CURO Group Holdings Corp. Reports Preliminary Fourth Quarter and Full Year 2023 Financial Results

Rhea-AI Summary

CURO Group Holdings Corp. (NYSE: CURO) announced preliminary financial results for its fourth quarter and full year ended December 31, 2023. Gross loans receivables increased 3.3% year-over-year to $1.3 billion, with a total fourth quarter revenue of $168.2 million. The net charge-off rate improved by 440 bps year-over-year to 16.5%. The company reported a marked reduction in operating expenses and engaged in constructive dialogue with lenders to strengthen its balance sheet.

Insights

Financial Analyst

The reported increase in gross loans receivable by 3.3% both sequentially and year-over-year for CURO Group Holdings Corp. signals a consistent growth in the company's lending operations. This growth, particularly in the context of a market that has been facing headwinds from economic uncertainties, suggests a resilient demand for the company's loan products. The shift towards larger balance and longer-term loans may indicate a strategic pivot towards products with potentially more stable revenue streams, albeit at the cost of lower yields, as evidenced by the 7.6% year-over-year decline in total revenue.

The improvement in the net charge-off rate is a notable achievement, reflecting positively on the company's credit risk management and underwriting standards. A 440 basis points improvement year-over-year and 120 basis points sequentially to 16.5% is significant and may contribute to investor confidence in the company's credit portfolio quality. However, stakeholders should be cautious and consider the impact of such tightening on future loan volume and customer acquisition.

Market Research Analyst

The cancellation of CURO's earnings conference call, coinciding with the commencement of a consent solicitation for its senior secured notes, could be indicative of a strategic financial maneuver to restructure debt obligations. While this may not immediately affect the stock market's perception of CURO, it does suggest that the company is actively managing its balance sheet to better position itself for future growth. Investors often scrutinize such moves as they can affect the company’s creditworthiness and future interest expenses.

Furthermore, the reported decline in total operating expenses by 18.3% year-over-year suggests effective cost management, which could improve profitability margins in the long run. This reduction in expenses, coupled with the increase in net revenue by 6.0% year-over-year, may be viewed favorably by investors looking for companies with efficient operations and strong cost control measures.

Economist

The mix shift towards higher credit quality customers and the corresponding decrease in provision for credit loss expense by 25.8% reflect an economic environment where lenders may be adopting more conservative lending practices. This could be a response to macroeconomic factors such as interest rate hikes and potential recessionary pressures, which typically lead to increased credit risk. The ability of CURO to navigate these conditions and report a decrease in delinquency ratios across various timeframes is commendable and may point to the company's resilience in the face of economic headwinds.

However, the revenue decline related to the shift to lower-yielding loans raises questions about the long-term sustainability of interest income. Stakeholders should assess whether the trade-off between better credit quality and lower yields aligns with the company’s risk appetite and growth objectives. The company's performance in this area will be an important indicator to monitor in subsequent quarters.

-Gross loans receivables increased 3.3%, year-over-year, and 3.3%, sequentially, to $1.3 billion-

-Total fourth quarter revenue of $168.2 million-

-Net charge-off improvement of 440 bps, year-over-year, and 120 bps, sequentially, to 16.5%-

-Cancels earnings conference call previously scheduled for Wednesday, February 7, 2024-

CHICAGO--(BUSINESS WIRE)-- CURO Group Holdings Corp. (NYSE: CURO) (“CURO” or the “Company”), an omni-channel consumer finance company serving consumers in the U.S. and Canada, today announced preliminary financial results for its fourth quarter and full year ended December 31, 2023.

"Throughout 2023, we executed on our plan to enhance our underwriting and credit performance and simplify our overall operations, including consolidating our U.S. footprint onto one loan management system and further scaling our data and technological capabilities," said Doug Clark, Chief Executive Officer at CURO. "As a result, we showed improvement in our delinquency and charge-off performance, as well as a marked reduction in our operating expenses. As we continue to execute on our long-term U.S. and Canadian strategy, we are engaged in constructive dialogue with our lenders to strengthen our balance sheet and better position CURO for growth and success. We are proud of the foundation we laid in 2023 and look forward to building on this momentum in 2024. We thank our CURO employees for their dedication and hard work as we move forward."

