goeasy Ltd.

Thank you, operator, and good morning, everyone. I'm James Obright, Senior Vice President of Investor Relations and Capital Markets.

Thank you for joining us to discuss goeasy Limited's results for the fourth quarter and full year ended December 31, 2025. Our Q4 news release, which was issued yesterday is available on SEDAR+ and the goeasy website.

On today's call, Patrick Ens, goeasy's Chief Executive Officer, will provide an update on our fourth quarter performance and recent developments and an outlook for the business; Felix Wu, our Chief Financial Officer, will provide an overview of our Q4 and full year 2025 financial results as well as our liquidity position. Also joining us on the call today is Jason Appel, goeasy's Chief Risk Officer.

After the prepared remarks, we will open the lines for questions from our research analysts. [Operator Instructions] The operator will poll for questions and will provide instructions at the appropriate time.

Before we begin, I remind you that this conference call is open to all investors and is being webcast through the company website and supplemented by a quarterly earnings presentation, which will be referred to by our speakers today. For those dialing in by phone, the presentation can be found in the Investors section of the company website.

As noted on Slide 2, forward-looking statements will be made on this call, which may involve assumptions that have inherent risks and uncertainties. Actual results could differ materially.

I would also remind listeners that goeasy uses non-IFRS financial measures and metrics to arrive at adjusted results. Management evaluates performance on both a reported and an adjusted basis and considers both useful for assessing underlying business performance.

These are more fully described in the appendix. With that, I will turn the call over to Patrick Ens.

Thank you, James, and thank you, everyone, for listening today. I want to begin by acknowledging the impact on our shareholders, our lenders, our employees and our other stakeholders from the charge-offs at LendCare and the impact from the mitigating actions we have taken since disclosing those charge-offs to you on March 10.

Since 2021, our strategy has been to grow the secured loan book through merchant channels at LendCare with certain expectations of returns and credit performance. Based on what we are observing now, those expectations are not being met.

We are taking decisive action to pull back where we see the weakest performance and reoptimizing our strategy to focus on where we have the greatest confidence, our direct-to-consumer, unsecured and home equity personal loans. My top priority as CEO is to ensure we manage credit well and return to delivering the strong performance we expect of ourselves.

Although we are significantly pulling back on our originations at LendCare, we see potential in these product verticals to be unlocked down the road by applying the best practices established in the strong easyfinancial business to our merchant-originated loans. Since this is my first call as CEO, let me provide a brief introduction.

I've spent my entire professional career in credit, including serving as a Senior Credit Officer at a financial institution and working in the subprime lending sector for nearly 20 years. I came to goeasy in 2024 to lead easyfinancial, our direct-to-consumer lending business.

It's a business I'm very proud of, one with strong fundamentals and it represents the majority of our loan book today. The challenges we're currently navigating pertain to LendCare, our indirect, merchant-originated point-of-sale financing business.

On our call today, we're going to discuss the matters we disclosed on March 10 in more detail and have addressed in our current financial reporting, not only to help you better understand them, but critically, to highlight what we've already been doing to address them through our six-point action plan. We've taken decisive steps in recent weeks, initiated structural changes to our business and defined a road map to get goeasy back on track.

We have work to do, but we have a clear plan, we're executing with urgency and we're committed to building back stronger than ever. Now let me walk you through where we are and where we are headed.

Let's start with an update on the key financial developments of the quarter. As we'll get into in more detail later in this presentation, we saw higher levels of losses in LendCare, including an incremental charge-off of loans receivable and a related charge-off of loan interest and fees.

We recognized a goodwill impairment charge, also related to LendCare, and saw an increase in our allowance for credit losses. Beyond identifying and promptly disclosing these matters, we've set out a six-point action plan and have already taken swift and decisive steps.

While one part of our business is facing some significant challenges, the fundamental market opportunity remains strong and intact. We perform best where we have built direct relationships with our customers.

That's where our credit performance has been strongest. easyfinancial, the direct business I led as President before becoming CEO, continues to perform as expected.

That's why our strategy is focused on growing easyfinancial while we stabilize and rightsize LendCare by leveraging the best practices around credit discipline and collections in support of a unified operating model. Turning to a summary of our Q4 financial performance.

You can see the impact of the challenges at LendCare across key metrics. Profitability in the quarter was significantly impacted by the $72 million net change in allowance for credit losses, the incremental $178 million of charge-offs and the $160 million goodwill impairment charge.

However, as a reflection of continued strong customer demand for credit, Q4 originations drove continued growth in our consumer loan portfolio which ended the year at $5.5 billion, up almost 20% year-over-year. The origination levels in the quarter are a reminder of the opportunity we have to provide a valued service to an underserved customer base.

This opportunity will remain available to us as we work through this period and beyond. But we are determined to approach this opportunity right.

Let's look at exactly what we are doing to address the factors that impacted this quarter's results. As announced on March 10, we have a six-point action plan.

