CURO Group Holdings Corp. (NYSE: CURO) (“CURO” or the
“Company”), a tech-enabled, omni-channel consumer finance company
serving consumers in the U.S. and Canada, today announced financial
results for its first quarter ended March 31, 2023.
Highlights
- Net revenue increased 19.8% sequentially to $146.5 million
- Operating expenses declined 6.2% sequentially to $118.2
million, and $35.5 million and 23.1% year over year
- Gross loans receivables of $2.1 billion were slightly lower by
1.2% sequentially
- Net charge-off rate improved 326 bps sequentially to 11.5%, and
30 bps sequentially to 14.5% excluding the changes in the Direct
Lending brands in Canada charge-off policies
- On May 9, 2023, finalized a $150.0 million term loan and a
C$110.0 million non-recourse revolving warehouse facility
“Our first quarter results highlight the emerging benefits of
our business transformation and differentiated operating model,”
said Doug Clark, Chief Executive Officer of CURO. “Subsequent to
the quarter, we successfully raised over $230 million in gross
capital, a key step to executing our plan to profitability and
demonstrates continued access to capital markets and supportive
lending partners. We also delivered results that were favorable
relative to our guidance expectations, including solid revenue,
well-managed operating expenses and stable credit quality. With a
close eye on the various challenges presented by the macro
environment, we will continue to execute on our business plan,
support our customers and remain focused on generating long-term
sustainable returns for our investors.”
Consolidated Summary Results
For the three months ended March 31, 2023, the Company had total
revenue of $209.5 million compared with total revenue of $217.2
million sequentially, primarily driven by product mix shift. Net
revenue was $146.5 million, an increase of $24.2 million, or 19.8%
sequentially, primarily driven by a lower provision for loan loss
expense related to the decrease in the net charge-off rate.
For the three months ended March 31, 2023, the Company had total
operating expenses of $118.2 million, a decrease of $7.8 million,
or 6.2%, sequentially. The decline reflected lower restructuring
charges and operating expenses, in both cases related to store
closures and headcount reductions in the U.S. and Canada. One-time
restructuring charges recognized in the first quarter of 2023 and
the fourth quarter of 2022 were $10.0 million and $13.1 million,
respectively, representing $3.1 million of the sequential
decrease.
Net loss of $59.5 million ($1.46 per share) for the three months
ended March 31, 2023, compared with Net loss of $186.4 million
($4.60 per share) for the three months ended December 31, 2022. The
$126.9 million improvement in Net loss in the first quarter of 2023
compared to the prior quarter was driven by a $24.2 million
increase in net revenue quarter over quarter due to product mix
shift, the decline in Provision for loan loss, a $7.8 million
decrease in total Operating expenses related to store closures and
restructuring activities completed in the fourth quarter of 2022
and the $145.2 million Goodwill impairment charge in the fourth
quarter of 2022, with no such charge in the first quarter of 2023,
partially offset by a $29.0 million Provision for income taxes to
create a valuation allowance on U.S. deferred tax assets, and a
$4.0 million increase in Interest expense.
Gross loans receivable of $2.1 billion at March 31, 2023 were
slightly lower by 1.2% sequentially, primarily driven by a decrease
of $55.2 million, or 6.9%, in Direct Lending Installment Loans,
partially offset by an increase of $19.8 million, or 2.4%, in
Canada POS Lending.
As of January 1, 2023, the Company adopted Accounting Standards
Update No. 2016-13, Financial Instruments—Credit Losses (Topic
326): Measurement of Credit Losses on Financial Instruments
("CECL"). This adoption resulted in a onetime pre-tax increase to
our Allowance for loan losses of $135.2 million, which was recorded
to opening Accumulated deficit and did not impact the Statement of
Operations.
The Company's Net charge-off rate in the first quarter improved
326 bps, sequentially, to 11.5%, primarily driven by a change in
our Direct Lending brands in Canada charge-off policies during the
quarter, as part of the alignment of charge-off policies across the
Company, as well as improved recoveries as a result of improvements
to our credit collection processes. The Company's 91+ days
delinquency ratio increased by 60 bps, sequentially, to 3.2%
primarily driven by these policy changes.
