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Share Name | Share Symbol | Market | Type |
---|---|---|---|
CURO Group Holdings Corp | NYSE:CURO | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.095 | 0 | 01:00:00 |
Delaware | 90-0934597 | |||||||
(State or other jurisdiction Of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
200 W Hubbard Street, 8th Floor, Chicago, IL | 60654 | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common stock, $0.001 par value per share | CURO | New York Stock Exchange |
Large accelerated filer | ☐ | Accelerated filer | ☒ | |||||||||||
Non-accelerated filer | ☐ | |||||||||||||
Smaller reporting company | ☒ | Emerging growth company | ☐ |
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Item 3. | |||||||||||||||||||||||
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Item 5. | |||||||||||||||||||||||
Item 6. | Exhibits, Financial Statement Schedules | ||||||||||||||||||||||
Term or abbreviation | Definition | |||||||
2022 Form 10-K | Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 10, 2023 | |||||||
7.50% Senior Secured Notes | 7.50% Senior Secured Notes, issued in July 2021 for $750.0 million, which mature in August 2028 | |||||||
ABL | Asset-Backed Lending | |||||||
ACL | Allowance for credit losses | |||||||
AOCI | Accumulated other comprehensive income (loss) | |||||||
ASC | Accounting Standards Codification | |||||||
ASU | Accounting Standards Update | |||||||
Average gross loans receivable | Utilized to calculate product yield and NCO rates; calculated as average of beginning of quarter and end of quarter gross loans receivable | |||||||
BNPL | Buy-Now-Pay-Later | |||||||
bps | Basis points | |||||||
C$ | Canadian dollar | |||||||
Canada SPV | A four-year revolving credit facility with capacity up to C$400.0 million | |||||||
CECL | In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU requires an impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected rather than incurred losses, with an anticipated result of more timely loss recognition. This guidance is effective for us on January 1, 2023. | |||||||
CDOR | Canadian Dollar Offered Rate | |||||||
CODM | Chief Operating Decision Maker | |||||||
CSO | Credit services organization | |||||||
Exchange Act | Securities Exchange Act of 1934, as amended | |||||||
FASB | Financial Accounting Standards Board | |||||||
First Heritage | First Heritage Credit, LLC, a wholly-owned U.S. subsidiary of the Company, which we acquired in July 2022 | |||||||
First Heritage SPV | A revolving credit facility, entered into concurrent with the acquisition of First Heritage, with capacity up to $225.0 million | |||||||
Flexiti | Flexiti Financial Inc., a wholly-owned Canadian subsidiary of the Company, which we acquired on March 10, 2021 | |||||||
Flexiti Securitization | A non-recourse revolving credit facility, entered into on December 9, 2021, with capacity up to C$526.5 million | |||||||
Flexiti SPV | A revolving credit facility, entered into concurrent with the acquisition of Flexiti, with capacity up to C$535.0 million | |||||||
Form 10-Q | This report on Form 10-Q for the quarter ended March 31, 2023 | |||||||
Heights | SouthernCo, Inc., a Delaware corporation d/b/a Heights Finance, a wholly-owned U.S. subsidiary of the Company, which we acquired in December 2021 | |||||||
Heights Finance SPV | A non-recourse revolving credit facility, entered into concurrent with the acquisition of Heights Finance, with capacity up to $350.0 million. This facility was extinguished on July 15, 2022 when we entered into a new non-recourse revolving warehouse facility, see "Heights SPV." | |||||||
Heights SPV | A revolving credit facility, entered into to replace the incumbent lender's facility and finance future loans originated by Heights, with capacity up to $425.0 million | |||||||
Katapult | Katapult Holdings, Inc., a lease-to-own platform for online, brick and mortar and omni-channel retailers | |||||||
Legacy U.S. Direct Lending Business | The Legacy U.S. Direct Lending Business historically operated under the Speedy Cash, Rapid Cash and Avio Credit brands. We sold the Legacy U.S. Direct Lending Business to Community Choice Financial on July 8, 2022. | |||||||
NCO | Net charge-off; which equals total charge-offs less total recoveries | |||||||
POS | Point-of-sale | |||||||
ROU | Right of use | |||||||
RSU | Restricted Stock Unit | |||||||
SEC | Securities and Exchange Commission |
Term or abbreviation | Definition | |||||||
Senior Revolver | Senior Secured Revolving Loan Facility with borrowing capacity of $40.0 million | |||||||
SOFR | Secured Overnight Financing Rate | |||||||
SPV | Special Purpose Vehicle | |||||||
SRC | Smaller Reporting Company as defined by the SEC | |||||||
U.S. | United States of America | |||||||
U.S. GAAP | Generally Accepted Accounting Principles in the U.S. | |||||||
VIE | Variable Interest Entity; our wholly-owned, bankruptcy-remote special purpose subsidiaries |
March 31, 2023 (unaudited) | December 31, 2022 | ||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 54,935 | $ | 73,932 | |||||||
Restricted cash (includes restricted cash of consolidated VIEs of $92,185 and $52,277 as of March 31, 2023 and December 31, 2022, respectively) | 123,282 | 91,745 | |||||||||
Gross loans receivable (includes loans of consolidated VIEs of $1,890,438 and $1,964,275 as of March 31, 2023 and December 31, 2022, respectively) | 2,062,829 | 2,087,833 | |||||||||
Less: Allowance for credit losses (includes allowance for credit losses of consolidated VIEs of $227,642 and $108,451 as of March 31, 2023 and December 31, 2022, respectively) | (259,959) | (122,028) | |||||||||
Loans receivable, net | 1,802,870 | 1,965,805 | |||||||||
Income taxes receivable | 20,100 | 21,918 | |||||||||
Prepaid expenses and other (includes prepaid expenses and other of consolidated VIEs of $9,388 and $12,908 as of March 31, 2023 and December 31, 2022, respectively) | 47,295 | 53,057 | |||||||||
Property and equipment, net | 29,867 | 31,957 | |||||||||
