronger credit profile consumer segment.
• Net income and adjusted net income increased due to growth and effective cost management:
  • Net income increased by 91 per cent to $7.4-million in Q1 2023, compared with $3.9-million in Q1 2022 and adjusted net income increased by 48 per cent to $8.3-million in Q1 2023, compared with $5.6-million in Q1 2022;
  • The growth in net income and adjusted net income is primarily a result of the overall growth of the business and ongoing effective and prudent cost management and operating leverage. The disciplined expense management and inherent operating leverage in the business resulted in the net income margin increasing from 8 per cent in Q1 2022 to 11 per cent in Q1 2023, and the adjusted net income margin increasing from 11 per cent in Q1 2022 to 13 per cent in Q1 2023.
• Delivering on the company's growth strategy through diversification:
  • The company continues to grow Fora across Ontario, Alberta and British Columbia, and is excited to announce the launch in Saskatchewan on May 10, 2023. The Canadian market continues to perform in line with its expectations and the company is seeing strong demand and stable credit performance. Despite recently proposed regulatory changes, the company remains confident in its ability to adapt and for its Canadian brand to develop into a significant business over the long term.
  • The company's partnership with Pathward, through which the company will be providing white labelled lending-as-a-service functionality for their sub-36 per cent APR consumer lending product, is expected to launch imminently. In addition, the company continues to evaluate other new partnerships to leverage its expertise, platform capabilities and track record in on-line consumer lending.

Increase to annual dividend and declaration of q2 2023 dividend

Propel also announced today that its board of directors has approved an increase to the annual dividend from 38 Canadian cents per common share to 40 Canadian cents per common share, representing an increase of 5.3 per cent and the company's first dividend increase as a publicly traded company. The board declared a dividend of 10 Canadian cents per common share, payable on June 7, 2023, to shareholders of record as of the close of business on May 17, 2023. The company has designated this dividend as an eligible dividend within the meaning of the Income Tax Act (Canada).

Conference call details

The company will be hosting a conference call and webcast tomorrow morning with a presentation by Clive Kinross, chief executive officer, and Sheldon Saidakovsky, chief financial officer.

Conference call details are as follows:

Date:  Wednesday, May 10, 2023

Time:  8:30 a.m. ET

Toll-free North America:   1-888-886-7786

Local Toronto:   1-416-764-8658

Conference ID:  50344554

Replay:  1-877-674-7070 or 1-416-764-8692 (pin: 344554 followed by the pound key)

About Propel Holdings Inc.

Propel is an innovative financial technology company, committed to credit inclusion by facilitating fair, fast and transparent access to credit through its proprietary, industry-leading on-line 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.

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