-Gross loans receivables increased 3.7%
sequentially to $2.1 billion- -Total revenue of $209.2
million- -Operating expenses declined 8.5% sequentially to
$108.1 million- -Net charge-off normalizes at 13%-
CURO Group Holdings Corp. (NYSE: CURO) (“CURO” or the
“Company”), a tech-enabled, omni-channel consumer finance company
serving consumers in the U.S. and Canada, today announced financial
results for its second quarter ended June 30, 2023.
“We delivered solid results in the second quarter as we
continued to execute on all facets of our core business,” said Doug
Clark, Chief Executive Officer. “Our fundamentals continued to
gradually improve, with revenue, net charge-offs, gross loans
receivable and expenses all matching or exceeding our expectations.
As we look ahead, despite ongoing macro challenges, we are
encouraged by opportunities present in both the U.S. and Canada
while remaining mindful to balance future growth with further
improving our bottom line. Our extensive industry experience,
investments in automation and strong consumer demand for our
products position us well for long term growth and shareholder
value creation.”
Second Quarter 2023 Consolidated Summary Results
- Gross loans receivable increased 3.7% sequentially to $2.1
billion, primarily driven by sequential increases in Canada POS
Lending and Direct Lending Revolving LOC Loans of 6.9% and 2.5%,
respectively.
- Net revenue of $129.6 million, down 11.5% sequentially,
primarily driven by a higher provision for loan loss expense
related to the increase in charge offs and Allowance for loan loss
build due to loans receivable growth and change in macroeconomic
conditions.
- Total operating expenses declined 8.5% sequentially, to $108.1
million, primarily related to one-time restructuring charges of
$10.0 million recognized in the first quarter of 2023.
- Net loss of $59.3 million ($1.45 per share) compared with Net
loss of $59.5 million ($1.46 per share) for the first quarter of
2023. The $0.2 million improvement was primarily driven by
favorable decreases of $18.4 million in provision for income taxes
and $10.1 million in total operating expenses, partially offset by
lower net revenue and a $7.2 million increase in Interest expense
due to the new term loan secured in May 2023 as well as increased
utilization of non-recourse revolving credit facilities and $8.9
million of extinguishment and modification costs arising from the
second quarter's debt transactions.
- Net charge-off rate increased 150 bps, sequentially to 13.0%,
returning to normalized rates from the temporary lower rates we saw
in our Direct Lending brands in Canada after the policy change we
made in the first quarter of 2023. The Company's 91+ days
delinquency ratio remained flat sequentially at 3.2%.
As of or for the Quarter
Ended
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Delinquency and Loss Ratios
2023
2023
2022
2022
2022
31-60 days delinquency ratio
1.9
%
1.8
%
1.9
%
2.5
%
2.4
%
61-90 days delinquency ratio
1.3
%
1.5
%
1.3
%
1.5
%
1.8
%
91+ days delinquency ratio
3.2
%
3.2
%
2.6
%
2.6
%
2.0
%
Net charge-offs
13.0
%
11.5
%
14.8
%
13.2
%
24.0
%
Funding and Liquidity
As of June 30, 2023, principal debt balances outstanding were
$2.8 billion, consisting of 69.2% of fixed rate or hedged variable
rate debt and 30.8% of non-hedged variable rate debt.
As of June 30, 2023, available capital resources were
approximately $361.9 million, comprised of $111.3 million in
unrestricted Cash and cash equivalents, $176.7 million in unused
borrowing capacity and $74.0 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®, Flexiti®, Heights Finance, Southern Finance, Covington
Credit, Quick Credit and First Heritage Credit.
Conference Call
CURO will host a conference call to discuss these results at
8:30 a.m. Eastern Time on Thursday, August 3, 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 1-416-764-8658 (Toll free:
1-888-396-8049; Conference ID: 82661841). 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 six months ended June 30, 2023.