Investment in Katapult | 20,502 | 23,915 | |||||||||
Right of use asset - operating leases | 54,597 | 61,197 | |||||||||
Deferred tax assets | 53,474 | 49,893 | |||||||||
Goodwill | 276,487 | 276,269 | |||||||||
Intangibles, net | 127,387 | 123,677 | |||||||||
Other assets | 10,991 | 15,828 | |||||||||
Total Assets | $ | 2,621,787 | $ | 2,789,193 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Liabilities | |||||||||||
Accounts payable and accrued liabilities (includes accounts payable and accrued liabilities of consolidated VIEs of $15,785 and $13,571 as of March 31, 2023 and December 31, 2022, respectively) | $ | 85,875 | $ | 73,827 | |||||||
Deferred revenue | 33,227 | 32,259 | |||||||||
Lease liability - operating leases | 55,468 | 62,847 | |||||||||
Contingent consideration related to acquisition | 18,128 | 16,884 | |||||||||
Accrued interest (includes accrued interest of consolidated VIEs of $7,428 and $7,023 as of March 31, 2023 and December 31, 2022, respectively) | 20,090 | 38,460 | |||||||||
Debt (includes debt and issuance costs of consolidated VIEs of $1,624,804 and $1,609,427 as of March 31, 2023 and $21,094 and $20,047 as of December 31, 2022, respectively) | 2,627,263 | 2,607,314 | |||||||||
Other long-term liabilities | 10,552 | 11,736 | |||||||||
Total Liabilities | 2,850,603 | 2,843,327 | |||||||||
Commitments and contingencies (Note 7) | |||||||||||
Stockholders' Equity | |||||||||||
Preferred stock - $0.001 par value, 25,000,000 shares authorized; no shares were issued | — | — | |||||||||
Common stock - $0.001 par value; 225,000,000 shares authorized; 50,658,160 and 50,216,165 shares issued; and 40,960,047 and 40,518,052 shares outstanding at the respective period ends | 23 | 23 | |||||||||
Treasury stock, at cost - 9,698,113 and 9,698,113 shares at the respective period ends | (136,832) | (136,832) | |||||||||
Paid-in capital | 125,337 | 124,483 | |||||||||
(Accumulated deficit)/retained earnings | (168,548) | 4,268 | |||||||||
Accumulated other comprehensive loss | (48,796) | (46,076) | |||||||||
Total Stockholders' (Deficit) Equity | (228,816) | (54,134) | |||||||||
Total Liabilities and Stockholders' (Deficit) Equity | $ | 2,621,787 | $ | 2,789,193 |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Revenue | |||||||||||
Interest and fees revenue | $ | 179,437 | $ | 264,956 | |||||||
Insurance and other income | 30,036 | 25,240 | |||||||||
Total revenue | 209,473 | 290,196 | |||||||||
Provision for losses | 62,932 | 97,531 | |||||||||
Net revenue | 146,541 | 192,665 | |||||||||
Operating Expenses | |||||||||||
Salaries and benefits | 64,805 | 79,729 | |||||||||
Occupancy | 11,672 | 17,037 | |||||||||
Advertising | 2,175 | 10,500 | |||||||||
Direct operations | 13,092 | 20,274 | |||||||||
Depreciation and amortization | 9,021 | 9,814 | |||||||||
Other operating expense | 17,433 | 16,377 | |||||||||
Total operating expenses | 118,198 | 153,731 | |||||||||
Other expense (income) | |||||||||||
Interest expense | 58,943 | 38,341 | |||||||||
Loss (income) from equity method investment | 3,413 | (1,584) | |||||||||
Loss (gain) on change in fair value of contingent consideration | 2,728 | (265) | |||||||||
Gain on sale of business | 2,027 | — | |||||||||
Total other expense | 67,111 | 36,492 | |||||||||
(Loss) income before income taxes | (38,768) | 2,442 | |||||||||
Provision for income taxes | 20,703 | 1,106 | |||||||||
Net (loss) income | $ | (59,471) | $ | 1,336 | |||||||
(Loss) earnings per share: | |||||||||||
Basic (loss) earnings per share | $ | (1.46) | $ | 0.03 | |||||||
Diluted (loss) earnings per share | $ | (1.46) | $ | 0.03 | |||||||
Weighted average common shares outstanding: | |||||||||||
Basic | 40,783 | 40,368 | |||||||||
Diluted | 40,783 | 41,308 |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net (loss) income | $ | (59,471) | $ | 1,336 | |||||||
Other comprehensive (loss) income, net of tax: | |||||||||||
Change in derivative instruments designated as cash flow hedges, net of tax | (2,750) | — | |||||||||
Foreign currency translation adjustment, net of tax | 30 | 6,633 | |||||||||
Other comprehensive (loss) income, net of tax | (2,720) | 6,633 | |||||||||
Comprehensive (loss) income | $ | (62,191) | $ | 7,969 |
Common Stock | Treasury Stock, at cost | Paid-in capital | Retained Earnings (Deficit) | AOCI | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||
Shares Outstanding | Par Value | ||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2022 | 40,518,052 | $ | 23 | $ | (136,832) | $ | 124,483 | $ | 4,268 | $ | (46,076) | $ | (54,134) | ||||||||||||||||||||||||||||
Cumulative effect of Adoption of , net of tax | (113,019) | (113,019) | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | (59,471) | (59,471) | |||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | — | (2,720) | (2,720) | ||||||||||||||||||||||||||||||||||
Dividends | (326) | (326) | |||||||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | 1,636 | — | — | 1,636 | |||||||||||||||||||||||||||||||||||
Net settlement of share-based awards | 441,995 | — | (782) | — | — | (782) | |||||||||||||||||||||||||||||||||||
Balances at March 31, 2023 | 40,960,047 | $ | 23 | $ | (136,832) | $ | 125,337 | $ | (168,548) | $ | (48,796) | $ | (228,816) | ||||||||||||||||||||||||||||
Common Stock | Treasury Stock, at cost | Paid-in capital | Retained Earnings | AOCI | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||
Shares Outstanding | Par Value | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | 40,810,444 | $ | 23 | $ | (124,302) | $ | 113,520 | $ | 203,467 | $ | (32,378) | $ | 160,330 | ||||||||||||||||||||||||||||
Net income | — | — | — | — | 1,336 | — | 1,336 | ||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | 6,633 | 6,633 | ||||||||||||||||||||||||||||||||||
Dividends | — | — | — | — | (4,791) | — | (4,791) | ||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | 4,093 | — | — | 4,093 | ||||||||||||||||||||||||||||||||||
Proceeds from exercise of stock options | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Repurchase of common stock | (824,477) | — | (12,530) | — | — | — | (12,530) | ||||||||||||||||||||||||||||||||||
