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 fourth quarter ended December 31, 2022.
Highlights
- Gross Loans Receivables increased 34.8% year-over-year to $2.1 billion
- Goodwill impairment of $107.8 million in U.S. Direct Lending and $37.4 million in Canada POS Lending
“2022 was a historical year for CURO as we completed our transformation into a full spectrum consumer lender focused on longer-term, lower credit risk products,” said Doug Clark, Chief Executive Officer. “While the macroeconomic headwinds associated with rising interest rates and inflationary and recessionary pressures on the consumer have delayed our ability to recognize all of the benefits of our transformation, we strongly believe in the strength and foundation of our businesses and ability to provide long-term value and returns to our investors.”
Consolidated Summary Results
We reported Net loss of $186.4 million ($4.60 loss per share) on total revenue of $217.2 million for the three months ended December 31, 2022, compared with Net loss of $28.9 million ($0.72 loss per share) on total revenue of $224.3 million for the three months ended December 31, 2021.
The $157.5 million increase in Net loss in the fourth quarter of 2022 compared to the same period in 2021 was primarily driven by a $174.9 million increase in other expense, offset by a favorable increase in benefit from income taxes of $12.1 million. The increase in other expense was primarily the result of a $107.8 million goodwill impairment charge recorded on the U.S. Direct Lending reporting unit during the quarter, a $37.4 million goodwill impairment charge recorded on the Canada POS Lending reporting unit, a $26.4 million increase in interest expense, $13.1 million of restructuring charges related to targeted U.S. and Canadian store closures and other cost saving initiatives and a $4.9 million net change in losses recognized on our equity method investment. The goodwill impairment charge on the U.S. Direct Lending Reporting unit was driven by rising interest rates, macroeconomic conditions and performance of recent acquisitions to date. The increase in interest expense in the fourth quarter of 2022 compared to the same period in 2021 was driven by (i) increased non-recourse asset-backed lending (ABL) borrowing to support organic loan growth and acquired portfolios, (ii) Senior Notes issued to fund in part our Q4 2021 Heights Finance acquisition, and (iii) an increase in benchmark rates on variable rate debt.
Net revenue decreased $8.3 million, or 6.4%, year over year for the three months ended December 31, 2022, primarily driven by lower interest and fees revenue attributable to our strategic change in product mix and the additional provision for loan losses driven by loan growth.
Year-over-year growth in Gross loans receivable of $539.5 million, or 34.8%, was primarily driven by an increase of $374.3 million or 81.5% in Canada POS lending as Flexiti continues to increase originations, and $111.4 million or 16.8%, due to the acquisitions of Heights Finance in Q4 2021 and First Heritage in Q3 2022 and an increase of $53.8 million, or 12.6%, for Canada Direct Lending due to organic loan growth, which was partially offset by the sale of the Legacy U.S. Direct Lending business in Q3 2022.
|
As of or Quarter-to-Date |
||||||||||||||
|
Dec 31, |
|
Sep 30, |
|
Jun 30, |
|
Mar 31, |
|
Dec 31, |
||||||
Delinquency and Loss Ratios |
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2021 |
||||||
31-60 days delinquency ratio |
2.1 |
% |
2.5 |
% |
2.4 |
% |
2.1 |
% |
2.4 |
% |
|||||
61-90 days delinquency ratio |
1.2 |
% |
1.5 |
% |
1.8 |
% |
1.9 |
% |
2.0 |
% |
|||||
91+ days delinquency ratio |
2.5 |
% |
2.6 |
% |
2.0 |
% |
2.2 |
% |
2.0 |
% |
|||||
Net charge-offs |
14.8 |
% |
13.2 |
% |
24.0 |
% |
23.2 |
% |
24.4 |
% |
|||||
Operating expense for the fourth quarter of 2022 was $126.0 million, a decrease of $13.6 million, or 9.7%, from $139.6 million in the prior year quarter primarily related to the divestiture of our Legacy U.S. Direct Lending business partially offset by the acquisitions of Heights Finance and First Heritage.
Funding and Liquidity
As of December 31, 2022, we had principal debt balances outstanding of $2.6 billion, which consisted of approximately 65.5% of fixed rate or hedged variable rate debt and 34.5% of variable rate debt. We had $73.9 million of cash and cash equivalents on the Consolidated Balance Sheet and available for general corporate purposes.
Unrestricted cash and cash equivalents, together with $125.6 million in unused borrowing capacity and $123.6 million of unencumbered Gross loans receivable, provides approximately $323.1 million in available capital resources.
About CURO
CURO Group Holdings Corp. (NYSE: CURO) is a full-spectrum 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 alternative 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®, Opt+®, Revolve Finance®, Heights Finance, Southern Finance, Covington Credit, Quick Credit, First Phase 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, February 23, 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 March 2, 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 3665641.