As of or for the Quarter
Ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Delinquency and Loss Ratios
2023
2022
2022
2022
2022
31-60 days delinquency ratio
1.8
%
1.9
%
2.5
%
2.4
%
2.1
%
61-90 days delinquency ratio
1.5
%
1.3
%
1.5
%
1.8
%
1.9
%
91+ days delinquency ratio
3.2
%
2.6
%
2.6
%
2.0
%
2.2
%
Net charge-offs
11.5
%
14.8
%
13.2
%
24.0
%
23.2
%
Funding and Liquidity
As of March 31, 2023, principal debt balances outstanding of
$2.7 billion, which consisted of 65.5% of fixed rate or hedged
variable rate debt and 34.5% of variable rate debt. We had $54.9
million of Cash and cash equivalents on the Consolidated Balance
Sheet and available for general corporate purposes.
As of March 31, 2023, unrestricted cash and cash equivalents,
together with $109.9 million in unused borrowing capacity and
$140.1 million of unencumbered Gross loans receivable, provided
approximately $303.6 million in available capital resources.
About CURO
CURO Group Holdings Corp. (NYSE: CURO) is a leading consumer
credit lender serving U.S. and Canadian customers for over 25
years. Our roots in the consumer finance market run deep. We’ve
worked diligently to provide customers a variety of convenient,
easily accessible financial services. Our decades of diversified
data power a hard-to-replicate underwriting and scoring engine,
mitigating risk across the full spectrum of credit products. We
operate a number of brands including Cash Money®, LendDirect®,
Flexiti®, Heights Finance, Southern Finance, Covington Credit,
Quick Credit and First Heritage Credit.
Conference Call
CURO will host a conference call to discuss these results at
8:30 a.m. Eastern Time on Wednesday, May 10, 2023. The live webcast
of the call can be accessed at the CURO Investor Relations website
at http://ir.curo.com/.
You may access the call at 1-833-953-2430 (1-412-317-5759 for
international callers). Please ask to join the CURO Group Holdings
call. A replay of the conference call will be available until May
17, 2023, at 5:00 p.m. Eastern Time. An archived version of the
webcast will be available on the CURO Investors website for 90
days. You may access the conference call replay at 1-877-344-7529
(1-412-317-0088 for international callers). The replay access code
is 1314764.
Final Results
The financial results presented and discussed herein are on a
preliminary and unaudited basis; final unaudited data will be
included in the Company’s Quarterly Report on Form 10-Q for the
three months ended March 31, 2023.
Table 1 - Consolidated Statements of
Operations
Three Months Ended,
Mar 31,
Dec 31,
Sept 30,
Jun 30,
Mar 31,
(in thousands, unaudited)
2023
2022
2022
2022
2022
Revenue
Interest and fees revenue
$
179,437
$
181,605
$
180,515
$
278,331
$
264,956
Insurance and other income
30,036
35,593
33,605
26,073
25,240
Total revenue
209,473
217,198
214,120
304,404
290,196
Provision for losses
62,932
94,849
78,399
129,546
97,531
Net revenue
146,541
122,349
135,721
174,858
192,665
Operating Expenses
Salaries and benefits
64,805
66,067
53,413
82,427
79,729
Occupancy
11,672
12,114
12,827
17,507
17,037
Advertising
2,175
3,692
5,244
12,707
10,500
Direct operations
13,092
11,832
11,729
20,293
20,274
Depreciation and amortization
9,021
8,337
9,499
8,672
9,814
Other operating expense
17,433
24,002
23,645
18,787
16,377
Total operating expenses
118,198
126,044
116,357