Net settlement of share-based awards | 362,815 | — | — | (2,284) | — | — | (2,284) | ||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | 40,348,782 | $ | 23 | $ | (136,832) | $ | 115,329 | $ | 200,012 | $ | (25,745) | $ | 152,787 | ||||||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities | |||||||||||
Net (loss) income | $ | (59,471) | $ | 1,336 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 9,021 | 9,814 | |||||||||
Provision for losses | 62,932 | 97,531 | |||||||||
Amortization of debt issuance costs and bond discount | 3,730 | 2,241 | |||||||||
Deferred income tax benefit | 19,681 | (4,326) | |||||||||
Loss on disposal of property and equipment | (21) | 38 | |||||||||
Loss from equity method investment | 3,413 | (1,584) | |||||||||
Change in fair value of contingent consideration | 2,728 | (265) | |||||||||
Share-based compensation | 1,636 | 4,093 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accrued interest on loans receivable | (37,415) | 28,491 | |||||||||
Prepaid expenses and other assets | 3,517 | 2,177 | |||||||||
Accounts payable and accrued liabilities | 4,664 | (41,555) | |||||||||
Deferred revenue | 968 | 2,285 | |||||||||
Income taxes payable | — | (684) | |||||||||
Income taxes receivable | 1,818 | 3,114 | |||||||||
Accrued interest | (18,370) | (18,511) | |||||||||
Other long-term liabilities | (2,974) | (462) | |||||||||
Net cash (used in) provided by operating activities | (4,143) | 83,733 | |||||||||
Cash flows from investing activities | |||||||||||
Purchase of property, equipment and software | (10,027) | (11,375) | |||||||||
Loans receivable originated or acquired | (401,763) | (541,674) | |||||||||
Loans receivable repaid | 420,823 | 365,379 | |||||||||
Divestiture of Legacy U.S. Direct Lending Business, net of cash provided | (2,027) | — | |||||||||
Net cash provided by (used in) investing activities | 7,006 | (187,670) | |||||||||
Cash flows from financing activities | |||||||||||
Proceeds from SPV and SPE facilities | 68,576 | 190,922 | |||||||||
Payments on SPV and SPE facilities | (56,140) | (79,718) | |||||||||
Debt issuance costs paid | (2,237) | (276) | |||||||||
Proceeds from credit facilities | — | 87,560 | |||||||||
Payments on credit facilities | — | (67,560) | |||||||||
Payments to net share settle equity awards | (782) | (2,284) | |||||||||
Repurchase of common stock | — | (13,531) | |||||||||
Dividends paid to stockholders | (326) | (4,791) | |||||||||
Net cash provided by financing activities | 9,091 | 110,322 | |||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 586 | 1,867 | |||||||||
Net increase in cash, cash equivalents and restricted cash | 12,540 | 8,252 | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 165,677 | 162,075 | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 178,217 | $ | 170,327 |
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Cash and cash equivalents | $ | 54,935 | $ | 60,209 | ||||||||||
Restricted cash (includes restricted cash of consolidated VIEs of $92,185 and $64,141 as of March 31, 2023 and March 31, 2022, respectively) | 123,282 | 110,118 | ||||||||||||
Total cash, cash equivalents and restricted cash used in the Statement of Cash Flows | $ | 178,217 | $ | 170,327 |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Revolving LOC | $ | 84,225 | $ | 91,023 | ||||||||||
Installment | 95,212 | 173,933 | ||||||||||||
Total interest and fees revenue | 179,437 | 264,956 | ||||||||||||
Insurance and other income | 30,036 | 25,240 | ||||||||||||
Total revenue | $ | 209,473 | $ | 290,196 |
March 31, 2023 | ||||||||||||||||||||
Revolving LOC | Installment | Total | ||||||||||||||||||
Current loans receivable | $ | 1,198,115 | $ | 631,661 | $ | 1,829,776 | ||||||||||||||
1-30 days past-due | 44,835 | 55,119 | 99,954 | |||||||||||||||||
Delinquent: | ||||||||||||||||||||
31-60 days past-due | 22,039 | 15,098 | 37,137 | |||||||||||||||||
61-90 days past-due | 17,439 | 12,658 | 30,097 | |||||||||||||||||
91 + days past-due | 32,268 | 33,597 | 65,865 | |||||||||||||||||
Total delinquent loans receivable | 71,746 | 61,353 | 133,099 | |||||||||||||||||
Total loans receivable | 1,314,696 | 748,133 | 2,062,829 | |||||||||||||||||
Less: allowance for credit losses | (175,101) | (84,858) | (259,959) | |||||||||||||||||
Loans receivable, net | $ | 1,139,595 | $ | 663,275 | $ | 1,802,870 | ||||||||||||||
December 31, 2022 | ||||||||||||||||||||
Revolving LOC | Installment | Total | ||||||||||||||||||
Current loans receivable | $ | 1,194,554 | $ | 649,262 | $ | 1,843,816 | ||||||||||||||
1-30 days past-due | 46,956 | 76,709 | 123,665 | |||||||||||||||||
Delinquent: | ||||||||||||||||||||
31-60 days past-due | 17,677 | 21,480 | 39,157 | |||||||||||||||||
61-90 days past-due | 12,190 | 14,143 | 26,333 | |||||||||||||||||
91 + days past-due | 13,138 | 41,724 | 54,862 | |||||||||||||||||
Delinquent loans receivable | 43,005 | 77,347 | 120,352 | |||||||||||||||||
Total loans receivable | 1,284,515 | 803,318 | 2,087,833 | |||||||||||||||||
Less: allowance for credit losses | (78,815) | (43,213) | (122,028) | |||||||||||||||||
Loans receivable, net | $ | 1,205,700 | $ | 760,105 | $ | 1,965,805 | ||||||||||||||
Three Months Ended March 31, 2023 | ||||||||||||||
Revolving LOC | Installment | Other | Total | |||||||||||
Allowance for credit losses: | ||||||||||||||
Balance, beginning of period, prior to adoption of ASU 2016-13 | $ | 78,815 | $ | 43,213 | $ | — | $ | 122,028 | ||||||
Impact of adoption of ASU 2016-13 | 83,646 | 51,566 | — | 135,212 | ||||||||||
Balance, January 1, 2023 | 162,461 | 94,779 | — | 257,240 | ||||||||||
Charge-offs | (24,272) | (51,520) | (2,000) | (77,792) | ||||||||||
Recoveries | 6,319 | 10,442 | 315 | 17,076 | ||||||||||
Net charge-offs | (17,953) | (41,078) | (1,685) | (60,716) | ||||||||||
Provision for losses | 30,107 | 31,140 | 1,685 | 62,932 | ||||||||||
Effect of foreign currency translation | 486 | 17 | — | 503 | ||||||||||
Balance, end of period | $ | 175,101 | $ | 84,858 | $ | — | $ | 259,959 |
