Gross Loans Receivables Increased 115% year-over-year to $1.9 billion
Completed Divestiture of Legacy U.S. Business and Acquisition of First Heritage Credit
Completed $650 million of Non-recourse Warehouse Funding for U.S. Direct Lending
Upsized and Extended Flexiti Warehouse Funding
WICHITA, Kan.–(BUSINESS WIRE)–CURO Group Holdings Corp. (NYSE: CURO) (“CURO” or the “Company”), a tech-enabled, omni-channel consumer finance company serving a full spectrum of non-prime and prime consumers in the U.S. and Canada, today announced financial results for its third quarter ended 30 Settembre 2022.
“With our strategic transformations completed, we are very pleased to end the third quarter with close to $1.9 billion of gross loans receivable across our three lines of business. These loans, which are more than double the same period last year, are longer duration, better credit quality and more resilient than our legacy portfolios,” said Don Gayhardt, CURO’s Chief Executive Officer. “Excluding the loans associated with our purchase of First Heritage and the sale of our legacy business, we grew our gross loans receivables by 10% sequentially in constant currency.”
“Macroeconomic headwinds have continued to pressure our results on three fonts — benchmark interest rate increases, Canadian to U.S. dollar weakening and credit trends normalizing to pre-pandemic levels. We have begun taking actions — primarily to reduce ongoing operating expenses — that we expect will yield meaningful results beginning in the fourth quarter of 2022 and throughout 2023 to counterbalance these macroeconomic factors.”
|
Summarized Financial Information |
|||||||||||||||
|
(in thousands, unaudited) |
|
|
|
|
|
||||||||||
|
Revenue |
Q3 2022 |
Q3 2021 |
|
|
Change $ |
Change % |
|||||||||
|
Legacy U.S. Direct Lending (Divested) (1) |
$ |
10,581 |
|
$ |
126,990 |
|
|
|
$ |
(116,409 |
) |
(92 |
)% |
||
|
US Direct Lending |
|
96,849 |
|
|
4,684 |
|
|
|
|
92,165 |
|
1968 |
% |
||
|
Canada Direct Lending |
|
78,979 |
|
|
66,190 |
|
|
|
|
12,789 |
|
19 |
% |
||
|
Canada POS |
|
27,711 |
|
|
11,416 |
|
|
|
|
16,295 |
|
143 |
% |
||
|
Total Revenue |
$ |
214,120 |
|
$ |
209,280 |
|
|
|
$ |
4,840 |
|
2 |
% |
||
|
|
|
|
|
|
|
|
|||||||||
|
Loans Receivable |
Q3 2022 |
Q2 2022 |
Q3 2021 |
|
Change $ |
Change % |
|||||||||
|
Legacy U.S. Direct Lending (Divested) (1) |
$ |
— |
|
$ |
201,364 |
|
$ |
217,053 |
|
|
$ |
(201,364 |
) |
(100 |
)% |
|
US Direct Lending |
|
739,100 |
|
|
527,998 |
|
|
11,539 |
|
|
|
211,102 |
|
40 |
% |
|
Canada Direct Lending |
|
465,057 |
|
|
467,555 |
|
|
390,824 |
|
|
|
(2,498 |
) |
(1 |
)% |
|
Canada POS |
|
690,270 |
|
|
627,163 |
|
|
302,349 |
|
|
|
63,107 |
|
10 |
% |
|
Total Loans Receivable |
$ |
1,894,427 |
|
$ |
1,824,080 |
|
$ |
921,765 |
|
|
$ |
70,347 |
|
4 |
% |
|
|
|
|
|
|
|
|
|||||||||
|
NCO Rates |
Q3 2022 |
Q2 2022 |
Q3 2021 |
|
|
|
|||||||||
|
Legacy U.S. Direct Lending (Divested) (1) |
|
3.5 |
% |
|
23.8 |
% |
|
19.8 |
% |
|
|
|
|||
|
US Direct Lending |
|
3.9 |
% |
|
5.0 |
% |
|
** |
|
|
|
|
|||
|
Canada Direct Lending |
|
5.9 |
% |
|
5.0 |
% |
|
3.3 |
% |
|
|
|
|||
|
Canada POS |
|
0.9 |
% |
|
0.6 |
% |
|
0.7 |
% |
|
|
|
|||
|
Consolidated NCO Rates |
|
3.3 |
% |
|
6.0 |
% |
|
7.3 |
% |
|
|
|
|||
|
|
|
|
|
|
|
|
|||||||||
|
(1) Loans receivable and NCO rates for Legacy U.S. Direct Lending (Divested) represents gross combined loans receivable for the Legacy U.S. Direct Lending business. Gross combined loans receivable is a non-GAAP metric which represents gross loans receivable plus loans originated by third-party lenders which are Guaranteed by the Company. Legacy U.S. Direct Lending (Divested) revenue represents revenue related to gross combined loans receivable. |
|||||||||||||||
|
** Not meaningful |
|||||||||||||||
Consolidated Summary Results
We reported Net income of $25.7 million ($0.63 earnings per share) and Adjusted net loss of $11.9 million ($0.29 adjusted loss per share) on total revenue of $214.1 million for the three months ended 30 Settembre 2022, compared with Net loss of $42.0 million ($1.02 per share) and Adjusted net income of $6.4 million ($0.15 adjusted diluted earnings per share) on total revenue of $209.3 million for the three months ended 30 Settembre 2021.
