CURO - Earnings call transcript Q4 2021 | CURO Group Holdings Corp

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Operator

Good day, and welcome to the CURO Holdings Fourth Quarter 2021 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, today’s event is being recorded. I’d now like to turn the conference over to Matt Keating with Investor Relations. sir. ahead, go Please

Matt Keating

of good results After and website. are for are Investors XXXX, Executive and me be ir.curo.com. is yesterday, today’s call our on Gayhardt; full market section CURO which section the on released the available being and website will morning, you, at Officer, call on the With President everyone. closed year our Thank fourth Officer, the Operating of This Chief CURO’s Roger and Baker; Dean. Chief archived Investors Bill Chief Don and Financial Officer, webcast quarter

call Before we I as based turn like to the forward-looking the discussion on over currently today’s see note will statements contain to that it. environment I’d business Don,

refer Forms we forward-looking update press in results from or the projections specific today, our As future last new night to to and issued or undertake obligation described statements that XX-K risk to as no cause materially our assumptions information such, based include factors uncertainties. and in this Any it events. does on our release actual information we of differ for revise today’s certain XX-Q more risks could the that statements are Please on call a make of result as discussion. these on and

U.S. release. between Reconciliation are in yesterday’s We these performance. found non-GAAP believe and to certain financial the to principles. accounting of in measures GAAP we our included addition GAAP In report tables non-GAAP conform measures reporting, accepted that press do the generally not these understanding measures enhance

investor have presentation. we you supplemental I’d a we like begin, Before remind provided that to again

to I and With Events in of Presentations will our call IR Don. like this to and remarks, that, you find can it in turn over the We reference presentation section website. would the our

Don Gayhardt

customer that into business, our future. drive for and two everyone, We value thanks well significant prospects acquisitions: our direct dramatically year a now grow reducing was long-term our transformative uncertainties. Canadian Heights us morning, the growth. very Finance to in for shareholder Good prospects COVID-related healthy enhanced ability our U.S. a growth our Matt. demand growth sustained stimulus, business, Thanks, our to diversified XXXX Flexiti will is and today. regulatory by legacy seeing business CURO of after U.S. shape strong and us weak joining We and and direct positioned company’s all made that lending in and saw base exposure while period Canada, to lending driven our the

improved position Importantly, main our card-based team’s meaningfully our focus three we direct-to-consumer, in target, consumer priorities credit the verticals applications. on strategic that and executing our point-of-sale

adding Flexiti and point-of-sale Our to furnishing our March home mix point-of-sale agreement Canada. the loan provider private of Canada’s LFL financing and largest We direct by in in XX-year capabilities believe a of revenue XXXX acquisition of Group, Flexiti’s label company exclusive of as credit established year, last June signing in channel, capabilities our financing largest cards diversified lending to retailer Canada. positioned point-of-sale the financing

holiday $XXX sold consider fourth loans Flexiti’s the March, demand. Group increased of million. loans gross receivable LFL driven $XXX and receivable or $XXX recent year-end, loans when growth, XXXX reached acquisition we ended the our and million good million For sequentially in onboarding perspective by volume closed acquired during gross as in by the XX% fashion on our Flexiti quarter, seasonal

and new accelerated cross-sell our card longer-term, Southern our states. to acquisition set our and customers serves products. and omnichannel rate primarily expanded opportunities lower balance offers recently into leverage as Finance non-prime direct-to-consumer U.S. Our and Midwestern of geographic near XXX capabilities transition branches credit our Heights acquisition higher and business of of significantly into XX This December and its us products prime network markets, strengthened XXXX through expand Heights

new the our December Phase, of forward First a to launch eligible to year. select look this U.S. launched Visa-branded in We that credit in and customers excited provides rollout of credit markets card channels this also with product card. non-prime We’re all business our across

expect contributor momentum. we earnings significant meaningfully it XXXX to don’t our with we First these beyond. growth to year XXXX, Phase earnings be a with the to in business core expect Along and very affect While our acquisitions, in two solid good ended

year-over-year gross Excluding also Flexiti If and exclude Heights and X% the receivable the year-over-year growth sequentially. runoff XX% increased in and was we X%, Loans, U.S., loans our and combined sequential portfolio respectively. XX%

year, million to At to over increasing by key part completed rate notes, C$X $XXX secured initiatives. several and acquisition. also Flexiti’s reducing In securitization basis our our refinanced increased to the During date existing secured to the the we extending the we the XXXX. facility bringing points, Flexiti, notes and capacity XX capacity we interest the total fourth in finance capacity senior added Heights our financing In warehouse added funding maturity July, capacity, of we senior quarter, billion.

