CURO Group Holdings Corp. Announces Third Quarter 2021 Financial Results
CURO Group Holdings Corp. (CURO) reported significant growth in its Q3 2021 financial results, with total revenue increasing by 15% year-over-year to $209.3 million and gross loans receivable up by 77.4%. The Canadian operations drove this growth, notably the POS Lending segment which saw a 63% revenue increase sequentially. Despite these gains, CURO reported a diluted loss per share of $1.02, largely due to a loss on debt extinguishment. The company also raised its revenue and earnings growth outlook for 2022 and 2023, anticipating continued strong trends as demand recovers from the pandemic.
- Total revenue increased by 15% year-over-year to $209.3 million.
- Gross loans receivable surged 77.4% compared to Q3 2020.
- Canada Direct Lending revenue grew 34.7% year-over-year.
- POS Lending revenue increased by 63% sequentially.
- Raised revenue and earnings growth outlook for 2022 and 2023.
- Reported a diluted loss per share of $1.02, attributed to the extinguishment of $40.2 million in debt.
- Adjusted net income decreased by 43.1% year-over-year.
Company Owned Gross Loans Receivable Grew
“We posted extremely strong loan growth in our Canadian businesses and demand returned as expected in the
“Our consolidated net charge-off rate improved by approximately 240 bps year over year and delinquencies remained at historically low levels. Our customers drove stable and excellent credit quality in the third quarter, which was aided by our newly acquired Flexiti portfolio. On the
“This was another successful quarter in our journey to transform CURO into a full-spectrum North American consumer lender while reducing risk and creating value by diversifying our product and channel mix. We recently raised our 2022 and 2023 revenue and earnings growth outlook for
“We expect strong revenue and growth trends to continue as we exit 2021 and we execute on our strategic growth initiatives and demand continues to recover from the COVID-19 pandemic. Between our unique collection of businesses in the
Consolidated Summary Results - Unaudited
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||
(in thousands, except per share data) |
|
2021 |
2020 |
Variance |
|
2021 |
2020 |
Variance |
||||||
Revenue |
|
|
|
|
|
15.0 |
% |
|
|
|
|
|
(8.0) |
% |
Net revenue |
|
138,562 |
|
127,253 |
|
8.9 |
% |
|
441,496 |
|
426,339 |
|
3.6 |
% |
Company Owned gross loans receivable |
|
882,356 |
|
497,442 |
|
77.4 |
% |
|
882,356 |
|
497,442 |
|
77.4 |
% |
Unrestricted cash |
|
205,785 |
|
207,071 |
|
(0.6) |
% |
|
205,785 |
|
207,071 |
|
(0.6) |
% |
Net (loss) income |
|
(42,039) |
|
12,881 |
|
# |
|
88,213 |
|
71,259 |
|
23.8 |
% |
|
Adjusted Net Income (1) |
|
6,445 |
|
11,326 |
|
(43.1) |
% |
|
53,967 |
|
65,772 |
|
(17.9) |
% |
Diluted (Loss) Earnings per Share from continuing operations |
|
( |
|
|
|
# |
|
|
|
|
|
20.8 |
% |
|
Adjusted Diluted Earnings per Share from continuing operations (1)(2) |
|
|
|
|
|
(44.4) |
% |
|
|
|
|
|
(21.5) |
% |
EBITDA (1) |
|
(22,324) |
|
34,800 |
|
# |
|
205,923 |
|
139,487 |
|
47.6 |
% |
|
Adjusted EBITDA (1) |
|
37,623 |
|
36,115 |
|
4.2 |
% |
|
151,700 |
|
153,031 |
|
(0.9) |
% |
Weighted Average Shares — diluted |
|
41,220 |
|
41,775 |
|
|
|
43,422 |
|
41,660 |
|
|
||
Adjusted Weighted Average Shares — diluted (2) |
|
43,285 |
|
41,775 |
|
|
|
43,422 |
|
41,660 |
|
|
||
# - Variance greater than |
||||||||||||||
(1) These are non-GAAP metrics. For a reconciliation of each non-GAAP metric to the nearest GAAP metric, see the applicable reconciliations contained under "Results of Operations." For a description of each non-GAAP metric, see "Non-GAAP Financial Measures." |
||||||||||||||
(2) We calculate Adjusted Diluted Earnings per Share utilizing diluted shares outstanding as of |
||||||||||||||
We reported Net Loss of
Below are additional highlights of our performance during the three and nine months ended
-
Loans Receivable
-
Year-over-year growth in Company Owned gross loans receivable and combined gross loans receivable of
$384.9 million 77.4% , and$388.6 million 72.3% , respectively. -
Canada Direct Lending gross loans receivable grew
$98.7 million 33.8% , year over year and$29.6 million 8.2% , sequentially (described within this release as the change from the second quarter to the third quarter). -
Canada POS Lending gross loans receivable were
$302.3 million March 2021 . Sequentially, Canada POS Lending gross loans receivable grew$80.9 million 36.5% , primarily driven by Flexiti's exclusive agreement with Leon's Furniture Limited ("LFL"),Canada's largest home furnishings retailer, which commenced inJuly 2021 , as well the onboarding and ramp up of other merchants. -
U.S. Company Owned gross loans receivable declined$16.1 million 7.8% , year-over-year. Excluding runoff portfolios inCalifornia ,Virginia and Verge Installment loans,U.S. Company Owned gross loans receivable grew$20.1 million 14.5% , compared to the same period in the prior year, and$18.2 million 12.9% , sequentially.
-
Year-over-year growth in Company Owned gross loans receivable and combined gross loans receivable of
-
Revenue and Net Revenue
-
For the three months ended
September 30, 2021 , revenue increased$27.3 million 15.0% , year over year. Compared to the second quarter of 2021, revenue increased$21.6 million 11.5% , primarily driven by growth of$12.9 million 10.8% in theU.S. ,$4.4 million 62.6% , inCanada POS Lending and$4.3 million 7.0% , inCanada Direct Lending. -
For the three months ended
September 30, 2021 , net revenue increased$11.3 million 8.9% , year over year and decreased$4.0 million 2.8% , sequentially. Net revenue declined as compared to the second quarter of 2021, due to higher provision for losses as a result of higher net charge-offs ("NCOs") and increased delinquencies associated with our loan growth. -
For the nine months ended
September 30, 2021 , revenue decreased$51.8 million 8.0% , compared to the prior year, primarily due to the effect of COVID-19 and two rounds of significantU.S. government stimulus that reducedU.S. loan balances. -
For the nine months ended
September 30, 2021 , net revenue increased$15.2 million 3.6% , year over year as the negative effect on revenue of lower average loan balances was mitigated by significant improvements in credit quality and the effect of changes in loan balances on loan loss provisioning.
-
For the three months ended
-
NCOs and Delinquency Metrics
-
Consolidated quarterly NCO rates improved year over year by 240 bps, primarily as a result of the acquisition of Canada POS Lending and loan growth in
Canada Direct Lending. Sequentially, consolidated quarterly NCO rates increased 70 bps due to product mix shifts. -
Quarterly NCO rates for
U.S. increased 440 bps both year over year and sequentially, primarily driven by customer and origination channel mix shifts and diminishing COVID-19 Impacts. - Quarterly NCO rates for Canada Direct Lending remained stable year over year and improved 20 bps sequentially.
-
Past-due loans increased year over year and sequentially for
U.S. and Canada Direct Lending, primarily as a result of government stimulus-related loan repayments in the prior year and first half of 2021.