On 8 Luglio 2022, the Company completed the sale of our Legacy U.S. Direct Lending business to Community Choice Financial for $345.0 million, resulting in a gain on sale of business of $68.4 million recorded in the third quarter of 2022. On 13 Luglio 2022, we completed the acquisition of First Heritage Credit, LLC (“First Heritage”), a consumer lender that provides near-prime installment loans along with customary opt-in insurance and other financial products, for $140.0 million in cash. On 27 Dicembre 2021, we closed the acquisition of Heights Finance, a consumer finance company that provides Installment loans and offers customary opt-in insurance and other financial products or a total purchase price of $360.0 million ($335.0 million in cash plus $25.0 million in stock). The completion of these transactions completed our strategic transition into longer term, higher balance and lower rate credit products.
The improvement in Net income in the third quarter of 2022 compared to the same period in 2021 was primarily driven by (i) the $68.4 million Gain on sale of business recorded in the third quarter resulting from the completion of the divestiture of our Legacy U.S. Direct Lending business in July 2022, (ii) a $11.4 million adjustment to the fair value of contingent consideration recorded in connection with our acquisition of Flexiti, and (iii) in the third quarter of 2021, a $40.2 million loss on the extinguishment and refinancing of our former senior notes (“8.25% Senior Secured Notes”), partially offset by a year-over-year $24.3 million increase in interest expense in the third quarter of 2022. The increase in interest expense in the third quarter of 2022 compared to the same period in 2021 was driven by (i) an increase in benchmark rates on variable rate debt, (ii) Senior Notes issued to fund in part our Heights Finance acquisition, and (iii) increased non-recourse asset-backed lending (ABL) borrowing to support organic loan growth and acquired portfolios.
Below are additional highlights of our performance this year:
-
Revenue and Net Revenue
- Revenue increased $4.8 million, or 2.3%, year over year, primarily driven by revenue growth in Canada POS Lending and Canada Direct Lending of 142.7% and 19.3%, respectively, and revenue related to the Heights Finance and First Heritage acquisitions. U.S. revenue declined 18.4% primarily as a result of the July 2022 divestiture of our Legacy U.S. Direct Lending business. The strategic mix shift from the divested Legacy U.S. Direct Lending business’ high-cost, short-term lending to the longer-duration, lower risk consumer finance acquisitions, also affected the relationship between loan growth and revenue growth.
- Sequentially, revenue decreased $90.3 million, or 29.7%, driven by the July 2022 divestiture of our Legacy U.S. Direct Lending business.
- For the three months ended 30 Settembre 2022, net revenue decreased $2.8 million, or 2.1%, year over year, and $39.1 million, or 22.4%, sequentially primarily driven by lower revenue attributable to our strategic change in product mix and the additional provision for loan losses driven by loan growth.
-
Loans Receivable
- Year-over-year growth in Gross loans receivable of $1,012.1 million, or 114.7%, was primarily driven by an increase of $549.9 million due to the acquisitions of Heights Finance and First Heritage offset by the sale of the Legacy U.S. Direct Lending business, as well as increases of $387.9 million for Canada POS Lending and $74.2 million for Canada Direct Lending.
- Sequential loan growth in Gross loans receivable of $113.6 million, or 6.4% was primarily due to growth in Canada POS Lending of $63.1 million, or 10.1%, and growth in U.S. Lending of $53.0 million, or 7.7%, primarily due to the acquisition of First Heritage offset by the sale of the Legacy U.S. Direct Lending business.
-
NCOs and Delinquency Metrics
- Consolidated quarterly NCO rates improved by 396 bps, and consolidated 31+ past due rates decreased 332 bps year over year, respectively, primarily attributable to mix shift from (i) the relative growth of Canada POS Lending, (ii) the acquisition of Heights Finance and First Heritage, and (iii) the sale of the Legacy U.S. Direct Lending business, all of which shifts our loan portfolio mix to lower loss-rate products.
- Sequentially, consolidated quarterly NCO rates improved by 266 bps, and consolidated 31+ past-due rates decreased by 592 bps, respectively, largely driven by loan growth in (i) U.S. Direct Lending and Canada POS Lending, which have lower NCO rates, in addition to the sale of Legacy U.S. Direct Lending business, which was a higher expected loss-rate product.
-
Other Highlights
- on 13 Luglio 2022, concurrently with the closing of the First Heritage acquisition, we entered into a new $225.0 million non-recourse revolving warehouse facility to replace First Heritage’s incumbent lender’s facility and to finance future loans originated by First Heritage.
- On 15 Luglio 2022, we entered into a new $425.0 million non-recourse revolving warehouse facility to replace the incumbent lender’s facility and finance future loans originated by Heights Finance.
- On 29 Settembre 2022, we amended the existing Flexiti credit facility to increase the borrowing capacity from C$500 million to C$535 million and extended its maturity to 29 Settembre 2025.