a it our monetized in Katapult became portion also successful from in public of investment. $XXX this when receiving XXXX, June highly We in cash investment million

was recall million. total investment that $XX You’ll our

Katapult strong We originations basis. objectives, infrastructure XXXX, diluted first, scale to of retain are to In investment a XX% also continuing accommodate a growth. we currently focused and primarily on number Flexiti’s key ownership on stake in a fully in

in more double XXXX. again We and than expect to threefold grow in to Flexiti’s revenue XXXX

Second, of Heights growing combined on Finance. and synergies executing

with margin online with continues business lending of LendDirect moment. pandemic-related Fifth, our More for all in a of two branches. opening units and growth in cost the success segment focus XXXX and this remaining underwriting expansion the on continuing across this of building and sustaining spend and from Fourth, disciplined our our our growing LendDirect, and of our the very acquisition business legacy to Canadian direct decisions. new on impacts. opportunities direct U.S. Third, a to on through both evaluate lending years customer structure business as recover ad

and regulatory by definition, loans lower-yielding prospects secure better ahead funding. business larger, curve growth less stable and conservative to and and cost-effective intensive longer-term and growth products our are, to of capital Markets stay to have remain and capital. Finally, lines to these more the require continue us but careful managers of for risk

a Next, I’ll details some few provide of these additional objectives. on

start our originations center we to with origination Flexiti where in forecasted from plans partnership company’s the June, strong XXXX we in the When million in announced growth. XXXX. on C$XXX Let’s increasing million supporting LFL C$XXX XXXX

growing totaled and XXXX originations by outlook. continued year. well in C$X exceeding growth fourth alone Flexiti very at C$X came million XXXX strong Our the us by million, our C$XXX and our projection for million, this revenue publicly originations quarter year-over-year. positioning in disclosed exceeded Flexiti’s earnings C$XXX our million pretax XXX%

customers, long in merchant in relationships on direct-to-consumer considerable over accelerate the And LFL and a retail we acquisition. Desjardins, initiatives our including capitalizing could implies, than likely on several to to channel growth executing current distinct growth While be the full better exit wave for dilutive are customer that forecast even developing which finally, new on close but opportunity have the hopeful wins is underway, estimated to standard pipeline, near-term total for of XX% a run. will pay partners’ have designed the continues spend, new out include card drive include focused new further being to very while retail that its Flexiti option merchant merchant its Flexiti the and address sizable to reminder remains Flexiti small visible online branded of other and non-prime to sales investing our Canada, accretive in we’re market rolling ticket strong

results. XXXX, to XX, the our combined it so Moving Heights December immaterial on synergies execute an and next We Finance. plans acquisition grow our impact on quarter closed to financial on for fourth Heights had

CURO team the complements leadership with longer products. company joined of The loan product opportunities and type lower to and a the term, are with makes Height’s retain their our very profiles customers direct less credit only reflecting as our into to comprised year a average upmarket higher addressable XX%, CURO acclimated accelerates points a business and collaborative has around product lending and balances with transition score higher. quickly culture the to rate door opens how FICO of and acquisition positions further larger U.S. $XX,XXX about their our Approximately than see $XX,XXX combined grow balance us that’s legacy customers’ serve stronger pleased with the geographic or hard-working diversifies meaningful U.S. us loans culture. outstanding The our potentially recently, Although, an than more provides to XX meaningfully market XX Heights they’ve that profiles. an for we’re and us expansion. operations and our The customer Heights we geographic credit improve. loan revenue, mix APRs customer half average customer and

footprint. and already plans to states the we Heights count store new have XXXX Heights’ four fact, products at existing In in meaningfully expand in offer

of the speed the is how understands opportunity expansion the everyone in in sure I’m determines As near-term. investment dilutive market

direct signed expansion. locations Canadian dissimilar lending high-performing during opportunities LendDirect opening are additional branches to market new evaluating Heights new for and a brand growth year for XXXX our expansion. was our LendDirect leases through more for to great business branch in see and not we online drive and sites. We plans and paused terms Our of XX COVID, we’ve are

impacted during by business, non-prime increased funnel. U.S. of been rates top results competition COVID, at direct the our have elevated for Finally, repayment our lending the and