-
Consolidated quarterly NCO rates improved year over year by 240 bps, primarily as a result of the acquisition of Canada POS Lending and loan growth in
-
Earnings / Loss per Share
-
Diluted Loss per Share from continuing operations was
$1.02 September 30, 2021 compared to Diluted Earnings per Share of$0.31 September 30, 2020 , primarily due to the loss on our extinguishment of debt from our8.25% Senior Secured Notes refinancing. Adjusted Diluted Earnings per Share was$0.15 $0.27 September 30, 2021 and 2020, respectively. -
Diluted Earnings per Share from continuing operations was
$2.03 September 30, 2021 compared to$1.68 September 30, 2020 , primarily due to the Katapult Holdings Inc. ("Katapult") merger inJune 2021 . Adjusted Diluted Earnings per Share was$1.24 $1.58 September 30, 2021 and 2020, respectively.
-
Diluted Loss per Share from continuing operations was
-
Other Highlights
-
On
October 27, 2021 , our Board of Directors declared an$0.11 November 22, 2021 to stockholders of record as ofNovember 12, 2021 . -
On
July 30, 2021 , we closed$750.0 million 7.50% Senior Secured Notes due 2028. The proceeds were used: (i) to redeem our8.25% Senior Secured Notes due 2025, (ii) to pay related fees, expenses, premiums and accrued interest and (iii) for general corporate purposes. This refinancing extended maturities and increased our borrowing capacity while maintaining related borrowing costs at levels under the$690.0 million 8.25% Senior Secured Notes. -
We closed and consolidated 49 U.S. stores, representing approximately a quarter of all
U.S. stores, during the second and third quarters of 2021 to better align with changing customer trends, preferences for online transactions and certain states' regulatory considerations. The impacted locations generated only8% of ourU.S. store revenue in 2020. -
Effective
July 1, 2021 , Flexiti commenced a 10-year agreement to become the exclusive POS financing partner to LFL, which operates over 300 stores inCanada under multiple banners including Leon's and The Brick. -
Katapult's merger with FinServ Acquisition Corp. ("FinServ") closed on
June 9, 2021 . We received cash of$146.9 million $135.4 million September 30, 2021 was19.3% , including potential earn-out shares. -
Under the terms of our
$50.0 million April 2021 , we purchased 1,355,682 shares for$22.9 million October 29, 2021 . -
We completed our acquisition of Flexiti on
March 10, 2021 .
-
On
From the second quarter of 2020 through the first half of 2021, we experienced lower customer demand, good credit performance, increased or accelerated repayments and favorable payment trends as customers were aided by government stimulus programs while periodically enduring pandemic lockdowns (collectively "COVID-19 Impacts"). In the third quarter of 2021, our markets were less affected by COVID-19 Impacts, causing positive growth trends in revenue and receivables.
Consolidated Revenue by Product and Segment
The following table summarizes revenue by product, including revenue we earn from operating as a credit services organization ("CSO") by charging a customer a fee for arranging an unrelated third party to make a loan to that customer, which we refer to as "CSO fees", for the period indicated:
|
|
Three Months Ended |
||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||
(in thousands, unaudited) |
|
|
|
|
Total |
% of Total |
|
|
|
|
Total |
% of Total |
||||||||||
Revolving LOC |
|
|
|
|
|
|
|
|
|
37.4 |
% |
|
|
|
|
|
$ — |
|
|
|
32.2 |
% |
Installment |
|
101,036 |
|
11,331 |
|
— |
|
112,367 |
|
53.7 |
% |
|
98,946 |
|
10,238 |
|
— |
|
109,184 |
|
60.0 |
% |
Ancillary |
|
3,261 |
|
14,620 |
|
770 |
|
18,651 |
|
8.9 |
% |
|
3,471 |
|
10,637 |
|
— |
|
14,108 |
|
7.8 |
% |
Total revenue |
|
|
|
|
|
|
|
|
|
100.0 |
% |
|
|
|
|
|
$ — |
|
|
|
100.0 |
% |
During the three months ended
Canada POS Lending revenue includes merchant discount revenue ("MDR"), which is recognized over the life of the underlying loan term. On
The table below recaps acquisition-related adjustments to Flexiti's revenue and net revenue for the periods indicated:
|
Three months ended |
|
Nine months ended |
||||||||||||||||||||
(in thousands, unaudited) |
Canada POS
|
|
Acquisition-
|
|
Adjusted
|
|
Canada POS
|
|
Acquisition-
|
|
Adjusted
|
||||||||||||
Interest income |
$ |
7,409 |
|
|
$ |
(2,523) |
|
(1) |
$ |
4,886 |
|
|
$ |
14,414 |
|
|
$ |
(4,115) |
|
(1) |
$ |
10,299 |
|
Other revenue |
4,007 |
|
|
4,278 |
|
(2) |
8,285 |
|
|
5,640 |
|
|
9,924 |
|
(2) |
15,564 |
|
||||||
Total revenue |
$ |
11,416 |
|
|
$ |
1,755 |
|
|
$ |
13,171 |
|
|
$ |
20,054 |
|
|
$ |
5,809 |
|
|
$ |
25,863 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Provision for losses |
8,285 |
|
|
(2,526) |
|
(1) |
5,759 |
|
|
12,127 |
|
|
(3,945) |
|
(1) |
8,182 |
|
||||||
Net revenue |
$ |
3,131 |
|
|
$ |
4,281 |
|
|
$ |
7,412 |
|
|
$ |
7,927 |
|
|
$ |
9,754 |
|
|
$ |
17,681 |
|
(1) Acquisition-related adjustments for interest income and provision for losses relate to the amortization of the fair value discount of the Acquired Portfolio. |
|||||||||||||||||||||||
(2) Acquisition-related adjustments for other revenue represents the unearned MDR and annual and administrative fees, which were not included in the opening balance sheet as they did not represent future cash flows as of |
|||||||||||||||||||||||
From a product perspective, Revolving LOC revenue for the three months ended
For the three months ended
Ancillary revenue increased
The following table summarizes revenue by product, including CSO fees, for the period indicated:
|
|
Nine Months Ended |
||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||
(in thousands, unaudited) |
|
|
|
|
Total |
% of Total |
|
|
|
|
Total |
% of Total |
||||||||||
Revolving LOC |
|
|
|
|
|
|
|
|
|
35.2 |
% |
|
|
|
|
|
$ — |
|
|
|
28.9 |
% |
Installment |
|
297,803 |
|
32,319 |
|
— |
|
330,122 |
|
55.6 |
% |
|
377,158 |
|
38,522 |
|
— |
|
415,680 |
|
64.4 |
% |
Ancillary |
|
10,766 |
|
42,134 |
|
1,469 |
|
54,369 |
|
9.2 |
% |
|
11,440 |
|
31,769 |
|
— |
|
43,209 |
|
6.7 |
% |
Total revenue |
|
|
|
|
|
|
|
|
|
100.0 |
% |
|
|
|
|
|
$ — |
|
|
|
100.0 |
% |
For the nine months ended
As described above, certain acquisition-related adjustments related to the amortization of the fair value discount on acquired loans receivable increased Canada POS Lending revenue and net revenue for the nine months ended
From a product perspective, Revolving LOC revenues increased
For the nine months ended
Ancillary revenues increased
The following table presents online revenue and online transaction compositions, including CSO fees, of the products and services that we currently offer within the
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||
Online revenue as a percentage of consolidated revenue |
|
48.0 |
% |
|
48.8 |
% |
|
48.8 |
% |
|
47.8 |
% |
Online transactions as a percentage of consolidated transactions |
|
61.0 |
% |
|
57.2 |
% |
|
60.5 |
% |
|
53.4 |
% |
Online revenue as a percentage of consolidated revenue increased during the three and nine months ended
Consolidated Loans Receivable
The following table reconciles Company Owned gross loans receivable, a GAAP-basis balance sheet measure, to Gross combined loans receivable, a non-GAAP measure(1). Gross combined loans receivable includes loans originated by third-party lenders through CSO programs, which are not included in the Condensed Consolidated Financial Statements but from which we earn revenue by providing a guarantee to the unaffiliated lender.
