-Gross loans receivables increased 2%
sequentially to $1.25 billion-
-Total revenue of $167.9 million-
-Net charge-off improvement of 110 bps to
17.7%-
CURO Group Holdings Corp. (NYSE: CURO) (“CURO” or the
“Company”), an omni-channel consumer finance company serving
consumers in the U.S. and Canada, today announced financial results
for its third quarter ended September 30, 2023.
“The third quarter marked another significant milestone with the
sale of the Flexiti business which allows us to focus on being an
industry leader in Direct Lending in the U.S. and Canada,” said
Doug Clark, Chief Executive Officer at CURO. “We completed our
conversion to a single loan management system across our U.S.
footprint and continue to invest in our technology infrastructure
which we believe will accelerate our path to profitability. We
continue to execute on our plan outlined at the beginning of the
year, which resulted in meeting our expectations for the third
consecutive quarter. Our disciplined underwriting, prudent
originations and enhanced servicing have resulted in improved
credit quality metrics while at the same time allowing us to grow
our loan portfolio. We diligently monitor challenges presented by
the macro environment and will remain vigilant on executing our
long-term strategy which has exciting opportunities in both the U.S
and Canada.”
Third Quarter 2023 Consolidated Summary Results
Current and prior period financial information is presented on a
continuing operations basis, which excludes the results and
positions of the Canada POS Lending segment due to the sale of the
Flexiti business effective on August 31, 2023.
- Gross loans receivable increased $26.8 million, or 2%,
sequentially, to $1.25 billion.
- Gross loans receivable in the U.S. increased by 5%, driven by
growth in the Company's larger dollar, longer term products.
- Gross loans receivable in Canada decreased by 1%, due to
fluctuations in foreign currency. On a constant currency basis,
gross loans receivable in Canada increased by 2%.
- Net charge-off rate improved 110 bps sequentially, to 17.7%,
and 70 bps year-over-year.
- The improvement was primarily driven by increased credit
quality as a result of credit tightening and servicing
optimization, as well as the Company's continued product mix shift
toward better credit quality, larger balance and longer duration
loans.
- 31+ Days past due delinquencies as of September 30, 2023
remained stable vs prior quarter.
- Revenue for the quarter of $167.9 million increased slightly vs
the prior quarter.
- Provision for credit losses for the quarter was $49.0 million,
a decrease of $14.7 million, or 23%, compared to the prior quarter.
- The reduction in provision for credit losses was driven by a
reduction in allowance for credit losses of $10.6 million primarily
due to improving late-stage roll rates and estimated future
macroeconomic impacts on credit losses, partially offset by
portfolio growth during the quarter and lower net charge-offs.
- Total operating expenses for the quarter were $94.2 million, an
increase of $2.9 million, or 3%, sequentially, and the operating
expense to receivables ratio was 30.4% for the quarter, a slight
increase from prior quarter.
- The increase includes non-recurring charges of $6.5 million
recognized during the third quarter of 2023.
- Interest expense for the quarter was $55.8 million, an increase
of $5.3 million, or 10.6%, compared to the prior quarter.
- The increase was primarily related to higher interest rates as
well as an increased level of average debt due to the May 2023
capital raise.
As of or for the Quarter
Ended
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Delinquency and Loss Ratios
2023
2023
2023
2022
2022
31-60 days delinquency ratio
2.4
%
2.5
%
2.1
%
2.4
%
2.8
%
61-90 days delinquency ratio
1.7
%
1.7
%
1.8
%
1.8
%
2.0
%
91+ days delinquency ratio
4.4
%
4.1
%
4.4
%
3.4
%
3.5
%
Net charge-offs
17.7
%
18.8
%
15.6
%
20.9
%
18.4
%
Funding and Liquidity
As of September 30, 2023, principal debt balances outstanding
were $2.0 billion, consisting of 57% of fixed rate debt and 43% of
variable rate debt.
As of September 30, 2023, available capital resources were
approximately $285.3 million, comprised of $82.6 million in
unrestricted Cash and cash equivalents, $127.9 million in unused
borrowing capacity for growth and $74.8 million of unencumbered
Gross loans receivable.
