CURO Group Holdings Corp. Announces Third Quarter 2022 Financial Results
CURO Group Holdings Corp. reported a 115% year-over-year increase in gross loans receivable, totaling $1.9 billion as of September 30, 2022. Key developments include the divestiture of its legacy U.S. business and the acquisition of First Heritage Credit for $140 million. Despite this growth, net income improved significantly to $25.7 million ($0.63 EPS) from a loss of $42 million last year, driven by a $68.4 million gain on the sale. Revenue increased by 2% year-over-year to $214.1 million but fell 30% sequentially, attributed to the divestiture and macroeconomic pressures.
- Gross loans receivable increased by 115% year-over-year to $1.9 billion.
- Net income improved to $25.7 million ($0.63 EPS) from a loss of $42 million year-over-year.
- Acquisition of First Heritage Credit completed for $140 million.
- Revenue decreased 30% sequentially, primarily due to the divestiture of the legacy U.S. business.
- Ongoing macroeconomic pressures, including interest rate increases and currency fluctuations, continue to affect results.
Gross Loans Receivables Increased
Completed Divestiture of Legacy
Completed
Upsized and Extended Flexiti Warehouse Funding
"With our strategic transformations completed, we are very pleased to end the third quarter with close to
"Macroeconomic headwinds have continued to pressure our results on three fonts — benchmark interest rate increases, Canadian to
Summarized Financial Information |
|||||||||||||||
(in thousands, unaudited) |
|
|
|
|
|
||||||||||
Revenue |
Q3 2022 |
Q3 2021 |
|
|
Change $ |
Change % |
|||||||||
Legacy |
$ |
10,581 |
|
$ |
126,990 |
|
|
|
$ |
(116,409 |
) |
(92 |
)% |
||
US Direct Lending |
|
96,849 |
|
|
4,684 |
|
|
|
|
92,165 |
|
1968 |
% |
||
Canada Direct Lending |
|
78,979 |
|
|
66,190 |
|
|
|
|
12,789 |
|
19 |
% |
||
Canada POS |
|
27,711 |
|
|
11,416 |
|
|
|
|
16,295 |
|
143 |
% |
||
Total Revenue |
$ |
214,120 |
|
$ |
209,280 |
|
|
|
$ |
4,840 |
|
2 |
% |
||
|
|
|
|
|
|
|
|||||||||
Loans Receivable |
Q3 2022 |
Q2 2022 |
Q3 2021 |
|
Change $ |
Change % |
|||||||||
Legacy |
$ |
— |
|
$ |
201,364 |
|
$ |
217,053 |
|
|
$ |
(201,364 |
) |
(100 |
)% |
US Direct Lending |
|
739,100 |
|
|
527,998 |
|
|
11,539 |
|
|
|
211,102 |
|
40 |
% |
Canada Direct Lending |
|
465,057 |
|
|
467,555 |
|
|
390,824 |
|
|
|
(2,498 |
) |
(1 |
)% |
Canada POS |
|
690,270 |
|
|
627,163 |
|
|
302,349 |
|
|
|
63,107 |
|
10 |
% |
Total Loans Receivable |
$ |
1,894,427 |
|
$ |
1,824,080 |
|
$ |
921,765 |
|
|
$ |
70,347 |
|
4 |
% |
|
|
|
|
|
|
|
|||||||||
NCO Rates |
Q3 2022 |
Q2 2022 |
Q3 2021 |
|
|
|
|||||||||
Legacy |
|
3.5 |
% |
|
23.8 |
% |
|
19.8 |
% |
|
|
|
|||
US Direct Lending |
|
3.9 |
% |
|
5.0 |
% |
|
** |
|
|
|
|
|||
Canada Direct Lending |
|
5.9 |
% |
|
5.0 |
% |
|
3.3 |
% |
|
|
|
|||
Canada POS |
|
0.9 |
% |
|
0.6 |
% |
|
0.7 |
% |
|
|
|
|||
Consolidated NCO Rates |
|
3.3 |
% |
|
6.0 |
% |
|
7.3 |
% |
|
|
|
|||
|
|
|
|
|
|
|
|||||||||
(1) Loans receivable and NCO rates for Legacy |
|||||||||||||||
** Not meaningful |
Consolidated Summary Results
We reported Net income of
On
The improvement in Net income in the third quarter of 2022 compared to the same period in 2021 was primarily driven by (i) the
Below are additional highlights of our performance this year:
-
Revenue and Net Revenue
-
Revenue increased
, or$4.8 million 2.3% , year over year, primarily driven by revenue growth inCanada POS Lending and Canada Direct Lending of142.7% and19.3% , respectively, and revenue related to the Heights Finance and First Heritage acquisitions.U.S. revenue declined18.4% primarily as a result of theJuly 2022 divestiture of our LegacyU.S. Direct Lending business. The strategic mix shift from the divested LegacyU.S. Direct Lending business' high-cost, short-term lending to the longer-duration, lower risk consumer finance acquisitions, also affected the relationship between loan growth and revenue growth. -
Sequentially, revenue decreased
, or$90.3 million 29.7% , driven by theJuly 2022 divestiture of our LegacyU.S. Direct Lending business. -
For the three months ended
September 30, 2022 , net revenue decreased , or$2.8 million 2.1% , year over year, and , or$39.1 million 22.4% , sequentially primarily driven by lower revenue attributable to our strategic change in product mix and the additional provision for loan losses driven by loan growth.
-
Revenue increased
-
Loans Receivable
-
Year-over-year growth in Gross loans receivable of
, or$1,012.1 million 114.7% , was primarily driven by an increase of due to the acquisitions of Heights Finance and First Heritage offset by the sale of the Legacy$549.9 million U.S. Direct Lending business, as well as increases of for Canada POS Lending and$387.9 million for Canada Direct Lending.$74.2 million -
Sequential loan growth in Gross loans receivable of
, or$113.6 million 6.4% was primarily due to growth inCanada POS Lending of , or$63.1 million 10.1% , and growth inU.S. Lending of , or$53.0 million 7.7% , primarily due to the acquisition of First Heritage offset by the sale of the LegacyU.S. Direct Lending business.
-
Year-over-year growth in Gross loans receivable of
-
NCOs and Delinquency Metrics
-
Consolidated quarterly NCO rates improved by 396 bps, and consolidated 31+ past due rates decreased 332 bps year over year, respectively, primarily attributable to mix shift from (i) the relative growth of Canada POS Lending, (ii) the acquisition of Heights Finance and First Heritage, and (iii) the sale of the Legacy
U.S. Direct Lending business, all of which shifts our loan portfolio mix to lower loss-rate products. -
Sequentially, consolidated quarterly NCO rates improved by 266 bps, and consolidated 31+ past-due rates decreased by 592 bps, respectively, largely driven by loan growth in (i)
U.S. Direct Lending and Canada POS Lending, which have lower NCO rates, in addition to the sale of LegacyU.S. Direct Lending business, which was a higher expected loss-rate product.