|
|
As of |
|||||||||||||
(in thousands, unaudited) |
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Revolving LOC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Installment - Company Owned |
|
137,987 |
|
|
139,234 |
|
|
142,396 |
|
|
167,890 |
|
|
148,569 |
|
Canada Direct Lending |
|
|
|
|
|
|
|
|
|
|
|||||
Revolving LOC |
|
366,509 |
|
|
337,700 |
|
|
319,307 |
|
|
303,323 |
|
|
265,507 |
|
Installment |
|
24,315 |
|
|
23,564 |
|
|
24,385 |
|
|
26,948 |
|
|
26,639 |
|
Canada POS Lending |
|
|
|
|
|
|
|
|
|
|
|||||
Revolving LOC |
|
302,349 |
|
|
221,453 |
|
|
201,539 |
|
|
— |
|
|
— |
|
Company Owned gross loans receivable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross loans receivable Guaranteed by the Company |
|
43,422 |
|
|
37,093 |
|
|
32,439 |
|
|
44,105 |
|
|
39,768 |
|
Gross combined loans receivable (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See "Non-GAAP Financial Measures" at the end of this release for definition and more information. |
|||||||||||||||
Gross combined loans receivable increased
Sequentially, gross combined loans receivable increased
Results of Consolidated Operations
Condensed Consolidated Statements of Operations
(in thousands, unaudited) |
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||
|
2021 |
2020 |
Change $ |
Change % |
|
2021 |
2020 |
Change $ |
Change % |
|||||||||
Revenue |
|
|
|
|
|
|
|
15.0 |
% |
|
|
|
|
|
( |
|
(8.0) |
% |
Provision for losses |
|
70,718 |
|
54,750 |
|
15,968 |
|
29.2 |
% |
|
152,028 |
|
218,979 |
|
(66,951) |
|
(30.6) |
% |
Net revenue |
|
138,562 |
|
127,253 |
|
11,309 |
|
8.9 |
% |
|
441,496 |
|
426,339 |
|
15,157 |
|
3.6 |
% |
Advertising |
|
9,697 |
|
14,425 |
|
(4,728) |
|
(32.8) |
% |
|
24,824 |
|
32,394 |
|
(7,570) |
|
(23.4) |
% |
Non-advertising costs of providing services |
|
54,941 |
|
49,258 |
|
5,683 |
|
11.5 |
% |
|
156,085 |
|
154,177 |
|
1,908 |
|
1.2 |
% |
Total cost of providing services |
|
64,638 |
|
63,683 |
|
955 |
|
1.5 |
% |
|
180,909 |
|
186,571 |
|
(5,662) |
|
(3.0) |
% |
Gross margin |
|
73,924 |
|
63,570 |
|
10,354 |
|
16.3 |
% |
|
260,587 |
|
239,768 |
|
20,819 |
|
8.7 |
% |
Operating expense (income) |
|
|
|
|
|
|
|
|
|
|
||||||||
Corporate, district and other expenses |
|
61,745 |
|
36,658 |
|
25,087 |
|
68.4 |
% |
|
170,206 |
|
116,246 |
|
53,960 |
|
46.4 |
% |
Interest expense |
|
25,805 |
|
18,383 |
|
7,422 |
|
40.4 |
% |
|
68,784 |
|
54,018 |
|
14,766 |
|
27.3 |
% |
Loss (income) from equity method investment |
|
1,582 |
|
(3,530) |
|
5,112 |
|
# |
|
(676) |
|
(2,653) |
|
1,977 |
|
(74.5) |
% |
|
Gain from equity method investment |
|
— |
|
— |
|
— |
|
# |
|
(135,387) |
|
— |
|
(135,387) |
|
# |
||
Total operating expense |
|
89,132 |
|
51,511 |
|
37,621 |
|
73.0 |
% |
|
102,927 |
|
167,611 |
|
(64,684) |
|
(38.6) |
% |
Other expense |
|
|
|
|
|
|
|
|
|
|
||||||||
Loss on extinguishment of debt |
|
40,206 |
|
— |
|
40,206 |
|
# |
|
40,206 |
|
— |
|
40,206 |
|
# |
||
Total other expense |
|
40,206 |
|
— |
|
40,206 |
|
# |
|
40,206 |
|
— |
|
40,206 |
|
# |
||
(Loss) income from continuing operations before income taxes |
|
(55,414) |
|
12,059 |
|
(67,473) |
|
# |
|
117,454 |
|
72,157 |
|
45,297 |
|
62.8 |
% |
|
(Benefit) provision for income taxes |
|
(13,375) |
|
(822) |
|
(12,553) |
|
# |
|
29,241 |
|
2,183 |
|
27,058 |
|
# |
||
Net (loss) income from continuing operations |
|
(42,039) |
|
12,881 |
|
(54,920) |
|
# |
|
88,213 |
|
69,974 |
|
18,239 |
|
26.1 |
% |
|
Net income from discontinued operations, net of tax |
|
— |
|
— |
|
— |
|
# |
|
— |
|
1,285 |
|
(1,285) |
|
# |
||
Net (loss) income |
|
( |
|
|
|
( |
|
# |
|
|
|
|
|
|
|
23.8 |
% |
|
# - Variance greater than |
||||||||||||||||||
Reconciliation of Net (Loss) Income from Continuing Operations and Diluted Earnings per Share to Adjusted Net Income and Adjusted Diluted Earnings per Share, non-GAAP measures
(in thousands, except per share data, unaudited) |
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||
|
2021 |
2020 |
Change $ |
Change % |
|
2021 |
2020 |
Change $ |
Change % |
|||||||||
Net (loss) income from continuing operations |
|
( |
|
|
|
( |
|
# |
|
|
|
|
|
|
|
26.1 |
% |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
||||||||
Restructuring costs (1) |
|
5,651 |
|
— |
|
|
|
|
11,414 |
|
— |
|
|
|
||||
Legal and other costs (2) |
|
370 |
|
1,029 |
|
|
|
|
370 |
|
2,779 |
|
|
|
||||
Loss (income) from equity method investment (3) |
|
1,582 |
|
(3,530) |
|
|
|
|
(676) |
|
(2,653) |
|
|
|
||||
Gain from equity method investment (4) |
|
— |
|
— |
|
|
|
|
(135,387) |
|
— |
|
|
|
||||
Transaction costs (5) |
|
141 |
|
386 |
|
|
|
|
6,482 |
|
723 |
|
|
|
||||
Acquisition-related adjustments (6) |
|
4,292 |
|
— |
|
|
|
|
9,787 |
|
— |
|
|
|
||||
Change in fair value of contingent consideration (7) |
|
3,825 |
|
— |
|
|
|
|
3,825 |
|
— |
|
|
|
||||
Loss on extinguishment of debt (8) |
|
42,262 |
|
— |
|
|
|
|
42,262 |
|
— |
|
|
|
||||
Share-based compensation (9) |
|
3,998 |
|
3,392 |
|
|
|
|
10,148 |
|
9,896 |
|
|
|
||||
Intangible asset amortization (10) |
|
1,774 |
|
750 |
|
|
|
|
4,471 |
|
2,246 |
|
|
|
||||
Canada GST adjustment (11) |
|