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 under a number of brands including Cash Money®,
LendDirect®, 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 Thursday, November 2, 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 1-416-764-8624 (Toll free:
1-888-259-6580). Please ask to join the CURO Group Holdings call.
An archived version of the webcast will be available on the CURO
Investors website for 90 days.
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 and nine months ended September 30, 2023.
Table 1 - Consolidated Statements of Operations
(in thousands, except per share data,
unaudited)
Three Months Ended,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Sep 30,
2023
2023
2023
2022
2022
Revenue
Interest and fees revenue
$
143,493
$
141,766
$
144,304
$
150,350
$
155,940
Insurance and other income
24,370
25,250
25,064
31,575
30,469
Total revenue
167,863
167,016
169,368
181,925
186,409
Provision for losses
49,009
63,755
48,364
77,724
65,020
Net revenue
118,854
103,261
121,004
104,201
121,389
Operating Expenses
—
Salaries and benefits
52,148
53,144
56,619
60,149
49,179
Occupancy
10,454
10,885
11,344
11,785
12,419
Advertising
2,819
1,967
1,999
3,383
4,676
Direct operations
12,176
12,032
9,745
7,921
8,288
Depreciation and amortization
5,390
5,339
5,390
5,329
5,683
Other operating expense
11,207
7,918
18,054
23,065
22,595
Total operating expenses
94,194
91,285
103,151
111,632
102,840
Other expense (income)
Interest expense
55,798
50,460
44,045
41,180
38,155
Loss from equity method investment
1,453
2,134
3,413
1,932
2,309
Goodwill impairment
—
—
—
107,827
—
Extinguishment or modification of debt
costs
—
8,864
—
24
3,702
Gain on sale of business
—
—
2,027
—
(68,443
)
Miscellaneous expenses
—
1,435
—
—
—
Total other expense (income)
57,251
62,893
49,485
150,963
(24,277
)
(Loss) income from continuing operations
before income taxes
(32,591
)
(50,917
)
(31,632
)
(158,394
)
42,826
Provision for income taxes from continuing
operations
1,021
3,147
23,277
(15,970
)
21,709
Net (loss) income from continuing
operations
$
(33,612
)
$
(54,064
)
$
(54,909
)
$
(142,424
)
$
21,117
Net (loss) income from discontinued
operations
(70,830
)
(5,263
)
(4,562
)
(43,969
)
4,536
Net (loss) income
$
(104,442
)
$
(59,327
)
$
(59,471
)
$
(186,393
)
$
25,653
Basic (loss) earnings per share:
Continuing operations
$
(0.81
)
$
(1.32
)
$
(1.35
)
$
(3.52
)
$
0.52
Discontinued operations
$
(1.72
)
$
(0.13
)
$
(0.11
)
$
(1.09
)
$
0.11
Diluted (loss) earnings per share:
Continuing operations
$
(0.81
)
$
(1.32
)
$
(1.35
)
$
(3.52
)
$
0.52
Discontinued operations
$
(1.72
)
$
(0.13
)
$
(0.11
)
$
(1.09
)
$
0.11
Weighted average common shares
outstanding:
Basic
41,267
41,002
40,783
40,428
40,479
Diluted
41,267
41,002
40,783
40,428
40,835
Table 2 - Consolidated Balance Sheets
As of
(in thousands, unaudited)
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Sep 30,
2023
2023
2023
2022
2022
ASSETS
Cash and cash equivalents
$
82,550
$
101,033
$
40,449
$
50,856
$
40,068
Restricted cash
53,818
76,375
90,211
59,645
66,962
Gross loans receivable
1,254,401
1,227,615
1,209,576
1,254,395
1,204,157
Less: Allowance for loan losses
(199,739
)
(210,292
)
(202,757
)
(81,185
)
(69,535
)
Loans receivable, net
1,054,662
1,017,323
1,006,819
1,173,210
1,134,622
Income taxes receivable
58,064
20,854
22,737