Preliminary Fourth Quarter 2023 Consolidated Summary Results

Current and prior period financial information is presented on a continuing operations basis, which excludes the Canada POS Lending segment due to the sale of Flexiti on August 31, 2023.

• Gross loans receivable of $1.3 billion increased $41.3 million, or 3.3%, sequentially, and $41.3 million, or 3.3%, year-over-year.
  • Gross loans receivable in the U.S. were stable year-over-year, with increases in larger balance and longer-term loans offset by reductions in smaller balance and shorter-term loans. Sequentially, Gross loans receivable in the U.S. increased $23.1 million, or 3.1%, due to increases in larger balance and longer-term loans.
  • Gross loans receivable in Canada increased by $39.7 million, or 8.3%, year-over-year, and $18.2 million, or 3.6%, sequentially, driven by increases in Canadian Revolving LOC loans and favorable foreign currency exchange rates.
• Total revenue of $168.2 million declined $13.7 million, or 7.6%, year-over-year, primarily related to the mix shift to larger, longer-term, higher credit and lower yielding loans. Sequentially, total revenue increased by $0.3 million, or 0.2%.
• Net revenue of $110.5 million increased $6.3 million, or 6.0%, year-over-year, primarily driven by a $20.0 million, or 25.8%, decrease in provision for credit loss expense related to the mix shift to larger and longer-term loans to higher credit quality customers and enhanced collections efforts, partially offset by the reduction in Total revenue. Sequentially, Net revenue decreased $8.4 million, or 7.0%, primarily driven by additional provision for credit loss expense due to new loans originated during the fourth quarter, partially offset by the improvement in net charge-off rate.
• Net charge-off rate of 16.5% improved 440 bps, year-over-year, and improved 120 bps sequentially, driven by increased credit quality as a result of the product mix shift, credit tightening and servicing optimization.
• Total operating expenses of $91.2 million decreased $20.4 million, or 18.3%, year-over-year, and $3.0 million, or 3.1%, sequentially.

	As of or for the Quarter Ended
(unaudited)	Dec 31,	Sep 30,	Jun 30,	Mar 31,	Dec 31,
Delinquency and Loss Ratios	2023	2023	2023	2023	2022
31-60 days delinquency ratio	2.2%	2.4%	2.5%	2.1%	2.4%
61-90 days delinquency ratio	1.6%	1.7%	1.7%	1.8%	1.8%
91+ days delinquency ratio	4.6%	4.4%	4.1%	4.4%	3.4%
Net charge-offs	16.5%	17.7%	18.8%	15.6%	20.9%

Conference Call Cancellation and Consent Solicitation

In a separate press release issued today, CURO announced the commencement of a consent solicitation from the holders of its 7.500% Senior 1.5 Lien Senior Secured Notes Due 2028. As a result, CURO has cancelled its earnings conference call previously scheduled for 8:00 a.m. Eastern Time on Wednesday, February 7, 2024.

Preliminary Results

The financial results presented and discussed herein are on a preliminary and unaudited basis; final audited data will be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

About CURO

CURO Group Holdings Corp. (NYSE: CURO) is a leading consumer credit lender serving U.S. and Canadian customers for over 25 years. Our roots in the consumer finance market run deep. We’ve worked diligently to provide customers a variety of convenient, easily accessible financial services. Our decades of diversified data power a hard-to-replicate underwriting and scoring engine, mitigating risk across the full spectrum of credit products. We operate under a number of brands including Cash Money®, LendDirect®, Heights Finance, Southern Finance, Covington Credit, Quick Credit and First Heritage Credit. For more information, please visit http://www.curo.com.