Table 1 - Consolidated Statements of Operations
(in thousands, except per share data,
unaudited)
Three Months Ended,
Jun 30,
Mar 31,
Dec 31,
Sept 30,
Jun 30,
2023
2023
2022
2022
2022
Revenue
Interest and fees revenue
$
178,986
$
179,437
$
181,605
$
180,515
$
278,331
Insurance and other income
30,257
30,036
35,593
33,605
26,073
Total revenue
209,243
209,473
217,198
214,120
304,404
Provision for losses
79,598
62,932
94,849
78,399
129,546
Net revenue
129,645
146,541
122,349
135,721
174,858
Operating Expenses
Salaries and benefits
61,346
64,805
66,067
53,413
82,427
Occupancy
11,267
11,672
12,114
12,827
17,507
Advertising
2,131
2,175
3,692
5,244
12,707
Direct operations
15,466
13,092
11,832
11,729
20,293
Depreciation and amortization
9,141
9,021
8,337
9,499
8,672
Other operating expense
8,796
17,433
24,002
23,645
18,787
Total operating expenses
108,147
118,198
126,044
116,357
160,393
Other expense (income)
Interest expense
66,101
58,943
54,978
50,149
42,193
Loss from equity method investment
2,134
3,413
1,932
2,309
1,328
Goodwill impairment
—
—
145,241
—
—
Extinguishment or modification of debt
costs
8,864
—
689
3,702
—
Loss on change in fair value of contingent
consideration
—
2,728
—
(11,354
)
4,014
Gain on sale of business
—
2,027
—
(68,443
)
—
Miscellaneous expenses
1,435
—
—
—
—
Total other expense (income)
78,534
67,111
202,840
(23,637
)
47,535
Income (loss) before income taxes
(57,036
)
(38,768
)
(206,535
)
43,001
(33,070
)
Provision (benefit) for income taxes
2,291
20,703
(20,142
)
17,348
(6,990
)
Net (loss) income
$
(59,327
)
$
(59,471
)
$
(186,393
)
$
25,653
$
(26,080
)
Basic (loss) earnings per share
$
(1.45
)
$
(1.46
)
$
(4.60
)
$
0.63
$
(0.65
)
Diluted (loss) earnings per share
$
(1.45
)
$
(1.46
)
$
(4.60
)
$
0.63
$
(0.65
)
Weighted average common shares
outstanding:
Basic
41,002
40,783
40,488
40,479
40,376
Diluted
41,002
40,783
40,488
40,835
40,376
Table 2 - Consolidated Balance Sheets
As of
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in thousands, unaudited)
2023
2023
2022
2022
2022
ASSETS
Cash and cash equivalents
$
112,531
$
54,935
$
73,932
$
45,683
$
37,394
Restricted cash
109,484
123,282
91,745
144,020
97,465
Gross loans receivable
2,139,865
2,062,829
2,087,833
1,894,427
1,592,815
Less: Allowance for loan losses
(272,615
)
(259,959
)
(122,028
)
(102,743
)
(90,286
)
Loans receivable, net
1,867,250
1,802,870
1,965,805
1,791,684
1,502,529
Income taxes receivable
20,854
20,100
21,918
13,469
46,450
Prepaid expenses and other
44,518
47,295
53,057
65,167
25,370
Property and equipment, net
28,418
29,867
31,957
37,402
38,752
Investment in Katapult
18,368
20,502
23,915
25,848
28,157
Right of use asset - operating leases
56,021
54,597
61,197
64,683
64,602
Deferred tax assets
54,102
53,474
49,893
31,986
23,993
Goodwill
277,069
276,487
276,269
424,292
352,990
Intangibles, net
133,947
127,387
123,677
120,345
113,130
Other assets
22,275
10,991
15,828
12,774
8,558
Assets held for sale (1)
—
—
—
—
338,779
Total Assets
$
2,744,837
$
2,621,787
$
2,789,193
$
2,777,353
$
2,678,169
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued
liabilities
$
78,343
$
85,875
$
73,827
$
66,723
$
81,423
Deferred revenue
36,793
33,227
32,259
25,111
23,425
Lease liability - operating leases
56,585
55,468
62,847
66,370
67,339
Contingent consideration related to
acquisition
18,499
18,128
16,884
15,770
30,354
Income taxes payable
788
—
—
—
4
Accrued interest
39,306
20,090
38,460
18,048
34,970
Debt
2,772,872
2,627,263
2,607,314
2,449,316
2,189,431
Other long-term liabilities
10,016
10,552
11,736
11,563
12,146
Deferred tax liabilities
8
—
—
—
12,360
Liabilities held for sale (1)
—
—
—
—
111,137
Total Liabilities
$
3,013,210
$
2,850,603
$
2,843,327
$
2,652,901
$
2,562,589
Total Stockholders' (Deficit) Equity
(268,373
)
(228,816
)
(54,134
)
124,452
115,580
Total Liabilities and Stockholders'
(Deficit) Equity
$
2,744,837
$
2,621,787
$
2,789,193
$
2,777,353
$
2,678,169
(1) Assets held for sale and Liabilities
held for sale represent the balance, as of June 30, 2022, for
assets and liabilities, respectively, associated with the sale of
the Legacy U.S. Direct Lending Business, which closed in July
2022.