160,393
153,731
Other expense (income)
Interest expense
58,943
54,978
50,149
42,193
38,341
Loss (income) from equity method
investment
3,413
1,932
2,309
1,328
(1,584
)
Goodwill impairment
—
145,241
—
—
—
Loss on extinguishment of debt
—
689
3,702
—
—
Loss (gain) on change in fair value of
contingent consideration
2,728
—
(11,354
)
4,014
(265
)
Gain on sale of business
2,027
—
(68,443
)
—
—
Total other expense
67,111
202,840
(23,637
)
47,535
36,492
(Loss) income before income taxes
(38,768
)
(206,535
)
43,001
(33,070
)
2,442
Provision (benefit) for income taxes
20,703
(20,142
)
17,348
(6,990
)
1,106
Net (loss) income
$
(59,471
)
$
(186,393
)
$
25,653
$
(26,080
)
$
1,336
Basic (loss) earnings per share
$
(1.46
)
$
(4.60
)
$
0.63
$
(0.65
)
$
0.03
Diluted (loss) earnings per share
$
(1.46
)
$
(4.60
)
$
0.63
$
(0.65
)
$
0.03
Weighted average common shares
outstanding:
Basic
40,783
40,488
40,479
40,376
40,368
Diluted
40,783
40,488
40,835
40,376
41,308
Table 2 - Consolidated Balance
Sheets
As of
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in thousands, unaudited)
2023
2022
2022
2022
2022
ASSETS
Cash and cash equivalents
$
54,935
$
73,932
$
45,683
$
37,394
$
60,209
Restricted cash
123,282
91,745
144,020
97,465
110,118
Gross loans receivable
2,062,829
2,087,833
1,894,427
1,592,815
1,628,568
Less: Allowance for loan losses
(259,959
)
(122,028
)
(102,743
)
(90,286
)
(98,168
)
Loans receivable, net
1,802,870
1,965,805
1,791,684
1,502,529
1,530,400
Income taxes receivable
20,100
21,918
13,469
46,450
28,664
Prepaid expenses and other
47,295
53,057
65,167
25,370
40,112
Property and equipment, net
29,867
31,957
37,402
38,752
54,865
Investment in Katapult
20,502
23,915
25,848
28,157
29,484
Right of use asset - operating leases
54,597
61,197
64,683
64,602
114,305
Deferred tax assets
53,474
49,893
31,986
23,993
20,066
Goodwill
276,487
276,269
424,292
352,990
430,967
Intangibles, net
127,387
123,677
120,345
113,130
113,640
Other assets
10,991
15,828
12,774
8,558
9,535
Assets held for sale (1)
—
—
—
338,779
—
Total Assets
$
2,621,787
$
2,789,193
$
2,777,353
$
2,678,169
$
2,542,365
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued
liabilities
$
85,875
$
73,827
$
66,723
$
81,423
$
84,783
Deferred revenue
33,227
32,259
25,111
23,425
24,265
Lease liability - operating leases
55,468
62,847
66,370
67,339
120,593
Contingent consideration related to
acquisition
18,128
16,884
15,770
30,354
26,687
Income taxes payable
—
—
—
4
—
Accrued interest
20,090
38,460
18,048
34,970
16,481
Liability for losses on CSO lender-owned
consumer loans
—
—
—
—
7,166
Debt
2,627,263
2,607,314
2,449,316
2,189,431
2,090,085
Other long-term liabilities
10,552
11,736
11,563
12,146
13,679
Deferred tax liabilities
—
—
—
12,360
5,839
Liabilities held for sale (1)
—
—
—
111,137
—
Total Liabilities
$
2,850,603
$
2,843,327
$
2,652,901
$
2,562,589
$
2,389,578
Total Stockholders' (Deficit) Equity
(228,816
)
(54,134
)
124,452
115,580
152,787
Total Liabilities and Stockholders'
(Deficit) Equity
$
2,621,787
$
2,789,193
$
2,777,353
$
2,678,169
$
2,542,365
(1) Assets held for sale and Liabilities
held for sale represent the balance, as of June 30, 2022, for
assets and liabilities, respectively, associated with the sale of
the Legacy U.S. Direct Lending Business. The sale of the Legacy
U.S. Direct Lending business closed in July 2022.