Table 1 - Consolidated Statements of Operations
(in thousands, except per share data, unaudited)		Three Months Ended,																	Year Ended,
		Dec 31,			Sep 30,			Jun 30,			Mar 31,			Dec 31,					Dec 31,
		2023			2023			2023			2023			2022					2023
Revenue
Interest and fees revenue		$	142,239		$	143,493		$	141,766		$	144,304		$	150,350					571,802
Insurance and other income			25,940			24,370			25,250			25,064			31,575					100,624
Total revenue			168,179			167,863			167,016			169,368			181,925					672,426
Provision for losses			57,689			49,009			63,755			48,364			77,724					218,817
Net revenue			110,490			118,854			103,261			121,004			104,201					453,609
Operating Expenses
Salaries and benefits			49,537			52,148			53,144			56,619			60,149					211,448
Occupancy			11,277			10,454			10,885			11,344			11,785					43,960
Advertising			2,435			2,819			1,967			1,999			3,383					9,220
Direct operations			11,496			12,176			12,032			9,745			7,921					45,449
Depreciation and amortization			5,578			5,390			5,339			5,390			5,329					21,697
Other operating expense			10,915			11,207			7,918			18,054			23,065					48,094
Total operating expenses			91,238			94,194			91,285			103,151			111,632					379,868
Other expense
Interest expense			58,341			55,798			50,460			44,045			41,180					208,644
Loss from equity method investment			3,310			1,453			2,134			3,413			1,932					10,310
Goodwill Impairment			—			—			—			—			107,827					—
Extinguishment or modification of debt costs			—			—			8,864			—			24					8,864
Gain on sale of business			—			—			—			2,027			—					2,027
Miscellaneous expenses			—			—			1,435			—			—					1,435
Total other expense			61,651			57,251			62,893			49,485			150,963					231,280
Loss from continuing operations before income taxes			(42,399	)		(32,591	)		(50,917	)		(31,632	)		(158,394	)				(157,539	)
Provision (benefit) for income taxes from continuing operations			1,094			1,021			3,147			23,277			(15,970	)				28,539
Net loss from continuing operations		$	(43,493	)	$	(33,612	)	$	(54,064	)	$	(54,909	)	$	(142,424	)			$	(186,078	)
Net loss from discontinued operations			—			(70,830	)		(5,263	)		(4,562	)		(43,969	)				(80,655	)
Net loss		$	(43,493	)	$	(104,442	)	$	(59,327	)	$	(59,471	)	$	(186,393	)			$	(266,733	)
Basic loss per share:
Continuing operations		$	(1.05	)	$	(0.81	)	$	(1.32	)	$	(1.35	)	$	(3.52	)			$	(4.53	)
Discontinued operations		$	—		$	(1.72	)	$	(0.13	)	$	(0.11	)	$	(1.09	)			$	(1.96	)
Diluted loss per share:
Continuing operations		$	(1.05	)	$	(0.81	)	$	(1.32	)	$	(1.35	)	$	(3.52	)			$	(4.53	)
Discontinued operations		$	—		$	(1.72	)	$	(0.13	)	$	(0.11	)	$	(1.09	)			$	(1.96	)
Weighted average common shares outstanding:
Basic			41,317			41,267			41,002			40,783			40,428					41,093
Diluted			41,317			41,267			41,002			40,783			40,428					41,093

