Notes:

1. As of 30 September 2025, the Securitzation Trust I Revolving Warehouse was pledged CAD 1.28bn in consumer loans.
2. As of 30 September 2025, the Securitzation Trust II Revolving Warehouse was pledged CAD 386.1m in automotive consumer loans.
3. As of 30 September 2025, the Securitization Facilities were pledged CAD 217.7m in consumer loans.
4. Undrawn borrowing capacity consists of CAD 112.4m of availability under the Securitization Facilities as of 30 September 2025.
5. We have assumed GSY rolls its Securitization Trusts when they come due later in CY2026 and that the Securitization Facilities also remain past August 2026.

Summary

goeasy Ltd. (GSY or goeasy) offers a full suite of lending and leasing products to non-prime consumers in Canada. The company operates two business segments, easyhome and easyfinancial, which includes the LendCare business.

easyhome is the largest lease-to-own company in Canada based on store count. The business offers customers brand-name household goods, including furniture, appliances and electronics through flexible lease agreements. In addition, the business offers unsecured lending products. As of 31 December 2024, the business had 134 physical locations, including 34 franchised stores, and also serves customers through an ecommerce platform. As of 30 September 2025, easyhome comprised ~9% of GSY’s LTM revenue and ~3% of GSY’s gross consumer loans receivable.

easyfinancial is consumer lending business that provides installment loans to customers. The business looks to fill the gap between traditional financial institutions and payday lenders. easyfinancial’s products consist of secured and unsecured installment loans up to CAD 125,000 with rates generally between 9.9% and 35%. Secured loans are typically collateralized by residential property, an automobile, a recreational vehicle or other personal property and typically range in size from CAD 15,000 to CAD 125,000 with repayment periods of 48 to 240 months. Unsecured loans typically range in size from CAD 500 to CAD 27,600 with repayment periods of 9 to 84 months. Loan payments are comprised of both principal and interest components, resulting in the entire balance of the loan being repaid over the stated amortization period. Loans are offered through an omnichannel business model, including a retail branch network comprised of 295 locations as of 31 December 2024, a digital platform, and partnerships with merchants and other indirect lending partners. As of 30 September 2025, easyhome comprised ~91% of GSY’s LTM revenue and ~97% of GSY’s gross consumer loans receivable, ~48% of which are secured loans and ~52% of which are unsecured loans.

The easyfinancial segment was bolstered significantly by the 2021 acquisition of LendCare Holdings Inc., a Canadian consumer finance business focused on point-of-sale product offerings. This acquisition accelerated GSY’s point-of-sale business into new verticals, including powersports and healthcare financing. Shortly after the acquisition, GSY launched an automotive financing program focused on non-prime Canadian customers.

The company has historically funded itself with a combination of revolving warehouse facilities (securitization trusts) as well as other secured facilities. More recently GSY has begun issuing unsecured bonds to raise funds to pay down its secured facilities and also take advantage of preferable market terms.

On 10 March 2026, Debtwire reported that GSY withdrew guidance, cut its dividend entirely and disclosed that it was seeking waivers from lenders based on the expectation for covenant breaches across its capital structure due to higher than expected net charge offs. At issue is a book of auto and powersports loans with the LendCare business that GSY has determined are now uncollectable. GSY stopped reporting various calculations regarding covenant compliance for its Securitization Facilities after 4Q22, making it more complicated for investors to understand the historical trends. In the wake of this surprise announcement, GSY’s stock fell precipitously and the price for its unsecured debt moved down meaningfully as well. Investors are waiting for an update from the company as part of the 4Q25 earnings release scheduled for 25 March and 26 March 2026. Candidly, we are surprised that investors are in turn surprised by these write offs as GSY’s disclosure showed a large increase in long-delinquent loan (151+ days) beginning in 4Q24.

Debt, Cash Flow, and Liquidity

As of 30 September 2025, GSY had CAD 4.7bn of corporate debt. Of this debt, CAD 859m was comprised of paper from two securitization trusts, CAD 92m of other secured facilities, and CAD 3.76bn was senior unsecured notes.

For 3Q25, GSY reported net operating cash flow of negative CAD 194m and levered free cash flow of negative CAD 200m.

As of 30 September 2025, GSY reported liquidity of CAD 614m, comprised of CAD 502m in cash and CAD 112m in availability under its other secured facilities.

For the next 12-month period, we estimate liquidity will increase by CAD 27m on 30 September 2026 to CAD 641m. Excluding availability under its other secured facilities, we estimate liquidity will increase by CAD 5m on 30 September 2026 to CAD 619m. The largest estimated source of liquidity over the next 12 months are EBITDA of CAD 571m while the largest estimated uses of liquidity over the next 12 months are taxes of CAD 86m, interest of CAD 346m and CapEx of CAD 22m. We have also assumed GSY can roll CAD 950m of its current debt. Our estimates assume GSY’s recently announced issues are contained and do not represent existential / going concern risk.

Valuation

GSY is currently trading at an NTME EV/EBITDA multiple of 8.3x, versus a peer average of 8.6x. GSY also trades at 0.4x book value and 0.6x tangible book value versus 1.8x and 2.3x, respectively, for its peer group. Total NTM leverage is 8.2x, compared with a peer average of 5.5x. Net NTM leverage is 7.4x, versus a 5.6x average of the peers.