Final Results
The financial results presented and discussed herein are on a preliminary and unaudited basis; final audited data will be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Table 1 - Consolidated Statements of Operations |
|||||||||||||||||||||||||||||
(in thousands, unaudited) |
|
Three Months Ended, |
|
|
Twelve Months Ended, |
||||||||||||||||||||||||
|
Dec 31, |
|
Sep 30, |
|
Jun 30, |
|
Mar 31, |
|
Dec 31, |
|
|
Dec 31, |
|
Dec 31, |
|||||||||||||||
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2021 |
|
|
2022 |
|
2021 |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Interest and fees revenue |
|
$ |
181,605 |
|
$ |
180,515 |
|
$ |
278,331 |
|
$ |
264,956 |
|
$ |
204,581 |
|
|
|
|
905,407 |
|
|
743,735 |
|
|||||
Insurance premiums and commissions |
|
|
26,831 |
|
|
24,746 |
|
|
18,653 |
|
|
18,260 |
|
|
13,389 |
|
|
|
|
88,490 |
|
|
49,411 |
|
|||||
Other revenue |
|
|
8,762 |
|
|
8,859 |
|
|
7,420 |
|
|
6,980 |
|
|
6,349 |
|
|
|
|
32,021 |
|
|
24,697 |
|
|||||
Total revenue |
|
|
217,198 |
|
|
214,120 |
|
|
304,404 |
|
|
290,196 |
|
|
224,319 |
|
|
|
|
1,025,918 |
|
|
817,843 |
|
|||||
Provision for losses |
|
|
94,849 |
|
|
78,399 |
|
|
129,546 |
|
|
97,531 |
|
|
93,640 |
|
|
|
|
400,325 |
|
|
245,668 |
|
|||||
Net revenue |
|
|
122,349 |
|
|
135,721 |
|
|
174,858 |
|
|
192,665 |
|
|
130,679 |
|
|
|
|
625,593 |
|
|
572,175 |
|
|||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Salaries and benefits |
|
|
66,067 |
|
|
53,413 |
|
|
82,427 |
|
|
79,729 |
|
|
61,762 |
|
|
|
|
281,636 |
|
|
237,109 |
|
|||||
Occupancy |
|
|
12,114 |
|
|
12,827 |
|
|
17,507 |
|
|
17,037 |
|
|
13,698 |
|
|
|
|
59,485 |
|
|
55,559 |
|
|||||
Advertising |
|
|
3,692 |
|
|
5,244 |
|
|
12,707 |
|
|
10,500 |
|
|
13,938 |
|
|
|
|
32,143 |
|
|
38,762 |
|
|||||
Direct operations |
|
|
11,832 |
|
|
11,729 |
|
|
20,293 |
|
|
20,274 |
|
|
19,504 |
|
|
|
|
64,128 |
|
|
60,056 |
|
|||||
Depreciation and amortization |
|
|
8,337 |
|
|
9,499 |
|
|
8,672 |
|
|
9,814 |
|
|
7,270 |
|
|
|
|
36,322 |
|
|
26,955 |
|
|||||
Other operating expense |
|
|
24,002 |
|
|
23,645 |
|
|
18,787 |
|
|
16,377 |
|
|
23,452 |
|
|
|
|
82,811 |
|
|
68,473 |
|
|||||
Total operating expenses |
|
|
126,044 |
|
|
116,357 |
|
|
160,393 |
|
|
153,731 |
|
|
139,624 |
|
|
|
|
556,525 |
|
|
486,914 |
|
|||||
Other expense (income) |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Interest expense |
|
|
54,978 |
|
|
50,149 |
|
|
42,193 |
|
|
38,341 |
|
|
28,550 |
|
|
|
|
185,661 |
|
|
97,334 |
|
|||||
Loss (income) from equity method investment |
|
|
1,932 |
|
|
2,309 |
|
|
1,328 |
|
|
(1,584 |
) |
|
(2,982 |
) |
|
|
|
3,985 |
|
|
(3,658 |
) |
|||||
Gain from equity method investment |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
(135,387 |
) |
|||||
Goodwill impairment |
|
|
145,241 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
145,241 |
|
|
— |
|
|||||
Loss on extinguishment of debt |
|
|
689 |
|
|
3,702 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
4,391 |
|
|
40,206 |
|
|||||
Gain on change in fair value of contingent consideration |
|
|
— |
|
|
(11,354 |
) |
|
4,014 |
|
|
(265 |
) |
|
2,384 |
|
|
|
|
(7,605 |
) |
|
6,209 |
|
|||||
Gain on sale of business |
|
|
— |
|
|
(68,443 |
) |
|
— |
|
|
— |
|
|
— |
|
|
|
|
(68,443 |
) |
|
— |
|
|||||
Total other expense (income) |
|
|
202,840 |
|
|
(23,637 |
) |
|
47,535 |
|
|
36,492 |
|
|
27,952 |
|
|
|
|
263,230 |
|
|
4,704 |
|
|||||
(Loss) income before income taxes |
|
|
(206,535 |
) |
|
43,001 |
|
|
(33,070 |
) |
|
2,442 |
|
|
(36,897 |
) |
|
|
|
(194,162 |
) |
|
80,557 |
|
|||||
(Benefit) provision for income taxes |
|
|
(20,142 |
) |
|
17,348 |
|
|
(6,990 |
) |
|
1,106 |
|
|
(8,018 |
) |
|
|
|
(8,678 |
) |
|
21,223 |
|
|||||
Net (loss) income |
|
$ |
(186,393 |
) |
$ |
25,653 |
|
$ |
(26,080 |
) |
$ |
1,336 |
|
$ |
(28,879 |
) |
|
|
$ |
(185,484 |
) |
$ |
59,334 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Basic (loss) earnings per share |
|
$ |
(4.60 |
) |
$ |
0.63 |
|
$ |
(0.65 |
) |
$ |
0.03 |
|
$ |
(0.72 |
) |
|
|
$ |
(4.59 |
) |
$ |
1.44 |
|
|||||
Diluted (loss) earnings per share |
|
$ |
(4.60 |
) |
$ |
0.63 |
|
$ |
(0.65 |
) |
$ |
0.03 |
|
$ |
(0.72 |
) |
|
|
$ |
(4.59 |
) |
$ |
1.38 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Basic |
|
|
40,488 |
|
|
40,479 |
|
|
40,376 |
|
|
40,368 |
|
|
40,254 |
|
|
|
|
40,428 |
|
|
41,155 |
|
|||||
Diluted |
|
|
40,488 |
|
|
40,835 |
|
|
40,376 |
|
|
41,308 |
|
|
40,254 |
|
|
|
|
40,428 |
|
|
43,143 |
|
|||||
Table 2 - Consolidated Balance Sheets |
|||||||||||||||||||
|
As of |
||||||||||||||||||
|
Dec, 31 |
|
Sept 30, |
|
Jun 30, |
|
Mar 31, |
|
Dec, 31 |
||||||||||
(in thousands, unaudited) |
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2021 |
||||||||||
ASSETS |
|||||||||||||||||||
Cash and cash equivalents |
$ |
73,932 |
|
$ |
45,683 |
|
$ |
37,394 |
|
$ |
60,209 |
|
$ |
63,179 |
|
||||
Restricted cash |
|
91,745 |
|
|
144,020 |
|
|
97,465 |
|
|
110,118 |
|
|
98,896 |
|
||||
Gross loans receivable |
|
2,087,833 |
|
|
1,894,427 |
|
|
1,592,815 |
|
|
1,628,568 |
|
|
1,548,318 |
|
||||
Less: Allowance for loan losses |
|
(122,028 |
) |
|
(102,743 |
) |
|
(90,286 |
) |
|
(98,168 |
) |
|
(87,560 |
) |
||||
Loans receivable, net |
|
1,965,805 |
|
|
1,791,684 |
|
|
1,502,529 |