— |
|
— |
|
|
|
|
— |
|
2,160 |
|
|
|
||||
Income tax valuations (12) |
|
— |
|
— |
|
|
|
|
— |
|
(3,472) |
|
|
|
||||
Impact of tax law changes (13) |
|
— |
|
(2,137) |
|
|
|
|
— |
|
(11,251) |
|
|
|
||||
Cumulative tax effect of adjustments (14) |
|
(15,411) |
|
(1,445) |
|
|
|
|
13,058 |
|
(4,630) |
|
|
|
||||
Adjusted Net Income |
|
|
|
|
|
( |
|
(43.1) |
% |
|
|
|
|
|
( |
|
(17.9) |
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income from continuing operations |
|
( |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted Weighted Average Shares Outstanding |
|
41,220 |
|
41,775 |
|
|
|
|
43,422 |
|
41,660 |
|
|
|
||||
Adjusted Diluted Average Shares Outstanding |
|
43,285 |
|
41,775 |
|
|
|
|
43,422 |
|
41,660 |
|
|
|
||||
Diluted (Loss) Earnings per Share from continuing operations |
|
( |
|
|
|
( |
|
# |
|
|
|
|
|
|
|
20.8 |
% |
|
Per Share impact of adjustments to Net (loss) income from continuing operations |
|
1.17 |
|
(0.04) |
|
|
|
|
(0.79) |
|
(0.10) |
|
|
|
||||
Adjusted Diluted Earnings per Share |
|
|
|
|
|
( |
|
(44.4) |
% |
|
|
|
|
|
( |
|
(21.5) |
% |
Note: Footnotes follow Reconciliation of Net income table on the next page |
||||||||||||||||||
Reconciliation of Net Income from Continuing Operations to EBITDA and Adjusted EBITDA, Non-GAAP Measures
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||
(in thousands, unaudited) |
|
2021 |
2020 |
Change $ |
Change % |
|
2021 |
2020 |
Change $ |
Change % |
||||||||
Net (loss) income from continuing operations |
|
( |
|
|
|
( |
|
# |
|
|
|
|
|
|
|
26.1 |
% |
|
(Benefit) provision for income taxes |
|
(13,375) |
|
(822) |
|
(12,553) |
|
# |
|
29,241 |
|
2,183 |
|
27,058 |
|
# |
||
Interest expense |
|
25,805 |
|
18,383 |
|
7,422 |
|
40.4 |
% |
|
68,784 |
|
54,018 |
|
14,766 |
|
27.3 |
% |
Depreciation and amortization |
|
7,285 |
|
4,358 |
|
2,927 |
|
67.2 |
% |
|
19,685 |
|
13,312 |
|
6,373 |
|
47.9 |
% |
EBITDA |
|
(22,324) |
|
34,800 |
|
(57,124) |
|
# |
|
205,923 |
|
139,487 |
|
66,436 |
|
47.6 |
% |
|
Restructuring costs (1) |
|
5,651 |
|
— |
|
|
|
|
11,414 |
|
— |
|
|
|
||||
Legal and other costs (2) |
|
370 |
|
1,029 |
|
|
|
|
370 |
|
2,779 |
|
|
|
||||
Loss (income) from equity method investment (3) |
|
1,582 |
|
(3,530) |
|
|
|
|
(676) |
|
(2,653) |
|
|
|
||||
Gain from equity method investment (4) |
|
— |
|
— |
|
|
|
|
(135,387) |
|
— |
|
|
|
||||
Transaction costs (5) |
|
141 |
|
386 |
|
|
|
|
6,482 |
|
723 |
|
|
|
||||
Acquisition-related adjustments (6) |
|
4,292 |
|
— |
|
|
|
|
9,787 |
|
— |
|
|
|
||||
Change in fair value of contingent consideration (7) |
|
3,825 |
|
— |
|
|
|
|
3,825 |
|
— |
|
|
|
||||
Loss on extinguishment of debt (8) |
|
40,206 |
|
— |
|
|
|
|
40,206 |
|
— |
|
|
|
||||
Share-based compensation (9) |
|
3,998 |
|
3,392 |
|
|
|
|
10,148 |
|
9,896 |
|
|
|
||||
Canada GST adjustment (11) |
|
— |
|
— |
|
|
|
|
— |
|
2,160 |
|
|
|
||||
Other adjustments (15) |
|
(118) |
|
38 |
|
|
|
|
(392) |
|
639 |
|
|
|
||||
Adjusted EBITDA |
|
|
|
|
|
|
|
4.2 |
% |
|
|
|
|
|
( |
|
(0.9) |
% |
Adjusted EBITDA Margin |
|
18.0 |
% |
19.8 |
% |
|
|
|
25.6 |
% |
23.7 |
% |
|
|
||||
# - Change greater than |
||||||||||||||||||
(1) |
Restructuring costs for the three and nine months ended |
(2) |
Legal and other costs for the three and nine months ended
Legal and other costs for the three and nine months ended |
(3) |
The amount reported is our share of Katapult's |
(4) |
During the nine months ended |
(5) |
Transaction costs for the nine months ended
Transaction costs for the nine months ended |
(6) |
During the nine months ended |
(7) |
In connection with our acquisition of Flexiti, we recorded a |
(8) |
On |
(9) |
The 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 acquisition of Flexiti. |
(11) |
We received a Notice of Adjustment from Canadian tax authority auditors in the second quarter 2020 related to the treatment of certain expenses in prior years for purposes of calculating the Goods and Services Tax ("GST") due. |
(12) |
During the nine months ended |
(13) |
On |
(14) |
Cumulative tax effect of adjustments included in Reconciliation of Net income from continuing operations Adjusted Net Income table is calculated using the estimated incremental tax rate by country. |
(15) |
Other adjustments primarily reflect the intercompany foreign-currency exchange impact. |
For the Three Months Ended
Revenue and Net Revenue
For a discussion of revenue, see "Consolidated Revenue by Product and Segment" above.
Provision for losses increased by
Cost of Providing Services
Advertising costs decreased
Non-advertising costs of providing services increased
Corporate, District and Other Expenses
Corporate, district and other expenses were
Interest Expense
Interest expense for the three months ended
Refer to the "Katapult Update for the Three and Nine Months Ended
Loss on Extinguishment of Debt
Loss on extinguishment of debt for the three months ended
Provision for Income Taxes
The effective income tax rate for the three months ended
For the Nine Months Ended
Revenue and Net Revenue
For a discussion of revenue, see "Consolidated Revenue by Product and Segment" above.