-
Consolidated quarterly NCO rates improved by 396 bps, and consolidated 31+ past due rates decreased 332 bps year over year, respectively, primarily attributable to mix shift from (i) the relative growth of Canada POS Lending, (ii) the acquisition of Heights Finance and First Heritage, and (iii) the sale of the Legacy
-
Other Highlights
-
on
July 13, 2022 , concurrently with the closing of the First Heritage acquisition, we entered into a new non-recourse revolving warehouse facility to replace First Heritage's incumbent lender's facility and to finance future loans originated by First Heritage.$225.0 million -
On
July 15, 2022 , we entered into a new non-recourse revolving warehouse facility to replace the incumbent lender's facility and finance future loans originated by Heights Finance.$425.0 million -
On
September 29, 2022 , we amended the existing Flexiti credit facility to increase the borrowing capacity fromC to$500 million C and extended its maturity to$535 million September 29, 2025 .
-
on
Results of Consolidated Operations
Beginning
Table 1 - Consolidated Statements of Operations |
||||||||||||||||||||||||
(in thousands, unaudited) |
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
Change $ |
Change % |
|
|
2022 |
|
|
2021 |
|
Change $ |
Change % |
|||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest and fees revenue |
|
$ |
180,515 |
|
$ |
190,629 |
|
$ |
(10,114 |
) |
(5.3 |
) % |
|
|
723,802 |
|
|
539,155 |
|
|
184,647 |
|
34.2 |
% |
Insurance premiums and commissions |
|
|
24,746 |
|
|
12,599 |
|
|
12,147 |
|
96.4 |
% |
|
|
61,659 |
|
|
36,021 |
|
|
25,638 |
|
71.2 |
% |
Other revenue |
|
|
8,859 |
|
|
6,052 |
|
|
2,807 |
|
46.4 |
% |
|
|
23,259 |
|
|
18,348 |
|
|
4,911 |
|
26.8 |
% |
Total revenue |
|
|
214,120 |
|
|
209,280 |
|
|
4,840 |
|
2.3 |
% |
|
|
808,720 |
|
|
593,524 |
|
|
215,196 |
|
36.3 |
% |
Provision for losses |
|
|
78,399 |
|
|
70,718 |
|
|
7,681 |
|
10.9 |
% |
|
|
305,476 |
|
|
152,028 |
|
|
153,448 |
|
# |
|
Net revenue |
|
|
135,721 |
|
|
138,562 |
|
|
(2,841 |
) |
(2.1 |
) % |
|
|
503,244 |
|
|
441,496 |
|
|
61,748 |
|
14.0 |
% |
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Salaries and benefits |
|
|
53,413 |
|
|
62,110 |
|
|
(8,697 |
) |
(14.0 |
) % |
|
|
215,569 |
|
|
175,347 |
|
|
40,222 |
|
22.9 |
% |
Occupancy |
|
|
12,827 |
|
|
13,732 |
|
|
(905 |
) |
(6.6 |
) % |
|
|
47,371 |
|
|
41,862 |
|
|
5,509 |
|
13.2 |
% |
Advertising |
|
|
5,244 |
|
|
9,697 |
|
|
(4,453 |
) |
(45.9 |
) % |
|
|
28,451 |
|
|
24,824 |
|
|
3,627 |
|
14.6 |
% |
Direct operations |
|
|
11,729 |
|
|
14,883 |
|
|
(3,154 |
) |
(21.2 |
) % |
|
|
52,296 |
|
|
40,552 |
|
|
11,744 |
|
29.0 |
% |
Depreciation and amortization |
|
|
9,499 |
|
|
7,285 |
|
|
2,214 |
|
30.4 |
% |
|
|
27,985 |
|
|
19,685 |
|
|
8,300 |
|
42.2 |
% |
Other operating expense |
|
|
23,646 |
|
|
14,851 |
|
|
8,795 |
|
59.2 |
% |
|
|
58,809 |
|
|
45,020 |
|
|
13,789 |
|
30.6 |
% |
Total operating expenses |
|
|
116,358 |
|
|
122,558 |
|
|
(6,200 |
) |
(5.1 |
) % |
|
|
430,481 |
|
|
347,290 |
|
|
83,191 |
|
24.0 |
% |
Other expense (income) |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest expense |
|
|
50,149 |
|
|
25,805 |
|
|
24,344 |
|
94.3 |
% |
|
|
130,683 |
|
|
68,784 |
|
|
61,899 |
|
90.0 |
% |
Loss (income) from equity method investment |
|
|
2,309 |
|
|
1,582 |
|
|
727 |
|
46.0 |
% |
|
|
2,053 |
|
|
(676 |
) |
|
2,729 |
|
# |
|
Gain from equity method investment |
|
|
— |
|
|
— |
|
|
— |
|
# |
|
|
|
— |
|
|
(135,387 |
) |
|
135,387 |
|
# |
|
Loss on extinguishment of debt |
|
|
3,702 |
|
|
40,206 |
|
|
(36,504 |
) |
(90.8 |
) % |
|
|
3,702 |
|
|
40,206 |
|
|
(36,504 |
) |
(90.8 |
) % |
(Gain) loss on change in fair value of contingent consideration |
|
|
(11,355 |
) |
|
3,825 |
|
|
(15,180 |
) |
# |
|
|
|
(7,605 |
) |
|
3,825 |
|
|
(11,430 |
) |
# |
|
Gain on sale of business |
|
|
(68,443 |
) |
|
— |
|
|
(68,443 |
) |
# |
|
|
|
(68,443 |
) |
|
— |
|
|
(68,443 |
) |
# |
|
Total other (income) expense |
|
|
(23,638 |
) |
|
71,418 |
|
|
(95,056 |
) |
# |
|
|
|
60,390 |
|
|
(23,248 |
) |
|
83,638 |
|
# |
|
Income (loss) before income taxes |
|
|
43,001 |
|
|
(55,414 |
) |
|
98,415 |
|
# |
|
|
|
12,373 |
|
|
117,454 |
|
|
(105,081 |
) |
(89.5 |
) % |
Provision (benefit) for income taxes |
|
|
17,348 |
|
|
(13,375 |
) |
|
30,723 |
|
# |
|
|
|
11,464 |
|
|
29,241 |
|
|
(17,777 |
) |
(60.8 |
) % |
Net income (loss) |
|
$ |
25,653 |
|
$ |
(42,039 |
) |
$ |
67,692 |
|
# |
|
|
$ |
909 |
|
$ |
88,213 |
|
$ |
(87,304 |
) |
(99.0 |
) % |
# - Variance greater than |
Table 2 - Consolidated Balance Sheets (in thousands) |
|||||||
|
|
|
|
||||
ASSETS |
|||||||
Cash and cash equivalents |
$ |
45,683 |
|
|
$ |
63,179 |
|
Restricted cash |
|
144,020 |
|
|
|
98,896 |
|
Gross loans receivable |
|
1,894,427 |
|
|
|
1,548,318 |
|
Less: Allowance for loan losses |
|
(102,743 |
) |
|
|
(87,560 |
) |
Loans receivable, net |
|
1,791,684 |
|
|
|
1,460,758 |
|
Income taxes receivable |
|
13,469 |
|
|
|
31,774 |
|
Prepaid expenses and other |
|
65,167 |