|
|
1,530,400 |
|
|
1,460,758 |
|
||||
Income taxes receivable |
|
21,918 |
|
|
13,469 |
|
|
46,450 |
|
|
28,664 |
|
|
31,774 |
|
||||
Prepaid expenses and other |
|
53,057 |
|
|
65,167 |
|
|
25,370 |
|
|
40,112 |
|
|
42,038 |
|
||||
Property and equipment, net |
|
31,957 |
|
|
37,402 |
|
|
38,752 |
|
|
54,865 |
|
|
54,635 |
|
||||
Investment in Katapult |
|
23,915 |
|
|
25,848 |
|
|
28,157 |
|
|
29,484 |
|
|
27,900 |
|
||||
Right of use asset - operating leases |
|
61,197 |
|
|
64,683 |
|
|
64,602 |
|
|
114,305 |
|
|
116,300 |
|
||||
Deferred tax assets |
|
49,893 |
|
|
31,986 |
|
|
23,993 |
|
|
20,066 |
|
|
15,639 |
|
||||
Goodwill |
|
276,269 |
|
|
424,292 |
|
|
352,990 |
|
|
430,967 |
|
|
429,792 |
|
||||
Intangibles, net |
|
123,677 |
|
|
120,345 |
|
|
113,130 |
|
|
113,640 |
|
|
109,930 |
|
||||
Other assets |
|
15,828 |
|
|
12,774 |
|
|
8,558 |
|
|
9,535 |
|
|
9,755 |
|
||||
Assets held for sale (1) |
|
— |
|
|
— |
|
|
338,779 |
|
|
— |
|
|
— |
|
||||
Total Assets |
$ |
2,789,193 |
|
$ |
2,777,353 |
|
$ |
2,678,169 |
|
$ |
2,542,365 |
|
$ |
2,460,596 |
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||||||||||||||
Liabilities |
|
|
|
|
|
||||||||||||||
Accounts payable and accrued liabilities |
$ |
73,827 |
|
$ |
66,723 |
|
$ |
81,423 |
|
$ |
84,783 |
|
$ |
121,434 |
|
||||
Deferred revenue |
|
32,259 |
|
|
25,111 |
|
|
23,425 |
|
|
24,265 |
|
|
21,649 |
|
||||
Lease liability - operating leases |
|
62,847 |
|
|
66,370 |
|
|
67,339 |
|
|
120,593 |
|
|
122,431 |
|
||||
Contingent consideration related to acquisition |
|
16,884 |
|
|
15,770 |
|
|
30,354 |
|
|
26,687 |
|
|
26,508 |
|
||||
Income taxes payable |
|
— |
|
|
— |
|
|
4 |
|
|
— |
|
|
680 |
|
||||
Accrued interest |
|
38,460 |
|
|
18,048 |
|
|
34,970 |
|
|
16,481 |
|
|
34,974 |
|
||||
Liability for losses on CSO lender-owned consumer loans |
|
— |
|
|
— |
|
|
— |
|
|
7,166 |
|
|
6,908 |
|
||||
Debt |
|
2,607,314 |
|
|
2,449,316 |
|
|
2,189,431 |
|
|
2,090,085 |
|
|
1,945,793 |
|
||||
Other long-term liabilities |
|
11,736 |
|
|
11,563 |
|
|
12,146 |
|
|
13,679 |
|
|
13,845 |
|
||||
Deferred tax liabilities |
|
— |
|
|
— |
|
|
12,360 |
|
|
5,839 |
|
|
6,044 |
|
||||
Liabilities held for sale (1) |
|
— |
|
|
— |
|
|
111,137 |
|
|
— |
|
|
— |
|
||||
Total Liabilities |
$ |
2,843,327 |
|
$ |
2,652,901 |
|
$ |
2,562,589 |
|
$ |
2,389,578 |
|
$ |
2,300,266 |
|
||||
Total Stockholders' (Deficit) Equity |
|
(54,134 |
) |
|
124,452 |
|
|
115,580 |
|
|
152,787 |
|
|
160,330 |
|
||||
Total Liabilities and Stockholders' (Deficit) Equity |
$ |
2,789,193 |
|
$ |
2,777,353 |
|
$ |
2,678,169 |
|
$ |
2,542,365 |
|
$ |
2,460,596 |
|
||||
|
|
|
|
|
|
||||||||||||||
(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 U.S. Legacy 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) |
|
Q4 2022 |
Q3 2022 |
Q2 2022(2) |
Q1 2022 |
|
Q4 2021(1) |
|||||||||||||
Gross loans receivable |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
$ |
1,284,515 |
|
$ |
1,129,387 |
|
$ |
1,128,372 |
|
$ |
1,015,338 |
|
|
$ |
914,113 |
|
|||
Installment loans |
|
|
803,318 |
|
|
765,040 |
|
|
652,468 |
|
|
613,230 |
|
|
|
634,205 |
|
|||
Total gross loans receivable (3) |
|
$ |
2,087,833 |
|
$ |
1,894,427 |
|
$ |
1,780,840 |
|
$ |
1,628,568 |
|
|
$ |
1,548,318 |
|
|||
Lending Revenue: |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
$ |
81,170 |
|
$ |
77,037 |
|
$ |
96,582 |
|
$ |
91,023 |
|
|
$ |
85,558 |
|
|||
Installment loans(4) |
|
|
100,435 |
|
|
103,478 |
|
|
181,749 |
|
|
173,933 |
|
|
|
119,023 |
|
|||
Total lending revenue |
|
|
181,605 |
|
|
180,515 |
|
|
278,331 |
|
|
264,956 |
|
|
|
204,581 |
|
|||
Lending Provision: |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
$ |
46,745 |
|
$ |
41,787 |
|
$ |
40,435 |
|
$ |
37,447 |
|
|
$ |
44,183 |
|
|||
Installment loans(5) |
|
|
46,442 |
|
|
33,510 |
|
|
86,484 |
|
|
57,435 |
|
|
|
47,529 |
|
|||
Total lending provision |
|
$ |
93,187 |
|
$ |
75,297 |
|
$ |
126,919 |
|
$ |
94,882 |
|
|
$ |
91,712 |
|
|||
NCOs (6) |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
$ |
35,387 |
|
$ |
30,907 |
|
$ |
33,945 |
|
$ |
34,372 |
|
|
$ |
28,324 |
|
|||
Installment loans(7) |
|
|
38,168 |
|
|
31,372 |
|
|
71,056 |
|
|
60,386 |
|
|
|
48,487 |
|
|||
Total NCOs |
|
$ |
73,555 |
|
$ |
62,279 |
|
$ |
105,001 |
|
$ |
94,758 |
|
|
$ |
76,811 |
|
|||
NCO rate (annualized) (6) (8) |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
|
11.6 |
% |
|
10.8 |
% |
|
12.8 |
% |
|
14.4 |
% |
|
|
14.0 |
% |
|||
Installment loans |
|
|
19.6 |
% |
|
17.6 |
% |
|
44.8 |
% |
|
38.8 |
% |
|
|
48.8 |
% |
|||
Total NCO rate(9) |
|
|
14.8 |
% |
|
13.2 |
% |
|
24.0 |
% |
|
23.2 |
% |
|
|
24.4 |
% |
|||
ALL rate (10) |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
|
6.1 |
% |
|
6.0 |
% |
|
6.7 |
% |
|
7.0 |
% |
|
|
7.5 |
% |
|||
Installment loans |
|
|
5.4 |
% |
|
4.6 |
% |
|
8.1 |
% |
|
5.5 |
% |
|
|
4.2 |
% |
|||
Total ALL rate (11) |
|
|
5.8 |
% |
|
5.4 |
% |
|
6.7 |
% |
|
6.0 |
% |
|
|
5.7 |
% |
|||
31+ days past-due rate (10) |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
|
3.3 |
% |
|
4.1 |
% |
|
4.1 |
% |
|
3.7 |
% |
|
|
3.2 |
% |
|||
Installment loans |
|
|
9.6 |
% |
|
10.2 |
% |
|
9.2 |
% |
|
9.0 |
% |
|
|
8.6 |
% |
|||
Total past-due rate(12) |
|
|
5.8 |
% |
|
6.6 |
% |
|
6.1 |
% |
|
5.8 |