Results of Consolidated Operations
Beginning 1 Gennaio 2022, we began reporting “Interest and fees revenue,” “Insurance premiums and commissions” and “Other revenue” in place of our previously reported “Revenue” on our Statements of Operations. Prior period presentations have been revised to conform to the current period presentation.
|
Table 1 – Consolidated Statements of Operations |
||||||||||||||||||||||||
|
(in thousands, unaudited) |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||||||||||||
|
|
|
2022 |
|
|
2021 |
|
Change $ |
Change % |
|
|
2022 |
|
|
2021 |
|
Change $ |
Change % |
|||||||
|
Revenue |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Interest and fees revenue |
|
$ |
180,515 |
|
$ |
190,629 |
|
$ |
(10,114 |
) |
(5.3 |
) % |
|
|
723,802 |
|
|
539,155 |
|
|
184,647 |
|
34.2 |
% |
|
Insurance premiums and commissions |
|
|
24,746 |
|
|
12,599 |
|
|
12,147 |
|
96.4 |
% |
|
|
61,659 |
|
|
36,021 |
|
|
25,638 |
|
71.2 |
% |
|
Other revenue |
|
|
8,859 |
|
|
6,052 |
|
|
2,807 |
|
46.4 |
% |
|
|
23,259 |
|
|
18,348 |
|
|
4,911 |
|
26.8 |
% |
|
Total revenue |
|
|
214,120 |
|
|
209,280 |
|
|
4,840 |
|
2.3 |
% |
|
|
808,720 |
|
|
593,524 |
|
|
215,196 |
|
36.3 |
% |
|
Provision for losses |
|
|
78,399 |
|
|
70,718 |
|
|
7,681 |
|
10.9 |
% |
|
|
305,476 |
|
|
152,028 |
|
|
153,448 |
|
# |
|
|
Net revenue |
|
|
135,721 |
|
|
138,562 |
|
|
(2,841 |
) |
(2.1 |
) % |
|
|
503,244 |
|
|
441,496 |
|
|
61,748 |
|
14.0 |
% |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Salaries and benefits |
|
|
53,413 |
|
|
62,110 |
|
|
(8,697 |
) |
(14.0 |
) % |
|
|
215,569 |
|
|
175,347 |
|
|
40,222 |
|
22.9 |
% |
|
Occupancy |
|
|
12,827 |
|
|
13,732 |
|
|
(905 |
) |
(6.6 |
) % |
|
|
47,371 |
|
|
41,862 |
|
|
5,509 |
|
13.2 |
% |
|
Advertising |
|
|
5,244 |
|
|
9,697 |
|
|
(4,453 |
) |
(45.9 |
) % |
|
|
28,451 |
|
|
24,824 |
|
|
3,627 |
|
14.6 |
% |
|
Direct operations |
|
|
11,729 |
|
|
14,883 |
|
|
(3,154 |
) |
(21.2 |
) % |
|
|
52,296 |
|
|
40,552 |
|
|
11,744 |
|
29.0 |
% |
|
Depreciation and amortization |
|
|
9,499 |
|
|
7,285 |
|
|
2,214 |
|
30.4 |
% |
|
|
27,985 |
|
|
19,685 |
|
|
8,300 |
|
42.2 |
% |
|
Other operating expense |
|
|
23,646 |
|
|
14,851 |
|
|
8,795 |
|
59.2 |
% |
|
|
58,809 |
|
|
45,020 |
|
|
13,789 |
|
30.6 |
% |
|
Total operating expenses |
|
|
116,358 |
|
|
122,558 |
|
|
(6,200 |
) |
(5.1 |
) % |
|
|
430,481 |
|
|
347,290 |
|
|
83,191 |
|
24.0 |
% |
|
Other expense (income) |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Interest expense |
|
|
50,149 |
|
|
25,805 |
|
|
24,344 |
|
94.3 |
% |
|
|
130,683 |
|
|
68,784 |
|
|
61,899 |
|
90.0 |
% |
|
Loss (income) from equity method investment |
|
|
2,309 |
|
|
1,582 |
|
|
727 |
|
46.0 |
% |
|
|
2,053 |
|
|
(676 |
) |
|
2,729 |
|
# |
|
|
Gain from equity method investment |
|
|
— |
|
|
— |
|
|
— |
|
# |
|
|
|
— |
|
|
(135,387 |
) |
|
135,387 |
|
# |
|
|
Loss on extinguishment of debt |
|
|
3,702 |
|
|
40,206 |
|
|
(36,504 |
) |
(90.8 |
) % |
|
|
3,702 |
|
|
40,206 |
|
|
(36,504 |
) |
(90.8 |
) % |
|
(Gain) loss on change in fair value of contingent consideration |
|
|
(11,355 |
) |
|
3,825 |
|
|
(15,180 |
) |
# |
|
|
|
(7,605 |
) |
|
3,825 |
|
|
(11,430 |
) |
# |
|
|
Gain on sale of business |
|
|
(68,443 |
) |
|
— |
|
|
(68,443 |
) |
# |
|
|
|
(68,443 |
) |
|
— |
|
|
(68,443 |