Three Months Ended March 31, 2022 | ||||||||||||||
Revolving LOC | Installment | Other | Total | |||||||||||
Allowance for credit losses: | ||||||||||||||
Balance, beginning of period | $ | 68,140 | $ | 19,420 | $ | — | $ | 87,560 | ||||||
Charge-offs | (42,387) | (59,209) | (1,813) | (103,409) | ||||||||||
Recoveries | 8,015 | 30,913 | 553 | 39,481 | ||||||||||
Net charge-offs | (34,372) | (28,296) | (1,260) | (63,928) | ||||||||||
Provision for losses | 37,447 | 35,685 | 2,650 | 75,782 | ||||||||||
Effect of foreign currency translation | 110 | 34 | — | 144 | ||||||||||
Balance, end of period | $ | 71,325 | $ | 26,843 | $ | 1,390 | $ | 99,558 | ||||||
Liability for losses on CSO lender-owned consumer loans: | ||||||||||||||
Balance, beginning of period | $ | — | $ | 6,908 | $ | — | $ | 6,908 | ||||||
Decrease in liability | — | 258 | — | 258 | ||||||||||
Balance, end of period | $ | — | $ | 7,166 | $ | — | $ | 7,166 |
Gross loans receivables by origination year, as of March 31, 2023 | |||||||||||||||||||||||
Delinquent | |||||||||||||||||||||||
Current | 1-30 days past-due | 31-60 days past-due | 61-90 days past-due | 91+ days past due | Total Delinquent | Total Loans Receivable | |||||||||||||||||
Revolving LOC | $ | 1,198,115 | $ | 44,835 | $ | 22,039 | $ | 17,439 | $ | 32,268 | $ | 71,746 | $ | 1,314,696 | |||||||||
Installment loans | |||||||||||||||||||||||
2023 | $ | 188,481 | $ | 9,038 | $ | 1,772 | $ | 95 | $ | — | $ | 1,867 | $ | 199,386 | |||||||||
2022 | 360,421 | 35,165 | 10,281 | 10,413 | 27,968 | 48,662 | 444,248 | ||||||||||||||||
2021 | 74,221 | 9,638 | 2,675 | 1,983 | 5,112 | 9,770 | 93,629 | ||||||||||||||||
2020 | 7,466 | 1,123 | 285 | 150 | 447 | 882 | 9,471 | ||||||||||||||||
2019 | 691 | 130 | 38 | 9 | 53 | 100 | 921 | ||||||||||||||||
Prior | 381 | 25 | 47 | 8 | 17 | 72 | 478 | ||||||||||||||||
Total installment loans | $ | 631,661 | $ | 55,119 | $ | 15,098 | $ | 12,658 | $ | 33,597 | $ | 61,353 | $ | 748,133 | |||||||||
Total loans receivables | $ | 1,829,776 | $ | 99,954 | $ | 37,137 | $ | 30,097 | $ | 65,865 | $ | 133,099 | $ | 2,062,829 |
March 31, 2023 | ||||||||||||||||||||
31-60 days past-due | 61-90 days past-due | 91 + days past-due | Total past due | 90 or more days delinquent and accruing | Total non-accruing (1) | |||||||||||||||
Revolving LOC | $ | 22,039 | $ | 17,439 | $ | 32,268 | $ | 71,746 | $ | 4,752 | $ | 18,344 | ||||||||
Installment | 15,098 | 12,658 | 33,597 | $ | 61,353 | 17,846 | 32,838 | |||||||||||||
Total delinquent loans | $ | 37,137 | $ | 30,097 | $ | 65,865 | $ | 133,099 | $ | 22,598 | $ | 51,182 | ||||||||
Percentage of total loan receivables | 1.8 | % | 1.5 | % | 3.2 | % | 6.5 | % | 1.1 | % | 2.5 | % | ||||||||
(1) The gross interest income that was recognized related to non-accruing loans was $1.7 million for the three months ended March 31, 2023. |
Three Months Ended March 31, 2023 | ||||||||
Amount | % of Loan Receivables | |||||||
Revolving LOC modifications | ||||||||
Principal / accrued interest forgiven | $ | 547 | — | % | ||||
Installment modifications | ||||||||
Principal / accrued interest forgiven | 45 | — | % | |||||
Total modifications | $ | 592 | 0.1 | % |
Amortized Cost Basis, as of March 31, 2023 | ||||||||||||||||||||
Delinquent | ||||||||||||||||||||
Current | 1-30 days past-due | 31-60 days past-due | 61-90 days past-due | 91+ days past-due | Total delinquent | |||||||||||||||
Revolving LOC | $ | 11,875 | $ | 1,476 | $ | 848 | $ | 922 | $ | 1,270 | $ | 3,040 | ||||||||
Installment | 104 | 55 | 19 | 31 | $ | 4 | $ | 54 | ||||||||||||
Total delinquent modified loans | $ | 11,979 | 1,531 | 867 | 953 | $ | 1,274 | $ | 3,094 | |||||||||||
Percentage of total loan receivables | 0.6 | % | 0.1 | % | — | % | — | % | 0.1 | % | 0.1 | % |
Three Months Ended March 31, 2023 | ||||||||
Number of Accounts defaulted (charged-off) | Value of accounts defaulted (charged-off) | |||||||
Revolving LOC | 1,780 | $ | 54 | |||||
Installment | 155 | 2 | ||||||
Total defaults | 1,935 | $ | 56 |
March 31, 2022 | ||||||||
Current TDR gross receivables | $ | 12,711 | ||||||
Delinquent TDR gross receivables | 4,771 | |||||||
Total TDR gross receivables | 17,482 | |||||||
Less: Impairment included in the allowance for credit losses | (4,031) | |||||||
Less: Additional allowance | (1,853) | |||||||
Outstanding TDR receivables, net of impairment | $ | 11,598 |
Three Months Ended March 31, | ||||||||
2022 | ||||||||
Pre-modification TDR loans receivable | $ | 5,271 | ||||||
Post-modification TDR loans receivable | 4,791 | |||||||
Total concessions included in gross charge-offs | $ | 480 |
Three Months Ended March 31, | ||||||||
2022 | ||||||||
Average outstanding TDR loans receivable | $ | 17,064 | ||||||
Interest income recognized | $ | 4,035 | ||||||
Number of TDR loans | 3,424 |
March 31, 2023 | December 31, 2022 | |||||||||||||
Assets | ||||||||||||||
Restricted cash | $ | 92,185 | $ | 52,277 | ||||||||||
Loans receivable, net | 1,662,796 | 1,855,824 | ||||||||||||
Prepaid expenses and other | 9,388 | 12,908 | ||||||||||||
Deferred tax assets | 31,964 | 17,027 | ||||||||||||
Total Assets | $ | 1,796,333 | $ | 1,938,036 | ||||||||||
Liabilities | ||||||||||||||
Accounts payable and accrued liabilities | $ | 15,785 | $ | 13,571 | ||||||||||
Deferred revenue | 38 | 31 | ||||||||||||
Accrued interest | 7,428 | 7,023 | ||||||||||||
Income taxes payable | 3,292 | 7,850 | ||||||||||||
Debt | 1,603,710 | 1,589,380 | ||||||||||||
Total Liabilities | $ | 1,630,253 | $ | 1,617,855 |
Direct Lending | Canada POS Lending | Total | |||||||||||||||
Goodwill at December 31, 2022 | $ | 276,269 | $ | — | $ | 276,269 | |||||||||||
Foreign currency translation | 218 | — | 218 | ||||||||||||||
Goodwill at March 31, 2023 | $ | 276,487 | $ | — | $ | 276,487 | |||||||||||
Estimated Fair Value | |||||||||||||||||
Carrying Value March 31, 2023 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets: | |||||||||||||||||
Cash Surrender Value of Life Insurance | $ | 5,961 | $ | 5,961 | $ | — | $ | — | $ | 5,961 | |||||||