Table 3 - Consolidated Portfolio Performance
(in thousands, except percentages,
unaudited)
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Q2 2022(1)
Gross loans
receivable
Revolving LOC
$
1,385,152
$
1,314,695
$
1,284,515
$
1,129,387
$
1,128,372
Installment loans
754,713
748,134
803,318
765,040
652,468
Total gross loans receivable
$
2,139,865
$
2,062,829
$
2,087,833
$
1,894,427
$
1,780,840
Lending
Revenue
Revolving LOC
$
86,703
$
84,225
$
81,170
$
77,037
$
96,582
Installment loans
92,283
95,212
100,435
103,478
181,749
Total lending revenue
$
178,986
$
179,437
$
181,605
$
180,515
$
278,331
Lending
Provision
Revolving LOC
$
42,932
$
30,106
$
46,745
$
41,787
$
40,435
Installment loans
35,171
31,139
46,442
33,510
86,484
Total lending provision
$
78,103
$
61,245
$
93,187
$
75,297
$
126,919
NCOs (2)
Revolving LOC
$
32,786
$
17,953
$
35,387
$
30,907
$
33,945
Installment loans
35,483
41,078
38,168
31,372
71,056
Total NCOs
$
68,269
$
59,031
$
73,555
$
62,279
$
105,001
NCO rate
(annualized) (2) (3)
Revolving LOC
9.7
%
5.6
%
11.6
%
10.8
%
12.8
%
Installment loans
18.9
%
21.5
%
19.6
%
17.6
%
44.8
%
Total NCO rate
13.0
%
11.5
%
14.8
%
13.2
%
24.0
%
ACL rate (4)
(5)
Revolving LOC
13.6
%
13.3
%
6.1
%
6.0
%
6.7
%
Installment loans
11.2
%
11.3
%
5.4
%
4.6
%
8.1
%
Total ACL rate
12.7
%
12.6
%
5.8
%
5.4
%
6.7
%
31+ days past-due
rate (4)
Revolving LOC
5.6
%
5.5
%
3.3
%
4.1
%
4.1
%
Installment loans
8.1
%
8.2
%
9.6
%
10.2
%
9.2
%
Total past-due rate
6.5
%
6.5
%
5.8
%
6.6
%
6.1
%
(1) Includes loan balances and activity
classified as Held for Sale.
(2) NCOs include $0.5 million and $10.3
million, for the three months ended September 30, 2022 and June 30,
2022, respectively, related to the purchase accounting fair value
discount, which are excluded from provision.
(3) We calculate NCO rate as total
quarterly NCOs divided by Average gross loans receivable; then we
annualize the rate. The amount and timing of recoveries are
impacted by our collection strategies, which are based on customer
behavior and risk profile and include direct customer
communications and the periodic sale of charged off loans.
(4) We calculate (i) Allowance for credit
losses ("ACL") rate and (ii) 31+ days past-due rate as the
respective totals divided by gross loans receivable at each quarter
end.
(5) We adopted ASU 2016-13, "Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments" on January 1, 2023, which requires
us to estimate the lifetime expected credit loss on financial
instruments. Our previous model required the recognition of credit
losses when it was probable that a loss had been incurred.