) |
# |
|
|
Total other (income) expense |
|
|
(23,638 |
) |
|
71,418 |
|
|
(95,056 |
) |
# |
|
|
|
60,390 |
|
|
(23,248 |
) |
|
83,638 |
|
# |
|
|
Income (loss) before income taxes |
|
|
43,001 |
|
|
(55,414 |
) |
|
98,415 |
|
# |
|
|
|
12,373 |
|
|
117,454 |
|
|
(105,081 |
) |
(89.5 |
) % |
|
Provision (benefit) for income taxes |
|
|
17,348 |
|
|
(13,375 |
) |
|
30,723 |
|
# |
|
|
|
11,464 |
|
|
29,241 |
|
|
(17,777 |
) |
(60.8 |
) % |
|
Net income (loss) |
|
$ |
25,653 |
|
$ |
(42,039 |
) |
$ |
67,692 |
|
# |
|
|
$ |
909 |
|
$ |
88,213 |
|
$ |
(87,304 |
) |
(99.0 |
) % |
|
# – Variance greater than 100% or not meaningful |
||||||||||||||||||||||||
|
Table 2 – Consolidated Balance Sheets (in thousands) |
|||||||
|
|
30 Settembre 2022 |
|
31 Dicembre 2021 |
||||
|
ASSETS |
|||||||
|
Cash and cash equivalents |
$ |
45,683 |
|
|
$ |
63,179 |
|
|
Restricted cash |
|
144,020 |
|
|
|
98,896 |
|
|
Gross loans receivable |
|
1,894,427 |
|
|
|
1,548,318 |
|
|
Less: Allowance for loan losses |
|
(102,743 |
) |
|
|
(87,560 |
) |
|
Loans receivable, net |
|
1,791,684 |
|
|
|
1,460,758 |
|
|
Income taxes receivable |
|
13,469 |
|
|
|
31,774 |
|
|
Prepaid expenses and other |
|
65,167 |
|
|
|
42,038 |
|
|
Property and equipment, net |
|
37,402 |
|
|
|
54,635 |
|
|
Investment in Katapult |
|
25,848 |
|
|
|
27,900 |
|
|
Right of use asset – operating leases |
|
64,683 |
|
|
|
116,300 |
|
|
Deferred tax assets |
|
31,986 |
|
|
|
15,639 |
|
|
Goodwill |
|
424,292 |
|
|
|
429,792 |
|
|
Intangibles, net |
|
120,345 |
|
|
|
109,930 |
|
|
Other assets |
|
12,774 |
|
|
|
9,755 |
|
|
Total Assets |
$ |
2,777,353 |
|
|
$ |
2,460,596 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||
|
Liabilities |
|
|
|
||||
|
Accounts payable and accrued liabilities |
$ |
66,723 |
|
|
$ |
121,434 |
|
|
Deferred revenue |
|
25,111 |
|
|
|
21,649 |
|
|
Lease liability – operating leases |
|
66,370 |
|
|
|
122,431 |
|
|
Contingent consideration related to acquisition |
|
15,770 |
|
|
|
26,508 |
|
|
Income taxes payable |
|
— |
|
|
|
680 |
|
|
Accrued interest |
|
18,048 |
|
|
|
34,974 |
|
|
Liability for losses on CSO lender-owned consumer loans |
|
— |
|
|
|
6,908 |
|
|
Debt |
|
2,449,316 |
|
|
|
1,945,793 |
|
|
Other long-term liabilities |
|
11,563 |
|
|
|
13,845 |
|
|
Deferred tax liabilities |
|
— |
|
|
|
6,044 |
|
|
Total Liabilities |
$ |
2,652,901 |
|
|
$ |
2,300,266 |
|
|
Total Stockholders’ Equity |
|
124,452 |
|
|
|
160,330 |
|
|
Total Liabilities and Stockholders’ Equity |
$ |
2,777,353 |
|
|
$ |
2,460,596 |
|
|
Table 3 – Consolidated Revenue by Product and Segment |
||||||||||||||||||||||
|
The following table summarizes revenue by product related to our business lines. |
||||||||||||||||||||||
|
|
|
Three Months Ended |
||||||||||||||||||||
|
|
|
30 Settembre 2022 |
|
30 Settembre 2021 |
||||||||||||||||||
|
(in thousands, unaudited) |
|
U.S. |
Canada Direct Lending |
Canada POS Lending |
Total |
% of Total |
|
U.S. |
Canada Direct Lending |
Canada POS Lending |
Total |
% of Total |
||||||||||
|
Revolving LOC |
|
$ |
2,210 |
$ |
50,251 |
$ |
24,575 |
$ |
77,036 |
36.0 |
% |
|
$ |
27,377 |
$ |
40,239 |
$ |
10,646 |
$ |
78,262 |
37.4 |
% |
|
Installment |
|
|
90,834 |
|
12,645 |
|
— |
|
103,479 |
48.3 |
% |
|
|
101,036 |
|
11,331 |
|
— |
|
112,367 |
53.7 |
% |
|
Total interest and fees |