|
|
|
42,038 |
|
Property and equipment, net |
|
37,402 |
|
|
|
54,635 |
|
Investment in Katapult |
|
25,848 |
|
|
|
27,900 |
|
Right of use asset - operating leases |
|
64,683 |
|
|
|
116,300 |
|
Deferred tax assets |
|
31,986 |
|
|
|
15,639 |
|
|
|
424,292 |
|
|
|
429,792 |
|
Intangibles, net |
|
120,345 |
|
|
|
109,930 |
|
Other assets |
|
12,774 |
|
|
|
9,755 |
|
Total Assets |
$ |
2,777,353 |
|
|
$ |
2,460,596 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||
Liabilities |
|
|
|
||||
Accounts payable and accrued liabilities |
$ |
66,723 |
|
|
$ |
121,434 |
|
Deferred revenue |
|
25,111 |
|
|
|
21,649 |
|
Lease liability - operating leases |
|
66,370 |
|
|
|
122,431 |
|
Contingent consideration related to acquisition |
|
15,770 |
|
|
|
26,508 |
|
Income taxes payable |
|
— |
|
|
|
680 |
|
Accrued interest |
|
18,048 |
|
|
|
34,974 |
|
Liability for losses on CSO lender-owned consumer loans |
|
— |
|
|
|
6,908 |
|
Debt |
|
2,449,316 |
|
|
|
1,945,793 |
|
Other long-term liabilities |
|
11,563 |
|
|
|
13,845 |
|
Deferred tax liabilities |
|
— |
|
|
|
6,044 |
|
Total Liabilities |
$ |
2,652,901 |
|
|
$ |
2,300,266 |
|
Total Stockholders' Equity |
|
124,452 |
|
|
|
160,330 |
|
Total Liabilities and Stockholders' Equity |
$ |
2,777,353 |
|
|
$ |
2,460,596 |
|
Table 3 - Consolidated Revenue by Product and Segment |
||||||||||||||||||||||
The following table summarizes revenue by product related to our business lines. |
||||||||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||
(in thousands, unaudited) |
|
|
Canada Direct Lending |
Canada POS Lending |
Total |
% of Total |
|
|
Canada Direct Lending |
Canada POS Lending |
Total |
% of Total |
||||||||||
Revolving LOC |
|
$ |
2,210 |
$ |
50,251 |
$ |
24,575 |
$ |
77,036 |
36.0 |
% |
|
$ |
27,377 |
$ |
40,239 |
$ |
10,646 |
$ |
78,262 |
37.4 |
% |
Installment |
|
|
90,834 |
|
12,645 |
|
— |
|
103,479 |
48.3 |
% |
|
|
101,036 |
|
11,331 |
|
— |
|
112,367 |
53.7 |
% |
Total interest and fees |
|
|
93,044 |
|
62,896 |
|
24,575 |
|
180,515 |
84.3 |
% |
|
|
128,413 |
|
51,570 |
|
10,646 |
|
190,629 |
91.1 |
% |
Insurance premiums and commissions |
|
|
9,986 |
|
14,045 |
|
715 |
|
24,746 |
11.6 |
% |
|
|
— |
|
12,506 |
|
93 |
|
12,599 |
6.0 |
% |
Other revenue |
|
|
4,400 |
|
2,038 |
|
2,421 |
|
8,859 |
4.1 |
% |
|
|
3,261 |
|
2,114 |
|
677 |
|
6,052 |
2.9 |
% |
Total revenue |
|
$ |
107,430 |
$ |
78,979 |
$ |
27,711 |
$ |
214,120 |
100.0 |
% |
|
$ |
131,674 |
$ |
66,190 |
$ |
11,416 |
$ |
209,280 |
100.0 |
% |
|
|
Nine Months Ended |
||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||
(in thousands, unaudited) |
|
|
Canada Direct Lending |
Canada POS Lending |
Total |
% of Total |
|
|
Canada Direct Lending |
Canada POS Lending |
Total |
% of Total |
||||||||||
Revolving LOC |
|
$ |
57,269 |
$ |
143,296 |
$ |
64,077 |
$ |
264,642 |
32.7 |
% |
|
$ |
78,391 |
$ |
112,057 |
$ |
18,585 |
$ |
209,033 |
35.2 |
% |
Installment |
|
|
423,537 |
|
35,623 |
|
— |
|
459,160 |
56.8 |
% |
|
|
297,803 |
|
32,319 |
|
— |
|
330,122 |
55.6 |
% |
Total interest and fees |
|
|
480,806 |
|
178,919 |
|
64,077 |
|
723,802 |
89.5 |
% |
|
|
376,194 |
|
144,376 |
|
18,585 |
|
539,155 |
90.8 |
% |
Insurance premiums and commissions |
|
|
19,310 |
|
40,988 |
|
1,361 |
|
61,659 |
7.6 |
% |
|
|
— |
|
35,753 |
|
268 |
|
36,021 |
6.1 |
% |
Other revenue |
|
|
11,424 |
|
6,100 |
|
5,735 |
|
23,259 |
2.9 |
% |
|
|
10,766 |
|
6,381 |
|
1,201 |
|
18,348 |
3.1 |
% |
Total revenue |
|
$ |
511,540 |
$ |
226,007 |
$ |
71,173 |
$ |
808,720 |
100.0 |
% |
|
$ |
386,960 |
$ |
186,510 |
$ |
20,054 |
$ |
593,524 |
100.0 |
% |
Table 4 - Consolidated Loans Receivable |
|||||||||||||||
The following table presents our gross loans receivables. With the sale of the Legacy |
|||||||||||||||
|
|
|
|
As of |
|||||||||||
(in thousands, unaudited) |
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Revolving LOC |
|
$ |
— |
|
$ |
58,471 |
|
$ |
49,077 |
|
$ |
52,532 |
|
$ |
51,196 |
Installment - Company Owned |
|
|
739,100 |
|
|
627,651 |
|
|
589,652 |
|
|
609,413 |
|
|
137,987 |
Canada Direct Lending |
|
|
|
|
|
|
|
|
|
|
|||||
Revolving LOC |
|
|
439,117 |
|
|
442,738 |
|
|
424,485 |
|
|
402,405 |
|
|
366,509 |
Installment |
|
|
25,940 |
|
|
24,817 |
|
|
23,578 |
|
|
24,792 |
|
|
24,315 |
Canada POS Lending |
|
|
|
|
|
|
|
|
|
|
|||||
Revolving LOC |
|
|
690,270 |
|
|
627,163 |
|
|
541,776 |
|
|
459,176 |
|
|
302,349 |
Company Owned gross loans receivable |
|
$ |
1,894,427 |
|
$ |
1,780,840 |
|
$ |
1,628,568 |
|
$ |
1,548,318 |
|
$ |
882,356 |
Gross loans receivable Guaranteed by the Company |
|
|
— |
|
|
51,323 |
|
|
44,420 |
|
|
46,317 |
|
|
43,422 |
Gross combined loans receivable (1) |
|
$ |
1,894,427 |
|
$ |
1,832,163 |
|
$ |
1,672,988 |
|
$ |
1,594,635 |
|
$ |
925,778 |
(1) See "Non-GAAP Financial Measures" at the end of this release for definition and more information. |
Segment Analysis
The following tables provide a summary of segment operating (loss) income and portfolio performance for the segment and period indicated.