Table 4 - Direct Lending Segment - Operating Income /
(Loss)
(in thousands, unaudited)
Three Months Ended,
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
2023
2023
2022
2022
2022
Total revenue
$
167,016
$
169,368
$
181,925
$
186,409
$
281,251
Provision for losses
63,755
48,364
77,724
65,020
123,584
Net revenue
103,261
121,004
104,201
121,389
157,667
Total operating expenses
91,285
103,151
111,632
102,840
143,965
Segment operating income (loss)
$
11,976
$
17,853
$
(7,431
)
$
18,549
$
13,702
Table 5 - Direct Lending Segment - Portfolio
Performance
(in thousands, except percentages,
unaudited)
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Q2 2022(1)
Gross loans
receivable
Revolving LOC
$
472,902
$
461,443
$
451,077
$
439,117
$
501,209
Installment loans
754,713
748,133
803,318
765,041
652,467
Total gross loans receivable
$
1,227,615
$
1,209,576
$
1,254,395
$
1,204,158
$
1,153,676
Lending
Revenue
Revolving LOC
$
49,483
$
49,092
$
49,915
$
52,461
$
75,736
Installment loans
92,283
95,212
100,435
103,478
181,748
Total lending revenue
$
141,766
$
144,304
$
150,350
$
155,939
$
257,484
Lending
Provision
Revolving LOC
$
27,089
$
15,539
$
29,620
$
28,408
$
34,472
Installment loans
35,171
31,139
46,442
33,511
86,485
Total lending provision
$
62,260
$
46,678
$
76,062
$
61,919
$
120,957
NCOs (2)
Revolving LOC
$
21,780
$
6,234
$
26,715
$
24,793
$
30,408
Installment loans
35,483
41,078
38,168
29,783
43,661
Total NCOs
$
57,263
$
47,312
$
64,883
$
54,576
$
74,069
NCO rate
(annualized) (2) (3)
Revolving LOC
18.7
%
5.5
%
23.8
%
20.9
%
25.0
%
Installment loans
18.9
%
21.5
%
19.3
%
16.7
%
27.7
%
Total NCO rate
18.8
%
15.6
%
20.9
%
18.4
%
26.5
%
ACL rate (4)
(5)
Revolving LOC
26.6
%
25.6
%
8.4
%
7.9
%
9.3
%
Installment loans
11.2
%
11.3
%
5.4
%
4.6
%
6.9
%
Total ACL rate
17.1
%
16.8
%
6.5
%
5.8
%
7.9
%
31+ days past-due
rate (4)
Revolving LOC
8.5
%
8.4
%
4.1
%
5.1
%
5.8
%
Installment loans
8.1
%
8.2
%
9.6
%
10.2
%
9.7
%
Total past-due rate
8.3
%
8.3
%
7.6
%
8.3
%
8.0
%
(1) Includes loan balances and activity
classified as Held for Sale.
(2) NCOs include $0.5 million and $10.3
million, for the three months ended September 30, 2022 and June 30,
2022, respectively, related to the purchase accounting fair value
discount, which are excluded from provision.
(3) We calculate NCO rate as total
quarterly NCOs divided by Average gross loans receivable, then we
annualize the rate. The amount and timing of recoveries are
impacted by our collection strategies, which are based on customer
behavior and risk profile and include direct customer
communications and the periodic sale of charged off loans.
(4) We calculate (i) ACL rate and (ii) 31+
days past-due rate as the respective totals divided by gross loans
receivable at each quarter end.
(5) We adopted ASU 2016-13, "Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments" on January 1, 2023, which requires
us to estimate the lifetime expected credit loss on financial
instruments. Our previous model required the recognition of credit
losses when it was probable that a loss had been incurred.
Table 6 - Canada POS Lending Segment - Operating
Income
(in thousands, unaudited)
Three Months Ended,
Jun 30,
Mar 31,
Dec 31,
Sept 30,
Jun 30,
2023
2023
2022
2022
2022
Total revenue
$
42,227
$
40,105
$
35,273
$
27,711
$
23,153
Provision for losses
15,843
14,568
17,125
13,379
5,962
Net revenue
26,384
25,537
18,148
14,332
17,191
Total operating expenses
16,862
15,047
14,412
13,518
16,428
Segment operating income
$
9,522
$
10,490
$
3,736
$
814
$
763
Table 7 - Canada POS Lending Segment - Portfolio
Performance
(in thousands, except percentages,
unaudited)
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Revolving
LOC
Gross loans receivable
$
912,250
$
853,253
$
833,438
$
690,270
$
627,163
Lending revenue
$
37,220
$
35,133
$
31,255
$
24,575
$
20,847
Lending provision
$
15,843
$
14,568
$
17,125
$
13,379
$
5,963
NCOs
$
11,006
$
11,719
$
8,672
$
6,114
$
3,537
NCO rate (annualized) (1)
5.0
%
5.6
%
4.4
%
3.6
%
2.4
%
ACL rate (2) (3)
6.8
%
6.7
%
4.9
%
4.8
%
4.5
%
31+ days past-due rate (2)
4.0
%
3.9
%
2.9
%
3.6
%
2.8
%
(1) We calculate NCO rate as total
quarterly NCOs divided by Average gross loans receivable and then
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 respective quarter end.
(3) We adopted ASU 2016-13, "Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments" on January 1, 2023, which requires
us to estimate the lifetime expected credit loss on financial
instruments. Our previous model required the recognition of credit
losses when it was probable that a loss had been incurred.
Forward-Looking Statements
This press release contains forward-looking statements. These
forward-looking statements include projections, estimates and
assumptions about various matters, such as future financial and
operational performance, including our belief in the drivers of
creating long term growth and shareholder value. 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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