CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENT INFORMATION
The following Unaudited Pro Forma Condensed Consolidated Financial Statement information is based on the historical financial statements of CURO Group Holdings Corp., ("CGHC" or "the Company"), including certain pro forma adjustments, and has been prepared to illustrate the pro forma effect of Curo Transatlantic Limited ("CTL") and SRC Transatlantic Limited (collectively with CTL, “the U.K. Subsidiaries”) entry into administration and deconsolidation effective February 25, 2019.
The Unaudited Pro Forma Condensed Consolidated Statements of Income for the nine months ended September 30, 2018 and the years ended December 31, 2017, 2016 and 2015 assume that the entrance into administration occurred at the beginning of the period presented. The unaudited pro forma Consolidated Balance Sheet as of September 30, 2018 is presented as if the U.K. Subsidiaries entered into administration as of September 30, 2018.
The Unaudited Pro Forma Condensed Consolidated Financial Statement information has been prepared based upon available information and management estimates; actual amounts may differ from these estimated amounts. The Unaudited Pro Forma Condensed Consolidated Financial Statement information is not necessarily indicative of the financial position of results of operations that might have occurred had the distribution occurred as of the dates stated above. The pro forma adjustments are described in the notes below.
The Unaudited Pro Forma Condensed Consolidated Financial Statement information should be read in conjunction with the Financial Statements and Notes and related Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") included in the Company's Quarterly Report on Form 10-Q for the nine months ended September 30, 2018 and the Company's Annual Report on Form 10-K for the year ended December 31, 2017.
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2018
|
| | | | | | | | | | | |
| | | | Pro Forma Adjustments for U.K. Segment (c) | | Unaudited Pro Forma Condensed Consolidated Balance Sheet |
| (in thousands, except per share data) | Historical | | |
| ASSETS |
| Cash | $ | 153,361 |
| | $ | 7,855 |
| | $ | 145,506 |
|
| Restricted cash | 24,236 |
| | 3,448 |
| | 20,788 |
|
| Gross loans receivable | 567,675 |
| | 29,912 |
| | 537,763 |
|
| Less: allowance for loan losses | (76,068 | ) | | (7,385 | ) | | (68,683 | ) |
| Loans receivable, net | 491,607 |
| | 22,527 |
| | 469,080 |
|
| Income taxes receivable | 16,363 |
| | — |
| | 16,363 |
|
| Prepaid expenses and other | 40,109 |
| | 1,490 |
| | 38,619 |
|
| Property and equipment, net | 79,790 |
| | 1,286 |
| | 78,504 |
|
| Goodwill | 143,966 |
| | 23,113 |
| | 120,853 |
|
| Other intangibles, net of accumulated amortization | 33,208 |
| | 3,945 |
| | 29,263 |
|
| Other | 13,090 |
| | 274 |
| | 12,816 |
|
| Total Assets | $ | 995,730 |
| | $ | 63,938 |
| | $ | 931,792 |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
| Accounts payable and accrued liabilities | $ | 52,853 |
| | $ | 7,460 |
| | $ | 45,393 |
|
| Deferred revenue | 9,667 |
| | 334 |
| | 9,333 |
|
| Income taxes payable | 338 |
| | — |
| | 338 |
|
| Accrued interest | 7,391 |
| | (14 | ) | | 7,405 |
|
| Credit services organization guarantee liability | 13,243 |
| | — |
| | 13,243 |
|
| Deferred rent | 11,288 |
| | 194 |