% |
|
|
5.5 |
% |
|||
|
|
|
|
|
|
|
|
|||||||||||||
(1) On December 27, 2021, we acquired Heights Finance, which accounted for approximately $472 million of U.S. Direct Lending Installment loans as of December 31, 2021. As the period between December 27, 2021 and December 31, 2021 did not result in material loan performance, we have excluded Heights Finance from the table for the fourth quarter of 2021. |
||||||||||||||||||||
(2) Includes loan balances and activity classified as Held for Sale. |
||||||||||||||||||||
(3) Total combined gross loans receivable including receivables from installment loans originated by third-party lenders through CSO programs and guaranteed by the Company were $1,832.2 million, $1,673.0 million and $1,594.6 million as of June 30, 2022, March 31, 2022 and December 31, 2021, respectively, including installment loans – guaranteed by the Company of $51.3 million, $44.4 million and $46.3 million as of June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon the completion of the divestiture of the Legacy U.S. Direct Lending business. Total combined gross loans receivable and installment loans – guaranteed by the Company are non-GAAP measures. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures.” |
||||||||||||||||||||
(4) Includes lending revenue from installment loans originated by third-party lenders through CSO programs and guaranteed by the Company of $3.9 million, $48.3 million, $49.0 million and $47.3 million for the three months ended September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. |
||||||||||||||||||||
(5) Includes provision from installment loans originated by third-party lenders through CSO programs and guaranteed by the Company of $0.0, $28.3 million, $21.7 million and $26.0 million for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. |
||||||||||||||||||||
(6) NCOs presented above include $0.0 million, $0.5 million, $10.3 million, $5.0 million and $0.8 million for the three months ended December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively, related to the purchase accounting fair value discount, which are excluded from provision. |
||||||||||||||||||||
(7) Total consolidated NCOs included NCOs for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company of $1.6 million, $27.4 million, $21.5 million and $26.1 million for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. |
||||||||||||||||||||
(8) 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. |
||||||||||||||||||||
(9) Total consolidated NCO rate included the NCO rate for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company was 24.8%, 228.8%, 189.6% and 232.4% for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. |
||||||||||||||||||||
(10) We calculate (i) Allowance for loan losses (ALL) rate and (ii) past-due rate as the respective totals divided by gross loans receivable at each respective quarter end. |
||||||||||||||||||||
(11) Total consolidated CSO liability for losses for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company was 15.7%, 16.1% and 14.9% for the three months ended June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. Total consolidated ALL and CSO liability for losses rate was 7.0%, 6.3% and 8.4% for the three months ended, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. |
||||||||||||||||||||
(12) Total consolidated past-due rate included the past-due rate for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company was 2.6%, 4.5% and 3.1% for the three months ended June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. |
||||||||||||||||||||
Table 4 - U.S. Direct Lending Segment - Operating Loss/Income |
|||||||||||||||||||||||||||
(in thousands, unaudited) |
|
Three Months Ended, |
|
|
Twelve Months Ended, |
||||||||||||||||||||||
|
Dec 31, |
|
Sep 30, |
|
Jun 30, |
|
Mar 31, |
|
Dec 31, |
|
|
Dec 31, |
|
Dec 31, |
|||||||||||||
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2021 |
|
|
2022 |
|
2021 |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total revenue |
|
$ |
104,182 |
|
$ |
107,430 |
|
$ |
205,711 |
|
$ |
198,399 |
$ |
139,002 |
|
|
|
|
615,722 |
|
|
525,962 |
|||||
Provision for losses |
|
|
44,117 |
|
|
32,073 |
|
|
97,563 |
|
|
66,825 |
|
57,925 |
|
|
|
|
240,578 |
|
|
166,033 |
|||||
Net revenue |
|
|
60,065 |
|
|
75,357 |
|
|
108,148 |
|
|
131,574 |
|
81,077 |
|
|
|
|
375,144 |
|
|
359,929 |
|||||
Total operating expenses |
|
|
80,803 |
|
|
76,067 |
|
|
115,633 |
|
|
110,941 |
|
93,085 |
|
|
|
|
383,444 |
|
|
338,708 |
|||||
Segment operating (loss) income |
|
$ |
(20,738 |
) |
$ |
(710 |
) |
$ |
(7,485 |
) |
$ |
20,633 |
$ |
(12,008 |
) |
|
|
$ |
(8,300 |
) |
$ |
21,221 |
|||||
Table 5 - U.S. Direct Lending Segment - Portfolio Performance |
||||||||||||||||||||
(in thousands, except percentages, unaudited) |
|
Q4 2022 |
Q3 2022 |
Q2 2022(2) |
Q1 2022 |
|
Q4 2021(1) |
|||||||||||||
Gross loans receivable |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
$ |
— |
|
$ |
— |
|
$ |
58,471 |
|
$ |
49,077 |
|
|
$ |
52,532 |
|
|||
Installment loans |
|
|
773,380 |
|
|
739,100 |
|
|
627,651 |
|
|
589,652 |
|
|
|
137,782 |
|
|||
Total gross loans receivable (3) |
|
$ |
773,380 |
|
$ |
739,100 |
|
$ |
686,122 |
|
$ |
638,729 |
|
|
$ |
190,314 |
|
|||
