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CURO Group Holdings Corp. Reports Third Quarter 2023 Financial Results

-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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