Table 2 - Consolidated Balance Sheets
	As of
	Dec 31,			Sep 30,			Jun 30,			Mar 31,			Dec 31,
(in thousands, unaudited)	2023			2023			2023			2023			2022
ASSETS
Cash and cash equivalents	$	84,594		$	82,550		$	101,033		$	40,449		$	50,856
Restricted cash		48,008			53,818			76,375			90,211			59,645
Gross loans receivable		1,295,660			1,254,401			1,227,615			1,209,576			1,254,395
Less: Allowance for credit losses		(206,227	)		(199,739	)		(210,292	)		(202,757	)		(81,185	)
Loans receivable, net		1,089,433			1,054,662			1,017,323			1,006,819			1,173,210
Income taxes receivable		54,986			58,064			20,854			22,737			23,984
Prepaid expenses and other		45,221			61,441			42,131			45,592			51,081
Property and equipment, net		22,206			23,903			25,826			27,244			29,232
Investment in Katapult		13,605			16,915			18,368			20,502			23,915
Right of use asset - operating leases		49,606			51,413			53,042			51,615			58,177
Deferred tax assets		13,248			14,194			15,304			13,623			18,138
Goodwill		276,951			276,269			277,069			276,487			276,269
Intangibles, net		75,301			74,336			74,007			71,798			70,913
Other assets		9,745			9,387			6,673			6,785			8,370
Assets, discontinued operations		—			—			1,016,832			947,925			945,403
Total Assets	$	1,782,904		$	1,776,952		$	2,744,837		$	2,621,787		$	2,789,193
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Liabilities
Accounts payable and accrued liabilities	$	56,800		$	62,992		$	54,169		$	60,890		$	45,595
Deferred revenue		2,298			2,358			3,370			3,493			3,467
Lease liability - operating leases		51,715			51,579			53,182			52,061			59,396
Income taxes payable		3,552			2,537			(1,242	)		—			—
Accrued interest		40,792			20,953			39,306			20,090			38,460
Debt		2,055,853			2,024,934			1,988,173			1,888,407			1,882,608
Other long-term liabilities		7,595			9,620			10,017			10,045			11,736
Liabilities, discontinued operations		—			—			866,235			815,617			802,065
Total Liabilities	$	2,218,605		$	2,174,973		$	3,013,210		$	2,850,603		$	2,843,327
Total Stockholders' Deficit		(435,701	)		(398,021	)		(268,373	)		(228,816	)		(54,134	)
Total Liabilities and Stockholders' (Deficit) Equity	$	1,782,904		$	1,776,952		$	2,744,837		$	2,621,787		$	2,789,193

Table 3 - Consolidated Portfolio Performance
(in thousands, except percentages, unaudited)		Q4 2023			Q3 2023			Q2 2023			Q1 2023			Q4 2022
Gross loans receivable
Revolving LOC		$	488,932		$	469,041		$	472,902		$	461,443		$	451,077
Installment loans			806,728			785,360			754,713			748,133			803,318
Total gross loans receivable		$	1,295,660		$	1,254,401		$	1,227,615		$	1,209,576		$	1,254,395
Lending Revenue
Revolving LOC		$	50,794		$	51,039		$	49,483		$	49,092		$	49,915
Installment loans			91,445			92,454			92,283			95,212			100,435
Total lending revenue		$	142,239		$	143,493		$	141,766		$	144,304		$	150,350
Lending Provision
Revolving LOC		$	20,131		$	19,031		$	27,089		$	15,539		$	29,620
Installment loans			36,269			28,464			35,171			31,139			46,442
Total lending provision		$	56,400		$	47,495		$	62,260		$	46,678		$	76,062
NCOs
Revolving LOC		$	19,989		$	22,023		$	21,780		$	6,234		$	26,715
Installment loans			32,908			33,342			35,483			41,078			38,168
Total NCOs		$	52,897		$	55,365		$	57,263		$	47,312		$	64,883
NCO rate (annualized) (1)
Revolving LOC			16.6	%		18.6	%		18.7	%		5.5	%		23.8	%
Installment loans			16.4	%		17.2	%		18.9	%		21.5	%		19.3	%
Total NCO rate			16.5	%		17.7	%		18.8	%		15.6	%		20.9	%
ACL rate (2) (3)
Revolving LOC			25.0	%		25.4	%		26.6	%		25.6	%		8.4	%
Installment loans			10.4	%		10.3	%		11.2	%		11.3	%		5.4	%
Total ACL rate			15.9	%		15.9	%		17.1	%		16.8	%		6.5	%
31+ days past-due rate (2)
Revolving LOC			8.0	%		8.6	%		8.5	%		8.4	%		4.1	%
Installment loans			8.6	%		8.5	%		8.1	%		8.2	%		9.6	%
Total past-due rate			8.3	%		8.5	%		8.3	%		8.3	%		7.6	%
(1) We calculate NCO rate as total quarterly NCOs divided by Average gross loans receivable, then we annualize the rate. The amount and timing of recoveries are impacted by our collection strategies, which are based on customer behavior and risk profile and include direct customer communications and the periodic sale of charged off loans.
(2) We calculate (i) ACL rate and (ii) 31+ days past-due rate as the respective totals divided by gross loans receivable at each quarter end.
(3) We adopted ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" on January 1, 2023, which requires us to estimate the lifetime expected credit loss on financial instruments. Our previous model required the recognition of credit losses when it was probable that a loss had been incurred.