Provision for losses decreased by
Cost of Providing Services
Advertising costs decreased
Non-advertising costs of providing services decreased
Corporate, District and Other Expenses
Corporate, district and other expenses were
Interest Expense
Interest expense for the nine months ended
Refer to the "Katapult Update for the Three and Nine Months Ended
Loss on Extinguishment of Debt
Loss on extinguishment of debt for the nine months ended
Provision for Income Taxes
The effective income tax rate for the nine months ended
Additionally, the effective tax rate also includes the release of a valuation allowance of
The effective income tax rate of adjusted tax expense included in Adjusted Net Income for the nine months ended
Katapult Update for the Three and Nine Months Ended
We account for our investment in Katapult using the equity method of accounting. The investment is included in "Investments in Katapult" on the unaudited Condensed Consolidated Balance Sheet. Our share of Katapult's loss was
The Katapult and FinServ merger closed in
Segment Analysis
Beginning in the first quarter of 2021, when we acquired Flexiti, we report financial results for three reportable segments:
(in thousands, except percentages) |
|
Q3 2021 |
Q2 2021 |
Q1 2021 |
|
Q4 2020 |
Q3 2020 |
Gross combined loans receivable (1) |
|
|
|
|
|
|
|
Revolving LOC |
|
|
|
|
|
|
|
Installment loans - Company Owned |
|
137,987 |
139,234 |
142,396 |
|
167,890 |
148,569 |
Total |
|
189,183 |
186,511 |
185,783 |
|
223,451 |
205,296 |
Installment loans - Guaranteed by the Company (2) |
|
43,422 |
37,093 |
32,439 |
|
44,105 |
39,768 |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lending Revenue: |
|
|
|
|
|
|
|
Revolving LOC |
|
|
|
|
|
|
|
Installment loans - Company Owned |
|
57,659 |
55,918 |
64,516 |
|
68,927 |
62,215 |
Installment loans - Guaranteed by the Company (2) |
|
43,377 |
34,908 |
41,425 |
|
42,972 |
36,731 |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lending Provision: |
|
|
|
|
|
|
|
Revolving LOC |
|
|
|
|
|
|
|
Installment loans - Company Owned |
|
16,792 |
14,048 |
11,159 |
|
24,629 |
16,259 |
Installment loans - Guaranteed by the Company (2) |
|
23,146 |
12,583 |
9,648 |
|
22,621 |
14,936 |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lending Net Revenue |
|
|
|
|
|
|
|
Revolving LOC |
|
|
|
|
|
|
|
Installment loans - Company Owned |
|
40,867 |
41,870 |
53,357 |
|
44,298 |
45,956 |
Installment loans - Guaranteed by the Company (2) |
|
20,231 |
22,325 |
31,777 |
|
20,351 |
21,795 |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NCOs |
|
|
|
|
|
|
|
Revolving LOC |
|
|
|
|
|
|
|
Installment loans - Company Owned |
|
19,548 |
18,617 |
17,313 |
|
19,620 |
16,758 |
Installment loans - Guaranteed by the Company (2) |
|
21,404 |
12,044 |
12,150 |
|
21,590 |
13,902 |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NCO rate (3) |
|
|
|
|
|
|
|
Revolving LOC |
|
|
|
|
|
|
|
Installment loans - Company Owned |
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
Installment loans - Guaranteed by the Company (2) |
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses ("ALL") and CSO Liability for Losses (4) |
|
|
|
|
|||
Revolving LOC |
|
|
|
|
|
|
|
Installment loans - Company Owned |
|
18,491 |
21,246 |
25,815 |
|
31,971 |
26,961 |
Installment loans - Guaranteed by the Company (2) |
|
7,007 |
5,265 |
4,727 |
|
7,228 |
6,198 |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALL and CSO Liability for Losses rate (5) |
|
|
|
|
|
|
|
Revolving LOC |
|
|
|
|
|
|
|
Installment loans - Company Owned |
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
Installment loans - Guaranteed by the Company (2) |
|
|
|
|
|
|
|
Total ALL and CSO Liability for Losses rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past-due rate (5) |
|
|
|
|
|
|
|
Revolving LOC |
|
|
|
|
|
|
|
Installment loans - Company Owned |
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Installment loans - Guaranteed by the Company (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Non-GAAP measure. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures." |
|||||||
(2) Includes loans originated by third-party lenders through CSO programs. Installment gross loans receivable Guaranteed by the Company are not included in the Condensed Consolidated Financial Statements. |
|||||||
(3) We calculate NCO rate as total NCOs divided by Average gross loans receivables. |
|||||||
(4) We report ALL as a contra-asset reducing gross loans receivable and the CSO Liability for Losses as a liability on the Condensed Consolidated Balance Sheets. |
|||||||
(5) We calculate (i) ALL and CSO Liability for losses rate and (ii) past-due rate as the respective totals divided by gross loans receivable at each respective quarter end. |
|||||||
The provision for losses increased
We launched Verge installment loans originated by Stride Bank in the fourth quarter of 2019 and executed pilot programs in several states. After testing various offers, rates, terms and approval criteria, Stride informed us in the first quarter of 2021 that it planed to focus on near-prime loans as they represented a larger addressable market and offered greater opportunity to scale. As a result, Stride discontinued new
Following is a summary of results of operations for the
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||
(dollars in thousands, unaudited) |
2021 |
2020 |
Change $ |
Change % |
|
2021 |
2020 |
Change $ |
Change % |
||||||||
Revenue |
|
|
|
|
( |
|
(0.9) |
% |
|
|
|
|
|
( |
|
(21.3) |
% |
Provision for losses |
48,430 |
|
43,485 |
|
4,945 |
|
11.4 |
% |
|
108,108 |
|
171,056 |
|
(62,948) |
|
(36.8) |
% |
Net revenue |
83,244 |
|
89,363 |
|
(6,119) |
|
(6.8) |
% |
|
278,852 |
|
320,880 |
|
(42,028) |
|
(13.1) |
% |
Advertising |
8,297 |
|
13,405 |
|
(5,108) |
|
(38.1) |
% |
|
21,527 |
|
29,619 |
|
(8,092) |
|
(27.3) |
% |
Non-advertising costs of providing services |
35,719 |
|
32,574 |
|
3,145 |
|
9.7 |
% |
|
99,711 |
|
103,477 |
|
(3,766) |
|
(3.6) |
% |
Total cost of providing services |
44,016 |
|
45,979 |
|
(1,963) |
|
(4.3) |
% |
|
121,238 |
|
133,096 |
|
(11,858) |
|
(8.9) |
% |
Gross margin |
39,228 |
|
43,384 |
|
(4,156) |
|
(9.6) |
% |
|
157,614 |
|
187,784 |
|
(30,170) |
|
(16.1) |
% |
Corporate, district and other expenses |
40,058 |
|
31,503 |
|
8,555 |
|
27.2 |
% |
|
124,385 |
|
98,784 |
|
25,601 |
|
25.9 |
% |
Interest expense |
19,481 |
|
16,107 |
|
3,374 |
|
20.9 |
% |
|
53,177 |
|
47,066 |
|
6,111 |
|
13.0 |
% |
Loss (income) from equity method investment |
1,582 |
|
(3,530) |
|
5,112 |
|
# |
|
(676) |
|
(2,653) |
|
1,977 |
|
(74.5) |
% |
|
Gain from equity method investment |
— |
|