|
|
93,044 |
|
62,896 |
|
24,575 |
|
180,515 |
84.3 |
% |
|
|
128,413 |
|
51,570 |
|
10,646 |
|
190,629 |
91.1 |
% |
|
Insurance premiums and commissions |
|
|
9,986 |
|
14,045 |
|
715 |
|
24,746 |
11.6 |
% |
|
|
— |
|
12,506 |
|
93 |
|
12,599 |
6.0 |
% |
|
Other revenue |
|
|
4,400 |
|
2,038 |
|
2,421 |
|
8,859 |
4.1 |
% |
|
|
3,261 |
|
2,114 |
|
677 |
|
6,052 |
2.9 |
% |
|
Total revenue |
|
$ |
107,430 |
$ |
78,979 |
$ |
27,711 |
$ |
214,120 |
100.0 |
% |
|
$ |
131,674 |
$ |
66,190 |
$ |
11,416 |
$ |
209,280 |
100.0 |
% |
|
|
|
Nine Months Ended |
||||||||||||||||||||
|
|
|
30 Settembre 2022 |
|
30 Settembre 2021 |
||||||||||||||||||
|
(in thousands, unaudited) |
|
U.S. |
Canada Direct Lending |
Canada POS Lending |
Total |
% of Total |
|
U.S. |
Canada Direct Lending |
Canada POS Lending |
Total |
% of Total |
||||||||||
|
Revolving LOC |
|
$ |
57,269 |
$ |
143,296 |
$ |
64,077 |
$ |
264,642 |
32.7 |
% |
|
$ |
78,391 |
$ |
112,057 |
$ |
18,585 |
$ |
209,033 |
35.2 |
% |
|
Installment |
|
|
423,537 |
|
35,623 |
|
— |
|
459,160 |
56.8 |
% |
|
|
297,803 |
|
32,319 |
|
— |
|
330,122 |
55.6 |
% |
|
Total interest and fees |
|
|
480,806 |
|
178,919 |
|
64,077 |
|
723,802 |
89.5 |
% |
|
|
376,194 |
|
144,376 |
|
18,585 |
|
539,155 |
90.8 |
% |
|
Insurance premiums and commissions |
|
|
19,310 |
|
40,988 |
|
1,361 |
|
61,659 |
7.6 |
% |
|
|
— |
|
35,753 |
|
268 |
|
36,021 |
6.1 |
% |
|
Other revenue |
|
|
11,424 |
|
6,100 |
|
5,735 |
|
23,259 |
2.9 |
% |
|
|
10,766 |
|
6,381 |
|
1,201 |
|
18,348 |
3.1 |
% |
|
Total revenue |
|
$ |
511,540 |
$ |
226,007 |
$ |
71,173 |
$ |
808,720 |
100.0 |
% |
|
$ |
386,960 |
$ |
186,510 |
$ |
20,054 |
$ |
593,524 |
100.0 |
% |
|
Table 4 – Consolidated Loans Receivable |
|||||||||||||||
|
The following table presents our gross loans receivables. With the sale of the Legacy U.S. Direct Lending business, we no longer guarantee loans originated by third-party lenders through CSO programs. |
|||||||||||||||
|
|
|
|
|
As of |
|||||||||||
|
(in thousands, unaudited) |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|||||
|
U.S. |
|
|
|
|
|
|
|
|
|
|
|||||
|
Revolving LOC |
|
$ |
— |
|
$ |
58,471 |
|
$ |
49,077 |
|
$ |
52,532 |
|
$ |
51,196 |
|
Installment – Company Owned |
|
|
739,100 |
|
|
627,651 |
|
|
589,652 |
|
|
609,413 |
|
|
137,987 |
|
Canada Direct Lending |
|
|
|
|
|
|
|
|
|
|
|||||
|
Revolving LOC |
|
|
439,117 |
|
|
442,738 |
|
|
424,485 |
|
|
402,405 |
|
|
366,509 |
|
Installment |
|
|
25,940 |
|
|
24,817 |
|
|
23,578 |
|
|
24,792 |
|
|
24,315 |
|
Canada POS Lending |
|
|
|
|
|
|
|
|
|
|
|||||
|
Revolving LOC |
|
|
690,270 |
|
|
627,163 |
|
|
541,776 |
|
|
459,176 |
|
|
302,349 |
|
Company Owned gross loans receivable |
|
$ |
1,894,427 |
|
$ |
1,780,840 |
|
$ |
1,628,568 |
|
$ |
1,548,318 |
|
$ |
882,356 |
|
Gross loans receivable Guaranteed by the Company |
|
|
— |
|
|
51,323 |
|
|
44,420 |
|
|
46,317 |
|
|
43,422 |
|
Gross combined loans receivable (1) |
|
$ |
1,894,427 |
|
$ |
1,832,163 |
|
$ |
1,672,988 |
|
$ |
1,594,635 |
|
$ |
925,778 |
|
(1) See “Non-GAAP Financial Measures” at the end of this release for definition and more information. |
|||||||||||||||
Segment Analysis
The following tables provide a summary of segment operating (loss) income and portfolio performance for the segment and period indicated.