Table 3 - Consolidated Portfolio
Performance
(in thousands, except percentages,
unaudited)
Q1 2023
Q4 2022
Q3 2022
Q2 2022(1)
Q1 2022
Gross loans
receivable (5)
Revolving LOC
$
1,314,695
$
1,284,515
$
1,129,387
$
1,128,372
$
1,015,338
Installment loans
748,134
803,318
765,040
652,468
613,230
Total gross loans receivable
$
2,062,829
$
2,087,833
$
1,894,427
$
1,780,840
$
1,628,568
Lending
Revenue
Revolving LOC
$
84,225
$
81,170
$
77,037
$
96,582
$
91,023
Installment loans
95,212
100,435
103,478
181,749
173,933
Total lending revenue
$
179,437
$
181,605
$
180,515
$
278,331
$
264,956
Lending
Provision
Revolving LOC
$
30,106
$
46,745
$
41,787
$
40,435
$
37,447
Installment loans
31,139
46,442
33,510
86,484
57,435
Total lending provision
$
61,245
$
93,187
$
75,297
$
126,919
$
94,882
NCOs (2)
(6)
Revolving LOC
$
17,953
$
35,387
$
30,907
$
33,945
$
34,372
Installment loans (5)
41,078
38,168
31,372
71,056
60,386
Total NCOs
$
59,031
$
73,555
$
62,279
$
105,001
$
94,758
NCO rate
(annualized) (2) (3) (5)
Revolving LOC
5.6
%
11.6
%
10.8
%
12.8
%
14.4
%
Installment loans
21.5
%
19.6
%
17.6
%
44.8
%
38.8
%
Total NCO rate
11.5
%
14.8
%
13.2
%
24.0
%
23.2
%
ACL rate (4)
(5) (6)
Revolving LOC
13.3
%
6.1
%
6.0
%
6.7
%
7.0
%
Installment loans
11.3
%
5.4
%
4.6
%
8.1
%
5.5
%
Total ACL rate
12.6
%
5.8
%
5.4
%
6.7
%
6.0
%
31+ days past-due
rate (4) (5)
Revolving LOC
5.5
%
3.3
%
4.1
%
4.1
%
3.7
%
Installment loans
8.2
%
9.6
%
10.2
%
9.2
%
9.0
%
Total past-due rate
6.5
%
5.8
%
6.6
%
6.1
%
5.8
%
(1) Includes loan balances and activity
classified as Held for Sale.
(2) NCOs presented above include $0.0
million, $0.0 million, $0.5 million, $10.3 million, and $5.0
million for the three months ended March 31, 2023, December 31,
2022, September 30, 2022, June 30, 2022, March 31, 2022,
respectively, related to the purchase accounting fair value
discount, which are excluded from provision.
(3) We calculate NCO rate as total
quarterly NCOs divided by Average gross loans receivable; then we
annualize the rate. The amount and timing of recoveries are
impacted by our collection strategies, which are based on customer
behavior and risk profile and include direct customer
communications and the periodic sale of charged off loans.
(4) We calculate (i) Allowance for credit
losses ("ACL") rate and (ii) 31+ days past-due rate as the
respective totals divided by gross loans receivable at each
respective quarter end.
(5) All balances in connection with the
CSO program were disposed of on July 8, 2022 upon the completion of
the divestiture of the Legacy U.S. Direct Lending business, as such
these balances have been excluded from this amount.
(6) We adopted ASU 2016-13, Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments on January 1, 2023, which requires
us to estimate the lifetime expected credit loss on financial
instruments. Our previous model required the recognition of credit
losses when it was probable that a loss had been incurred.