— |
|
— |
|
# |
|
(135,387) |
|
— |
|
(135,387) |
|
# |
||
Total operating expense |
61,121 |
|
44,080 |
|
17,041 |
|
38.7 |
% |
|
41,499 |
|
143,197 |
|
(101,698) |
|
(71.0) |
% |
Loss on extinguishment of debt |
40,206 |
|
— |
|
40,206 |
|
# |
|
40,206 |
|
— |
|
40,206 |
|
# |
||
Total other expense |
40,206 |
|
— |
|
40,206 |
|
# |
|
40,206 |
|
— |
|
40,206 |
|
# |
||
Segment operating (loss) income |
(62,099) |
|
(696) |
|
(61,403) |
|
# |
|
75,909 |
|
44,587 |
|
31,322 |
|
70.2 |
% |
|
Interest expense |
19,481 |
|
16,107 |
|
3,374 |
|
20.9 |
% |
|
53,177 |
|
47,066 |
|
6,111 |
|
13.0 |
% |
Depreciation and amortization |
3,020 |
|
3,228 |
|
(208) |
|
(6.4) |
% |
|
9,154 |
|
9,914 |
|
(760) |
|
(7.7) |
% |
EBITDA (1) |
(39,598) |
|
18,639 |
|
(58,237) |
|
# |
|
138,240 |
|
101,567 |
|
36,673 |
|
36.1 |
% |
|
Restructuring costs |
5,651 |
|
— |
|
5,651 |
|
|
|
11,414 |
|
— |
|
11,414 |
|
|
||
Legal and other costs |
370 |
|
1,029 |
|
(659) |
|
|
|
370 |
|
2,779 |
|
(2,409) |
|
|
||
Loss (income) from equity method investment |
1,582 |
|
(3,530) |
|
5,112 |
|
|
|
(676) |
|
(2,653) |
|
1,977 |
|
|
||
Gain from equity method investment |
— |
|
— |
|
— |
|
|
|
(135,387) |
|
— |
|
(135,387) |
|
|
||
Transaction costs |
141 |
|
386 |
|
(245) |
|
|
|
6,482 |
|
723 |
|
5,759 |
|
|
||
Loss on extinguishment of debt |
40,206 |
|
— |
|
40,206 |
|
|
|
40,206 |
|
— |
|
40,206 |
|
|
||
Share-based compensation |
3,998 |
|
3,392 |
|
606 |
|
|
|
10,148 |
|
9,896 |
|
252 |
|
|
||
Other adjustments |
(195) |
|
(105) |
|
(90) |
|
|
|
(600) |
|
59 |
|
(659) |
|
|
||
Adjusted EBITDA (1) |
|
|
|
|
( |
|
(38.6) |
% |
|
|
|
|
|
( |
|
(37.5) |
% |
# - Variance greater than |
|||||||||||||||||
(1) These are non-GAAP metrics. For a description of each non-GAAP addback, see the applicable reconciliations contained under "Results of Consolidated Operations." For a description of each non-GAAP metric, see "Non-GAAP Financial Measures." |
|||||||||||||||||
For a discussion of revenue, provision for losses and related gross combined loans receivables for the three months ended
Advertising costs for the three months ended
Non-advertising costs of providing services for the three months ended
Corporate, district and other expenses were
As previously announced, we closed 49 U.S. stores, 30 of which occurred in the third quarter, in response to evolving customer channel preferences that were accelerated by the impacts of COVID-19. The store closures represented nearly
As a result of the store closures, we incurred
As previously described, we recognize our share of Katapult’s income or loss on a one-quarter lag. We recorded a loss of
Loss on extinguishment of debt of
The provision for losses decreased
Advertising costs were
Non-advertising costs of providing services for the nine months ended
Corporate, district and other expenses were
As previously described, we recognize our share of Katapult’s income or loss on a one-quarter lag and recorded income of
Loss on extinguishment of debt of
Canada Direct Lending and Canada POS Lending Portfolio Performance
(in thousands, except percentages) |
|
Q3 2021 |
Q2 2021 |
Q1 2021 |
|
Q4 2020 |
Q3 2020 |
|||||
Gross loans receivable |
|
|
|
|
|
|
|
|||||
Canada Direct Lending Revolving LOC |
|
|
|
|
|
|
|
|||||
Canada Direct Lending Installment loans |
|
24,315 |
23,564 |
24,385 |
|
26,948 |
26,639 |
|||||
Total Canada Direct Lending gross loans receivable |
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||
Total Canada POS Lending gross loans receivable |
|
302,349 |
|
|
|
$ — |
$ — |
|||||
|
|
|
|
|
|
|
|
|||||
Lending Revenue: |
|
|
|
|
|
|
|
|||||
Canada Direct Lending Revolving LOC |
|
|
|
|
|
|
|
|||||
Canada Direct Lending Installment loans |
|
11,331 |
10,541 |
10,447 |
|
11,106 |
10,238 |
|||||
Total Canada Direct Lending - lending revenue |
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||
Canada POS Lending - lending revenue |
|
|
|
|
|
$ — |
$ — |
|||||
|
|
|
|
|
|
|
|
|||||
Lending Provision: |
|
|
|
|
|
|
|
|||||
Canada Direct Lending Revolving LOC |
|
|
|
|
|
|
|
|||||
Canada Direct Lending Installment loans |
|
2,512 |
1,438 |
1,234 |
|
1,972 |
1,426 |
|||||
Total Canada Direct Lending - lending provision |
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||
Canada POS Lending - lending provision |
|
|
|
|
|
$ — |
$ — |
|||||
|
|
|
|
|
|
|
|
|||||
Lending Net Revenue |
|
|
|
|
|
|
|
|||||
Canada Direct Lending Revolving LOC |
|
|
|
|
|
|
|
|||||
Canada Direct Lending Installment loans |
|
8,819 |
9,103 |
9,213 |
|
9,134 |
8,812 |
|||||
Total Canada Direct Lending - lending net revenue |
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||
Canada POS Lending - lending net revenue |
|
|
|
|
|
$ — |
$ — |
|||||
|
|
|
|
|
|
|
|
|||||
NCOs |
|
|
|
|
|
|
|
|||||
Canada Direct Lending Revolving LOC |
|
|
|
|
|
|
|
|||||
Canada Direct Lending Installment loans |
|
2,444 |
1,513 |
1,669 |
|
2,060 |
1,289 |
|||||
Total Canada Direct Lending NCOs |
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||
Canada POS Lending NCOs (1) |
|
|
|
|
|
$ — |
$ — |
|||||
|
|
|
|
|
|
|
|
|||||
NCO rate (2) |
|
|
|
|
|
|
|
|||||
Canada Direct Lending Revolving LOC |
|
|
|
|
|
|
|
|||||
Canada Direct Lending Installment loans |
|
|
|
|
|
|
|
|||||
Total Canada Direct Lending NCO rate |
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||
Canada POS Lending NCO rate |
|
|
0.7 |
% |
NM (3) |
|
—% |
—% |
||||
|
|
|
|
|
|
|
|
|||||
ALL (4) |
|
|
|
|
|
|
|
|||||
Canada Direct Lending Revolving LOC |
|
|
|
|
|
|
|
|||||
Canada Direct Lending Installment loans |
|
1,790 |
1,767 |
1,819 |
|
2,233 |
2,204 |
|||||
Total Canada Direct Lending ALL |
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||
Canada POS Lending ALL (5) |
|
|
|
|
|
$ — |
$ — |
|||||
|
|
|
|
|
|
|
|
|||||
ALL rate (6) |
|
|
|
|
|
|
|
|||||
Canada Direct Lending Revolving LOC |
|
7.5 |
% |
7.9 |
% |
9.4 |
% |
|
10.8 |
% |
11.8 |
% |
Canada Direct Lending Installment loans |
|
7.4 |
% |
7.5 |
% |
7.5 |
% |
|
8.3 |
% |
8.3 |
% |
Total Canada Direct Lending ALL rate |
|
7.5 |
% |
7.9 |
% |
9.2 |
% |
|
10.6 |
% |
11.5 |
% |
|
|
|
|
|
|
|
|
|||||
Canada POS Lending ALL rate |
|
3.8 |
% |
2.1 |
% |
0.3 |
% |
|
— |
% |
— |
% |
|
|
|
|
|
|
|
|
|||||
Past-due rate (6) |
|
|
|
|
|
|
|
|||||
Canada Direct Lending Revolving LOC |
|
6.8 |
% |
5.8 |
% |
6.4 |
% |
|
6.8 |
% |
6.0 |
% |
Canada Direct Lending Installment loans |
|
2.0 |
% |
2.3 |
% |
2.1 |
% |
|
2.1 |
% |
2.9 |
% |
Total Canada Direct Lending past-due rate |
|
6.5 |
% |
5.5 |
% |
6.1 |
% |
|
6.4 |
% |
5.7 |
% |
|
|
|
|
|
|
|
|
|||||
Canada POS Lending past-due rate |
|
4.8 |
% |
5.4 |
% |
5.7 |
% |
|
— |
% |