direct at earnings. In some runoff lending headwinds see of our close healthy levels, but is will of higher to related to will $XX grow The year-over-year change create of pretax regulatory to addition, U.S. million builds. expected business portfolio balance allowance we

revenue pretax earnings and previous lending to X XXXX guidance. on XXXX Slide beyond. our increasing earnings outlook Turning we supplement for outlook of our raising and our Canada Starting our direct are XXXX deck,

also pretax and We our are guidance increasing this for XXXX revenue business. earnings

earnings are lending, lowering our revenue noting. front, pretax guidance. couple modestly XXXX POS a are of that we On Canada developments while maintaining For our worth guidance

of but related as which to classified an now operating being to portion lower bottom rebates, are cost. from a revenue accounting to the instead it change slightly First, related does merchant No reduction an change revenue. line, of the deducted is

most being interest-bearing lower customers lower And and is as Flexiti’s percentage of that in business portfolio full pay yield, in by revolving provinces of a January. at results but higher Omicron and just slower modified continuing the are period looked of end in with are This balances. offset process growth to led certain off in the promotional to started charge-offs. some in impact, This moving categories partially finally, versus to our Second, at. retail now in revenue XXXX restrictions December their

as in segments. these see pre-pandemic later levels, trends increase loss we’re Canada, will position extraordinarily higher rates. to revolving with to on line better business being We’re and expenses pleased starting now, corresponding overall from offset in uptick prospects to the our pay the returns for are both revenue investment over Flexiti and and moving balances. pay To towards early credit And of performance, buy the yields that and spending new close with product. market support merchant in by financial And for

You can and investor Page see and are million find combined million million. our but income revenue respectively, of XXXX, the forecasting of pretax pretax income, C$XXX deck, revenue X C$XXX details we and C$XXX million. on for C$XXX of And now of XXXX we

of we see outlook. Next, XXXX our guidance our Heights XXXX our in affirming deck you’ll supplement introducing previous Slide are XX that and earnings for

Heights related operating visible believe income. achieve XXXX growth leverage, guidance expectations we our the acquisition expand synergies to to With revenue for support necessary loan opportunity the pretax and and the footprint growth store count, in and can drive

our affirm and in $XX For million $XXX pretax million income. XXXX, we in revenue guide of

the in that To see the and sure $XXX a on is is maintained close, expanded revenue and increasing organization. value our all the are is million. by potential $XX culture creation considerable acquisitions we hallmarks realizing urgency, the XXXX, of our with presented ensuring focus full opportunities pretax million new CURO large-scale these careful passion achieved culture, income shared that teamwork, by execution and to XXXX, For making colleagues. we acquisition strong by recognize on Accordingly, and only throughout of of

on for We’re continue are to already our growth value our and and plan to long-term off strong strategic drive excited a start shareholders. deliver executing to

full needs I’ll priorities and the to are review base. critical results. by now delivering like meeting on highlights team our our XXXX the our fourth our turn close I’d and over customer from the expanding of to to always, strategic to who members call thanking Roger quarter year As to so

Roger Dean

to last compared pretty per $X.XX. point, EBITDA million of $XXX $X.XX $XX revenue Don, good drivers. share adjusted were per at of to the quarter adjusted earnings XX% Fourth morning. of and and million, increase last was quarter quarter an the of Adjusted EBITDA easy share adjusted an a Thanks, year. from the we year’s earnings XXXX of and and summarize Consolidated fourth low it’s reported $XX same million, was loss for

sequential expected of for sequential sequential holiday support loan at provisioning with our credit $X First, high revenue growth increased upticks merchant net impacts decline good fourth decreased from LFL’s $X loan we of Flexiti’s a and increases for loss levels for normalization; growth originations, decreased million loan X% had reflected in second, shifts. mix and onboarding origination the net upfront in accelerated on loan million quarter really channel revenue to new expenses. and charge-offs Net on Flexiti sequential partners and charge-off spending net provisioning or and rates the seasonality X% sequentially. year-over-year The higher sequential customer upfront mix or loss season

by illustrates thinking the headwinds loan-loss for $XX million and the provision for charge-offs chart the top increased or compared XXXX. net to consolidated for quarter operating fourth our Slide earnings the of of presentation Our prior quarter at Consolidated million of about XX% by tailwinds X useful the year. in provision, quarter The loan $XX.X and XXXX. losses is exceeded supplemental expenses