Table 4 - Direct Lending Segment -
Operating (Loss)/Income
Three Months Ended,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in thousands, unaudited)
2023
2022
2022
2022
2022
Total revenue
$
169,368
$
181,925
$
186,409
$
281,251
$
269,887
Provision for losses
48,364
77,724
65,020
123,584
88,817
Net revenue
121,004
104,201
121,389
157,667
181,070
Total operating expenses
103,151
111,632
102,840
143,965
137,963
Segment operating (loss) income
$
17,853
$
(7,431
)
$
18,549
$
13,702
$
43,107
Table 5 - Direct Lending Segment -
Portfolio Performance
(in thousands, except percentages,
unaudited)
Q1 2023
Q4 2022
Q3 2022
Q2 2022(1)
Q1 2022
Gross loans
receivable (5)
Revolving LOC
$
461,443
$
451,077
$
439,117
$
501,209
$
473,562
Installment loans
748,133
803,318
765,041
652,467
613,231
Total gross loans receivable
$
1,209,576
$
1,254,395
$
1,204,158
$
1,153,676
$
1,086,793
Lending
Revenue
Revolving LOC
$
49,092
$
49,915
$
52,461
$
75,736
$
72,368
Installment loans
95,212
100,435
103,478
181,747
173,934
Total lending revenue
$
144,304
$
150,350
$
155,939
$
257,483
$
246,302
Lending
Provision
Revolving LOC
$
15,539
$
29,620
$
28,408
$
34,472
$
28,734
Installment loans
31,139
46,442
33,511
86,485
57,435
Total lending provision
$
46,678
$
76,062
$
61,919
$
120,957
$
86,169
NCOs (2)
(5)
Revolving LOC
$
6,234
$
26,715
$
24,793
$
30,408
$
31,645
Installment loans
41,078
38,168
29,783
43,661
38,894
Total NCOs
$
47,312
$
64,883
$
54,576
$
74,069
$
70,539
NCO rate
(annualized) (2) (3) (5)
Revolving LOC
5.5
%
23.8
%
20.9
%
25.0
%
27.6
%
Installment loans
21.5
%
19.3
%
16.7
%
27.7
%
25.3
%
Total NCO rate
15.6
%
20.9
%
18.4
%
26.5
%
26.3
%
ACL rate (4)
(5) (6)
Revolving LOC
25.6
%
8.4
%
7.9
%
9.3
%
9.2
%
Installment loans
11.3
%
5.4
%
4.6
%
6.9
%
4.4
%
Total ACL rate
16.8
%
6.5
%
5.8
%
7.9
%
6.5
%
31+ days past-due
rate (4) (5)
Revolving LOC
8.4
%
4.1
%
5.1
%
5.8
%
5.8
%
Installment loans
8.2
%
9.6
%
10.2
%
9.7
%
9.3
%
Total past-due rate
8.3
%
7.6
%
8.3
%
8.0
%
7.8
%
(1) Includes loan balances and activity
classified as Held for Sale.
(2) NCOs presented above include $0.0
million, $0.0 million, $0.5 million, $10.3 million and $5.0 million
for the three months ended March 31, 2023, December 31, 2022,
September 30, 2022, June 30, 2022 and March 31, 2022, respectively,
related to the purchase accounting fair value discount, which are
excluded from provision.
(3) We calculate NCO rate as total
quarterly NCOs divided by Average gross loans receivable, then we
annualize the rate. The amount and timing of recoveries are
impacted by our collection strategies, which are based on customer
behavior and risk profile and include direct customer
communications and the periodic sale of charged off loans.
(4) We calculate (i) ACL rate and (ii) 31+
days past-due rate as the respective totals divided by gross loans
receivable at each respective quarter end.
(5) All balances in connection with the
CSO program were disposed of on July 8, 2022 upon the completion of
the divestiture of the Legacy U.S. Direct Lending Business, as such
these balances have been excluded from this amount.
(6) We adopted ASU 2016-13, Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments on January 1, 2023, which requires
us to estimate the lifetime expected credit loss on financial
instruments. Our previous model required the recognition of credit
losses when it was probable that a loss had been incurred.