— |
% |
|
|
|
|
|
|
|
|
|||||
(1) For the second and third quarters of 2021, NCOs presented above include |
||||||||||||
(2) We calculate NCO rate as total NCOs divided by Average gross loans receivables. |
||||||||||||
(3) Not material or not meaningful. |
||||||||||||
(4) We report ALL as a contra-asset reducing gross loans receivable on the Condensed Consolidated Balance Sheets. |
||||||||||||
(5) Loans originated pre-acquisition have been adjusted to fair value at the acquisition date and included estimates of future losses. The ALL represents estimated incurred losses for loans originated after acquisition plus incurred losses for acquired loans in excess of the remaining fair value discount. |
||||||||||||
(6) We calculate ALL rate and past-due rate as the respective totals divided by gross loans receivable at each respective quarter end. |
||||||||||||
Canada Direct Lending Net Revenue
Canada Direct Lending revenue increased year over year by
The provision for losses increased
Canada Direct Lending Revolving LOC loan performance
Canada Direct Lending Revolving LOC gross loans receivable increased
Canada Direct Lending Installment loan performance
Canada Direct Lending Installment revenue increased
Canada POS Lending Revolving LOC loan performance
Canada POS Lending Revolving LOC gross loans receivable as of
Originations for the three months ended
Canada Direct Lending Results of Operations
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||
(dollars in thousands, unaudited) |
2021 |
2020 |
Change $ |
Change % |
|
2021 |
2020 |
Change $ |
Change % |
||||||||
Revenue |
|
|
|
|
|
|
34.7 |
% |
|
|
|
|
|
|
|
21.6 |
% |
Provision for losses |
14,003 |
|
11,265 |
|
2,738 |
|
24.3 |
% |
|
31,793 |
|
47,923 |
|
(16,130) |
|
(33.7) |
% |
Net revenue |
52,187 |
|
37,890 |
|
14,297 |
|
37.7 |
% |
|
154,717 |
|
105,459 |
|
49,258 |
|
46.7 |
% |
Advertising |
1,139 |
|
1,020 |
|
119 |
|
11.7 |
% |
|
2,821 |
|
2,775 |
|
46 |
|
1.7 |
% |
Non-advertising costs of providing services |
18,860 |
|
16,684 |
|
2,176 |
|
13.0 |
% |
|
55,625 |
|
50,700 |
|
4,925 |
|
9.7 |
% |
Total cost of providing services |
19,999 |
|
17,704 |
|
2,295 |
|
13.0 |
% |
|
58,446 |
|
53,475 |
|
4,971 |
|
9.3 |
% |
Gross margin |
32,188 |
|
20,186 |
|
12,002 |
|
59.5 |
% |
|
96,271 |
|
51,984 |
|
44,287 |
|
85.2 |
% |
Corporate, district and other expenses |
6,004 |
|
5,155 |
|
849 |
|
16.5 |
% |
|
17,644 |
|
17,462 |
|
182 |
|
1.0 |
% |
Interest expense |
2,440 |
|
2,276 |
|
164 |
|
7.2 |
% |
|
7,293 |
|
6,952 |
|
341 |
|
4.9 |
% |
Total operating expense |
8,444 |
|
7,431 |
|
1,013 |
|
13.6 |
% |
|
24,937 |
|
24,414 |
|
523 |
|
2.1 |
% |
Segment operating income |
23,744 |
|
12,755 |
|
10,989 |
|
86.2 |
% |
|
71,334 |
|
27,570 |
|
43,764 |
|
# |
|
Interest expense |
2,440 |
|
2,276 |
|
164 |
|
7.2 |
% |
|
7,293 |
|
6,952 |
|
341 |
|
4.9 |
% |
Depreciation and amortization |
1,124 |
|
1,130 |
|
(6) |
|
(0.5) |
% |
|
3,394 |
|
3,398 |
|
(4) |
|
(0.1) |
% |
EBITDA (1) |
27,308 |
|
16,161 |
|
11,147 |
|
69.0 |
% |
|
82,021 |
|
37,920 |
|
44,101 |
|
# |
|
Canada GST adjustment |
— |
|
— |
|
— |
|
|
|
— |
|
2,160 |
|
(2,160) |
|
|
||
Other adjustments |
94 |
|
143 |
|
(49) |
|
|
|
242 |
|
580 |
|
(338) |
|
|
||
Adjusted EBITDA (1) |
|
|
|
|
|
|
68.1 |
% |
|
|
|
|
|
|
|
102.3 |
% |
# - Variance greater than |
|
|
|
|
|
|
|
||||||||||
(1) These are non-GAAP metrics. For a description of each non-GAAP addback, see the applicable reconciliations contained under "Results of Consolidated Operations." For a description of each non-GAAP metric, see "Non-GAAP Financial Measures." |
|||||||||||||||||
Canada Direct Lending Segment Results - For the Three Months Ended
For a discussion of revenue, provision for losses and related gross combined loans receivables for the three months ended
Canada Direct Lending cost of providing services were
Canada Direct Lending operating expenses increased to
Canada Direct Lending Segment Results - For the Nine Months Ended
Canada Direct Lending revenue increased
The provision for losses decreased
Canada Direct Lending cost of providing services for the nine months ended
Canada Direct Lending operating expenses for the nine months ended
Canada POS Lending Results of Operations
|
Three Months Ended |
|
Nine Months Ended |
||
(dollars in thousands, unaudited) |
2021 |
|
2021 |
||
Revenue |
|
|
|
|
|
Provision for losses |
8,285 |
|
|
12,127 |
|
Net revenue |
3,131 |
|
|
7,927 |
|
Advertising |
261 |
|
|
476 |
|
Non-advertising costs of providing services |
362 |
|
|
749 |
|
Total cost of providing services |
623 |
|
|
1,225 |
|
Gross margin |
2,508 |
|
|
6,702 |
|
Corporate, district and other expenses |
15,683 |
|
|
28,177 |
|
Interest expense |
3,884 |
|
|
8,314 |
|
Total operating expense |
19,567 |
|
|
36,491 |
|
Segment operating loss |
(17,059) |
|
|
(29,789) |
|
Interest expense |
3,884 |
|
|
8,314 |
|
Depreciation and amortization |
3,141 |
|
|
7,137 |
|
EBITDA (1) |
(10,034) |
|
|
(14,338) |
|
Acquisition-related adjustments |
4,292 |
|
|
9,787 |
|
Change in fair value of contingent consideration |
3,825 |
|
|
3,825 |
|
Other adjustments |
(17) |
|
|
(34) |
|
Adjusted EBITDA (1) |
( |
|
|
( |
|
(1) These are non-GAAP metrics. For a description of each non-GAAP addback, see the applicable reconciliations contained under "Results of Consolidated Operations." For a description of each non-GAAP metric, see "Non-GAAP Financial Measures." |
|||||
Canada POS Lending Segment Results - For the Three and Nine Months Ended
For a discussion of revenue, provision for losses and related gross loans receivables, see the "Canada Direct Lending and Canada POS Lending Portfolio Performance," above for the three months ended
For the nine months ended
Provision for losses for the nine months ended
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
|
|
|
|
||
ASSETS |
|||||
Cash and cash equivalents |
|
|
|
|
|
Restricted cash (includes restricted cash of consolidated VIEs of |
66,168 |
|
|
54,765 |
|
Gross loans receivable (includes loans of consolidated VIEs of |
882,356 |
|
|
553,722 |
|
Less: Allowance for loan losses (includes allowance for loan losses of consolidated VIEs of |
(72,543) |
|
|
(86,162) |
|
Loans receivable, net |
809,813 |
|
|
467,560 |
|
Income taxes receivable |
23,806 |
|
|
32,062 |
|
Prepaid expenses and other (includes prepaid expenses and other of consolidated VIEs of |
31,558 |
|
|
27,994 |
|
Property and equipment, net |
48,001 |
|
|
59,749 |
|
Investments in Katapult |
14,919 |
|
|
27,370 |
|
Right of use asset - operating leases |
102,296 |
|
|
115,032 |
|
Deferred tax assets |
7,850 |
|
|
— |
|
|
175,973 |
|
|
136,091 |
|
Intangibles, net |