Forward-Looking Statements

This press release contains forward-looking statements. These forward-looking statements include projections, estimates and assumptions about various matters, such as future financial and operational performance, including our plans to address our liquidity and debt obligations and executing on our long-term U.S. and Canadian strategy. In addition, words such as “guidance,” “estimate,” “anticipate,” “believe,” “forecast,” “step,” “plan,” “predict,” “focused,” “project,” “is likely,” “expect,” "anticipate," “intend,” “should,” “will,” “confident,” variations of such words and similar expressions are intended to identify forward-looking statements. Our ability to achieve these forward-looking statements is based on certain assumptions, judgments and other factors, both within and outside of our control, that could cause actual results to differ materially from those in the forward-looking statements, including: risks relating to the uncertainty of projected financial and operational information and forecasts, including errors in our internal forecasts; our ability to manage growth; our dependence on third-party lenders to provide the cash we need to fund our loans and our ability to affordably access third-party financing; our level of indebtedness; the effects of competition on our business; our ability to attract and retain customers; global economic, market, financial, political or health conditions or events; actions of regulators and the impact of those actions on our business; our ability to protect our proprietary technology and analytics and keep up with that of our competitors; disruption of our information technology systems that adversely affect our business operations; ineffective pricing of the credit risk of our prospective or existing customers; inaccurate information supplied by customers or third parties that could lead to errors in judging customers’ qualifications to receive loans; improper disclosure of customer personal data; failure of third parties who provide products, services or support to us; disruption to our relationships with banks and other third-party electronic payment solutions providers as well as other factors discussed in our filings with the Securities and Exchange Commission. These projections, estimates and assumptions may prove to be inaccurate in the future. These forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. There may be additional risks that we presently do not know or that we currently believe are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual future results. We undertake no obligation to update, amend or clarify any forward-looking statement for any reason.

(CURO-NWS)

View source version on businesswire.com: https://www.businesswire.com/news/home/20240202923239/en/

Investor Relations:

Email: IR@curo.com

Source: CURO Group Holdings Corp.

FAQ

What is the ticker symbol for CURO Group Holdings Corp.?

The ticker symbol for CURO Group Holdings Corp. is CURO.

What were the gross loans receivables for CURO in the fourth quarter of 2023?

Gross loans receivables for CURO in the fourth quarter of 2023 were $1.3 billion, representing a 3.3% increase year-over-year.

What was the total revenue reported by CURO in the fourth quarter of 2023?

CURO reported a total revenue of $168.2 million in the fourth quarter of 2023.

How much did the net charge-off rate improve year-over-year for CURO?

The net charge-off rate for CURO improved by 440 basis points year-over-year, reaching 16.5%.

What did CURO announce regarding its earnings conference call?

CURO cancelled its earnings conference call previously scheduled for February 7, 2024, and announced the commencement of a consent solicitation from the holders of its 7.500% Senior 1.5 Lien Senior Secured Notes Due 2028.