Derivative asset | 4,206 | — | 4,206 | — | 4,206 | ||||||||||||
Financial liabilities: | |||||||||||||||||
Non-qualified deferred compensation plan | $ | 4,376 | $ | 4,376 | $ | — | $ | — | 4,376 | ||||||||
Contingent consideration related to acquisition | 18,128 | — | 18,128 | — | 18,128 | ||||||||||||
Derivative liability | 507 | — | 507 | — | 507 |
Estimated Fair Value | |||||||||||||||||
Carrying Value December 31, 2022 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets: | |||||||||||||||||
Cash Surrender Value of Life Insurance | $ | 7,591 | $ | 7,591 | $ | — | $ | — | $ | 7,591 | |||||||
Derivative asset | 7,458 | — | 7,458 | — | 7,458 | ||||||||||||
Financial liabilities: | |||||||||||||||||
Non-qualified deferred compensation plan | $ | 5,149 | $ | 5,149 | $ | — | $ | — | $ | 5,149 | |||||||
Contingent consideration related to acquisition | 16,884 | — | — | 16,884 | 16,884 |
Estimated Fair Value | |||||||||||||||||
Carrying Value March 31, 2023 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets: | |||||||||||||||||
Cash and cash equivalents | $ | 54,935 | $ | 54,935 | $ | — | $ | — | $ | 54,935 | |||||||
Restricted cash | 123,282 | 123,282 | — | — | 123,282 | ||||||||||||
Loans receivable, net | 1,802,870 | — | — | 1,802,870 | 1,802,870 | ||||||||||||
Investment in Katapult | 20,502 | 9,612 | — | — | 9,612 | ||||||||||||
Financial liabilities: | |||||||||||||||||
7.50% Senior Secured Notes | $ | 983,553 | $ | — | $ | 398,960 | $ | — | $ | 398,960 | |||||||
Heights SPV | 403,696 | — | — | 403,696 | 403,696 | ||||||||||||
First Heritage SPV | 170,050 | — | — | 170,050 | 170,050 | ||||||||||||
Flexiti SPV | 351,543 | — | — | 355,804 | 355,804 | ||||||||||||
Flexiti Securitization | 387,314 | — | — | 390,753 | 390,753 | ||||||||||||
Canada SPV | 291,107 | — | — | 293,457 | 293,457 | ||||||||||||
Senior Revolver | 40,000 | — | — | 40,000 | 40,000 | ||||||||||||
Estimated Fair Value | |||||||||||||||||
Carrying Value December 31, 2022 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets: | |||||||||||||||||
Cash and cash equivalents | $ | 73,932 | $ | 73,932 | $ | — | $ | — | $ | 73,932 | |||||||
Restricted cash | 91,745 | 91,745 | — | — | 91,745 | ||||||||||||
Loans receivable, net | 1,965,805 | — | — | 1,965,805 | 1,965,805 | ||||||||||||
Investment in Katapult | 23,915 | 20,624 | — | — | 20,624 | ||||||||||||
Financial liabilities: | |||||||||||||||||
7.50% Senior Secured Notes | $ | 982,934 | $ | — | $ | 466,500 | $ | — | $ | 466,500 | |||||||
Heights SPV | 393,181 | — | — | 393,181 | 393,181 | ||||||||||||
First Heritage SPV | 178,622 | — | — | 182,751 | 182,751 | ||||||||||||
Flexiti SPV | 339,651 | — | — | 343,565 | 343,565 | ||||||||||||
Flexiti Securitization | 385,054 | — | — | 387,759 | 387,759 | ||||||||||||
Canada SPV | 292,872 | — | — | 294,594 | 294,594 | ||||||||||||
Senior Revolver | 35,000 | — | — | 35,000 | 35,000 |
Investment in Katapult | ||||||||
Balance at December 31, 2021 | $ | 27,900 | ||||||
Equity method income - Q1 2022 | 1,584 | |||||||
Balance at March 31, 2022 | 29,484 | |||||||
Equity method loss - Q2 2022 | (1,328) | |||||||
Balance at June 30, 2022 | 28,156 | |||||||
Equity method loss - Q3 2022 | (2,309) | |||||||
Balance at September 30, 2022 | 25,847 | |||||||
Equity method loss - Q4 2022 | (1,932) | |||||||
Balance at December 31, 2022 | 23,915 | |||||||
Equity method loss - Q1 2023 | (3,413) | |||||||
Balance at March 31, 2023 | $ | 20,502 | ||||||
Effective interest rate | Outstanding as of | ||||||||||||||||||||||
Maturity Date | Borrowing Capacity | March 31, 2023 | December 31, 2022 | ||||||||||||||||||||
Corporate Debt: | |||||||||||||||||||||||
7.50% Senior Secured Notes | August 1, 2028 | 7.50 | % | $ | 1,000,000 | $ | 1,000,000 | ||||||||||||||||
Total corporate debt | 1,000,000 | 1,000,000 | |||||||||||||||||||||
Funding Debt: | |||||||||||||||||||||||
Heights SPV | July 15, 2025 | 1-Mo SOFR + 4.25% | $425.0 million | $ | 410,867 | $ | 400,758 | ||||||||||||||||
First Heritage SPV | July 13, 2025 | 1-Mo SOFR + 4.25% | $225.0 million | 173,923 | 182,751 | ||||||||||||||||||
Flexiti SPV (1) | September 29, 2025 | Weighted average interest rate (2)(3) 8.27% | C$535.0 million | 355,804 | 343,565 | ||||||||||||||||||
Flexiti Securitization (1) (4) | December 9, 2025 | 1-Mo CDOR + 3.59% (3) | C$526.5 million | 390,753 | 387,759 | ||||||||||||||||||
Canada SPV (1) | August 2, 2026 | 3-Mo CDOR + 6.00% | C$400.0 million | 293,457 | 294,594 | ||||||||||||||||||
Senior Revolver | August 31, 2023 | 1-Mo SOFR + 5.00% | $40.0 million | 40,000 | 35,000 | ||||||||||||||||||
Total funding debt | $ | 1,664,804 | $ | 1,644,427 | |||||||||||||||||||
Less: debt issuance costs | (37,541) | (37,113) | |||||||||||||||||||||
Total Debt | $ | 2,627,263 | $ | 2,607,314 | |||||||||||||||||||
(1) Capacity amounts are denominated in Canadian dollars, whereas outstanding balances as of March 31, 2023 and December 31, 2022 are denominated in U.S. dollars. The exchange rate applied at March 31, 2023 was 0.74217 and the exchange rate at December 31, 2022 was 0.7365. | |||||||||||||||||||||||
(2) The weighted average interest rate does not include the impact of the amortization of deferred loan origination costs or debt discounts. | |||||||||||||||||||||||
(3) Swapped to fixed rate via interest rate swap hedging arrangement entered into on July 7, 2022 for Flexiti Securitization and October 11, 2022 for Flexiti SPV. | |||||||||||||||||||||||
(4) The effective rate is 7.09%. | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net (loss) income | $ | (59,471) | $ | 1,336 | |||||||
Weighted average common shares - basic | 40,783 | 40,368 | |||||||||
Dilutive effect of stock options and restricted stock units | — | 940 | |||||||||
Weighted average common shares - diluted | 40,783 | 41,308 | |||||||||
(Loss) earnings per share: | |||||||||||
Basic (loss) earnings per share | $ | (1.46) | $ | 0.03 | |||||||
Diluted (loss) earnings per share | $ | (1.46) | $ | 0.03 | |||||||
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Operating lease costs: | ||||||||