96,524 |
|
|
40,425 |
|
Other assets |
9,430 |
|
|
8,595 |
|
Total Assets |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||
Liabilities |
|
|
|
||
Accounts payable and accrued liabilities (includes accounts payable and accrued liabilities of consolidated VIEs of |
|
|
|
|
|
Deferred revenue |
15,243 |
|
|
5,394 |
|
Lease liability - operating leases |
108,655 |
|
|
122,648 |
|
Contingent consideration related to acquisition |
24,129 |
|
|
— |
|
Accrued interest (includes accrued interest of consolidated VIEs of |
11,106 |
|
|
20,123 |
|
Liability for losses on CSO lender-owned consumer loans |
7,007 |
|
|
7,228 |
|
Debt (includes debt and issuance costs of consolidated VIEs of |
1,131,998 |
|
|
819,661 |
|
Other long-term liabilities |
16,185 |
|
|
15,382 |
|
Deferred tax liabilities |
4,616 |
|
|
11,021 |
|
Total Liabilities |
|
|
|
|
|
Stockholders' Equity |
|
|
|
||
Total Stockholders' Equity |
|
|
|
|
|
Total Liabilities and Stockholders' Equity |
|
|
|
|
|
Balance Sheet Changes -
Cash and cash equivalents - Cash and cash equivalents decreased as compared to
Restricted cash - The increase in Restricted cash from
Gross loans receivable and Allowance for loan losses - The increase in Gross loans receivable from
Investment in Katapult - The change in Investment in Katapult from
Accounts payable and accrued liabilities – The increase in Accounts payable and accrued liabilities from
Contingent Consideration related to acquisition - The acquisition of Flexiti on
Debt and Accrued interest - The increase in Debt from
Debt Capitalization Summary
(in thousands, net of deferred financing costs)
|
|
Capacity |
Interest Rate |
Maturity |
Counterparties |
Balance as of |
|
Non-Recourse Canada SPV Facility (1) |
|
|
3-Mo CDOR + |
|
|
|
|
Senior Secured Revolving Credit Facility |
|
|
1-Mo LIBOR + |
|
|
— |
|
Non-Recourse |
|
|
1-Mo LIBOR + |
|
|
44,940 |
|
Non-Recourse Flexiti SPE Facility (1) |
|
|
3-Mo CDOR + |
|
Credit Suisse (Class A); SPF (Class B) |
255,704 |
|
Cash Money Revolving Credit Facility (1) |
|
|
Canada Prime Rate + |
On-demand |
Royal Bank of Canada |
— |
|
|
|
|
|
|
|
734,533 |
|
(1) Capacity amounts are denominated in Canadian dollars, while outstanding balances as of |
|||||||
(2) On |
|||||||
Non-GAAP Financial Measures
In addition to the financial information prepared in conformity with
- Adjusted Net Income and Adjusted Earnings Per Share, or the Adjusted Earnings Measures (net income from continuing operations 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, certain tax adjustments and impacts from tax law changes and cumulative tax effect of applicable adjustments, on a total and per share basis);
- EBITDA (earnings before interest, income taxes, depreciation and amortization);
- Adjusted EBITDA (EBITDA plus or minus certain non-cash and other adjusting items);
- Adjusted effective income tax rate (effective tax rate plus or minus certain non-cash and other adjusting items); and
- Gross Combined Loans Receivable (includes loans originated by third-party lenders through CSO programs which are not included in the Consolidated Financial Statements).
We believe that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of the Company's operations. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of the business that, when viewed with the Company's
We believe that investors regularly rely on non-GAAP financial measures, such as Adjusted Net Income, Adjusted Earnings per Share, EBITDA and Adjusted EBITDA, 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
In addition to reporting loans receivable information in accordance with
We provide non-GAAP financial information for informational purposes and to enhance understanding of the
Description and Reconciliations of Non-GAAP Financial Measures
Adjusted Net Income, Adjusted Earnings per Share, EBITDA and Adjusted EBITDA 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
- 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 year-end. If the Company records a loss from continuing operations under
As noted above, Gross Combined Loans Receivable includes loans originated by third-party lenders through CSO programs which are not included in the consolidated financial statements but from which we earn revenue and for which we provide a guarantee to the lender. Management believes this analysis provides investors with important information needed to evaluate overall lending performance.
We believe Adjusted Net Income, Adjusted Earnings per Share, EBITDA and Adjusted EBITDA are used by investors to analyze operating performance and to evaluate our ability to incur and service debt and the capacity for making capital expenditures. Adjusted EBITDA is also useful to investors to help assess our estimated enterprise value. The computation of Adjusted EBITDA as presented in this release may differ from the computation of similarly titled measures provided by other companies.
Forward-Looking Statements
This press release contains forward-looking statements. These forward-looking statements include projections, estimates and assumptions about revenue and growth trends and our ability to create value, the continuing impacts of COVID-19, the run-off of Verge loan balances; 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,” “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: errors in our internal forecasts or those of companies in which we invest; the effects of competition on the Company’s business or on those companies in which we invest; our ability to attract and retain customers; market, financial, political and legal conditions; actions of regulators and the negative impact of those actions on our business; the continuing impact of COVID-19 pandemic or any other similar wide-spread event on the Company’s business and the global economy; 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; our ability to 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; any failure of third-party lenders upon whom we rely to conduct business in certain states; 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
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About CURO
Conference Call
CURO will host a conference call to discuss these results at
You may access the call at 1-833-953-2430 (1-412-317-5759 for international callers). Please ask to join the
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
(CURO-NWS)
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Investor Relations:
Executive Vice President and Chief Financial Officer
Phone: 844-200-0342
Email: IR@curo.com
Or
Curo@finprofiles.com
Source:
FAQ
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