Lending Revenue: |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
$ |
— |
|
$ |
2,210 |
|
$ |
28,145 |
|
$ |
26,913 |
|
|
$ |
27,911 |
|
|||
Installment loans (4) |
|
|
88,001 |
|
|
90,834 |
|
|
169,878 |
|
|
162,824 |
|
|
|
104,168 |
|
|||
Total lending revenue |
|
$ |
88,001 |
|
$ |
93,044 |
|
$ |
198,023 |
|
$ |
189,737 |
|
|
$ |
132,079 |
|
|||
Lending Provision: |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
$ |
— |
|
$ |
— |
|
$ |
11,831 |
|
$ |
9,577 |
|
|
$ |
11,592 |
|
|||
Installment loans (5) |
|
|
42,523 |
|
|
29,045 |
|
|
83,181 |
|
|
54,711 |
|
|
|
44,585 |
|
|||
Total lending provision |
|
$ |
42,523 |
|
$ |
29,045 |
|
$ |
95,012 |
|
$ |
64,288 |
|
|
$ |
56,177 |
|
|||
NCOs (6) |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
$ |
— |
|
$ |
1,140 |
|
$ |
10,248 |
|
$ |
10,055 |
|
|
$ |
11,481 |
|
|||
Installment loans (7) |
|
|
34,664 |
|
|
27,311 |
|
|
68,152 |
|
|
57,739 |
|
|
|
45,729 |
|
|||
Total NCOs |
|
$ |
34,664 |
|
$ |
28,451 |
|
$ |
78,400 |
|
$ |
67,794 |
|
|
$ |
57,210 |
|
|||
NCO rate (annualized) (6) (8) |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
|
— |
% |
|
15.6 |
% |
|
76.4 |
% |
|
79.2 |
% |
|
|
88.4 |
% |
|||
Installment loans |
|
|
18.4 |
% |
|
16.0 |
% |
|
44.8 |
% |
|
63.6 |
% |
|
|
132.8 |
% |
|||
Total NCO rate (9) |
|
|
18.4 |
% |
|
15.6 |
% |
|
44.0 |
% |
|
58.8 |
% |
|
|
97.6 |
% |
|||
ALL rate (10) |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
|
— |
% |
|
— |
% |
|
25.1 |
% |
|
26.7 |
% |
|
|
25.9 |
% |
|||
Installment loans |
|
|
5.2 |
% |
|
4.4 |
% |
|
8.1 |
% |
|
5.4 |
% |
|
|
17.7 |
% |
|||
Total ALL rate (11) |
|
|
5.2 |
% |
|
4.4 |
% |
|
8.9 |
% |
|
6.6 |
% |
|
|
16.0 |
% |
|||
31+ days past-due rate (10) |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
|
— |
% |
|
— |
% |
|
17.4 |
% |
|
19.1 |
% |
|
|
19.2 |
% |
|||
Installment loans |
|
|
9.9 |
% |
|
10.5 |
% |
|
20.5 |
% |
|
19.0 |
% |
|
|
19.0 |
% |
|||
Total past-due rate(12) |
|
|
9.9 |
% |
|
10.5 |
% |
|
10.1 |
% |
|
10.0 |
% |
|
|
9.7 |
% |
|||
(1) On December 27, 2021, we acquired Heights Finance, which accounted for approximately $472 million of U.S. Direct Lending Installment loans as of December 31, 2021. As the period between December 27, 2021 and December 31, 2021 did not result in material loan performance, we have excluded Heights Finance from the table for the fourth quarter of 2021. |
||||||||||||||||||||
(2) Includes loan balances and activity classified as Held for Sale. |
||||||||||||||||||||
(3)Total combined gross loans receivable including receivables from installment loans originated by third-party lenders through CSO programs and guaranteed by the Company were $737.4 million, $683.1 million and $236.6 million as of June 30, 2022, March 31, 2022 and December 31, 2021, respectively, including installment loans – guaranteed by the Company of $51.3 million, $44.4 million and $46.3 million as of June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. Total combined gross loans receivable and installment loans – guaranteed by the Company are non-GAAP measures. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures.” |
||||||||||||||||||||
(4) Includes lending revenue from installment loans originated by third-party lenders through CSO programs and guaranteed by the Company of $3.9 million, $48.3 million, $49.0 million and $47.3 million for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. |
||||||||||||||||||||
(5) Includes provision from installment loans originated by third-party lenders through CSO programs and guaranteed by the Company of $28.3 million, $21.7 million and $26.0 million for the three months ended June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. |
||||||||||||||||||||
(6) NCOs presented above include $0.0 million, $0.5 million, $10.3 million and $5.0 million, for the three months ended 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. |
||||||||||||||||||||
(7) Total NCOs included NCOs for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company of $1.6 million, $27.4 million, $21.5 million and $26.07 million for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. |
||||||||||||||||||||
(8) 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. |
||||||||||||||||||||
(9) Total NCO rate included the NCO rate for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company was 24.8%, 228.8%, 189.6% and 232.4% for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. |
||||||||||||||||||||
(10) We calculate (i) Allowance for loan losses (ALL) rate and (ii) past-due rate as the respective totals divided by gross loans receivable at each respective quarter end. |
||||||||||||||||||||
(11)Total CSO liability for losses for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company was 0%, 15.7%, 16.1% and 14.9% for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. Total U.S. Direct Lending ALL and CSO liability for losses rate was 8.9%, 6.6% and 16.0% for the three months ended June 30, 2022, March 31, 2022 and December 31, 2021, respectively. |
||||||||||||||||||||
(12) Total past-due rate included the past-due rate for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company was 2.6%, 4.5% and 3.1% for the three months ended June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business.