Let me walk you through what we've already delivered over the last 3 weeks. First, we're focusing growth on easyfinancial channels.

We've reoptimized our unsecured personal loan credit criteria and continue to underwrite loans where we have expertise and a strong track record. Second, we've reduced LendCare originations.

We've significantly tightened credit standards and reduced exposure in auto lending, powersports and other merchant channels. We are maintaining a smaller presence in segments and merchants where we see better performance and opportunities for future optimization.

We are fundamentally reassessing our approach in this area. Third, we're integrating functions across our business units as we adopt one unified operating model.

We've already unified our easyfinancial and LendCare loan processing teams under shared leadership, eliminating duplication and ensuring consistent standards. Fourth, we're delivering operational and cost efficiencies.

We implemented a workforce reduction in March, impacting approximately 9% of our employees that is expected to yield $30 million in annualized run rate savings that will flow through our P&L in coming quarters. The impact of these reductions was deepest in our LendCare business unit, consistent with the reduction in activity at LendCare, while we work on strengthening the business model.

Going forward, we will be investing as appropriate to strengthen and develop our operations in areas where additional resources are necessary to deliver strong results. Fifth, as previously disclosed, we've brought in new leadership at LendCare with the appointment of Farhan Ali Khan as Head.

And sixth, we've taken the first steps to strengthen our balance sheet and liquidity. Dividends and share buybacks are suspended to retain cash, and we've successfully negotiated covenant amendments with our secured lenders.

This is a plan already in motion, and we will continue to pursue ongoing initiatives around adjusting our business mix, integrating LendCare, looking for further opportunities to drive efficiencies and enhancing our funding position and liquidity. Our six-point action plan does two things: it stabilizes the business in the near term and it sets out some of the core elements of the strategy to establish a stronger foundation for future profitable growth.

So let me outline our road map for the next 3 years. This isn't just about fixing what's not working, it's about building a stronger, more resilient company that can deliver sustainable, profitable growth.

In 2026, our focus is on decisive action and stabilization through our six-point action plan. This includes rebuilding our access to attractively priced capital, and we are pressing ahead with that work.

As this year unfolds and into next, we will be investing in our platform for scalable disciplined growth. We will be strengthening our enterprise risk management with enhanced risk models, credit discipline and collections resources for our indirect merchant channel.

We will prudently invest in technology to automate manual processes and drive efficiency and scalability. We will leverage our unique multichannel model to pursue growth opportunities and develop dynamic and personal digital customer experiences.

Into 2028 and beyond, we're expecting to deliver disciplined high performance. Our strategy, which you'll be hearing more about in coming quarters as we refine our plans, is designed to deliver a return to sustainable profitability through balanced portfolio expansion, a scalable operating model and normalized credit metrics.

goeasy will be oriented to sustainable and profitable growth throughout the credit cycle. By transferring best practices from areas where we are already performing well to the entire business, we will approach the future with a significantly strengthened enterprise.

So I've told you about where we are taking goeasy, but wanted to spend some time on the company as it stands today. On Slide 9, we offer some new insights around our portfolio composition to underscore where we continue to see strong performance.

We have two reporting segments: easyfinancial, our consumer lending arm that provides installment loans; and easyhome, Canada's largest lease-to-own company. Under the consumer lending umbrella are two operating segments.

The easyfinancial operating segment is our direct-to-consumer lending business. This is the long-time core of goeasy and the business I was leading as President prior to taking the CEO role.

We offer unsecured personal loans and home equity loans directly to customers through our nearly 300 locations across Canada and our digital channels. With easyfinancial, we have deep credit expertise, proven underwriting models and strong customer relationships that have yielded a track record of success through credit cycles.

We acquired the second consumer lending operating segment, LendCare, in 2021. LendCare is our point-of-sale financing business.

It operates through thousands of merchant partnerships, auto dealerships, powersports dealers and retail partners. It's an indirect channel, which means we're one step removed from the customer relationship.

LendCare represents about 43% of our portfolio. Our direct channels, the healthy core of easyfinancial unsecured personal loans, secured home equity loans and easyhome lending comprised 57% of our portfolio.

And on Slide 9, we look specifically at the performance of the components of our consumer lending reporting segment. We're providing the weighted average interest rate of these three business lines to highlight the relative returns before ancillaries and interest charge-offs.

The decline in unsecured loans from Q4 2024 to Q1 2025 reflects the impact of the new maximum allowable rate of interest cap at 35%. Its impact has been moderating over time.

Now here's what's critical. We saw stable credit performance in Q4 in both our easyfinancial secured and unsecured products.

The elevated credit losses we experienced were not in our direct channels. The higher charge-offs in Q4, including the incremental $178 million were attributed to the LendCare loan portfolio.