|
Table 5 – Summary of Segment Operating (Loss) Income |
|||||||||||||||||||
|
|
Three Months Ended 30 Settembre 2022 |
|
Three Months Ended 30 Settembre 2021 |
||||||||||||||||
|
(dollars in thousands, unaudited) |
U.S. |
Canada Direct Lending |
Canada POS Lending |
|
U.S. |
Canada Direct Lending |
Canada POS Lending |
||||||||||||
|
Total revenue |
$ |
107,430 |
|
$ |
78,979 |
|
$ |
27,711 |
|
|
$ |
131,674 |
|
$ |
66,190 |
|
$ |
11,416 |
|
|
Provision for losses |
|
32,073 |
|
|
32,947 |
|
|
13,379 |
|
|
|
48,430 |
|
|
14,003 |
|
|
8,285 |
|
|
Net revenue |
|
75,357 |
|
|
46,032 |
|
|
14,332 |
|
|
|
83,244 |
|
|
52,187 |
|
|
3,131 |
|
|
Total operating expenses |
|
76,067 |
|
|
26,773 |
|
|
13,518 |
|
|
|
84,074 |
|
|
26,003 |
|
|
12,481 |
|
|
Non-recourse interest expense |
|
11,226 |
|
|
7,237 |
|
|
11,700 |
|
|
|
2,598 |
|
|
2,529 |
|
|
3,880 |
|
|
Recourse interest expense |
|
19,739 |
|
|
(47 |
) |
|
294 |
|
|
|
16,883 |
|
|
(89 |
) |
|
4 |
|
|
Segment operating (loss) income |
$ |
(31,675 |
) |
$ |
12,069 |
|
$ |
(11,180 |
) |
|
$ |
(20,311 |
) |
$ |
23,744 |
|
$ |
(13,234 |
) |
|
|
Nine Months Ended 30 Settembre 2022 |
|
Nine Months Ended 30 Settembre 2021 |
||||||||||||||||
|
(dollars in thousands, unaudited) |
U.S. |
Canada Direct Lending |
Canada POS Lending |
|
U.S. |
Canada Direct Lending |
Canada POS Lending |
||||||||||||
|
Total revenue |
$ |
511,540 |
|
$ |
226,007 |
|
$ |
71,173 |
|
|
$ |
386,960 |
|
$ |
186,510 |
|
$ |
20,054 |
|
|
Provision for losses |
|
196,461 |
|
|
80,960 |
|
|
28,055 |
|
|
|
108,108 |
|
|
31,793 |
|
|
12,127 |
|
|
Net revenue |
|
315,079 |
|
|
145,047 |
|
|
43,118 |
|
|
|
278,852 |
|
|
154,717 |
|
|
7,927 |
|
|
Total operating expenses |
|
302,641 |
|
|
82,126 |
|
|
45,714 |
|
|
|
245,623 |
|
|
76,090 |
|
|
25,577 |
|
|
Non-recourse interest expense |
|
26,635 |
|
|
17,442 |
|
|
25,998 |
|
|
|
6,728 |
|
|
7,562 |
|
|
8,302 |
|
|
Recourse interest expense |
|
59,838 |
|
|
(75 |
) |
|
845 |
|
|
|
46,449 |
|
|
(269 |
) |
|
12 |
|
|
Segment operating (loss) income |
$ |
(74,035 |
) |
$ |
45,554 |
|
$ |
(29,439 |
) |
|
$ |
(19,948 |
) |
$ |
71,334 |
|
$ |
(25,964 |
) |
|
Table 6 – Summary of Adjusted Segment Operating (Loss) Income |
|||||||||||||||||||
|
|
Three Months Ended 30 Settembre 2022 |
|
Three Months Ended 30 Settembre 2021 |
||||||||||||||||
|
(dollars in thousands, unaudited) |
U.S. |
Canada Direct Lending |
Canada POS Lending |
|
U.S. |
Canada Direct Lending |
Canada POS Lending |
||||||||||||
|
Total revenue |
$ |
107,430 |
|
$ |
78,979 |
|
$ |
27,711 |
|
|
$ |
131,674 |
|
$ |
66,190 |
|
$ |
11,416 |
|
|
Provision for losses |
|
32,073 |
|
|
32,947 |
|
|
13,379 |
|
|
|
48,430 |
|
|
14,003 |
|
|
8,285 |
|
|
Net revenue |
|
75,357 |
|
|
46,032 |
|
|
14,332 |
|
|
|
83,244 |
|
|
52,187 |
|
|
3,131 |
|
|
Adjusted operating expense (1) |
|
66,796 |
|
|
26,621 |
|
|
13,528 |
|
|
|
74,109 |
|
|
25,909 |
|
|
8,206 |
|
|
Non-recourse interest expense |
|
11,226 |
|
|
7,237 |
|
|
11,700 |
|
|
|
2,598 |
|
|
2,529 |
|
|
3,880 |
|
|
Recourse interest expense |
|
19,739 |
|
|
(47 |
) |
|
294 |
|
|
|
16,883 |
|
|
(89 |
) |
|
4 |
|
|
Adjusted segment operating (loss) income (1) |
$ |
(22,404 |
) |
$ |
12,221 |
|
$ |
(11,190 |
) |
|
$ |
(10,346 |
) |
$ |
23,838 |
|
$ |
(8,959 |
) |
|
(1) See “Non-GAAP Financial Measures” at the end of this release for definition and more information. |
|||||||||||||||||||
|
|
Nine Months Ended 30 Settembre 2022 |
|
Nine Months Ended 30 Settembre 2021 |
|||||||||||||||
|
(dollars in thousands, unaudited) |
U.S. |
Canada Direct Lending |
Canada POS Lending |
|
U.S. |
Canada Direct Lending |
Canada POS Lending |
|||||||||||
|
Total revenue |
$ |
511,540 |