Table 5 - Summary of Segment Operating (Loss) Income |
|||||||||||||||||||
|
Three Months Ended |
|
Three Months Ended |
||||||||||||||||
(dollars in thousands, unaudited) |
|
Canada Direct Lending |
Canada POS Lending |
|
|
Canada Direct Lending |
Canada POS Lending |
||||||||||||
Total revenue |
$ |
107,430 |
|
$ |
78,979 |
|
$ |
27,711 |
|
|
$ |
131,674 |
|
$ |
66,190 |
|
$ |
11,416 |
|
Provision for losses |
|
32,073 |
|
|
32,947 |
|
|
13,379 |
|
|
|
48,430 |
|
|
14,003 |
|
|
8,285 |
|
Net revenue |
|
75,357 |
|
|
46,032 |
|
|
14,332 |
|
|
|
83,244 |
|
|
52,187 |
|
|
3,131 |
|
Total operating expenses |
|
76,067 |
|
|
26,773 |
|
|
13,518 |
|
|
|
84,074 |
|
|
26,003 |
|
|
12,481 |
|
Non-recourse interest expense |
|
11,226 |
|
|
7,237 |
|
|
11,700 |
|
|
|
2,598 |
|
|
2,529 |
|
|
3,880 |
|
Recourse interest expense |
|
19,739 |
|
|
(47 |
) |
|
294 |
|
|
|
16,883 |
|
|
(89 |
) |
|
4 |
|
Segment operating (loss) income |
$ |
(31,675 |
) |
$ |
12,069 |
|
$ |
(11,180 |
) |
|
$ |
(20,311 |
) |
$ |
23,744 |
|
$ |
(13,234 |
) |
|
Nine Months Ended |
|
Nine Months Ended |
||||||||||||||||
(dollars in thousands, unaudited) |
|
Canada Direct Lending |
Canada POS Lending |
|
|
Canada Direct Lending |
Canada POS Lending |
||||||||||||
Total revenue |
$ |
511,540 |
|
$ |
226,007 |
|
$ |
71,173 |
|
|
$ |
386,960 |
|
$ |
186,510 |
|
$ |
20,054 |
|
Provision for losses |
|
196,461 |
|
|
80,960 |
|
|
28,055 |
|
|
|
108,108 |
|
|
31,793 |
|
|
12,127 |
|
Net revenue |
|
315,079 |
|
|
145,047 |
|
|
43,118 |
|
|
|
278,852 |
|
|
154,717 |
|
|
7,927 |
|
Total operating expenses |
|
302,641 |
|
|
82,126 |
|
|
45,714 |
|
|
|
245,623 |
|
|
76,090 |
|
|
25,577 |
|
Non-recourse interest expense |
|
26,635 |
|
|
17,442 |
|
|
25,998 |
|
|
|
6,728 |
|
|
7,562 |
|
|
8,302 |
|
Recourse interest expense |
|
59,838 |
|
|
(75 |
) |
|
845 |
|
|
|
46,449 |
|
|
(269 |
) |
|
12 |
|
Segment operating (loss) income |
$ |
(74,035 |
) |
$ |
45,554 |
|
$ |
(29,439 |
) |
|
$ |
(19,948 |
) |
$ |
71,334 |
|
$ |
(25,964 |
) |
Table 6 - Summary of Adjusted Segment Operating (Loss) Income |
|||||||||||||||||||
|
Three Months Ended |
|
Three Months Ended |
||||||||||||||||
(dollars in thousands, unaudited) |
|
Canada Direct Lending |
Canada POS Lending |
|
|
Canada Direct Lending |
Canada POS Lending |
||||||||||||
Total revenue |
$ |
107,430 |
|
$ |
78,979 |
|
$ |
27,711 |
|
|
$ |
131,674 |
|
$ |
66,190 |
|
$ |
11,416 |
|
Provision for losses |
|
32,073 |
|
|
32,947 |
|
|
13,379 |
|
|
|
48,430 |
|
|
14,003 |
|
|
8,285 |
|
Net revenue |
|
75,357 |
|
|
46,032 |
|
|
14,332 |
|
|
|
83,244 |
|
|
52,187 |
|
|
3,131 |
|
Adjusted operating expense (1) |
|
66,796 |
|
|
26,621 |
|
|
13,528 |
|
|
|
74,109 |
|
|
25,909 |
|
|
8,206 |
|
Non-recourse interest expense |
|
11,226 |
|
|
7,237 |
|
|
11,700 |
|
|
|
2,598 |
|
|
2,529 |
|
|
3,880 |
|
Recourse interest expense |
|
19,739 |
|
|
(47 |
) |
|
294 |
|
|
|
16,883 |
|
|
(89 |
) |
|
4 |
|
Adjusted segment operating (loss) income (1) |
$ |
(22,404 |
) |
$ |
12,221 |
|
$ |
(11,190 |
) |
|
$ |
(10,346 |
) |
$ |
23,838 |
|
$ |
(8,959 |
) |
(1) See "Non-GAAP Financial Measures" at the end of this release for definition and more information. |
|
Nine Months Ended |
|
Nine Months Ended |
|||||||||||||||
(dollars in thousands, unaudited) |
|
Canada Direct Lending |
Canada POS Lending |
|
|
Canada Direct Lending |
Canada POS Lending |
|||||||||||
Total revenue |
$ |
511,540 |
|
$ |
226,007 |
|
$ |
71,173 |
|
|
$ |
386,960 |
$ |
186,510 |
|
$ |
20,054 |
|
Provision for losses |
|
196,461 |
|
|
80,960 |
|
|
28,055 |
|
|
|
108,108 |
|
31,793 |
|
|
12,127 |
|
Net revenue |
|
315,079 |
|
|
145,047 |
|
|
43,118 |
|
|
|
278,852 |
|
154,717 |
|
|
7,927 |
|
Adjusted operating expense (1) |
|
280,629 |
|
|
81,707 |
|
|
43,959 |
|
|
|
217,809 |
|
75,848 |
|
|
15,824 |
|
Non-recourse interest expense |
|
26,635 |
|
|
17,442 |
|
|
25,998 |
|
|
|
6,728 |
|
7,562 |
|
|
8,302 |
|
Recourse interest expense |
|
59,838 |
|
|
(75 |
) |
|
845 |
|
|
|
46,449 |
|
(269 |
) |
|
12 |
|
Adjusted segment operating (loss) income (1) |
$ |
(52,023 |
) |
$ |
45,972 |
|
$ |
(27,684 |
) |
|
$ |
7,866 |
$ |
71,576 |
|
$ |
(16,211 |
) |
(1) See "Non-GAAP Financial Measures" at the end of this release for definition and more information. |
Table 7 - |
|||||||||||||||||
(in thousands, except percentages) |
|
Q3 2022 |
Q2 2022(6) |
Q1 2022 |
|
Q4 2021(1) |
Q3 2021 |
||||||||||
Gross combined loans receivable (2) |
|
|
|
|
|
|
|
||||||||||
Revolving LOC |
|
$ |
— |
|
$ |
58,471 |
|
$ |
49,077 |
|
|
$ |
52,532 |
|
$ |
51,196 |
|
Installment loans - Company Owned |
|
|
739,100 |
|
|
627,651 |
|
|
589,652 |
|
|
|
137,782 |
|
|
137,987 |
|
Total |
|
|
739,100 |
|
|
686,122 |
|
|
638,729 |
|
|
|
190,314 |
|
|
189,183 |
|
Installment loans - Guaranteed by the Company (3) |
|
|
— |
|
|
51,323 |
|
|
44,420 |