Our direct business continues to perform as expected, and that's where we're focusing our growth going forward while we invest in integrating and reoptimizing the LendCare business under Farhan's leadership. As I wrap up my initial remarks, I want to talk a little bit more about our easyfinancial direct business.

Our platform addresses a large target market, 9.5 million Canadians with non-prime credit scores who collectively represent almost $238 billion in non-mortgage credit balances. That group is underserved by the mainstream financial institutions.

With no dominant player, the market opportunity is attractive for participants that can execute with discipline. As the prior slide demonstrated, this part of our business is healthy and strong.

Our customers know our top-ranked brand. We've earned a great Trustpilot rating, an overall measurement of reviewer satisfaction.

And our customers have access to close to 300 locations nationwide and a whole suite of digital channels to engage with us and build relationships. As we have seen, the returns are attractive and the credit performance is consistent.

In my time leading easyfinancial, I have been impressed with the team members I work with, the business processes, credit discipline and overall performance. By pursuing a unified operating model going forward, we will bring that culture of success to the whole goeasy organization.

Our ability to execute this rebuild is grounded in our success with easyfinancial and our unique value proposition in the Canadian market. There is more work ahead but Felix and I and the rest of the executive leadership team here are determined to see it through.

Before I turn things over to Felix to go into more detail on our financial performance, I wanted to take a moment to formally introduce him in his new role. This is Felix's first call since being appointed as our permanent Chief Financial Officer last month.

Felix brings more than 20 years of senior leadership experience in finance, operations, risk and compliance at financial services companies. He served as CFO 3 times before, most recently at KOHO and previously at President's Choice Financial and Capital One Canada.

At a time when we're focused on strengthening our foundation, rebuilding our balance sheet and enhancing our risk management practices, Felix is exactly the leader we need in this seat. I have full confidence in his ability to strategically lead our financial function going forward.

Now I will turn it over to Felix for a discussion of our performance for the year and for the quarter. Felix, over to you.

Thank you, Patrick, and good morning. Before I recap the key financial developments in our business in 2025, I wanted to highlight three important points in our financials.

The first is a difference in the presentation of certain financial information that takes effect with our Q4 2025 financial reporting. In the preparation of these results, we identified a presentation change around consumer loan interest receivable write-offs, which were previously shown as an offset to interest income, lowering the net revenue line.

To align with IFRS 9, interest receivable write-offs are now being shown as a bad debt expense. This was purely a reclassification.

It had no impact on net income, earnings per share, cash flow or our balance sheet. For consistency with prior presentation of certain non-IFRS measures and ratios such as total yield and annualized net charge-offs, we maintained our prior approach to the calculations.

The second important point is the restatement of prior period information that corrects an error in the accounting treatment of certain customer payments. This had an impact on the gross loans receivable, interest and fees receivable, the allowance for credit losses as well as our delinquency and loan staging disclosures.

I will describe this more fully in the coming slides. This was also an error in the over-accrual of -- there was also an error in the over-accrual of interest income on Stage 3 loans.

As required by IFRS 9, interest income is recognized on the net carrying amount of the loan, whereas we were recognizing interest income on the gross loan amount for Stage 3 loans. The company has corrected this error in our previously provided financial reports.

More details of our restatements can be found in Note 2 of our financial statements and in the sections of our MD&A headed Restatement of Prior Period Financial Information and Restatement Impact on Interim Financial Information. Finally, during our year-end assessment, we identified a LendCare-specific control deficiency related to the application of IFRS 9 in our financial statements.

While this LendCare deficiency did not prevent us from accurately restating our financial statements and properly accounting for credit losses, we have determined that our internal control over financial reporting at LendCare requires enhancement. We are implementing additional controls and oversight mechanisms to strengthen our financial reporting processes going forward.

Turning to the summary of our full year results. For the year, our top line was strong.

We grew our consumer loan portfolio by nearly 20% and saw double-digit year-over-year growth in revenue as a result. However, our net income and return on equity were negatively impacted by the measures taken in the fourth quarter related to LendCare, namely a significant charge-off of late-stage receivables based on an assessment of collectibility, a meaningful increase in the allowance for credit losses on the expectation of higher charge-offs and the impairment of goodwill associated with our LendCare business.

I will expand on these further in the coming slides. We had a positive year in originations and asset growth.

Originations grew by nearly 10% for the year, driven by strong customer demand and volume of applications for credit. Gross consumer loans receivable grew by nearly 20% to $5.5 billion, with 45.6% of that number secured, down from the prior quarter due to the LendCare charge-offs and continued strong easyfinancial growth.

Originations growth drove revenue growth of more than 10% for the full year. The chart on the right side shows total yield on our consumer loan portfolio, which declined to 26.6% and in the fourth quarter from 32.6% in the prior year.

Yields faced downward pressure on three fronts. The most significant impact came from higher interest and fee receivable charge-offs relating to the LendCare portfolio.