our of loan and quarter to Excluding primarily operating operating aided performance-based Heights. due combined store increased $XXX volume was XXXX. by in related Heights, earlier store million that transaction Don to gross year-over-year, gross excluding and related the or by influenced illustrate, year-over-year. due our mentioned compensation fees million Flexiti closure the from adjusted increased loans by savings the costs the higher combined $X.X Flexiti Flexiti by and variable XXX% Canadian increase lending. third million closures. second rationalization, million $XX receivable and increase U.S. direct on The our of receivable to significantly acquisitions collection XXXX costs cost just level expenses acquisition, and costs $X.X costs, store XX% with and acquisition or loans To higher Heights particularly variable timing in services in X.X%, or of financial onetime our and to growth associated increased was

loans receivable million runoff or in Excluding XX% U.S. combined XXXX. portfolios, the gross increased $XXX

XXXX the Turning Direct business partnership Canada $XX July to LFL grow throughout million segments. X% Flexiti its XXXX, loan financing by beginning in sequentially. with and POS XXXX during Group particularly exclusive the XX% our when increased balances Lending continued to rapidly or began.

season holiday in POS resulted million $XXX growth In of addition, the in alone. and November Canadian December Lending

XX% receivable impacts and impact the Heights the million primarily $XX Excluding in to gross XXXX, loans of decreased acquisition, due U.S. our COVID-XX or portfolios. combined runoff

or and receivable finance ago increased million acquisition. portfolios XX% $XX Heights, for our primarily increased million on loans runoff XX% the or a X% and million additional $XXX Heights debt year-over-year X.X% excluding combined acquired issuance However, U.S. the loan non-recourse with part $XX senior interest notes support in fourth versus expense of loans and gross year quarter to the sequentially. the Flexiti at secured to tack-on to related growth Interest

to next Turning credit.

pre-pandemic overall, normalization favorable consistent to rates. run have Our trend credit still turned seen were with peers is of trends metric towards in being a as our QX but many what what

Canada due the XXX XXX increased charge-off past customer Our rates XXXX. mix growth XXXX, better the seasonality. Canadian rate new and from remain businesses QX XXX mix mix and due including net year-over-year loans XXXX. to past origination XXX balances U.S. the and points releases due Canada and XX loss of by XX growth, several to shifts charge-off mix origination allowance improved impacts. loan guaranteed growth. for net of XXX the on originations, both channel leading earnings, customer increased sequentially below the The adjustments. points federal net bucking to points Canada Lending seasonal rates diminishing seasonality basis the XXX increased seasonality. a by Lending basis six of In points Flexiti basis portfolio consolidated than decline by or our charge-off primarily and through quarter sequentially, with Notwithstanding, points quarterly fourth January is earnings from Lending, normalized primarily Customer I’d provisioning which quarter million sequentially due driven expectations. rates basis a $XX Direct basis by loan covered year-over-year it points everyone post-holiday also consolidated basis basis some normally below weeks, year-over-year new big of thinking rates the behavior QX especially rate, growth and net Direct businesses. mix uncertainty shifts. noise lower basis the relative U.S. approximately charge-off the already by quarter chart. net basis Consolidated Sequentially, quarterly outlook products. points continued relative QX quarterly supplement the our remained growth. for no channel think our fully with COVID-XX we the expectations. XXX January’s XXXX Direct right Canadian about to deck, as expected. we grow growth, tax fourth which charge-off in upper for sequentially charge-off color of about We income points basis were points season next POS affects Don X% X rate close increased rates net was the way to with grew points rates encouraged I’ll is and for improved what Lending Slide fourth company, U.S. merchant XX point or U.S.

million charge-off XXXX, benefit other major resulted U.S. You’ll see of allowance round that words, less provision COVID-XX net million than $XX In in of loss second the low the net loan release $XX earnings by stimulus driven with historically government rates. the in charge-offs. first quarter primarily of being pretax

also bouncing are QX off As end growth the loss acquired the of Flexiti of net half normalized unsustainable provisioning XXXX, in we that back loan of we And XXXX. levels. charge-offs remember at and saw loan with

base earnings of QX for in improved QX. operating in This below QX result versus So we should significantly meaningfully expense XXXX. comping are XXXX, but Flexiti against no QX of

of continue We levels. year the you and undrawn $XXX quarter will $XX We credit month. facilities on revolving practice borrowing and on with million the ended our million for outlook base including additional next liquidity, unrestricted capacity cash of updating our in

begin share to program. work the $X.XX finally, our support authorized several Q&A. to dividend remarks, a And prepared expand new now on share We continue capital our opportunities million authorized to return. repurchase to our per concludes Board about quarterly capacity This ask and $XX growth we’ll operator and and

Operator

question comes Blair. you. first of Instructions] Thank Today’s go Bob [Operator ahead. from Please William Napoli

Bob Napoli

and good morning. Thank you

Don Gayhardt

Bob. Good morning,

Bob Napoli

you? How Good morning, Don. are

Don Gayhardt

I’m good.