GSY’s path forward is clouded with significant uncertainty. We currently see three likely outcomes.

Scenario 1. The charge-off concern passes entirely. Based on the limited information available today, we see this as the lowest probability outcome. In this scenario, GSY’s stock rally’s back to ~CAD 133/share and its unsecured notes also retrace recent losses.

Scenario 2. The charge-off issues are contained as management suggests in the 10 March 2026 announcement, and lenders agree to waive covenant breaches and allow GSY access to capital to fund new loans. Based on the limited information available today, we see this as the highest probability outcome. The path might have a few twists and turns, but in this scenario GSY’s stock bounces back to ~CAD 49/share and its unsecured notes also retrace recent losses.

Scenario 3. GSY’s lenders pull the plug and the company goes into liquidation. Based on Debtwire’s analysis and estimates, GSYs various secured facilities have collateral pledges that in aggregate exceed the principal amount of these facilities by CAD 934m. Even if none of this excess pledged collateral is available for the waterfall, which we think is unlikely, our analysis suggests that GSY’s unsecured bonds should recover ~89% of par if the company was liquidated in the near term, but we have no reason to believe that would happen given GSY’s current liquidity profile. Based on the limited information available today, we see this as a relatively low probability outcome. In this scenario, GSY’s stock is worthless and its unsecured notes could recover as little as ~56% of par.

Based on our three scenarios and the recent market prices for GSY’s stock and unsecured notes, we believe the market is putting too much weight on the potential liquidation scenario. Based on the limited information available today, we believe GSY’s stock and unsecured notes are likely undervalued.

The news of the write-offs and larger NCO level surprised investors, and we are at a loss to understand why. GSY’s disclosure clearly showed a significant increase in long-dated delinquencies beginning in 4Q24. We imagine that GSY’s auditors required this update in 4Q24 and that after another year of trying to collect, GSY was finally forced to write them off entirely. Given that GSY’s all important sources of ongoing funding mature in 2026, we believe it is likely that other parties, perhaps private credit managers with specialty finance expertise and appetite, will either take over the existing facilities or step in to refinance them and extend GSY new money on new terms. Prior disclosure noted that the lending syndicate for at least the Securitization Trust I facility is made up of three Schedule 1 banks. Prior disclosure for the Securitization Trust II facility noted the lender included Bank of Montreal and Wells Fargo Bank. We doubt that Canadian banks are interested in cratering a Canadian company, and believe the most likely outcome is for them to grant GSY near-term waivers and then seek to exit these facilities and any commitments to future funding.

Relative Value Comment

GSY’s debt capital structure is comprised of numerous secured and unsecured issuances. It’s seven senior unsecured notes issuances trade and trade wide to wide of indices and comparables given the recent uncertainty.

3Q25 Results

GSY reported total revenue of CAD 440m for 3Q25 versus CAD 383m for 3Q24, representing 15% growth YoY. Over the same period of time GSY’s gross consumer loans receivable book grew 6.5%, while portfolio yield fell from 33.7% to 31.8%. Net revenue of CAD 283m for 3Q25 exceeded year ago levels of CAD 262m as higher bad debt expenses were more than offset by total revenue growth in the period. EBITDA of CAD 178m for 3Q25 was flat with the prior year as higher operating expenses more than offset growth in net revenue YoY. The following table highlights performance for GSY’s two business segments, easyhome and easyfinancial.

Operating margin for 3Q25 was 38%, down from 42% in 3Q24. Over the same period of time, net revenue margin fell to 64% from 68%, salaries and benefits remained flat at 12% of total revenue, underwriting and collections moved up to 2% of total revenue from 1% a year ago, and occupancy costs remained flat at 1% of total revenue.

Levered free cash flow was negative CAD 200m for 3Q25 versus negative CAD 133m for 3Q24. Adjusted net cash flow from operating activities for 3Q25 was negative CAD 194m versus CAD 129m in the prior year period, driven by an increase in net consumer loans receivable in the most recent period. In addition, capex for 3Q25 of CAD 6m came in above the prior period spend of CAD 4m.

Our NTME estimates are based on the assumption that the recently announced charge off issues are contained to the pool management noted and that lenders will continue to support the business. They are also likely to change meaningfully after the 4Q25 update, which is expected to include news of waivers and more details around the charge-off situation. We currently believe GSY will bleed CAD 593m in cash in the NTM period as it continues to grow its receivables book, albeit with higher than historical charge offs as it works through the problematic LendCare book.

Business Description

goeasy Ltd. (GSY or goeasy) offers a full suite of lending and leasing products to non-prime consumers in Canada. We initiated coverage of goeasy in March 2026 after the company announced unexpected charge offs for 4Q25 and anticipated related covenant breaches.

Disclaimer

This report should not be relied upon to make investment decisions. Furthermore, this report is not intended and should not be construed as investment advice. ION Analytics does not provide any investment advice, and clients should consult with their own financial advisor for matters requiring investment advice. All information is sourced from either the public domain or ION Analytics data or intelligence, and ION Analytics cannot and does not verify or guarantee the adequacy, accuracy or completeness of any source document. No representation is made that it is current, complete or accurate. The information herein is not intended to be used as a basis for investing and does not constitute an offer to buy or sell any securities or investment strategy. The information herein is for informational purposes only and ION Analytics accepts no liability whatsoever for any direct or consequential loss arising from any use of the information contained herein.