|
|
|
46,317 |
|
|
43,422 |
|
Total |
|
$ |
739,100 |
|
$ |
737,445 |
|
$ |
683,149 |
|
|
$ |
236,631 |
|
$ |
232,605 |
|
|
|
|
|
|
|
|
|
||||||||||
Lending Revenue: |
|
|
|
|
|
|
|
||||||||||
Revolving LOC |
|
$ |
2,210 |
|
$ |
28,145 |
|
$ |
26,913 |
|
|
$ |
27,911 |
|
$ |
27,377 |
|
Installment loans - Company Owned |
|
|
86,936 |
|
|
121,595 |
|
|
113,833 |
|
|
|
56,820 |
|
|
57,659 |
|
Installment loans - Guaranteed by the Company (3) |
|
|
3,898 |
|
|
48,283 |
|
|
48,991 |
|
|
|
47,348 |
|
|
43,377 |
|
Total |
|
$ |
93,044 |
|
$ |
198,023 |
|
$ |
189,737 |
|
|
$ |
132,079 |
|
$ |
128,413 |
|
|
|
|
|
|
|
|
|
||||||||||
Lending Provision: |
|
|
|
|
|
|
|
||||||||||
Revolving LOC |
|
$ |
— |
|
$ |
11,831 |
|
$ |
9,577 |
|
|
$ |
11,592 |
|
$ |
8,140 |
|
Installment loans - Company Owned |
|
|
29,045 |
|
|
54,868 |
|
|
32,962 |
|
|
|
18,618 |
|
|
16,792 |
|
Installment loans - Guaranteed by the Company (3) |
|
|
— |
|
|
28,313 |
|
|
21,749 |
|
|
|
25,967 |
|
|
23,146 |
|
Total |
|
$ |
29,045 |
|
$ |
95,012 |
|
$ |
64,288 |
|
|
$ |
56,177 |
|
$ |
48,078 |
|
|
|
|
|
|
|
|
|
||||||||||
NCOs (7) |
|
|
|
|
|
|
|
||||||||||
Revolving LOC |
|
$ |
1,140 |
|
$ |
10,248 |
|
$ |
10,055 |
|
|
$ |
11,481 |
|
$ |
8,329 |
|
Installment loans - Company Owned |
|
|
25,722 |
|
|
40,757 |
|
|
36,247 |
|
|
|
19,664 |
|
|
19,548 |
|
Installment loans - Guaranteed by the Company (3) |
|
|
1,589 |
|
|
27,395 |
|
|
21,492 |
|
|
|
26,065 |
|
|
21,404 |
|
Total |
|
$ |
28,452 |
|
$ |
78,400 |
|
$ |
67,794 |
|
|
$ |
57,210 |
|
$ |
49,281 |
|
|
|
|
|
|
|
|
|
||||||||||
NCO rate (4) (7) |
|
|
|
|
|
|
|
||||||||||
Revolving LOC |
|
|
3.9 |
% |
|
19.1 |
% |
|
19.8 |
% |
|
|
22.1 |
% |
|
16.9 |
% |
Installment loans - Company Owned |
|
|
3.8 |
% |
|
6.7 |
% |
|
6.0 |
% |
|
|
14.3 |
% |
|
14.1 |
% |
Total |
|
|
3.8 |
% |
|
7.7 |
% |
|
7.1 |
% |
|
|
16.4 |
% |
|
14.8 |
% |
Installment loans - Guaranteed by the Company (3) |
|
|
6.2 |
% |
|
57.2 |
% |
|
47.4 |
% |
|
|
58.1 |
% |
|
53.2 |
% |
Total |
|
|
3.9 |
% |
|
11.0 |
% |
|
14.7 |
% |
|
|
24.4 |
% |
|
21.6 |
% |
|
|
|
|
|
|
|
|
||||||||||
ALL and CSO Liability for Losses rate (5) |
|
|
|
|
|
|
|
||||||||||
Revolving LOC |
|
|
— |
% |
|
25.1 |
% |
|
26.7 |
% |
|
|
25.9 |
% |
|
26.3 |
% |
Installment loans - Company Owned |
|
|
4.4 |
% |
|
6.8 |
% |
|
4.2 |
% |
|
|
12.7 |
% |
|
13.4 |
% |
Total |
|
|
4.4 |
% |
|
8.4 |
% |
|
5.9 |
% |
|
|
16.3 |
% |
|
16.9 |
% |
Installment loans - Guaranteed by the Company (3) |
|
|
— |
% |
|
15.7 |
% |
|
16.1 |
% |
|
|
14.9 |
% |
|
16.1 |
% |
Total ALL and CSO Liability for Losses rate |
|
|
4.4 |
% |
|
8.9 |
% |
|
6.6 |
% |
|
|
16.0 |
% |
|
16.8 |
% |
|
|
|
|
|
|
|
|
||||||||||
31+ days past-due rate (5) |
|
|
|
|
|
|
|
||||||||||
Revolving LOC |
|
|
— |
% |
|
17.4 |
% |
|
19.1 |
% |
|
|
19.2 |
% |
|
18.3 |
% |
Installment loans - Company Owned |
|
|
10.5 |
% |
|
10.0 |
% |
|
9.6 |
% |
|
|
9.4 |
% |
|
11.9 |
% |
Total |
|
|
10.5 |
% |
|
10.7 |
% |
|
10.4 |
% |
|
|
10.1 |
% |
|
13.6 |
% |
|
|
|
|
|
|
|
|
||||||||||
Installment loans - Guaranteed by the Company (3) |
|
|
— |
% |
|
2.6 |
% |
|
4.5 |
% |
|
|
3.1 |
% |
|
3.8 |
% |
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
||||||||||
(1) On |
|||||||||||||||||
(2) Non-GAAP measure. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures." |
|||||||||||||||||
(3) Includes loans originated by third-party lenders through CSO programs. Installment gross loans receivable Guaranteed by the Company are not included in the Consolidated Financial Statements. All balances in connection with the CSO programs were disposed of on |
|||||||||||||||||
(4) We calculate NCO rate as total NCOs divided by Average gross loans receivable. 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. |
|||||||||||||||||
(5) We calculate (i) Allowance for loan losses (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. |
|||||||||||||||||
(6) Includes loan balances and activity classified as Held for Sale. |
|||||||||||||||||
(7) For the first, second and third quarters of 2022, NCOs presented above include |
|||||||||||||||||
(8) The total past-due rate for |
Table 8 - Canada Direct Lending Portfolio Performance |
|||||||||||||||||
(in thousands, except percentages) |
|
Q3 2022 |
Q2 2022 |
Q1 2022 |
|
Q4 2021 |
Q3 2021 |
||||||||||
Gross loans receivable |
|
|
|
|
|
|
|
||||||||||
Revolving LOC |
|
$ |
439,117 |
|
$ |
442,738 |
|
$ |
424,485 |
|
|
$ |
402,405 |
|
$ |
366,509 |
|
Installment loans |
|
|
25,941 |
|
|
24,817 |
|
|
23,578 |
|
|
|
24,792 |
|
|
24,315 |
|
Total gross loans receivable |
|
$ |
465,058 |
|
$ |
467,555 |
|
$ |
448,063 |
|
|
$ |
427,197 |
|
$ |
390,824 |
|
|
|
|
|
|
|
|
|
||||||||||
Lending Revenue: |
|
|
|
|
|
|
|
||||||||||
Revolving LOC |
|
|
50,251 |
|
$ |
47,591 |
|
$ |
45,455 |
|
|
$ |
43,943 |
|
$ |
40,239 |
|
Installment loans |