23,984
13,561
Prepaid expenses and other
61,441
42,131
45,592
51,081
62,685
Property and equipment, net
23,903
25,826
27,244
29,232
34,715
Investment in Katapult
16,915
18,368
20,502
23,915
25,848
Right of use asset - operating leases
51,413
53,042
51,615
58,177
61,642
Deferred tax assets
14,194
15,304
13,623
18,138
4,817
Goodwill
276,269
277,069
276,487
276,269
387,298
Intangibles, net
74,336
74,007
71,798
70,913
69,989
Other assets
9,387
6,673
6,785
8,370
8,207
Assets, discontinued operations
—
1,016,832
947,925
945,403
866,939
Total Assets
$
1,776,952
$
2,744,837
$
2,621,787
$
2,789,193
$
2,777,353
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued
liabilities
$
62,992
$
54,169
$
60,890
$
45,595
$
46,666
Deferred revenue
2,358
3,370
3,493
3,467
3,256
Lease liability - operating leases
51,579
53,182
52,061
59,396
62,893
Income taxes payable
2,537
(1,242
)
—
—
—
Accrued interest
20,953
39,306
20,090
38,460
18,048
Debt
2,024,934
1,988,173
1,888,407
1,882,608
1,804,946
Other long-term liabilities
9,620
10,017
10,045
11,736
11,563
Liabilities, discontinued operations
—
866,235
815,617
802,065
705,529
Total Liabilities
$
2,174,973
$
3,013,210
$
2,850,603
$
2,843,327
$
2,652,901
Total Stockholders' (Deficit) Equity
(398,021
)
(268,373
)
(228,816
)
(54,134
)
124,452
Total Liabilities and Stockholders'
(Deficit) Equity
$
1,776,952
$
2,744,837
$
2,621,787
$
2,789,193
$
2,777,353
Table 3 - Consolidated Portfolio Performance
(in thousands, except percentages,
unaudited)
Q3 2023
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Gross loans
receivable
Revolving LOC
$
469,041
$
472,902
$
461,443
$
451,077
$
439,117
Installment loans
785,360
754,713
748,133
803,318
765,041
Total gross loans receivable
$
1,254,401
$
1,227,615
$
1,209,576
$
1,254,395
$
1,204,158
Lending
Revenue
Revolving LOC
$
51,039
$
49,483
$
49,092
$
49,915
$
52,461
Installment loans
92,454
92,283
95,212
100,435
103,478
Total lending revenue
$
143,493
$
141,766
$
144,304
$
150,350
$
155,939
Lending
Provision
Revolving LOC
$
19,031
$
27,089
$
15,539
$
29,620
$
28,408
Installment loans
28,464
35,171
31,139
46,442
33,511
Total lending provision
$
47,495
$
62,260
$
46,678
$
76,062
$
61,919
NCOs
Revolving LOC
$
22,023
$
21,780
$
6,234
$
26,715
$
24,793
Installment loans
33,342
35,483
41,078
38,168
29,783
Total NCOs
$
55,365
$
57,263
$
47,312
$
64,883
$
54,576
NCO rate
(annualized) (1)
Revolving LOC
18.6
%
18.7
%
5.5
%
23.8
%
20.9
%
Installment loans
17.2
%
18.9
%
21.5
%
19.3
%
16.7
%
Total NCO rate
17.7
%
18.8
%
15.6
%
20.9
%
18.4
%
ACL rate (2)
(3)
Revolving LOC
25.4
%
26.6
%
25.6
%
8.4
%
7.9
%
Installment loans
10.3
%
11.2
%
11.3
%
5.4
%
4.6
%
Total ACL rate
15.9
%
17.1
%
16.8
%
6.5
%
5.8
%
31+ days past-due
rate (2)
Revolving LOC
8.6
%
8.5
%
8.4
%
4.1
%
5.1
%
Installment loans
8.5
%
8.1
%
8.2
%
9.6
%
10.2
%
Total past-due rate
8.5
%
8.3
%
8.3
%
7.6
%
8.3
%
(1)
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.
(2)
We calculate (i) ACL rate and (ii) 31+
days past-due rate as the respective totals divided by gross loans
receivable at each 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 drivers of
accelerating our path to profitability and executing on our
long-term strategy. 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: Email: IR@curo.com
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