The ongoing impact of the new maximum allowable rate of interest on the company's unsecured lending product introduced at the beginning of 2025 was the second largest impact. And lastly, a higher proportion of larger dollar value loans, which have reduced pricing on certain ancillary products also weighed down yield.

Let's get into expenses and cost management for the business. The company defines efficiency ratio as adjusted other operating expenses divided by total revenue, less bad debt on interest income.

As we've seen in recent quarters, adjusted operating margin can move around for reasons beyond how we're managing costs, such as provisioning or credit performance. We also recognize that the efficiency ratio aligns more closely with how other lenders think about operating efficiency, which enhances comparability as revenue normalizes.

Over the course of 2025, we continue to evaluate and implement measures designed to improve effectiveness and operational efficiency across all areas with a particular focus on credit underwriting and collection practices, which resulted in a Q4 efficiency ratio of 25% or 24.9% for the full fiscal year. As was noted by Patrick, the fourth point in our action plan is a focus on operational and cost efficiencies, which we expect will yield approximately $30 million in run rate savings.

Our future focus is on enhancing our whole firm practices by building off of the rigor of the easyfinancial operating model. On both a reported and on an adjusted basis, which excludes the goodwill impairment, Q4 operating income was a significant negative, reflecting large items recorded in the quarter, pertaining entirely to our LendCare segment.

The next three slides focus on our credit and underwriting performance in the quarter. Charge-offs are an important indicator of the health of our operations.

Excluding the incremental $178 million, the net charge-off rate was 11% due to weakness in the LendCare portfolio that emerged in Q4 2025. In addition, in Q4 2025, we incorporated more recent data in the assessment of the collectibility of unsecured and secured loans that are greater than 90 and 180 days past due, respectively.

There are now two scenarios where an unsecured loan can age beyond 90 days and a secured loan can age beyond 180 days, namely, the collateral has been seized, but we're still waiting on proceeds from sale, or we've entered into an agreement with the borrower to modify the loan, but the process has not yet been completed. With our current view of collectibility informed by additional data, we expect to see higher loss rates in our LendCare business.

I want to reference the new disclosure Patrick covered on Slide 9, which showed net charge-offs in greater detail than we had previously shared. For Q4 2025, net charge-offs in LendCare were 40.6% as compared with 12.1% in easyfinancial unsecured and 1% in easyfinancial's home equity secured business.

Regarding our delinquency disclosures, you will see some of the impact of the restatements I mentioned here. After the year ended December 31, 2025, we identified an error related to the financial reporting of certain customer payments initiated close to period end dates in Q4 2024 and the first 3 quarters of 2025.

These payments were credited to our bank account by our banking partner, but had not yet settled with customers as of the relevant period end. We had reported them as customer payments.

Although the cash was accessible to us at period end, under our banking agreement, we remain liable for payment reversals and retained credit risk until settlement. Ultimately, there was a meaningful number of payment returns.

We reinstated the related loan, interest and fee receivables and recognized additional allowance for credit losses on the increased balances along with related tax impacts. We also corrected the disclosures for loan aging, staging classification.

You will also note that this quarter, we amended the aging buckets to align with how we are now monitoring delinquent loans and managing the collection strategy. These updated loan aging data are shown in this delinquency table.

The percentage in the 91 to 180-day bucket rose slightly quarter-over-quarter into Q4. This is a source of potential future charge-offs.

Following the application of the updated assessment of collectibility I covered on the prior slide, only 0.5% of the loan portfolio was more than 180 days past due at the end of 2025 compared with 2.9% at the end of 2024. Turning to our allowance for credit losses.

The net change was $72 million in the quarter and $168 million in the full year. Increases in allowance are driven by portfolio growth and by changes in expected credit losses.

Our rate of allowance for expected credit losses, which we refer to as provision rate in prior quarters, increased to 9.6% in Q4 from 8.4% in Q3, and reflects our expectation for higher credit losses in our LendCare portfolio. I want to point out something about our business that may not be fully understood.

So this chart should help to clarify. Our lending business generates strong cash flows.

The significant principal repayments we receive together with interest paid by our borrowers, generates about $0.5 billion in cash flow per quarter or roughly $2 billion per year before originations. In the past, we directed much of that cash flow to meet customer demand for new loans and to support the growth in our gross receivables.

To be clear, we are still making new loans, but we have a lot of flexibility to carefully manage the biggest use of cash in our business, originations, as we work to manage our liquidity in the near term and continue to strengthen our balance sheet. That flexibility also extends to our ability to control both the size and the mix of credit we underwrite and its associated risk and profitability.

I want to wrap up my remarks with an update on our balance sheet. We announced on March 24, we entered into definitive agreements with the lenders under our revolving credit facility, securitization facility and loan purchase and sale agreements.

These agreements provided that our revolving credit facility and securitization warehouse 1 would remain available to provide future funding as well as waiving compliance with certain covenants with respect to Q4 2025 and giving effect to other amendments. As a result of executing the definitive agreements, we are in compliance with all of the financial and other covenants under the facilities.