Table 6 - Canada POS Lending Segment -
Operating Income/(Loss)
Three Months Ended,
Mar 31,
Dec 31,
Sept 30,
Jun 30,
Mar 31,
(in thousands, unaudited)
2023
2022
2022
2022
2022
Total revenue
$
40,105
$
35,273
$
27,710
$
23,154
$
20,309
Provision for losses
14,568
17,125
13,378
5,963
8,714
Net revenue
25,537
18,148
14,332
17,191
11,595
Total operating expenses
15,047
14,412
13,519
16,427
15,768
Segment operating income (loss)
$
10,490
$
3,736
$
813
$
764
$
(4,173
)
Table 7 - Canada POS Lending Segment -
Portfolio Performance
(in thousands, except percentages,
unaudited)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Revolving
LOC
Gross loans receivable
$
853,253
$
833,438
$
690,270
$
627,163
$
541,776
Lending revenue
$
35,133
$
31,255
$
24,575
$
20,846
$
18,655
Lending provision
$
14,568
$
17,125
$
13,379
$
5,963
$
8,714
NCOs
$
11,719
$
8,672
$
6,114
$
3,537
$
2,727
NCO rate (annualized) (1)
5.6
%
4.4
%
3.6
%
2.4
%
2.0
%
ACL rate (2) (3)
6.7
%
4.9
%
4.8
%
4.5
%
5.1
%
31+ days past-due rate (2)
3.9
%
2.9
%
3.6
%
2.8
%
1.8
%
(1) We calculate NCO rate as total
quarterly NCOs divided by Average gross loans receivable then we
annualized the rate. The amount and timing of recoveries are
impacted by our collection strategies, which are based on customer
behavior and risk profile and include direct customer
communications and the periodic sale of charged off loans.
(2) We calculate (i) ACL rate and (ii) 31+
days past-due rate as the respective totals divided by gross loans
receivable at each respective quarter end.
(3) We adopted ASU 2016-13, Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments on January 1, 2023, which requires
us to estimate the lifetime expected credit loss on financial
instruments. Our previous model required the recognition of credit
losses when it was probable that a loss had been incurred.
Forward-Looking Statements
This press release contains forward-looking statements. These
forward-looking statements include projections, estimates and
assumptions about various matters, such as future financial and
operational performance, including our belief in the benefits of
our business transformation and differentiated operating model, our
ability to execute on our plan to profitability and demonstrate
continued access to capital markets and our ability to execute on
our business plan, support our customers and remain focused on
generating long-term sustainable returns for our investors. In
addition, words such as “guidance,” “estimate,” “anticipate,”
“believe,” “forecast,” “step,” “plan,” “predict,” “focused,”
“project,” “is likely,” “expect,” "anticipate," “intend,” “should,”
“will,” “confident,” variations of such words and similar
expressions are intended to identify forward-looking statements.
Our ability to achieve these forward-looking statements is based on
certain assumptions, judgments and other factors, both within and
outside of our control, that could cause actual results to differ
materially from those in the forward-looking statements, including:
risks relating to the uncertainty of projected financial and
operational information and forecasts, including errors in our
internal forecasts; our ability to manage growth; our dependence on
third-party lenders to provide the cash we need to fund our loans
and our ability to affordably access third-party financing; our
level of indebtedness; the effects of competition on our business;
our ability to attract and retain customers; global economic,
market, financial, political or health conditions or events;
actions of regulators and the impact of those actions on our
business; our ability to successfully integrate acquired
businesses; our ability to protect our proprietary technology and
analytics and keep up with that of our competitors; disruption of
our information technology systems that adversely affect our
business operations; ineffective pricing of the credit risk of our
prospective or existing customers; inaccurate information supplied
by customers or third parties that could lead to errors in judging
customers’ qualifications to receive loans; improper disclosure of
customer personal data; failure of third parties who provide
products, services or support to us; disruption to our
relationships with banks and other third-party electronic payment
solutions providers as well as other factors discussed in our
filings with the Securities and Exchange Commission. These
projections, estimates and assumptions may prove to be inaccurate
in the future. These forward-looking statements are not guarantees
of future performance and involve known and unknown risks and
uncertainties that are difficult to predict with regard to timing,
extent, likelihood and degree of occurrence. There may be
additional risks that we presently do not know or that we currently
believe are immaterial that could also cause actual results to
differ from those contained in the forward-looking statements.
Given these risks and uncertainties, investors should not place
undue reliance on forward-looking statements as a prediction of
actual future results. We undertake no obligation to update, amend
or clarify any forward-looking statement for any reason.
(CURO-NWS)
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Investor Relations: Phone: 844-200-0342 Email: IR@curo.com
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