|
$ |
226,007 |
|
$ |
71,173 |
|
|
$ |
386,960 |
$ |
186,510 |
|
$ |
20,054 |
|
|
Provision for losses |
|
196,461 |
|
|
80,960 |
|
|
28,055 |
|
|
|
108,108 |
|
31,793 |
|
|
12,127 |
|
|
Net revenue |
|
315,079 |
|
|
145,047 |
|
|
43,118 |
|
|
|
278,852 |
|
154,717 |
|
|
7,927 |
|
|
Adjusted operating expense (1) |
|
280,629 |
|
|
81,707 |
|
|
43,959 |
|
|
|
217,809 |
|
75,848 |
|
|
15,824 |
|
|
Non-recourse interest expense |
|
26,635 |
|
|
17,442 |
|
|
25,998 |
|
|
|
6,728 |
|
7,562 |
|
|
8,302 |
|
|
Recourse interest expense |
|
59,838 |
|
|
(75 |
) |
|
845 |
|
|
|
46,449 |
|
(269 |
) |
|
12 |
|
|
Adjusted segment operating (loss) income (1) |
$ |
(52,023 |
) |
$ |
45,972 |
|
$ |
(27,684 |
) |
|
$ |
7,866 |
$ |
71,576 |
|
$ |
(16,211 |
) |
|
(1) See “Non-GAAP Financial Measures” at the end of this release for definition and more information. |
||||||||||||||||||
|
Table 7 – U.S. Portfolio Performance |
|||||||||||||||||
|
(in thousands, except percentages) |
|
Q3 2022 |
Q2 2022(6) |
Q1 2022 |
|
Q4 2021(1) |
Q3 2021 |
||||||||||
|
Gross combined loans receivable (2) |
|
|
|
|
|
|
|
||||||||||
|
Revolving LOC |
|
$ |
— |
|
$ |
58,471 |
|
$ |
49,077 |
|
|
$ |
52,532 |
|
$ |
51,196 |
|
|
Installment loans – Company Owned |
|
|
739,100 |
|
|
627,651 |
|
|
589,652 |
|
|
|
137,782 |
|
|
137,987 |
|
|
Total U.S. Company Owned gross loans receivable |
|
|
739,100 |
|
|
686,122 |
|
|
638,729 |
|
|
|
190,314 |
|
|
189,183 |
|
|
Installment loans – Guaranteed by the Company (3) |
|
|
— |
|
|
51,323 |
|
|
44,420 |
|
|
|
46,317 |
|
|
43,422 |
|
|
Total U.S. gross combined loans receivable (2) |
|
$ |
739,100 |
|
$ |
737,445 |
|
$ |
683,149 |
|
|
$ |
236,631 |
|
$ |
232,605 |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Lending Revenue: |
|
|
|
|
|
|
|
||||||||||
|
Revolving LOC |
|
$ |
2,210 |
|
$ |
28,145 |
|
$ |
26,913 |
|
|
$ |
27,911 |
|
$ |
27,377 |
|
|
Installment loans – Company Owned |
|
|
86,936 |
|
|
121,595 |
|
|
113,833 |
|
|
|
56,820 |
|
|
57,659 |
|
|
Installment loans – Guaranteed by the Company (3) |
|
|
3,898 |
|
|
48,283 |
|
|
48,991 |
|
|
|
47,348 |
|
|
43,377 |
|
|
Total U.S. lending revenue |
|
$ |
93,044 |
|
$ |
198,023 |
|
$ |
189,737 |
|
|
$ |
132,079 |
|
$ |
128,413 |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Lending Provision: |
|
|
|
|
|
|
|
||||||||||
|
Revolving LOC |
|
$ |
— |
|
$ |
11,831 |
|
$ |
9,577 |
|
|
$ |
11,592 |
|
$ |
8,140 |
|
|
Installment loans – Company Owned |
|
|
29,045 |
|
|
54,868 |
|
|
32,962 |
|
|
|
18,618 |
|
|
16,792 |
|
|
Installment loans – Guaranteed by the Company (3) |
|
|
— |
|
|
28,313 |
|
|
21,749 |
|
|
|
25,967 |
|
|
23,146 |
|
|
Total U.S. lending provision |
|
$ |
29,045 |
|
$ |
95,012 |
|
$ |
64,288 |
|
|
$ |
56,177 |
|
$ |
48,078 |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
NCOs (7) |
|
|
|
|
|
|
|
||||||||||
|
Revolving LOC |
|
$ |
1,140 |
|
$ |
10,248 |
|
$ |
10,055 |
|
|
$ |
11,481 |
|
$ |
8,329 |
|
|
Installment loans – Company Owned |
|
|
25,722 |
|
|
40,757 |
|
|
36,247 |
|
|
|
19,664 |
|
|
19,548 |
|
|
Installment loans – Guaranteed by the Company (3) |
|
|
1,589 |
|
|
27,395 |
|
|
21,492 |
|
|
|
26,065 |
|
|
21,404 |
|
|
Total U.S. NCOs |
|
$ |
28,452 |
|
$ |
78,400 |
|
$ |
67,794 |
|
|
$ |
57,210 |
|
$ |
49,281 |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
NCO rate (4) (7) |
|
|
|
|
|
|
|
||||||||||
|
Revolving LOC |
|
|
3.9 |
% |
|
19.1 |
% |
|
19.8 |
% |
|
|
22.1 |
% |
|
16.9 |
% |
|
Installment loans – Company Owned |
|
|
3.8 |
% |
|
6.7 |
% |
|
6.0 |
% |
|
|
14.3 |
% |
|
14.1 |
% |
|
Total U.S. Company Owned NCO rate |
|
|
3.8 |
% |
|
7.7 |
% |
|
7.1 |
% |
|
|
16.4 |
% |
|
14.8 |
% |
|
Installment loans – Guaranteed by the Company (3) |
