ECN Capital is a leading corporate services provider to North America-based banks, credit unions, life insurance companies, pension funds, and mutual funds. In addition, it offers advisory and administration services for first-class loan portfolios.

ECN has a portfolio of business service providers that operate on a fee-based asset-light model. The company operates in three market-leading businesses – Service Finance (44% of sales over the last nine months), Triad Financial Services (26%) and The Kessler Group (30%).

Each of ECN’s operating partners has grown and improved their operating margins since their investment. The company’s core portfolio offerings include co-branded credit cards and related financial products, manufactured home loans, and mortgage loans.

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Plant data

Sales growth & market presence

ECN Capital serves more than 100 financial institutions, from some of the largest US banks and credit unions to community banks and local institutions. It offers unsecured and secured consumer credit and credit card portfolios. The company has managed and advised loan portfolios valued at $ 33 billion.

ECN Capital offers portfolio solutions for secured and unsecured consumer loans and consumer credit cards. It has an expanded product menu with new product launches. Over the years, ECN has built long-term regulatory relationships with financial regulators, as well as strong relationships with banks, credit unions, insurance companies, mutual funds, etc.

It will not be easy for newcomers to replicate these significant barriers to entry. In addition, providing management and advisory services to banks and financial institutions requires highly specialized expertise, industry knowledge, and regulatory compliance. ECN serves more than 50% of the top 25 US banks.

ECN’s businesses are leaders in the areas in which they operate. KG is a leading manager, consultant and structuring partner for credit card issuers, banks, credit unions and payment networks. Service Finance creates and manages short-term unsecured consumer loans for more than 25 partners, while Triad Financial Services is the oldest prefabricated home finance company in the United States, with a network of more than 3,000 prefabricated home dealers. The company is also growing through value-adding tuck-in acquisitions.

ECN’s SFC has seen sustained market share gains and above average dealer growth, which has seen dealer base growth of ~ 23% + CAGR since investment. It ended the last quarter with a backlog of ~ $ 311 million in April 2021. ECN estimates that service revenue will represent 46-50% of total revenue in 2021.

Triad continues to add and diversify financing partners. Due to strong core growth and new programs, its origins are expected to grow by around 50% in 2021. KG currently has approximately $ 27 billion in managed credit card portfolios and related assets. The results from discontinued operations from legacy inventories were eliminated in the first quarter of 2021.


ECN is a dividend aristocrat. It has an annual return of 1.2% and a high payout ratio. The company last increased its dividend 11% in 2019 and increased CAGR by more than 35% over the past three years. The company is also active on NCIB and has repurchased both preferred and common stocks last quarter. ECN has strong credit quality and a solid track record of providing management and advisory services.

The company continues to focus on growing origination and asset management as well as expanding its partner relationships. An asset-light, fee-controlled business model offers revenue transparency and supports a low capital requirement.

There is a growing demand for prefabricated homes as they typically cost ~ 40% less than comparable on-site built homes or apartments. These also have a longer lifespan with an expected useful life of 55 years. ECN’s Kessler Group has shifted its focus to longer-term, recurring revenue from partnership and marketing services, which are typically 3 to 10 year contracts with a high probability of renewal.

The majority of customers are large, government-regulated financial institutions with investment grade ratings. ECN’s service financing offers merchants and homeowners a one-stop-shop. The home improvement market has also proven resilient due to economic conditions and the Home Improvement Research Institute now expects to spend ~ $ 254 billion in additional home improvement spending through 2024.

For full year 2021, ECN expects adjusted operating income before taxes of $ 143 million to $ 161 million and adjusted net income of $ 121 million to $ 133 million. The company has reiterated its Adj EPS forecast for 2021 of $ 0.46-0.51, representing ~ 50% growth. in the middle. It has great identifiable market opportunities consisting of a growing customer base and credit card assets at stake, as well as a large home builder loan market.

ECN Capital historical return
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ECN Capital competes with Goeasy, a leading leasing and credit company in Canada. The company offers both non-prime leasing and credit services.

ECN’s capital-intensive businesses, scalable platforms and three decades of experience in specialty finance are significant competitive advantages. It is difficult to replicate ECN’s business model.

Bottom line

ECN Capital is known for generating attractive portfolio returns with embedded risk diversification. The company enjoys investment grade ratings and ample liquidity across all of its businesses.

ECN is driving business growth through organic and new programs, expanding relationships with banks and credit unions to more than one solution. The stores are expected to benefit from attractive new programs such as Big Box Traders and All-In-One, the roll-out of a turnkey BaaS program, and a strong pipeline.

ECN Capital historical PE
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