Third-Party | $ | 6,500 | 9,479 | |||||
Related-Party | 157 | 827 | ||||||
Total operating lease costs | $ | 6,657 | 10,306 | |||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 6,560 | $ | 10,925 | ||||
ROU assets obtained | $ | (1,287) | $ | 5,424 | ||||
Weighted average remaining lease term - Operating leases | 4.3 years | 4.9 years | ||||||
Weighted average discount rate - Operating leases | 8.1 | % | 7.9 | % |
Third-Party | Related-Party | Total | ||||||||||||||||||
Remainder of 2023 | $ | 16,784 | $ | 464 | $ | 17,248 | ||||||||||||||
2024 | 16,525 | 633 | 17,158 | |||||||||||||||||
2025 | 11,075 | 650 | 11,725 | |||||||||||||||||
2026 | 5,993 | 667 | 6,660 | |||||||||||||||||
2027 | 3,728 | 686 | 4,414 | |||||||||||||||||
2028 | 2,037 | 668 | 2,705 | |||||||||||||||||
Thereafter | 6,056 | 326 | 6,382 | |||||||||||||||||
Total | 62,198 | 4,094 | 66,292 | |||||||||||||||||
Less: Imputed interest | (9,725) | (1,099) | (10,824) | |||||||||||||||||
Operating lease liabilities | $ | 52,473 | $ | 2,995 | $ | 55,468 |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Revenues by segment: (1) | ||||||||||||||
Direct Lending | $ | 169,368 | $ | 269,887 | ||||||||||
Canada POS Lending | 40,105 | 20,309 | ||||||||||||
Consolidated revenue | $ | 209,473 | $ | 290,196 | ||||||||||
Net revenues by segment: | ||||||||||||||
Direct Lending | $ | 121,004 | $ | 181,070 | ||||||||||
Canada POS Lending | 25,537 | 11,595 | ||||||||||||
Consolidated net revenue | $ | 146,541 | $ | 192,665 | ||||||||||
Segment (loss) income before income taxes: | ||||||||||||||
Direct Lending | $ | (31,632) | $ | 12,976 | ||||||||||
Canada POS Lending | (7,136) | (10,534) | ||||||||||||
Consolidated (loss) income before income taxes | $ | (38,768) | $ | 2,442 | ||||||||||
Expenditures for long-lived assets by segment: | ||||||||||||||
Direct Lending | $ | 3,857 | $ | 7,315 | ||||||||||
Canada POS Lending | 6,170 | 4,224 | ||||||||||||
Consolidated expenditures for long-lived assets | $ | 10,027 | $ | 11,539 | ||||||||||
(1) For revenue by product, see Note 2, "Loans Receivable and Revenue." |
March 31, 2023 | December 31, 2022 | |||||||||||||
Direct Lending | $ | 1,209,576 | $ | 1,254,395 | ||||||||||
Canada POS Lending | 853,253 | 833,438 | ||||||||||||
Total gross loans receivable | $ | 2,062,829 | $ | 2,087,833 |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
U.S. | $ | 92,424 | $ | 198,399 | ||||||||||
Canada | 117,049 | 91,797 | ||||||||||||
Total revenue | $ | 209,473 | $ | 290,196 |
March 31, 2023 | December 31, 2022 | |||||||||||||
U.S. | $ | 714,816 | $ | 773,380 | ||||||||||
Canada | 1,348,013 | 1,314,453 | ||||||||||||
Total gross loans receivable | $ | 2,062,829 | $ | 2,087,833 |
March 31, 2023 | December 31, 2022 | |||||||||||||
U.S. | $ | 12,579 | $ | 29,232 | ||||||||||
Canada | 17,288 | 2,725 | ||||||||||||
Total net long-lived assets | $ | 29,867 | $ | 31,957 |
Amounts acquired on July 13, 2022 | |||||
Assets | |||||
Cash and cash equivalents | $ | 31,396 | |||
Restricted cash | 1,933 | ||||
Gross loans receivable(1) | 218,011 | ||||
Prepaid expenses and other | 1,285 | ||||
Property and equipment | 345 | ||||
Right-of-use assets | 4,241 | ||||
Intangibles, net | 10,670 | ||||
Total assets | $ | 267,880 | |||
Liabilities | |||||
Accounts payable and accrued liabilities | $ | 4,270 | |||
Lease liabilities | 4,241 | ||||
Debt | 170,392 | ||||
Total liabilities | $ | 178,904 | |||
Net assets acquired | $ | 88,976 | |||
Total consideration paid | 164,341 | ||||
Goodwill | $ | 75,365 | |||
(1) The gross contractual loans receivables as of July 13, 2022 were $236.1 million, of which the Company estimates $18.1 million will not be collected. |
Fair Value | Useful Life | |||||||
Trade name | $ | 3,790 | 10.0 years | |||||
Customer relationships | 6,880 | 3.5 years | ||||||
Total identified intangible assets | $ | 10,670 |
Employee Termination Benefits | Lease Exit Costs | Total Restructuring Costs | |||||||||
Salaries and Benefits | $ | 1,517 | $ | — | $ | 1,517 | |||||
Other Operating Expense | 958 | 7,481 | 8,439 | ||||||||
Total | $ | 2,475 | $ | 7,481 | $ | 9,956 |
Accrued restructuring costs as of December 31, 2022 | $ | 4,746 | |||
Restructuring costs incurred during the three months ended March 31, 2023 | 9,956 | ||||
Amount paid during the three months ended March 31, 2023 | (4,641) | ||||
Accrued restructuring costs as of March 31, 2023 | $ | 10,061 |
For the Three Months Ended | ||||||||||||||||||||||||||||||||
March 31, 2023 | March 31, 2022 | |||||||||||||||||||||||||||||||
(in thousands) | Direct Lending | Canada POS Lending | Total | % of Total | Direct Lending | Canada POS Lending | Total | % of Total | ||||||||||||||||||||||||
Revolving LOC | $ | 49,092 | $ | 35,133 | $ | 84,225 | 40.2 | % | $ | 72,368 | $ | 18,655 | $ | 91,023 | 31.4 | % | ||||||||||||||||
Installment | 95,212 | — | 95,212 | 45.5 | % | 173,933 | — | $ | 173,933 | 59.9 | % | |||||||||||||||||||||
Total interest and fees revenue | 144,304 | 35,133 | 179,437 | 85.7 | % | 246,301 | 18,655 | 264,956 | 91.3 | % | ||||||||||||||||||||||
Insurance and other income | 25,064 | 4,972 | 30,036 | 14.3 | % | 23,586 | 1,654 | 25,240 | 8.7 | % | ||||||||||||||||||||||
Total revenue | $ | 169,368 | $ | 40,105 | $ | 209,473 | 100.0 | % | $ | 269,887 | $ | 20,309 | $ | 290,196 | 100.0 | % |
(in thousands, unaudited) | Three Months Ended March 31, | ||||||||||||||||
2023 | 2022 | Change $ | Change % | ||||||||||||||
Revenue | |||||||||||||||||
Interest and fees revenue | $ | 179,437 | $ | 264,956 | $ | (85,519) | (32.3) | % | |||||||||
Insurance and other income | 30,036 | 25,240 | 4,796 | 19.0 | % | ||||||||||||
Total revenue | 209,473 | 290,196 | (80,723) | (27.8) | % | ||||||||||||
Provision for losses | 62,932 | 97,531 | (34,599) | (35.5) | % | ||||||||||||
Net revenue | 146,541 | 192,665 | (46,124) | (23.9) | % | ||||||||||||
Operating Expenses | |||||||||||||||||
Salaries and benefits | 64,805 | 79,729 | (14,924) | (18.7) | % | ||||||||||||
Occupancy | 11,672 | 17,037 | (5,365) | (31.5) | % | ||||||||||||