We've provided detailed disclosures on these amendments in the appendix to this presentation and in our MD&A. Under current assumptions, new equity was not required in order to comply with the revised covenants.

From a liquidity perspective, as I noted on the prior slide, we benefit from considerable cash flow coming in and our ability to control the volume of loans we originate. We'll be repaying our May notes maturity out of existing cash resources and have no other near-term maturities to manage.

We'll continue to benefit from the low and mostly fixed hedge interest costs we have with an average coupon of 6.6% at the end of 2025. As Patrick outlined in our six-point action plan, by focusing our growth on easyfinancial channels, where we have a strong track record of originating highly profitable loans while reducing underperforming LendCare originations, we have outlined a strategy to deliver on covenant compliance and strengthening our balance sheet.

Lastly, by suspending our dividend and share repurchases indefinitely, we're showing prudent retention of cash flow while we navigate this period. With that, I will turn the call back to Patrick for our outlook and concluding comments.

Thank you, Felix. Let me talk about what you should expect from us in the near term and how we're thinking about our path back to strong performance.

In terms of our outlook for the business, when we report Q1 next month, we expect ending loans receivable to be between $5.3 billion to $5.4 billion relative to $5.5 billion at year-end 2025. Yield on consumer loans is expected to land between 27% and 28%, and net charge-offs between 17.5% and 18.5%.

We know that many of you had hoped we would share 3-year financial forecast today, as has been goeasy's historic practice in prior fourth quarters. While we're not providing that detailed financial guidance today, we did want to share some outlook for the year ahead, 2026.

We expect gross loans receivable to decline before resuming growth in the second half. Yield on consumer loans is expected to improve over the course of the year as interest charge-offs decline.

And finally, we expect net charge-offs to average in the mid-teens for the year, with improvements expected as the year progresses. Our focus for 2026 is execution, delivering on our six-point plan, prudent management of liquidity and strengthening credit performance.

We aim to come back to you with well-thought-out commercial targets later this year, while we continue to deliver against the path forward we have outlined today. As we wrap up, I want to reinforce why goeasy remains an attractive opportunity even as we navigate these near-term challenges.

First, we are serving the relatively fragmented $238 billion non-prime consumer credit market in Canada. There is significant room for a disciplined, experienced player to gain share, and we already have a leadership position.

Second, we have a proven track record of meeting customer needs. easyfinancial is a well-known brand in the direct channel with more than 20 years of history of serving that market.

Our top-tier ratings of customer awareness and trust, our expansive merchant channel and our 400-plus locations means a presence that is hard to replicate. Third, our core direct-to-consumer business is healthy and profitable, and we are building on that foundation going forward.

And critically, we generate significant free cash flow before net principal written, $2.1 billion last year, that we can use to rebuild liquidity and balance sheet strength. This combination, a large market proven model, healthy core business and strong cash generation gives us confidence in our ability to execute on our six-point plan and emerge stronger.

This is the foundation we're building on as we navigate this transition and position ourselves for success in writing the next chapter in goeasy's story. Thank you for your time today and for your ongoing support of our company.

With the conclusion of our prepared remarks, I will turn the call back to our operator for questions from our research analysts. [Operator Instructions] Operator?

I want to start off with the loan book and the cash generated. So you did mention a decline in loan book to $5.3 billion to $5.4 billion in Q1 and a recovery in the back half.

So directionally, it sounds like Q2 could be the trough. Maybe just give us a sense of the size of the loan book as we progress throughout the year.

And more importantly, under those assumptions, Felix, Patrick, I think you highlighted $2 billion of cash flow generated last year. But looking out, can you elaborate under those assumptions with additional loans, like what's your net cash flow look like first half and second half?

And I think you also mentioned you don't need equity at this point. Maybe just talk us through what scenarios you perhaps might need some equity help, if at all?

Thank you, Gary. Thank you for the question.

Just to make sure that I was tracking there. I heard a request for a bit more color commentary on how our growth is expected to play out over the course of the year and how that pertains to our plans for funding that growth.

So maybe just to pull it up a level, what we outlined in our action plan here is that we feel really strongly about the performance of our easyfinancial direct-to-consumer business. So that's where we're focusing our growth and attention while we're pulling back on the LendCare merchant-originated loans so that we can recalibrate and rebuild our formula on that side of the house.

So we've shared for the full year that we expect our year-end gross loans receivable to be relatively flat by the end of the year. And so yes, declining in the first half of the year and then returning to some growth in the second half of the year to hit our year-end target of being roughly flat.

We also shared that we've successfully partnered with our secured lenders to reestablish our covenants and funding facilities there. And so that plan really all works together to achieve and fund those stated growth goals and successfully done that without any requirements for equity.

Okay. And then -- sorry, I know it's limited to one question, but like under those scenarios, you probably ran under -- other assumptions, like what are maybe some of the KPIs we should look at from the outside?