|
|
12,645 |
|
|
11,868 |
|
|
11,109 |
|
|
|
11,416 |
|
|
11,331 |
|
Total lending revenue |
|
$ |
62,896 |
|
$ |
59,459 |
|
$ |
56,564 |
|
|
$ |
55,359 |
|
$ |
51,570 |
|
|
|
|
|
|
|
|
|
||||||||||
Lending Provision: |
|
|
|
|
|
|
|
||||||||||
Revolving LOC |
|
$ |
28,408 |
|
$ |
22,641 |
|
$ |
19,156 |
|
|
$ |
20,080 |
|
$ |
11,375 |
|
Installment loans |
|
|
4,466 |
|
|
3,303 |
|
|
2,723 |
|
|
|
2,945 |
|
|
2,512 |
|
Total lending provision |
|
$ |
32,874 |
|
$ |
25,944 |
|
$ |
21,879 |
|
|
$ |
23,025 |
|
$ |
13,887 |
|
|
|
|
|
|
|
|
|
||||||||||
NCOs |
|
|
|
|
|
|
|
||||||||||
Revolving LOC |
|
$ |
23,652 |
|
$ |
20,160 |
|
$ |
21,590 |
|
|
$ |
15,112 |
|
$ |
9,887 |
|
Installment loans |
|
|
4,061 |
|
|
2,904 |
|
|
2,647 |
|
|
|
2,758 |
|
|
2,444 |
|
Total NCOs |
|
$ |
27,713 |
|
$ |
23,064 |
|
$ |
24,237 |
|
|
$ |
17,870 |
|
$ |
12,331 |
|
|
|
|
|
|
|
|
|
||||||||||
NCO rate (1) |
|
|
|
|
|
|
|
||||||||||
Revolving LOC |
|
|
5.4 |
% |
|
4.6 |
% |
|
5.2 |
% |
|
|
3.9 |
% |
|
2.8 |
% |
Installment loans |
|
|
16.0 |
% |
|
12.0 |
% |
|
10.9 |
% |
|
|
11.2 |
% |
|
10.2 |
% |
Total NCO rate |
|
|
5.9 |
% |
|
5.0 |
% |
|
5.5 |
% |
|
|
4.4 |
% |
|
3.3 |
% |
|
|
|
|
|
|
|
|
||||||||||
ALL rate (2) |
|
|
|
|
|
|
|
||||||||||
Revolving LOC |
|
|
7.9 |
% |
|
7.2 |
% |
|
7.2 |
% |
|
|
8.0 |
% |
|
7.5 |
% |
Installment loans |
|
|
10.3 |
% |
|
9.7 |
% |
|
8.8 |
% |
|
|
8.0 |
% |
|
7.4 |
% |
Total ALL rate |
|
|
8.0 |
% |
|
7.4 |
% |
|
7.3 |
% |
|
|
8.0 |
% |
|
7.5 |
% |
|
|
|
|
|
|
|
|
||||||||||
31+ days past-due rate (2) |
|
|
|
|
|
|
|
||||||||||
Revolving LOC |
|
|
5.1 |
% |
|
4.2 |
% |
|
4.3 |
% |
|
|
3.2 |
% |
|
2.5 |
% |
Installment loans |
|
|
1.0 |
% |
|
0.8 |
% |
|
1.0 |
% |
|
|
0.9 |
% |
|
0.7 |
% |
Total past-due rate(3) |
|
|
4.8 |
% |
|
4.0 |
% |
|
4.1 |
% |
|
|
3.1 |
% |
|
2.4 |
% |
|
|
|
|
|
|
|
|
||||||||||
(1) We calculate NCO rate as total NCOs divided by Average gross loans receivable. The amount and timing of recoveries are impacted by our collection strategies, which are based on customer behavior and risk profile and include direct customer communications and the periodic sale of charged off loans. |
|||||||||||||||||
(2) We calculate ALL rate and past-due rate as the respective totals divided by gross loans receivable at each respective quarter end. |
|||||||||||||||||
(3) The total past-due rate for Canada Direct Lending including loans 1-30 days past-due were |
Table 9 - Canada POS Lending Portfolio Performance |
|||||||||||||||||
(in thousands, except percentages) |
|
Q3 2022 |
Q2 2022 |
Q1 2022 |
|
Q4 2021 |
Q3 2021 |
||||||||||
Revolving LOC |
|
|
|
|
|
|
|
||||||||||
Total gross loans receivable |
|
$ |
690,270 |
|
$ |
627,163 |
|
$ |
541,776 |
|
|
$ |
459,176 |
|
$ |
302,349 |
|
Total lending revenue |
|
$ |
24,575 |
|
$ |
20,846 |
|
$ |
18,655 |
|
|
$ |
13,704 |
|
$ |
10,646 |
|
Total lending provision |
|
$ |
13,379 |
|
$ |
5,963 |
|
$ |
8,714 |
|
|
$ |
12,511 |
|
$ |
8,285 |
|
Canada POS Lending NCOs (1) |
|
$ |
6,114 |
|
$ |
3,537 |
|
$ |
2,727 |
|
|
$ |
1,731 |
|
$ |
1,827 |
|
NCO rate (1)(2) |
|
|
0.9 |
% |
|
0.6 |
% |
|
0.5 |
% |
|
|
0.5 |
% |
|
0.7 |
% |
ALL rate (3) |
|
|
4.8 |
% |
|
4.5 |
% |
|
5.1 |
% |
|
|
4.8 |
% |
|
3.8 |
% |
31+ days past-due rate (3)(4) |
|
|
3.6 |
% |
|
2.8 |
% |
|
2.2 |
% |
|
|
1.9 |
% |
|
2.1 |
% |
|
|
|
|
|
|
|
|
||||||||||
(1) For the third and fourth quarters of 2021, NCOs presented above include |
|||||||||||||||||
(2) We calculate NCO rate as total NCOs divided by Average gross loans receivable. |
|||||||||||||||||
(3) We calculate ALL rate and past-due rate as the respective totals divided by gross loans receivable at each respective quarter end. |
|||||||||||||||||
(4) The total past-due rate for Canada POS Lending including loans 1-30 days past-due were |
Non-GAAP Financial Measures
In addition to the financial information prepared in conformity with
- Adjusted Net Income ("ANI") and Adjusted Earnings Per Share, or the Adjusted Earnings Measures (net income plus or minus certain legal and other costs, income or loss from equity method investment, goodwill and intangible asset impairments, transaction-related costs, restructuring costs, loss on extinguishment of debt, adjustments related to acquisition accounting, share-based compensation, intangible asset amortization, gain on sale of business, changes in fair value of contingent consideration, certain tax adjustments and cumulative tax effect of applicable adjustments, on a total and per share basis);
- EBITDA (earnings before interest, income taxes, depreciation and amortization);
- Adjusted EBITDA (EBITDA 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). As a result of the sale of the Legacy
U.S. Direct Lending business, we no longer guarantee loans originated by third-party lenders through CSO programs.