Advertising | 2,175 | 10,500 | (8,325) | (79.3) | % | ||||||||||||
Direct operations | 13,092 | 20,274 | (7,182) | (35.4) | % | ||||||||||||
Depreciation and amortization | 9,021 | 9,814 | (793) | (8.1) | % | ||||||||||||
Other operating expense | 17,433 | 16,377 | 1,056 | 6.4 | % | ||||||||||||
Total operating expenses | 118,198 | 153,731 | (35,533) | (23.1) | % | ||||||||||||
Other expense (income) | |||||||||||||||||
Interest expense | 58,943 | 38,341 | 20,602 | 53.7 | % | ||||||||||||
Loss (income) from equity method investment | 3,413 | (1,584) | 4,997 | # | |||||||||||||
Loss (gain) on change in fair value of contingent consideration | 2,728 | (265) | 2,993 | # | |||||||||||||
Gain on sale of business | 2,027 | — | 2,027 | # | |||||||||||||
Total other expense | 67,111 | 36,492 | 30,619 | 83.9 | % | ||||||||||||
(Loss) income before income taxes | (38,768) | 2,442 | (41,210) | # | |||||||||||||
Provision for income taxes | 20,703 | 1,106 | 19,597 | # | |||||||||||||
Net (loss) income | $ | (59,471) | $ | 1,336 | $ | (60,807) | # | ||||||||||
#- Change greater than 100% or not meaningful |
(in thousands, except percentages, unaudited) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022(1) | Q1 2022 | |||||||||||||||
Gross loans receivable (5) | ||||||||||||||||||||
Revolving LOC | $ | 461,443 | $ | 451,077 | $ | 439,117 | $ | 501,209 | $ | 473,562 | ||||||||||
Installment loans | 748,133 | 803,318 | 765,041 | 652,467 | 613,231 | |||||||||||||||
Total gross loans receivable | $ | 1,209,576 | $ | 1,254,395 | $ | 1,204,158 | $ | 1,153,676 | $ | 1,086,793 | ||||||||||
Lending Revenue | ||||||||||||||||||||
Revolving LOC | $ | 49,092 | $ | 49,915 | $ | 52,461 | $ | 75,736 | $ | 72,368 | ||||||||||
Installment loans | 95,212 | 100,435 | 103,478 | 181,747 | 173,934 | |||||||||||||||
Total lending revenue | $ | 144,304 | $ | 150,350 | $ | 155,939 | $ | 257,483 | $ | 246,302 | ||||||||||
Lending Provision | ||||||||||||||||||||
Revolving LOC | $ | 15,539 | $ | 29,620 | $ | 28,408 | $ | 34,472 | $ | 28,734 | ||||||||||
Installment loans | 31,139 | 46,442 | 33,511 | 86,485 | 57,435 | |||||||||||||||
Total lending provision | $ | 46,678 | $ | 76,062 | $ | 61,919 | $ | 120,957 | $ | 86,169 | ||||||||||
NCOs (2) (5) | ||||||||||||||||||||
Revolving LOC | $ | 6,234 | $ | 26,715 | $ | 24,793 | $ | 30,408 | $ | 31,645 | ||||||||||
Installment loans | 41,078 | 38,168 | 29,783 | 43,661 | 38,894 | |||||||||||||||
Total NCOs | $ | 47,312 | $ | 64,883 | $ 54,576 | $ | 74,069 | $ | 70,539 | |||||||||||
NCO rate (annualized) (2) (3) (5) | ||||||||||||||||||||
Revolving LOC | 5.5 | % | 23.8% | 20.9% | 25.0% | 27.6 | % | |||||||||||||
Installment loans | 21.5 | % | 19.3% | 16.7% | 27.7% | 25.3 | % | |||||||||||||
Total NCO rate | 15.6 | % | 20.9% | 18.4% | 26.5% | 26.3 | % | |||||||||||||
ACL rate (4) (5) (6) | ||||||||||||||||||||
Revolving LOC | 25.6 | % | 8.4 | % | 7.9 | % | 9.3 | % | 9.2 | % | ||||||||||
Installment loans | 11.3 | % | 5.4 | % | 4.6 | % | 6.9 | % | 4.4 | % | ||||||||||
Total ACL rate | 16.8 | % | 6.5 | % | 5.8 | % | 7.9 | % | 6.5 | % | ||||||||||
31+ days past-due rate (4) (5) | ||||||||||||||||||||
Revolving LOC | 8.4 | % | 4.1 | % | 5.1 | % | 5.8 | % | 5.8 | % | ||||||||||
Installment loans | 8.2 | % | 9.6 | % | 10.2 | % | 9.7 | % | 9.3 | % | ||||||||||
Total past-due rate | 8.3 | % | 7.6 | % | 8.3 | % | 8.0 | % | 7.8 | % | ||||||||||
(1) Includes loan balances and activity classified as Held for Sale. | ||||||||||||||||||||
(2) NCOs presented above include $0.0 million, $0.0 million, $0.5 million, $10.3 million and $5.0 million for the three months ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, respectively, related to the purchase accounting fair value discount, which are excluded from provision. | ||||||||||||||||||||
(3) We calculate NCO rate as total quarterly NCOs divided by Average gross loans receivable, then we annualize the rate. The amount and timing of recoveries are impacted by our collection strategies, which are based on customer behavior and risk profile and include direct customer communications and the periodic sale of charged off loans. | ||||||||||||||||||||
(4) We calculate (i) ACL rate and (ii) 31+ days past-due rate as the respective totals divided by gross loans receivable at each respective quarter end. | ||||||||||||||||||||
(5) All balances in connection with the CSO program were disposed of on July 8, 2022 upon the completion of the divestiture of the Legacy U.S. Direct Lending Business, as such these balances have been excluded from this amount. | ||||||||||||||||||||
(6) 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. |
Three Months Ended March 31, | ||||||||||||||
(dollars in thousands, unaudited) | 2023 | 2022 | Change $ | Change % | ||||||||||
Revenue | ||||||||||||||
Interest and Fees Revenue | $ | 144,304 | $ | 246,301 | $ | (101,997) | (41.4) | % | ||||||
Insurance and other income | 25,064 | 23,586 | 1,478 | 6.3 | % | |||||||||
Total Revenue | 169,368 | 269,887 | (100,519) | (37.2) | % | |||||||||
Provision for Losses | 48,364 | 88,817 | (40,453) | (45.5) | % | |||||||||
Net Revenue | 121,004 | 181,070 | (60,066) | (33.2) | % | |||||||||
Operating expenses | ||||||||||||||
Salaries and Benefits | 56,619 | 73,059 | (16,440) | (22.5) | % | |||||||||
Occupancy | 11,344 | 16,811 | (5,467) | (32.5) | % | |||||||||
Advertising Expense | 1,999 | 10,200 | (8,201) | (80.4) | % | |||||||||
Direct Operations | 9,745 | 16,527 | (6,782) | (41.0) | % | |||||||||
Amortization and Depreciation | 5,390 | 5,682 | (292) | (5.1) | % | |||||||||
Other operating expenses | 18,054 | 15,684 | 2,370 | 15.1 | % | |||||||||
Total operating expenses | 103,151 | 137,963 | (34,812) | (25.2) | % | |||||||||
Other expense (income) | ||||||||||||||
Interest Expense | 44,045 | 31,715 | 12,330 | 38.9 | % | |||||||||
Loss (income) from equity method investment | 3,413 | (1,584) | 4,997 | # | ||||||||||
Gain on sale of business | 2,027 | — | 2,027 | # | ||||||||||
Total other expense | 49,485 | 30,131 | 19,354 | 64.2 | % | |||||||||