Is it your debt to tangible equity going to a certain range before there might be an equity raise, or no?

Yes. Thank you, Gary.

I think if you look as well in the appendix materials, you can see that we do have higher debt to tangible equity than we would have had in the past. What's important to note is that that's part of the plan that's been worked upon and agreed with our banking partners that doesn't require any additional equity.

So we're going to start a little bit higher and then continue to bring that down as the year progresses.

Can you hear me okay?

We can. Thank you, Jeff.

Okay. Great.

I just wanted just to get some clarification about the ability to access the funding under your amended credit agreements here. It looks like, obviously, there's an audit that needs to be completed on some aspects of the loan book through the end of Q1, some restrictions around advances and things like that.

Like what -- just trying to understand realistically how accessible that base of funding is? Are you really going to -- it sounds like at least not until midyear, but just being able to draw on either the securitization facility or the revolver, how should we think about that?

I mean, it looks like you're going to have to navigate largely with your own cash flows for the time being. And then it's just not quite clear to me that those dollars are there, but are they really desirable to be able to draw on?

Are they available for you to draw on without a lot of incremental challenge there?

Got it. Thank you, Jeff.

I'm going to let Felix take that one.

Yes. Great question, Jeff.

We have a lot of clarity in terms of the ability to draw on those amended facilities, both the securitization warehouse and the revolver. And so very clearly, on the revolver, we have access to it as of July 1.

And so it's [ date ] driven from that perspective. On the securitization warehouse facility, there are two things that we need to accomplish, and we have a good line of sight to being able to deliver on that over the next few months -- the next 2, 3 months.

The first one is the completion of an audit, and that continues to go well. And the second one is the changing of a backup servicer from that respect.

And so we have no sort of -- there's no complications or obstacles in terms of executing on that. And so we foresee having unfettered access to both of those facilities at the end of Q2, beginning of Q3 from that perspective.

Lastly, as we highlighted, we generate -- one of the big strengths of this portfolio is we generate a lot of cash. And so there is absolutely no issue in terms of liquidity.

We can manage our originations to manage any short-term liquidity or liquidity needs that we do have. We do have a very small bond maturity on May 1 that we stated that we're going to pay down with our existing cash flows.

And then our next big maturity from a high-yield bond perspective is not until December of 2028. And we can, again, as we highlighted, moderate our origination to manage any liquidity needs.

Okay. And I guess just a nuance there is that external -- or sorry, third-party servicer you mentioned, it's a little unusual.

I guess goeasy had been -- you had been servicing the loan book yourselves directly. So is this just to provide extra reassurance to the lending partners that they're more directly engaged in the process of the collections and remittance?

No, Jeff, let me be clear on this. This is a backup.

And so we continue to service all of the loans on that side. But in the event sort of that there is an issue that they have the right to switch to a backup service provider from that side.

So we are servicing our loans.

One question. I'll get to the main question, I guess.

Patrick, I think there's some concerns about the culture, this big write-off comes at a point of where the media was reporting predatory practices, aggressive lending. So I guess, Patrick, I'm going to put you a little bit on the spot here.

What is to blame here? Like -- or who is to blame?

Is there a problem with the culture in the company? Some people have pointed to the 3-year guidance that it maybe has driven employees to be more aggressive than necessary.

So how do you feel about the culture of this company? And does it need an adjustment or a change?

Stephen, thank you for the question. Let me just maybe start by saying that obviously, the leadership team here is certainly spending some time reflecting on how we got to this point.

These aren't results that we want to attain. So we've been reflecting quite a bit on that.

And just looking back on the strategy of the organization, there was a strong kind of belief that leaning into growth through our merchant-originated secured business was going to generate a certain set of performance and credit results that would be net beneficial to the organization. And we're now learning that those expectations aren't being met based on the most recent data that we have.

So it is an excellent learning opportunity for the organization and certainly one that we're institutionalizing. And it also just provides us an opportunity to recalibrate our strategy.

So really, what we were sharing through our action plan as well is that focusing our growth on where we've seen the best performance and where we have the strongest track record is the formula for success at this company, and that's why we're leaning so far into easyfinancial and pulling back on LendCare. But we also think there's a lot of good things that we're doing in that easyfinancial business that could be applied to our merchant-originated business as well, and that's what's behind that point in our action plan around delivering a unified operating model because fundamentally, we have this really successful business, and we had one business where the performance expectations are not being met.

So we want to take the great ingredients of that successful business and bring it to the whole organization.

Patrick, I wanted to explore the -- what I'm calling the runoff of the LendCare portfolio. Can you give us a little more details in terms of what you plan on underwriting going forward?

Is it by product, merchant, geography? And then from the originations in the LendCare in the fourth quarter, how much of those originations represent things that are not going to be going moving forward?