We believe that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of 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 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
Non-GAAP financial measures should not be considered as alternatives to income, segment operating income, or any other performance measure derived in accordance with
Description and Reconciliations of Non-GAAP Financial Measures
Non-GAAP financial measures have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our income or cash flows as reported under
- they do not include cash expenditures or future requirements for capital expenditures or contractual commitments;
- they do not include changes in, or cash requirements for, working capital needs;
- they do not include the interest expense, or the cash requirements necessary to service interest or principal payments on debt;
- depreciation and amortization are non-cash expense items reported in the statements of cash flows; and
- other companies in our industry may calculate these measures differently, limiting their usefulness as comparative measures.
We calculate Adjusted Earnings per Share utilizing diluted shares outstanding at quarter-end. If we record a loss under
We believe investors use the non-GAAP measures we present to analyze operating performance and to evaluate our ability to incur and service debt and the capacity for making capital expenditures. Adjusted EBITDA is also useful to investors to help assess our estimated enterprise value.
Table 10 - Reconciliation of Net Income 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
|
||||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
Change $ |
Change % |
|
|
2022 |
|
|
2021 |
|
Change $ |
Change % |
|||||||
Net income (loss) |
|
$ |
25,653 |
|
$ |
(42,039 |
) |
$ |
67,692 |
|
# |
|
|
$ |
909 |
|
$ |
88,213 |
|
($ |
87,304 |
) |
(99.0 |
) % |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Restructuring costs (1) |
|
|
739 |
|
|
5,651 |
|
|
|
|
|
2,954 |
|
|
11,414 |
|
|
|
||||||
Legal and other costs (2) |
|
|
46 |
|
|
370 |
|
|
|
|
|
1,083 |
|
|
370 |
|
|
|
||||||
Loss (income) from equity method investment (3) |
|
|
2,309 |
|
|
1,582 |
|
|
|
|
|
2,053 |
|
|
(676 |
) |
|
|
||||||
Gain from equity method investment (11) |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
(135,387 |
) |
|
|
||||||
Transaction costs (4) |
|
|
10,063 |
|
|
141 |
|
|
|
|
|
10,063 |
|
|
6,482 |
|
|
|
||||||
Acquisition-related adjustments (5) |
|
|
(2,883 |
) |
|
4,292 |
|
|
|
|
|
709 |
|
|
9,787 |
|
|
|
||||||
Change in fair value of contingent consideration (6) |
|
|
(11,355 |
) |
|
3,825 |
|
|
|
|
|
(7,605 |
) |
|
3,825 |
|
|
|
||||||
Loss on extinguishment of debt (12) |
|
|
3,702 |
|
|
42,262 |
|
|
|
|
|
3,702 |
|
|
42,262 |
|
|
|
||||||
Share-based compensation (7) |
|
|
1,448 |
|
|
3,998 |
|
|
|
|
|
9,958 |
|
|
10,148 |
|
|
|
||||||
Intangible asset amortization (8) |
|
|
3,151 |
|
|
1,774 |
|
|
|
|
|
9,652 |
|
|
4,471 |
|
|
|
||||||
Gain on sale of business (13) |
|
|
(68,443 |
) |
|
— |
|
|
|
|
|
(68,443 |
) |
|
— |
|
|
|
||||||
Cumulative tax effect of adjustments (9) |
|
|
23,677 |
|
|
(15,411 |
) |
|
|
|
|
18,061 |
|
|
13,058 |
|
|
|
||||||
Adjusted net (loss) income |
|
$ |
(11,893 |
) |
$ |
6,445 |
|
$ |
(18,338 |
) |
# |
|
|
$ |
(16,904 |
) |
$ |
53,967 |
|
$ |
(70,871 |
) |
# |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income (loss) |
|
$ |
25,653 |
|
$ |
(42,039 |
) |
|
|
|
$ |
909 |
|
$ |
88,213 |
|
|
|
||||||
Diluted weighted average shares outstanding |
|
|
40,835 |
|
|
41,220 |
|
|
|
|
|
40,754 |
|
|
43,422 |
|
|
|
||||||
Adjusted diluted average shares outstanding |
|
|
40,835 |
|
|
43,285 |
|
|
|
|
|
40,754 |
|
|
43,422 |
|
|
|
||||||
Diluted earnings (loss) per share |
|
$ |
0.63 |
|
$ |
(1.02 |
) |
$ |
1.65 |
|
# |
|
|
$ |
0.02 |
|
$ |
2.03 |
|
$ |
(2.01 |
) |
# |
|
Per share impact of adjustments to net (loss) income |
|
|
(0.92 |
) |
|
1.17 |
|
|
|
|
|
(0.43 |
) |
|
(0.79 |
) |
|
|
||||||
Adjusted diluted (loss) earnings per share |
|
$ |
(0.29 |
) |
$ |
0.15 |
|
$ |
(0.44 |
) |
(293.3 |
) % |
|
($ |
0.41 |
) |
$ |
1.24 |
|
$ |
(1.65 |
) |
(133.1 |
) % |
Note: Footnotes follow Reconciliation of Net income table on the next page |
Table 11 - Reconciliation of Net Income to EBITDA and Adjusted EBITDA, Non-GAAP Measures |
|||||||||||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||||||||||||||
(in thousands, unaudited) |
|
|
2022 |
|
|
2021 |
|
Change $ |
Change % |
|
|
2022 |
|
|
2021 |
|
Change $ |
Change % |
|||||
Net income (loss) |
|
$ |
25,653 |
|
$ |
(42,039 |
) |
$ |
67,692 |
# |
|
|
$ |
909 |
|
$ |
88,213 |
|
$ |
(87,304 |
) |
(99.0 |
) % |
Provision (benefit) for income taxes |
|
|
17,348 |
|
|
(13,375 |
) |
|
30,723 |
# |
|
|
|
11,464 |
|
|
29,241 |
|
|
(17,777 |
) |
(60.8 |
) % |
Interest expense |
|
|
50,149 |
|
|
25,805 |
|
|
24,344 |
94.3 |
% |
|
|
130,683 |
|
|
68,784 |
|
|
61,899 |
|
90.0 |
% |
Depreciation and amortization |
|
|
9,499 |
|
|
7,285 |
|
|
2,214 |
30.4 |
% |
|
|
27,985 |
|
|
19,685 |
|
|
8,300 |
|
42.2 |
% |
EBITDA |
|
|
102,649 |
|
|
(22,324 |
) |
|
124,973 |
# |
|
|
|
171,041 |
|
|
205,923 |
|
|
(34,882 |
) |
(16.9 |
) % |
Restructuring costs (1) |
|
|
739 |
|
|
5,651 |
|
|
|
|
|
2,954 |
|
|
11,414 |
|
|
|
|||||
Legal and other costs (2) |
|
|
46 |
|
|
370 |
|
|
|
|
|
1,083 |
|
|
370 |
|
|
|