|
||||||||||||||||||||
Table 6 - Canada Direct Lending Segment - Operating Income |
||||||||||||||||||||||
(in thousands, unaudited) |
|
Three Months Ended, |
|
|
Twelve Months Ended, |
|||||||||||||||||
|
Dec 31, |
|
Sep 30, |
|
Jun 30, |
|
Mar 31, |
|
Dec 31, |
|
|
Dec 31, |
|
Dec 31, |
||||||||
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2021 |
|
|
2022 |
|
2021 |
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total revenue |
|
$ |
77,743 |
$ |
78,979 |
$ |
75,540 |
$ |
71,488 |
$ |
70,529 |
|
|
|
303,750 |
|
257,039 |
|||||
Provision for losses |
|
|
33,607 |
|
32,947 |
|
26,021 |
|
21,992 |
|
23,204 |
|
|
|
114,567 |
|
54,997 |
|||||
Net revenue |
|
|
44,136 |
|
46,032 |
|
49,519 |
|
49,496 |
|
47,325 |
|
|
|
189,183 |
|
202,042 |
|||||
Total operating expenses |
|
|
30,829 |
|
26,773 |
|
28,332 |
|
27,021 |
|
27,423 |
|
|
|
112,955 |
|
103,513 |
|||||
Segment operating income |
|
$ |
13,307 |
$ |
19,259 |
$ |
21,187 |
$ |
22,475 |
$ |
19,902 |
|
|
$ |
76,228 |
$ |
98,529 |
|||||
Table 7 - Canada Direct Lending Segment - Portfolio Performance |
||||||||||||||||||||
(in thousands, except percentages, unaudited) |
|
Q4 2022 |
Q3 2022 |
Q2 2022 |
Q1 2022 |
|
Q4 2021 |
|||||||||||||
Gross loans receivable: |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
$ |
451,077 |
|
$ |
439,117 |
|
$ |
442,738 |
|
$ |
424,485 |
|
|
$ |
402,405 |
|
|||
Installment loans |
|
|
29,938 |
|
|
25,941 |
|
|
24,817 |
|
|
23,578 |
|
|
|
24,792 |
|
|||
Total gross loans receivable |
|
$ |
481,015 |
|
$ |
465,058 |
|
$ |
467,555 |
|
$ |
448,063 |
|
|
$ |
427,197 |
|
|||
Lending Revenue: |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
$ |
49,915 |
|
$ |
50,251 |
|
$ |
47,591 |
|
$ |
45,455 |
|
|
$ |
43,943 |
|
|||
Installment loans |
|
|
12,434 |
|
|
12,645 |
|
|
11,868 |
|
|
11,109 |
|
|
|
11,416 |
|
|||
Total lending revenue |
|
$ |
62,349 |
|
$ |
62,896 |
|
$ |
59,459 |
|
$ |
56,564 |
|
|
$ |
55,359 |
|
|||
Lending Provision: |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
$ |
29,620 |
|
$ |
28,408 |
|
$ |
22,641 |
|
$ |
19,156 |
|
|
$ |
20,080 |
|
|||
Installment loans |
|
|
3,919 |
|
|
4,466 |
|
|
3,303 |
|
|
2,723 |
|
|
|
2,945 |
|
|||
Total lending provision |
|
$ |
33,539 |
|
$ |
32,874 |
|
$ |
25,944 |
|
$ |
21,879 |
|
|
$ |
23,025 |
|
|||
NCOs |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
$ |
26,715 |
|
$ |
23,652 |
|
$ |
20,160 |
|
$ |
21,590 |
|
|
$ |
15,112 |
|
|||
Installment loans |
|
|
3,504 |
|
|
4,061 |
|
|
2,904 |
|
|
2,647 |
|
|
|
2,758 |
|
|||
Total NCOs |
|
$ |
30,219 |
|
$ |
27,713 |
|
$ |
23,064 |
|
$ |
24,237 |
|
|
$ |
17,870 |
|
|||
NCO rate (annualized) (1) |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
|
24.0 |
% |
|
21.6 |
% |
|
18.4 |
% |
|
20.8 |
% |
|
|
15.6 |
% |
|||
Installment loans |
|
|
50.0 |
% |
|
64.0 |
% |
|
48.0 |
% |
|
43.6 |
% |
|
|
44.8 |
% |
|||
Total NCO rate |
|
|
25.6 |
% |
|
23.6 |
% |
|
20.0 |
% |
|
22.0 |
% |
|
|
17.6 |
% |
|||
ALL rate (2) |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
|
8.4 |
% |
|
7.9 |
% |
|
7.2 |
% |
|
7.2 |
% |
|
|
8.0 |
% |
|||
Installment loans |
|
|
10.4 |
% |
|
10.3 |
% |
|
9.7 |
% |
|
8.8 |
% |
|
|
8.0 |
% |
|||
Total ALL rate |
|
|
8.5 |
% |
|
8.0 |
% |
|
7.4 |
% |
|
7.3 |
% |
|
|
8.0 |
% |
|||
31+ days past-due rate (2) |
|
|
|
|
|
|
|
|||||||||||||
Revolving LOC |
|
|
4.1 |
% |
|
5.1 |
% |
|
4.2 |
% |
|
4.3 |
% |
|
|
3.2 |
% |
|||
Installment loans |
|
|
1.9 |
% |
|
1.0 |
% |
|
0.8 |
% |
|
1.0 |
% |
|
|
0.9 |
% |
|||
Total past-due rate |
|
|
4.0 |
% |
|
4.8 |
% |
|
4.0 |
% |
|
4.1 |
% |
|
|
3.1 |
% |
|||
|
|
|
|
|
|
|
|
|||||||||||||
(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 ALL rate and past-due rate as the respective totals divided by gross loans receivable at each respective quarter end. |
||||||||||||||||||||
Table 8 - Canada POS Lending Segment - Operating Loss/Income
(in thousands, unaudited) |
|
Three Months Ended, |
|
|
Twelve Months Ended, |
||||||||||||||||||||
|
Dec 31, |
|
Sep 30, |
|
Jun 30, |
|
Mar 31, |
|
Dec 31, |
|
|
Dec 31, |
|
Dec 31, |
|||||||||||
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2021 |
|
|
2022 |
|
2021 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total revenue |
|
$ |
35,273 |
$ |
27,710 |
$ |
23,154 |
$ |
20,309 |
|
$ |
14,788 |
|
|
|
|
106,446 |
|
34,842 |
|
|||||
Provision for losses |
|
|
17,125 |
|
13,378 |
|
5,963 |
|
8,714 |
|
|
12,511 |
|
|
|
|
45,180 |
|
24,638 |
|
|||||
Net revenue |
|
|
18,148 |
|
14,332 |
|
17,191 |
|
11,595 |
|
|
2,277 |
|
|
|
|
61,266 |
|
10,204 |
|
|||||
Total operating expenses |
|
|
14,412 |
|
13,519 |
|
16,427 |
|
15,768 |
|
|
19,116 |
|
|
|
|
60,126 |
|
44,693 |
|
|||||
Segment operating income (loss) |
|
$ |
3,736 |
$ |
813 |
$ |
764 |
$ |
(4,173 |
) |
$ |
(16,839 |
) |
|
|
$ |
1,140 |
$ |
(34,489 |
) |
|||||
Table 9 - Canada POS Lending Segment - Portfolio Performance |
||||||||||||||||||||
(in thousands, except percentages, unaudited) |
|
Q4 2022 |
Q3 2022 |
Q2 2022 |
Q1 2022 |
|
Q4 2021 |
|||||||||||||
Revolving LOC |
|
|
|
|
|
|
|
|||||||||||||
Total gross loans receivable |
|
$ |
833,438 |
|
$ |
690,270 |
|
$ |
627,163 |
|
$ |
541,776 |
|
|
$ |
459,176 |
|
|||
Total lending revenue |
|
$ |
31,255 |
|
$ |
24,575 |
|
$ |
20,846 |
|
$ |
18,655 |
|
|
$ |
13,704 |
|
|||
Total lending provision |
|
$ |
17,125 |
|
$ |
13,379 |
|
$ |
5,963 |
|
$ |
8,714 |
|
|
$ |
12,511 |
|
|||
NCOs (1) |
|
$ |
8,672 |
|
$ |
6,114 |
|
$ |
3,537 |
|
$ |
2,727 |
|
|
$ |
1,731 |
|
|||
NCO rate (annualized) (1)(2) |