| | 11,094 |
|
| Long-term debt | 868,201 |
| | — |
| | 868,201 |
|
| Subordinated stockholder debt | 2,319 |
| | — |
| | 2,319 |
|
| Other long-term liabilities | 6,949 |
| | 472 |
| | 6,477 |
|
| Deferred tax liabilities | 13,617 |
| | 604 |
| | 13,013 |
|
| Total Liabilities | 985,866 |
| | 9,050 |
| | 976,816 |
|
| Commitments and contingencies | | | | | |
| Stockholders' Equity | | | | | |
| Preferred stock - $0.001 par value, 25,000,000 shares authorized; no shares were issued at either period end | — |
| | — |
| | — |
|
| Class A common stock - $0.001 par value; 225,000,000 shares authorized; 45,992,983 and 44,561,419 issued and outstanding as of September 30, 2018 and December 31, 2017, respectively) | 9 |
| | — |
| | 9 |
|
| Paid-in capital | 64,148 |
| | — |
| | 64,148 |
|
| (Accumulated deficit) retained earnings | (3,767 | ) | | 66,530 |
| (d) | (70,297 | ) |
| Accumulated other comprehensive loss | (50,526 | ) | | (11,642 | ) | (d) | (38,884 | ) |
| Total Stockholders' Equity (Deficit) | 9,864 |
|
| 54,888 |
| | (45,024 | ) |
| Total Liabilities and Stockholders' Equity | $ | 995,730 |
|
| $ | 63,938 |
| | $ | 931,792 |
|
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018
|
| | | | | | | | | | | | |
| | | | | Pro Forma Adjustments for U.K. Segment | | Unaudited Pro Forma Condensed Consolidated Income Statement |
| | | Historical | | |
| Revenue | | $ | 793,745 |
| | $ | 36,251 |
| (a) | $ | 757,494 |
|
| Provision for losses | | 307,540 |
| | 16,618 |
| (b) | 290,922 |
|
| Net revenue | | 486,205 |
|
| 19,633 |
| | 466,572 |
|
| | | | | | | |
| Cost of providing services | | | | | | |
| Advertising | | 51,424 |
| | 7,077 |
| (b) | 44,347 |
|
| Non-advertising costs of providing services | | 181,140 |
| | 2,703 |
| (b) | 178,437 |
|
| Total cost of providing services | | 232,564 |
|
| 9,780 |
| | 222,784 |
|
| Gross margin | | 253,641 |
|
| 9,853 |
| | 243,788 |
|
| | | | | | | |
| Operating (income) expense | | | | | | |
| Corporate, district and other | | 114,294 |
| | 18,390 |
| (b) | 95,904 |
|
| Interest expense (income) | | 66,210 |
| | (19 | ) | (b) | 66,229 |
|
| Loss on extinguishment of debt | | 80,883 |
| | — |
| | 80,883 |
|
| Total operating expense | | 261,387 |
|
| 18,371 |
| | 243,016 |
|
| Net (loss) income before income taxes | | (7,746 | ) |
| (8,518 | ) | | 772 |
|
| Provision for income taxes | | 9 |
| | — |
| | 9 |
|
| Net (loss) income | | $ | (7,755 | ) |
| $ | (8,518 | ) | | $ | 763 |
|
| | | | | | | |
| Weighted average common shares outstanding: | | | | | | |
| Basic | | 45,674 |
| | | | 45,674 |
|
| Diluted | | 45,674 |
| | | | 47,996 |
|
| Net (loss) income per common share: | | | | | | |
| Basic (loss) earnings per share | | $ | (0.17 | ) | | | | $ | 0.02 |
|
| Diluted (loss) earnings per share | | $ | (0.17 | ) | | | | $ | 0.02 |
|
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2017
|
| | | | | | | | | | | | |
| | | | | Pro Forma Adjustments for U.K. Segment | | Unaudited Pro Forma Condensed Consolidated Income Statement |
| (in thousands, except per share data) | | Historical | | |
| Revenue | | $ | 963,633 |
| | $ | 39,496 |
| (a) | $ | 924,137 |
|
| Provision for losses | | 326,226 |
| | 13,660 |
| (b) | 312,566 |
|
| Net revenue | | 637,407 |
|
| 25,836 |
| | 611,571 |
|
| | | | | | | |
| Cost of providing services | | | | | | |
| Advertising | | 52,058 |