|||||
Loss (income) from equity method investment (3) |
|
|
2,309 |
|
|
1,582 |
|
|
|
|
|
2,053 |
|
|
(676 |
) |
|
|
|||||
Gain from equity method investment (11) |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
(135,387 |
) |
|
|
|||||
Transaction costs (4) |
|
|
10,063 |
|
|
141 |
|
|
|
|
|
10,063 |
|
|
6,482 |
|
|
|
|||||
Acquisition-related adjustments (5) |
|
|
(2,883 |
) |
|
4,292 |
|
|
|
|
|
709 |
|
|
9,787 |
|
|
|
|||||
Change in fair value of contingent consideration (6) |
|
|
(11,355 |
) |
|
3,825 |
|
|
|
|
|
(7,605 |
) |
|
3,825 |
|
|
|
|||||
Loss on extinguishment of debt (12) |
|
|
3,702 |
|
|
40,206 |
|
|
|
|
|
3,702 |
|
|
40,206 |
|
|
|
|||||
Gain on sale of business (13) |
|
|
(68,443 |
) |
|
— |
|
|
|
|
|
(68,443 |
) |
|
— |
|
|
|
|||||
Share-based compensation (7) |
|
|
1,448 |
|
|
3,998 |
|
|
|
|
|
9,958 |
|
|
10,148 |
|
|
|
|||||
Other adjustments (10) |
|
|
— |
|
|
(118 |
) |
|
|
|
|
(581 |
) |
|
(392 |
) |
|
|
|||||
Adjusted EBITDA |
|
$ |
38,275 |
|
$ |
37,623 |
|
$ |
652 |
1.7 |
% |
|
$ |
124,934 |
|
$ |
151,700 |
|
$ |
(26,766 |
) |
(17.6 |
) % |
Adjusted EBITDA Margin |
|
|
17.9 |
% |
|
18.0 |
% |
|
|
|
|
15.4 |
% |
|
25.6 |
% |
|
|
|||||
# - Change greater than |
Table 12 - Reconciliation of Total Operating Expense to Adjusted Operating Expense |
|||||||||||||||||
|
Three Months Ended |
|
Three Months Ended |
||||||||||||||
(dollars in thousands, unaudited) |
|
Canada Direct Lending |
Canada POS Lending |
|
|
Canada Direct Lending |
Canada POS Lending |
||||||||||
Total operating expense |
$ |
76,067 |
|
$ |
26,773 |
$ |
13,518 |
|
|
$ |
84,074 |
|
$ |
26,003 |
$ |
12,481 |
|
Less: |
|
|
|
|
|
|
|
||||||||||
Restructuring costs (1) |
|
739 |
|
|
— |
|
— |
|
|
|
5,651 |
|
|
— |
|
— |
|
Legal and other costs (2) |
|
46 |
|
|
— |
|
— |
|
|
|
370 |
|
|
— |
|
— |
|
Transaction costs (4) |
|
10,063 |
|
|
— |
|
— |
|
|
|
141 |
|
|
— |
|
— |
|
Acquisition-related adjustments (5) |
|
(2,883 |
) |
|
— |
|
— |
|
|
|
— |
|
|
— |
|
4,292 |
|
Share-based compensation (7) |
|
1,306 |
|
|
152 |
|
(10 |
) |
|
|
3,998 |
|
|
— |
|
— |
|
Other adjustments (10) |
|
— |
|
|
— |
|
— |
|
|
|
(195 |
) |
|
94 |
|
(17 |
) |
Adjusted operating expense |
$ |
66,796 |
|
$ |
26,621 |
$ |
13,528 |
|
|
$ |
74,109 |
|
$ |
25,909 |
$ |
8,206 |
|
|
Nine Months Ended |
|
Nine Months Ended |
|||||||||||||
(dollars in thousands, unaudited) |
|
Canada Direct Lending |
Canada POS Lending |
|
|
Canada Direct Lending |
Canada POS Lending |
|||||||||
Total operating expense |
$ |
302,641 |
|
$ |
82,126 |
$ |
45,714 |
|
|
245,623 |
|
|
76,090 |
|
25,577 |
|
Less: |
|
|
|
|
|
|
|
|||||||||
Restructuring costs (1) |
|
2,954 |
|
|
— |
|
— |
|
|
11,414 |
|
|
— |
|
— |
|
Legal and other costs (2) |
|
1,076 |
|
|
7 |
|
— |
|
|
370 |
|
|
— |
|
— |
|
Transaction costs (4) |
|
10,063 |
|
|
— |
|
— |
|
|
6,482 |
|
|
— |
|
— |
|
Acquisition-related adjustments (5) |
|
491 |
|
|
— |
|
218 |
|
|
— |
|
|
— |
|
9,787 |
|
Share-based compensation (7) |
|
8,068 |
|
|
396 |
|
1,494 |
|
|
10,148 |
|
|
— |
|
— |
|
Other adjustments (10) |
|
(640 |
) |
|
16 |
|
43 |
|
|
(600 |
) |
|
242 |
|
(34 |
) |
Adjusted operating expense |
$ |
280,629 |
|
$ |
81,707 |
$ |
43,959 |
|
$ |
217,809 |
|
$ |
75,848 |
$ |
15,824 |
|
(1) |
Restructuring costs for the three and nine months ended |
|
(2) |
Legal and other costs for the three and nine months ended |
|
(3) |
The amount reported is our share of Katapult's |
|
(4) |
Transaction costs for the three and nine months ended |
|
(5) |
During the three months and nine months ended
During the three months and nine months ended |
|
(6) |
In connection with our acquisition of Flexiti, we recorded a |
|
(7) |
The estimated fair value of share-based awards was recognized as non-cash compensation expense on a straight-line basis over the vesting period. |
|
(8) |
Intangible asset amortization in determining ANI for the three and nine months ended |
|
(9) |
Cumulative tax effect of adjustments included in Reconciliation of Net income to Adjusted Net Income table is calculated using the estimated incremental tax rate by country. |
|
(10) |
During the three and nine months ended 2021 and during the nine months ended 2022, other adjustments primarily reflect the intercompany foreign-currency exchange impact. |
|
(11) |
Gain on investment in Katapult of |
|
(12) |
On
During the three and nine months ended |
|
(13) |
On |
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 reduction in operating expenses, and our belief in the usefulness of the various non-GAAP financial measures used in this release. In addition, words such as “guidance,” “estimate,” “anticipate,” “believe,” “forecast,” “step,” “plan,” “predict,” “focused,” “project,” “is likely,” “expect,” “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 our 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 our 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 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; 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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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
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Investor Relations:
Executive Vice President and Chief Financial Officer
Phone: 844-200-0342
Email: IR@curo.com
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