Segment (loss) income before income taxes | $ | (31,632) | $ | 12,976 | $ | (44,608) | # | |||||||
#- Change greater than 100% or not meaningful |
Three Months Ended March 31, | ||||||||||||||
(dollars in thousands, unaudited) | 2023 | 2022 | Change $ | Change % | ||||||||||
Revenue | ||||||||||||||
Interest and fees revenue | $ | 35,133 | $ | 18,655 | $ | 16,478 | 88.3 | % | ||||||
Insurance and other income | 4,972 | 1,654 | 3,318 | # | ||||||||||
Total revenue | 40,105 | 20,309 | 19,796 | 97.5 | % | |||||||||
Provision for losses | 14,568 | 8,714 | 5,854 | 67.2 | % | |||||||||
Net revenue | 25,537 | 11,595 | 13,942 | # | ||||||||||
Operating expenses | ||||||||||||||
Salaries and benefits | 8,186 | 6,670 | 1,516 | 22.7 | % | |||||||||
Occupancy | 328 | 226 | 102 | 45.1 | % | |||||||||
Advertising | 176 | 300 | (124) | (41.3) | % | |||||||||
Direct operations | 3,347 | 3,747 | (400) | (10.7) | % | |||||||||
Depreciation and amortization | 3,631 | 4,132 | (501) | (12.1) | % | |||||||||
Other operating expense | (621) | 693 | (1,314) | # | ||||||||||
Total operating expenses | 15,047 | 15,768 | (721) | (4.6) | % | |||||||||
Other expense (income) | ||||||||||||||
Interest expense | 14,898 | 6,626 | 8,272 | # | ||||||||||
Loss (gain) on change in fair value of contingent consideration | 2,728 | (265) | 2,993 | # | ||||||||||
Total other expense | 17,626 | 6,361 | 11,265 | # | ||||||||||
Segment loss before income taxes | $ | (7,136) | $ | (10,534) | $ | 3,398 | (32.3) | % | ||||||
#- Change greater than 100% or not meaningful |
Three Months Ended March 31, | |||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||
Average Exchange Rates for the Canadian Dollar | 0.7397 | 0.7893 | (0.0496) | (6.3) | % | ||||||||||||
March 31, | December 31, | Change | |||||||||||||||
2023 | 2022 | $ | % | ||||||||||||||
Exchange Rate for the Canadian Dollar | 0.7422 | 0.7365 | 0.0057 | 0.8 | % | ||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||||||||
Direct Lending – constant currency basis: | ||||||||||||||||||||
Revenues | $ | 174,549 | 269,887 | $ | (95,338) | (35.3) | % | |||||||||||||
Net revenue | 124,740 | 181,070 | (56,330) | (31.1) | % | |||||||||||||||
Segment (loss) income before income taxes | (30,279) | 12,976 | (43,255) | (333.3) | % | |||||||||||||||
Canada POS Lending – constant currency basis: | ||||||||||||||||||||
Revenues | $ | 42,798 | 20,309 | $ | 22,489 | 110.7 | % | |||||||||||||
Net revenue | 27,248 | 11,595 | 15,653 | 135.0 | % | |||||||||||||||
Segment loss before income taxes | (7,657) | (10,534) | 2,877 | (27.3) | % | |||||||||||||||
March 31, | December 31, | Change | ||||||||||||||||||
2023 | 2022 | $ | % | |||||||||||||||||
Direct Lending – constant currency basis: | ||||||||||||||||||||
Gross loans receivable | $ | 1,205,786 | $ | 1,254,395 | $ | (48,609) | (3.9) | % | ||||||||||||
Canada POS Lending – constant currency basis: | ||||||||||||||||||||
Gross loans receivable | $ | 846,717 | $ | 833,438 | $ | 13,279 | 1.6 | % | ||||||||||||
Capacity | Interest Rate | Maturity | Balance as of March 31, 2023 (in USD) | ||||||||||||||
7.50% Senior Secured Notes (due 2028) (2) | $1.0 billion | 7.50% | August 1, 2028 | $ | 983,553 | ||||||||||||
Heights SPV | $425.0 million | 1-Mo SOFR + 4.25% | July 15, 2025 | 403,696 | |||||||||||||
First Heritage SPV | $225.0 million | 1-Mo SOFR + 4.25% | July 13, 2025 | 170,050 | |||||||||||||
Flexiti SPV(1) | C$535.0 million | Weighted average interest rate (3)(4) 8.27% | September 29, 2025 | 351,543 | |||||||||||||
Flexiti Securitization(1) | C$526.5 million | 1-Mo CDOR + 3.59%)(5) | December 9, 2025 | 387,314 | |||||||||||||
Canada SPV(1) | C$400.0 million | 3-Mo CDOR + 6.00% | August 2, 2026 | 291,107 | |||||||||||||
Senior Revolver | $40.0 million | 1-Mo SOFR + 5.00% | August 31, 2023 | 40,000 | |||||||||||||
(1) Capacity amounts are denominated in Canadian dollars, while outstanding balances as of March 31, 2023 are denominated in U.S. dollars. | |||||||||||||||||
(2) On July 30, 2021, we closed our $750 million aggregate principal amount of new 7.50% Senior Secured Notes, which was used to redeem our $690.0 million 8.25% Senior Secured Notes due 2025. On December 27, 2021, we issued an additional $250.0 million of our 7.50% Senior Secured Notes for a total capacity of $1.0 billion. | |||||||||||||||||
(3) The weighted average interest rate does not include the impact of the amortization of deferred loan origination costs or debt discounts. | |||||||||||||||||
(4) Swapped to fixed rate via interest rate swap hedging arrangement that terminates on September 29, 2025 for Flexiti SPV and December 9, 2025 for Flexiti Securitization. |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Net cash (used in) provided by operating activities | $ | (4,143) | $ | 83,733 | ||||||||||
Net cash provided by (used in) investing activities | 7,006 | (187,670) | ||||||||||||
Net cash provided by financing activities | 9,091 | 110,322 | ||||||||||||
Exhibit no. | Exhibit Description | Filed/Incorporated by Reference from Form | Incorporated by Reference from Exhibit Number | Filing Date | |||||||||||||
3.1 | 10-Q | 10.1 | 8/5/2020 | ||||||||||||||
3.2 | 8-K | 3.2 | 12/11/17 | ||||||||||||||
4.1 | S-1 | 4.1 | 11/28/17 | ||||||||||||||
4.2 | S-1 | 4.2 | 11/28/17 | ||||||||||||||
4.3 | S-1 | 4.3 | 5/17/18 | ||||||||||||||
31.1 | Filed herewith | ||||||||||||||||
31.2 | Filed herewith | ||||||||||||||||
32.1 | Filed herewith | ||||||||||||||||
101 | The following unaudited financial information from the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2023, filed with the SEC on May 10, 2023, formatted in Extensible Business Reporting Language (“XBRL”) includes: (i) Condensed Consolidated Balance Sheets at March 31, 2023 and December 31, 2022, (ii) Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 and (v) Notes to Condensed Consolidated Financial Statements* | Filed herewith | |||||||||||||||
By: | /s/ Ismail Dawood | ||||||||||
Ismail Dawood | |||||||||||
Chief Financial Officer |
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