And then Felix, one sub-question for you. When you reassess the collectability within LendCare, was -- did any of those write-offs pertain to autos?

Or was that all the pleasure craft vehicles?

Thank you for the questions. Just to make sure I can track the two there.

There's just one around where do we see opportunity in the LendCare business? What sort of business might we be underwriting going forward?

And then the second one was just around the details of that kind of LendCare write-down. I might ask Jason Appel to answer the second one here.

I can start with the first. So we have a broad range of products and merchant types in the LendCare business today.

The two biggest verticals being automotive and powersports. We have seen some performance challenges in both of those verticals.

We are taking the opportunity to fully reassess exactly that question. So we're going to deeply understand where we see stronger performance, maybe less strong performance, whether that be by customer segments or merchant types or kind of product verticals.

And part of the reason we're not sharing the longer-term financial forecast today is just so that we can spend the time to do the rigor to answer exactly that question and come back to you with a more robust response. So I understand that might be a little bit unsatisfying, and just appreciate your patience on that.

Maybe I can ask Jason here to lean in on your second question.

Just on the reassessment of collectibility, that would have extended to a very broad brush that we took across the entire organization, but specifically in the quarter, in Q4, it pertained principally to the auto and powersports businesses of LendCare. So hopefully, that answers your second question.

And if I can just revert with a follow-on. Given the fact that you're still reassessing the LendCare business, can we assume that in -- going forward in the second quarter, there may not be any originations in LendCare as you're going [indiscernible] and that's one of the factors in terms of the decline in the portfolio?

Yes. Maybe just coming back to the prepared remarks off the top.

We have maintained a small presence in certain pockets of the merchant-originated channels there, particularly where we see better performance and where we have long-standing strong merchant relationships that we think there is long-term opportunity here. I would say that there's still more to be evaluated there and there could be more opportunity in other merchants as well.

But we still have a presence that we're maintaining in Q2.

Yes. I guess maybe a bit of a two-parter.

First part would be how much of a deep dive into the loan portfolio did you complete to come to the charge-off guidance for 2026? Did that include the unsecured easyfinancial portfolio?

And then related to that, if I think about the allowance rate at 9.6% compared to that mid-teens guidance. What's the risk?

Like the risk I'm concerned about is that allowance rate continues to rise through 2026. Why would it not rise?

Thank you, Jaeme. Jason, can you take that one?

Yes. Jaeme, just to answer the first part of your question, we did a pretty thorough deep dive across the entire portfolio so that would be both the LendCare channel as well as the easyfinancial channel.

And I think as I mentioned in past quarters, we tend to break out the performance of the loan books in two ways. We look at both the back book, which is all the loans that are effectively out as well as the anticipated performance of the front book, which is the originations we are going to use moving forward.

And both of those were modeled quite extensively using various scenario analysis to arrive at how we expected the charge-offs to run through. And as both Patrick and Felix mentioned on the call, we do expect those charge-offs to progressively move or ease as the quarters move along with an average coming in and around the mid-teens, which suggests that we should be -- we should be below that level by the end of the year.

And as far as the allowance is concerned, I would say that it's just important to remember that, that allowance contains multiple moving parts. Obviously, it looks at the underlying performance of the portfolio and also takes into consideration mostly future-oriented performance.

So you're right, we have indicated that charge-offs will remain elevated in our LendCare business, and that's partly why we saw an increase in the allowance in the quarter. But also keep in mind that as we write off certain portions of the LendCare book, that amount is netted against the allowance, which results in an allowance release.

So you have to look at this as a series of puts and takes. I wouldn't go so far as to say that one would expect the allowance to rise.

I'd say the other factor you have to keep in mind is there are also forward-looking indicators that weigh into the allowance that we have no direct control over. So all three of those component inputs can push the allowance up or down, and you'd be right in that the allowance has been moving up over the last number of quarters.

But with the action plan, as we have outlined and as the charge-offs starting to move down quarter-over-quarter, we would naturally expect that allowance to start to reflect that trend over time as we move forward.

Great. I wanted to have you guys maybe confirm for us the unit economics embedded within your 2026 outlook numbers?

And I'm thinking yield, losses, OpEx, cost of capital, et cetera. And I'm just trying to confirm whether you expect to be profitable based on that outlook and those embedded unit economics?

Thank you, Bart. I appreciate the question.

And yes, as you've noted, the economics of the loans we're originating are very important to our strategy. And so in providing the guidance that we did provide, which -- acknowledging it's relatively limited and directional on a couple of key elements, we expect the year to see net charge-offs starting higher than the average for the year and ending progressively lower throughout the year.

That obviously impacts our yield. So our yield as well starts lower and then will rise over the course of the year.

As you noted, we're pursuing fairly aggressively cost efficiency opportunities. And so we took a very meaningful step in the organization with the reduction in force that was implemented in March and certainly not one -- or not an action we take lightly.