|
|
6.2 |
% |
|
57.2 |
% |
|
47.4 |
% |
|
|
58.1 |
% |
|
53.2 |
% |
|
Total U.S. NCO rate |
|
|
3.9 |
% |
|
11.0 |
% |
|
14.7 |
% |
|
|
24.4 |
% |
|
21.6 |
% |
|
|
|
|
|
|
|
|
|
||||||||||
|
ALL and CSO Liability for Losses rate (5) |
|
|
|
|
|
|
|
||||||||||
|
Revolving LOC |
|
|
— |
% |
|
25.1 |
% |
|
26.7 |
% |
|
|
25.9 |
% |
|
26.3 |
% |
|
Installment loans – Company Owned |
|
|
4.4 |
% |
|
6.8 |
% |
|
4.2 |
% |
|
|
12.7 |
% |
|
13.4 |
% |
|
Total U.S. Company Owned ALL rate |
|
|
4.4 |
% |
|
8.4 |
% |
|
5.9 |
% |
|
|
16.3 |
% |
|
16.9 |
% |
|
Installment loans – Guaranteed by the Company (3) |
|
|
— |
% |
|
15.7 |
% |
|
16.1 |
% |
|
|
14.9 |
% |
|
16.1 |
% |
|
Total ALL and CSO Liability for Losses rate |
|
|
4.4 |
% |
|
8.9 |
% |
|
6.6 |
% |
|
|
16.0 |
% |
|
16.8 |
% |
|
|
|
|
|
|
|
|
|
||||||||||
|
31+ days past-due rate (5) |
|
|
|
|
|
|
|
||||||||||
|
Revolving LOC |
|
|
— |
% |
|
17.4 |
% |
|
19.1 |
% |
|
|
19.2 |
% |
|
18.3 |
% |
|
Installment loans – Company Owned |
|
|
10.5 |
% |
|
10.0 |
% |
|
9.6 |
% |
|
|
9.4 |
% |
|
11.9 |
% |
|
Total U.S. Company Owned past-due rate(8) |
|
|
10.5 |
% |
|
10.7 |
% |
|
10.4 |
% |
|
|
10.1 |
% |
|
13.6 |
% |
|
|
|
|
|
|
|
|
|
||||||||||
|
Installment loans – Guaranteed by the Company (3) |
|
|
— |
% |
|
2.6 |
% |
|
4.5 |
% |
|
|
3.1 |
% |
|
3.8 |
% |
|
|
|
|
|
|
|
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(1) On 27 Dicembre 2021, we acquired Heights Finance, which accounted for approximately $472 million of U.S. Installment loans as of 31 Dicembre 2021. As the period between 27 Dicembre 2021 and 31 Dicembre 2021 did not result in material loan performance, we have excluded Heights Finance from the table for the fourth quarter of 2021. |
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(2) Non-GAAP measure. For a description of each non-GAAP metric, see “Non-GAAP Financial Measures.” |
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(3) Includes loans originated by third-party lenders through CSO programs. Installment gross loans receivable Guaranteed by the Company are not included in the Consolidated Financial Statements. All balances in connection with the CSO programs were disposed of on 8 Luglio 2022 upon the completion of the divestiture of the Legacy U.S. Direct Lending business. |
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(4) We calculate NCO rate as total NCOs divided by Average gross loans receivable. 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. |
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(5) We calculate (i) Allowance for loan losses (ALL) and CSO Liability for losses rate and (ii) past-due rate as the respective totals divided by gross loans receivable at each respective quarter end. |
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(6) Includes loan balances and activity classified as Held for Sale. |
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(7) For the first, second and third quarters of 2022, NCOs presented above include $5.0 million, $10.3 million and $0.5 million, respectively, of NCO’s related to the purchase accounting fair value discount, which are excluded from provision. |
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(8) The total past-due rate for U.S. Lending including loans 1-30 days past-due were 20.0%, 21.2%, 17.7%, 18.3% and 22.3% for the three months ended 30 Settembre 2022, 30 Giugno 2022, 31 Marzo 2022, 31 Dicembre 2021 and 30 Settembre 2021, respectively. |
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Contacts
Investor Relations:
Roger Dean
Executive Vice President and Chief Financial Officer
Phone: 844-200-0342
Email: IR@curo.com