| | 5,495 |
| (b) | 46,563 |
|
| Non-advertising costs of providing services | | 236,112 |
| | 6,269 |
| (b) | 229,843 |
|
| Total cost of providing services | | 288,170 |
| | 11,764 |
| | 276,406 |
|
| Gross margin | | 349,237 |
| | 14,072 |
| | 335,165 |
|
| | | | | | | |
| Operating (income) expense | | | | | | |
| Corporate, district and other | | 154,973 |
| | 17,218 |
| (b) | 137,755 |
|
| Interest expense (income) | | 82,684 |
| | (12 | ) | (b) | 82,696 |
|
| Loss on extinguishment of debt | | 12,458 |
| | — |
| | 12,458 |
|
| Restructuring costs | | 7,393 |
| | 7,393 |
| (f) | — |
|
| Total operating expense | | 257,508 |
| | 24,599 |
| | 232,909 |
|
| Net income (loss) before income taxes | | 91,729 |
| | (10,527 | ) | | 102,256 |
|
| Provision for income taxes | | 42,576 |
| | — |
| | 42,576 |
|
| Net income (loss) | | $ | 49,153 |
| | $ | (10,527 | ) | | $ | 59,680 |
|
| | | | | | | |
| Weighted average common shares outstanding: | | | | | | |
| Basic | | 38,351 |
| | | | 38,351 |
|
| Diluted | | 39,277 |
| | | | 39,277 |
|
| Net income per common share: | | | | | | |
| Basic earnings per share | | $ | 1.28 |
| | | | $ | 1.56 |
|
| Diluted earnings per share | | $ | 1.25 |
| | | | $ | 1.52 |
|
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2016
|
| | | | | | | | | | | | |
| | | | | Pro Forma Adjustments for U.K. Segment | | Unaudited Pro Forma Condensed Consolidated Income Statement |
| (in thousands, except per share data) | | Historical | | |
| Revenue | | $ | 828,596 |
| | $ | 33,720 |
| (a) | $ | 794,876 |
|
| Provision for losses | | 258,289 |
| | 10,624 |
| (b) | 247,665 |
|
| Net revenue | | 570,307 |
|
| 23,096 |
| | 547,211 |
|
| | | | | | | |
| Cost of providing services | | | | | | |
| Advertising | | 43,921 |
| | 4,886 |
| (b) | 39,035 |
|
| Non-advertising costs of providing services | | 233,130 |
| | 7,921 |
| (b) | 225,209 |
|
| Total cost of providing services | | 277,051 |
| | 12,807 |
| | 264,244 |
|
| Gross margin | | 293,256 |
| | 10,289 |
| | 282,967 |
|
| | | | | | | |
| Operating (income) expense | | | | | | |
| Corporate, district and other | | 124,274 |
| | 18,561 |
| (b) | 105,713 |
|
| Interest expense (income) | | 64,334 |
| | (27 | ) | (b) | 64,361 |
|
| Gain on extinguishment of debt | | (6,991 | ) | | — |
| | (6,991 | ) |
| Restructuring costs | | 3,618 |
| | 994 |
| (b) | 2,624 |
|
| Total operating expense | | 185,235 |
| | 19,528 |
| | 165,707 |
|
| Net income (loss) before income taxes | | 108,021 |
| | (9,239 | ) | | 117,260 |
|
| Provision (loss) for income taxes | | 42,577 |
| | (140 | ) | (b) | 42,717 |
|
| Net income (loss) | | $ | 65,444 |
| | $ | (9,099 | ) | | $ | 74,543 |
|
| | | | | | | |
| Weighted average common shares outstanding: | | | | | | |
| Basic | | 37,908 |
| | | | 37,908 |
|
| Diluted | | 38,803 |
| | | | 38,803 |
|
| Net income per common share: | | | | | | |
| Basic earnings per share | | $ | 1.73 |
| | | | $ | 1.97 |
|
| Diluted earnings per share | | $ | 1.69 |
| | | | $ | 1.92 |
|
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2015
|
| | | | | | | | | | | | |
| | | | | Pro Forma Adjustments for U.K. Segment | | Unaudited Pro Forma Condensed Consolidated Income Statement |
| (in thousands, except per share data) | | Historical | | |
| Revenue | | $ | 813,131 |
| | $ | 54,608 |
| (a) | $ | 758,523 |
|
| Provision for losses | | 281,210 |