|
|
4.4 |
% |
|
3.6 |
% |
|
2.4 |
% |
|
2.0 |
% |
|
|
2.0 |
% |
|||
ALL rate (3) |
|
|
4.9 |
% |
|
4.8 |
% |
|
4.5 |
% |
|
5.1 |
% |
|
|
4.8 |
% |
|||
31+ days past-due rate (3) |
|
|
2.9 |
% |
|
3.6 |
% |
|
2.8 |
% |
|
1.8 |
% |
|
|
1.5 |
% |
|||
(1) NCOs presented above include $0.8 million for the three months ended December 31, 2021 of NCOs related to the purchase accounting fair value discount, which are excluded from provision. |
||||||||||||||||||||
(2) We calculate NCO rate as total quarterly NCOs divided by Average gross loans receivable then 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. |
||||||||||||||||||||
(3) We calculate ALL rate and past-due rate as the respective totals divided by gross loans receivable at each respective quarter end. |
||||||||||||||||||||
Non-GAAP Financial Measures
In addition to the financial information prepared in conformity with U.S. GAAP, we provide certain “non-GAAP financial measures,” including:
- Adjusted Net Income ("ANI") and Adjusted Earnings Per Share, or the Adjusted Earnings Measures (net income plus or minus certain legal and other costs, income or loss from equity method investment, goodwill and intangible asset impairments, transaction-related costs, restructuring costs, loss on extinguishment of debt, adjustments related to acquisition accounting, share-based compensation, intangible asset amortization, gain on sale of business, changes in fair value of contingent consideration, certain tax adjustments and cumulative tax effect of applicable adjustments, on a total and per share basis); and
- Gross Combined Loans Receivable (includes loans originated by third-party lenders through CSO programs which are not included in the Consolidated Financial Statements). As a result of the sale of the Legacy U.S. Direct Lending business, we no longer guarantee loans originated by third-party lenders through CSO programs.
We believe that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of our operations. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of the business that, when viewed with our U.S. GAAP results, provide a more complete understanding of factors and trends affecting the business.
We believe that investors regularly rely on non-GAAP financial measures to assess operating performance and that such measures may highlight trends in the business that may not otherwise be apparent when relying on financial measures calculated in accordance with U.S. GAAP. In addition, we believe that the adjustments shown above are useful to investors to allow them to compare our financial results during the periods shown without the effect of each of these income or expense items. In addition, we believe that these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of public companies in our industry, many of which present non-GAAP financial measures when reporting their results.
In addition to reporting loans receivable information in accordance with U.S. GAAP, we provide Gross Combined Loans Receivable consisting of owned loans receivable plus loans originated by third-party lenders through the CSO programs, which we guaranteed but do not include in the Consolidated Financial Statements. Management believes this analysis provides investors with important information needed to evaluate overall lending performance. As noted above, we no longer provide these guarantees to third-party lenders as a result of the sale of the Legacy U.S. Direct Lending business.
Non-GAAP financial measures should not be considered as alternatives to income, segment operating income or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flows from operating activities or any other liquidity measure derived in accordance with U.S. GAAP. Readers should consider the information in addition to, but not instead of or superior to, the financial statements prepared in accordance with U.S. GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.
Description and Reconciliations of Non-GAAP Financial Measures
Non-GAAP financial measures have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our income or cash flows as reported under U.S. GAAP. Some of these limitations are:
- they do not include cash expenditures or future requirements for capital expenditures or contractual commitments;
- they do not include changes in, or cash requirements for, working capital needs;
- they do not include the interest expense, or the cash requirements necessary to service interest or principal payments on debt;
- depreciation and amortization are non-cash expense items reported in the statements of cash flows; and
- other companies in our industry may calculate these measures differently, limiting their usefulness as comparative measures.
We calculate Adjusted Earnings per Share utilizing diluted shares outstanding at quarter-end. If we record a loss under U.S. GAAP, shares outstanding utilized to calculate Diluted Loss per Share are equivalent to basic shares outstanding. Shares outstanding utilized to calculate Adjusted Earnings per Share reflect the number of diluted shares we would have reported if reporting net income under U.S. GAAP. If we record an Adjusted Loss per Share, shares outstanding utilized to calculate Diluted Loss per Share are equivalent to basic shares outstanding.
We believe investors use the non-GAAP measures we present to analyze operating performance and to evaluate our ability to incur and service debt and the capacity for making capital expenditures.