So there's a variety of moving pieces there that are all intended to strengthen and improve the profitability of the company as we move forward. We haven't directly provided -- or we haven't provided more precise guidance than that.

We intend on doing that later on in the year. Once we've seen some of the actions that we've already got underway start to filter their way through the P&L, and we'll have more clarity and specificity for you.

Maybe we could talk about the securitization facility 1. It matures on October 30 of this year.

What's your confidence that you can renew that important lending facility? And when would you actually look to engage in discussions with that?

Would you look to do it before October 30?

Why don't I have Felix take that one.

Thanks, Patrick, and thanks for the question. We have a lot of confidence in renewing that facility.

That's based on the fact that, unfortunately, we had some tough news to share with our banking partners 2, 3 weeks ago, but we were able to quickly come to amendments after 2 weeks of effort. And so I think that, that just speaks to their support of the action plan that we have in place as well as the deepness of the relationship, and we acknowledge that support that we -- and collaboration that we received from our banking partners.

And so for that quick resolution, I think, is a testament to our confidence in being able to renew the facility on that. And so -- and to your point, we would be looking to do that well before the October time frame in terms of discussions.

There's obviously a couple of things that we outlined in terms of being able to access that facility over the next 2, 3 months, which is switching the backup service provider as well as completing this audit. And so we're taking it step by step.

But if you look at the sort of what we've been able to accomplish in a couple of weeks in terms of this amendment, we are very confident on that side.

Okay. That's helpful.

And just with the higher spreads on the amended facilities, what's your sort of expectation for that blended cost of debt going forward relative to what we saw in Q4?

Look, I think that, that will be part of the overall discussion with our bank partners at the time. It's obviously -- one component is pricing, but it's also the borrowing base that is allowed and the collateralization levels and the different triggers.

And so I think if we look at it at a portfolio level, it was up by 100 basis points. But when you take a look at sort of that overall funding mix compared to our total debt, this is 10% to 15% of our overall funding costs and so very manageable in terms of -- from a cost of funds impact.

Yes. So maybe two separate follow-ups.

First, I think I understand this. The -- there's no expectation of repaying or paying down the warehouse facility or the revolver facility.

Those balances outstanding today will remain outstanding for the next couple of quarters. Just want to make sure I'm clear on that.

And then the second is just on the charge-off guidance. If the unsecured portfolio is running at 12% charge-off right now, and the auto, powersports portfolio, if you ex out the sort of onetime $178 million, it's running at about 12%, like why is it jumping to 18% in Q1?

But what else do you see coming down the pipe? Why is it not -- like what did you miss in Q4, what did you not factor in, in Q4 that you need to take into account in Q1 and Q2, I guess?

Thanks, Jaeme. We got two distinct questions there.

So maybe Felix, you can start with the first question, and then maybe I'll pass it back to Jason to talk about the credit risk expectations there.

Yes. In terms of the first one, that is correct, Jaeme, there's no expectation to pay it down.

In fact, because of this amendment and the support from the banks, we are able to access additional funding from that side so you would expect over time for that funding amount to increase from that perspective. And then I'll pass it over to Jason in terms of your second question.

Yes, Jaeme, if you look at the charge-off performance in Q4, you'd be right, the unsecured business of easyfinancial is throwing off about a 12% net charge-off rate. And then the LendCare business, in totality, I think we indicated, threw off a 40% net charge-off rate.

And of that, roughly about 30% out of that 40% number is accounted for by the onetime charge-off of $177.9 million that we took in the quarter. So you'd be right in saying that the delta would be around 11% on that business.

And if we look at how we're guiding the remainder of the year, it's taking into a combination of a couple of factors. One is obviously the reduction in the size of the LendCare portfolio that's taking place principally as a result of two things, the reduction in originations that's been mentioned as well as the continued high expectation of charge-off numbers.

Felix commented on that when he walked you through -- or walked everyone through the delinquency numbers sitting as at Q4, where we still have a pretty appreciable size of loans in the late-stage buckets that we intend or expect a significant portion of that, which will charge off. So I would say that, that 11% number is informed by a combination of both the numerator and denominator.

And as far as whether or not we've missed anything in the quarter, as I said before, we've modeled out both the back book historical performance as well as the level of originations we anticipate going forward. And that gives us a fairly high degree of confidence that, that overall charge-off number will reduce through time, recognizing that, again, movements in the denominator might change that percentage a little bit.

But the important point to note is those charge-off numbers are moving down. They are moving down consistently.

And until such time as we've got that judicious review and comfort as to how the overall LendCare portfolio will perform, we'll continue to be mindful of how much we originate moving forward.

Okay. So I guess it's just a seasoning and timing factor for some of these loans that are currently delinquent and what you expect will become delinquent?

Correct.

Thank you, operator. In closing, we are committed to taking decisive action through a focused six-point plan to deliver strong financial performance, anchored in the strength of our direct-to-consumer business.

Thank you again for joining us.