| | 21,026 |
| (b) | 260,184 |
|
| Net revenue | | 531,921 |
|
| 33,582 |
| | 498,339 |
|
| | | | | | | |
| Cost of providing services | | | | | | |
| Advertising | | 65,664 |
| | 10,824 |
| (b) | 54,840 |
|
| Non-advertising costs of providing services | | 227,656 |
| | 13,254 |
| (b) | 214,402 |
|
| Total cost of providing services | | 293,320 |
| | 24,078 |
| | 269,242 |
|
| Gross margin | | 238,601 |
| | 9,504 |
| | 229,097 |
|
| | | | | | | |
| Operating (income) expense | | | | | | |
| Corporate, district and other | | 130,534 |
| | 26,904 |
| (b) | 103,630 |
|
| Interest expense (income) | | 65,020 |
| | (39 | ) | (b) | 65,059 |
|
| Goodwill impairment charge | | 2,882 |
| | 2,882 |
| (e) | — |
|
| Restructuring costs | | 4,291 |
| | 4,291 |
| (f) | — |
|
| Total operating expense | | 202,727 |
| | 34,038 |
| | 168,689 |
|
| Net income (loss) before income taxes | | 35,874 |
| | (24,534 | ) | | 60,408 |
|
| Provision (benefit) for income taxes | | 18,105 |
| | (975 | ) | | 19,080 |
|
| Net income (loss) | | $ | 17,769 |
| | $ | (23,559 | ) | | $ | 41,328 |
|
| | | | | | | |
| Weighted average common shares outstanding: | | | | | | |
| Basic | | 37,908 |
| | | | 37,908 |
|
| Diluted | | 38,895 |
| | | | 38,895 |
|
| Net income per common share: | | | | | | |
| Basic earnings per share | | $ | 0.47 |
| | | | $ | 1.09 |
|
| Diluted earnings per share | | $ | 0.46 |
| | | | $ | 1.06 |
|
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited Pro Forma Condensed Consolidated Financial Statements give effect to the pro forma adjustments necessary to reflect the U.K. Segment entrance into administration as if it occurred at the beginning of the period presented in the Pro Forma Statement of Income for the nine months ended September 30, 2018 and the years ended December 31, 2017, 2016 and 2015 and as of September 30, 2018 in the Pro Forma Balance Sheet.
2. Pro Forma Adjustments
The unaudited Pro Forma Condensed Consolidated Statements of Income and Balance Sheets reflect the effect of the following pro forma adjustments:
| |
| a. | Elimination of revenue historically reported by the U.K. that would not have been recognized by CGHC as a result of the entrance into administration. |
| |
| b. | Reduction of activity as a result of the disposition of the U.K. segment. For the indicated line items, all historical activity reported as part of the U.K. segment has been eliminated. These pro forma adjustments do not eliminate costs within Corporate, district and other related to transition services to be provided subsequent to the disposition and certain other costs determined to be not direct to the U.K. Further, no adjustments have been made to reflect any potential reductions in corporate costs in response to this change in the Company as they are expected to be immaterial. |
| |
| c. | The elimination of assets and liabilities associated with the U.K. included in the Company's historical consolidated financial statements. |
| |
| d. | Stockholders' equity was adjusted as a result of adjustments noted above. |
| |
| e. | For the year ending 2015, Goodwill impairment charge was reduced for impairment taken in the U.K., the only segment to report a charge. |
| |
| f. | For the years ending 2017 and 2015, Restructuring was reduced for activity in the U.K., the only segment to report a restructuring charge. |