Table 10 - Reconciliation of Net Income and Diluted Earnings per Share to Adjusted Net Income and Adjusted Diluted Earnings per Share, non-GAAP measures |
||||||||||||||||||||||||||||
|
|
Three Months Ended, |
|
Twelve Months Ended, |
||||||||||||||||||||||||
|
|
Dec 31, |
|
Sept 30, |
|
Jun 30, |
|
Mar 31, |
|
Dec 31, |
|
Dec 31, |
|
Dec 31, |
||||||||||||||
(in thousands, except per share data, unaudited) |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||||||||
Net (loss) income |
|
$ |
(186,393 |
) |
$ |
25,653 |
|
$ |
(26,080 |
) |
$ |
1,336 |
|
$ |
(28,879 |
) |
|
($ |
185,484 |
) |
$ |
59,334 |
|
|||||
Adjustments: |
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Restructuring costs (1) |
|
|
13,084 |
|
|
739 |
|
|
1,146 |
|
|
1,069 |
|
|
1,303 |
|
|
|
16,038 |
|
|
12,717 |
|
|||||
Legal and other costs (2) |
|
|
406 |
|
|
46 |
|
|
950 |
|
|
87 |
|
|
1,764 |
|
|
|
1,489 |
|
|
2,134 |
|
|||||
Loss (income) from equity method investment (3) |
|
|
1,932 |
|
|
2,309 |
|
|
1,328 |
|
|
(1,584 |
) |
|
(2,982 |
) |
|
|
3,985 |
|
|
(3,658 |
) |
|||||
Gain from equity method investment (4) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
(135,387 |
) |
|||||
Transaction costs (5) |
|
|
1,116 |
|
|
10,063 |
|
|
(168 |
) |
|
168 |
|
|
8,924 |
|
|
|
11,179 |
|
|
15,406 |
|
|||||
Acquisition-related adjustments (6) |
|
|
(2,713 |
) |
|
(2,883 |
) |
|
3,371 |
|
|
221 |
|
|
4,162 |
|
|
|
(2,004 |
) |
|
13,949 |
|
|||||
Change in fair value of contingent consideration (7) |
|
|
— |
|
|
(11,355 |
) |
|
4,014 |
|
|
(264 |
) |
|
2,384 |
|
|
|
(7,605 |
) |
|
6,209 |
|
|||||
Loss on extinguishment of debt (8) |
|
|
689 |
|
|
3,702 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
4,391 |
|
|
42,262 |
|
|||||
Share-based compensation (9) |
|
|
3,998 |
|
|
1,448 |
|
|
4,417 |
|
|
4,093 |
|
|
3,828 |
|
|
|
13,956 |
|
|
13,976 |
|
|||||
Intangible asset amortization (10) |
|
|
3,101 |
|
|
3,151 |
|
|
3,524 |
|
|
2,977 |
|
|
1,811 |
|
|
|
12,753 |
|
|
6,282 |
|
|||||
Gain on sale of business (11) |
|
|
— |
|
|
(68,443 |
) |
|
— |
|
|
— |
|
|
— |
|
|
|
(68,443 |
) |
|
— |
|
|||||
Goodwill impairment (12) |
|
|
145,241 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
145,241 |
|
|
— |
|
|||||
Cumulative tax effect of adjustments (13) |
|
|
(12,745 |
) |
|
23,677 |
|
|
(3,788 |
) |
|
(1,828 |
) |
|
(4,603 |
) |
|
|
5,316 |
|
|
8,455 |
|
|||||
Adjusted net (loss) income |
|
$ |
(32,284 |
) |
$ |
(11,893 |
) |
$ |
(11,286 |
) |
$ |
6,275 |
|
$ |
(12,288 |
) |
|
$ |
(49,188 |
) |
$ |
41,679 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net (loss) income |
|
$ |
(186,393 |
) |
$ |
25,653 |
|
$ |
(26,080 |
) |
$ |
1,336 |
|
$ |
(28,879 |
) |
|
($ |
185,484 |
) |
$ |
59,334 |
|
|||||
Diluted weighted average shares outstanding |
|
|
40,488 |
|
|
40,835 |
|
|
40,376 |
|
|
41,308 |
|
|
40,254 |
|
|
|
40,428 |
|
|
43,143 |
|
|||||
Adjusted diluted weighted average shares outstanding |
|
|
40,488 |
|
|
40,835 |
|
|
40,376 |
|
|
41,308 |
|
|
42,389 |
|
|
|
40,428 |
|
|
43,143 |
|
|||||
Diluted (loss) earnings per share |
|
$ |
(4.60 |
) |
$ |
0.63 |
|
$ |
(0.65 |
) |
$ |
0.03 |
|
$ |
(0.72 |
) |
|
$ |
(4.59 |
) |
$ |
1.38 |
|
|||||
Per share impact of adjustments to net income (loss) |
|
|
3.80 |
|
|
(0.92 |
) |
|
0.37 |
|
|
0.12 |
|
|
0.43 |
|
|
|
3.37 |
|
|
(0.41 |
) |
|||||
Adjusted diluted (loss) earnings per share |
|
$ |
(0.80 |
) |
$ |
(0.29 |
) |
$ |
(0.28 |
) |
$ |
0.15 |
|
$ |
(0.29 |
) |
|
($ |
1.22 |
) |
$ |
0.97 |
|
|||||
(1) |
Restructuring costs primarily related to U.S. and Canada store closures and other cost saving initiatives. |
(2) |
Legal and other costs primarily related to settlement costs related to certain legal matters. |
(3) |
Share of Katapult's U.S. GAAP net income or loss, recognized on a one quarter lag. |
(4) |
Gain on investment in Katapult recorded as a result of the completion of its reverse merger with FinServ. |
(5) |
Transaction costs primarily related to the sale of the Legacy U.S. Direct Lending business in July 2022, the acquisition of First Heritage in July 2022 and the acquisition of Heights Finance in December 2021. |
(6) |
During 2022, acquisition-related adjustments related to the Heights Finance and First Heritage acquisitions.
During 2022 and 2021, acquisition-related adjustments related to the Flexiti acquisition. |
(7) |
Adjustments related to the fair value of the contingent consideration related to the acquisition of Flexiti. |
(8) |
On July 30, 2021, we entered into new 7.50% Senior Secured Notes due 2028, which were used on August 12, 2021 to extinguish the 8.25% Senior Secured Notes due 2025. During the three and nine months ended December 30, 2021, $40.2 million from the loss on the extinguishment of debt was due to the early redemption of the 8.25% Senior Secured Notes due 2025. An additional $2.1 million of interest was incurred for the year ended December 30, 2021, which represents interest on the 8.25% Senior Secured Notes due 2025 for the period between July 30, 2021 and August 12, 2021, the period during which the 8.25% Senior Secured Notes and 7.50% Senior Secured Notes were outstanding.
During three months September 30, 2022, $3.1 million of the loss on extinguishment of debt was due to the early extinguishment of the U.S. SPV on July 8, 2022 upon the completion of the divestiture of our Legacy U.S.Direct Lending business to Community Choice Financial, and $0.6 million was due to the extinguishment of the Heights Finance SPV on July 15, 2022.
During three months December 31, 2022, $0.7 million of the loss on extinguishment of debt was due to the Flexiti SPF loan settlement. |
(9) |
Estimated fair value of share-based awards was recognized as non-cash compensation expense on a straight-line basis over the vesting period. |
(10) |
Intangible asset amortization primarily included amortization of identifiable intangible assets established in connection with the acquisitions of Flexiti in March 2021, Heights Finance in December 2021 and First Heritage in July 2022. |
(11) |
Gain on the divestiture of its Legacy U.S. Direct Lending business to Community Choice Financial in July 2022. |
(12) |
Goodwill impairment charge of $107.8 million recorded on the U.S. Direct Lending reporting unit and $37.4 million recorded on the Canada POS Lending reporting unit during the fourth quarter of 2022. |
(13) |
Cumulative tax effect of adjustments included in Reconciliation of Net (loss) income to Adjusted net (loss) income table is calculated using the estimated incremental tax rate by country. |
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 ability to provide long-term value and return to our investors, reduction in operating expenses and our belief in the usefulness of the various non-GAAP financial measures used in this release. 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-arty 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 negative 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.
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(CURO-NWS)
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Contacts
Investor Relations:
Izzy Dawood
Chief Financial Officer
Phone: 844-200-0342
Email: IR@curo.com