Bob Napoli

a the I for Flexiti. a businesses owned outlook. you on have you’ve Lending and the POS and question your – the the just for And So level Lending, and of Flexiti confidence I would imagine XXXX longer higher Direct particular. given there, in pretax now the in much kind confidence as Canada revenue while, Canada earnings history Canadian visibility

for So model a I’m I on owning in profit you’ve just and was the level, curious, the confidence model, the year – what confidence long-term Flexiti guess, that? in I your learned profit –

Don Gayhardt

Flexiti Bob, I’ll the business. comment talk a maybe of and on broader Lending kind Direct comments Canadian little bit Bill let sort a of and couple of about

It owned nine year. since we like and of lot – March But in diligence So Flexiti that. much seems – we’ve longer like than pretty last I spent intensive it’s somewhat think feels months on we a that.

really BXB know business. side well business, the to And business. there got obviously, we’ve the understand the and of merchant the think of got I the side to the So very team

with in the that had with we Katapult U.S. exposure and Board here really I some think activity ownership our service with good and

So a BXC a it’s company. – wasn’t different obviously it than

larger for new was was Uber think an wasn’t us which is I animal not really point union, a but union, say, up were the some would and and I of only TD think a getting sales $XXX also that billion they from there perspective. that compelling what I of ultimately the banks pace. had $XXX of been Desjardins, of completely billion kind Bank credit it out credit asset

enough, think cetera. was et You’d big et the market cetera,

LFL. larger of we origination we very, very a for for It take was all basically until We saw exited it. to think, had of of of triple that then like wasn’t able getting an the to to we share players proven, sort and I And as us chance to during So base. the some big kind true. we’re think players the opportunity Flexiti that decent We has sort thesis And smaller of get diligence, I it. – get get had after win felt it.

from new numbers. new in the any there out aren’t of where but business that basically some guess, major aren’t terms in wins like roll numbers are – So of the kind sort kind any there I here, It’s there in forecast. wins there’s into that of there, to of the growth some some kind and category call of, earthmoving of we in like kind aren’t wins, baked any XXXX XXXX a smaller existing of but are the merchant kind merchants, of them,

to the business, people fee a their balances disposable an I to December starting they U.S., – to their paying paying maybe November, started the a mean So we to the XXXX. was I flip card little buying And of the interest was it, Volume because confidence little off in a you lot a think, whatever. but in of XXXX, that bit just about days, of doesn’t get Yields now hump business think interest-bearing bit drivers certainly merchant that back. from we account. it promotional be pay card and and you been people discount, Like XX but – more cash. like period, in – yield. some are a lower are periods, I so going pay a in talked And days, little off if then lot of know that’s Yield these sort – off into – that’s balances level, during how of because was better. December a lower come income, but for our obligation little more – probably had XXX

interest-bearing at of which a of prime more see period let remember, at obligation. an are these promotional starting roll we’re the rate rate consumers which So – the normalization of they kind into the terms in customers FICOs, with to XXX

good, and got – customers. and and So very high-quality there, very, been credit these are we’ve again, credit’s from very then

to sort cases, to And sort of something we of prime pay sure then call they and merchant now, merchants. with a issue them, mentioned some different for And pay add they long we like, I – of But think and a trying robust it’s the the going some leg sort our product, areas of more by We’re going to think – base. product, to that from formulation give integrated large, a kind think trying online prime more I competitive base we’re one a us of a in standpoint, that’s easily to customer there, it. But it’s really invest just and and it’s for in later right have it’s we can is going make that on we continue building. nice to up to We merchants. bunch buy work OpEx. our

funding investment So costs. closed. putting we adding in – I And he this securitization. and I spent will the And into deal then some dollars continue Roger Roger, ton think started XXXX. XXXX November, year, in real got think that. and that time that and and back into obviously, We December That we’re of a about we a of – spent half probably priced

in we funding lower stuff our in that’s and putting December to cost. the that’s in the securitization borrowing So going and warehouse started overall

drivers. big are kind and So large, of those by I the think,

I to think we ability our manage good those. feel about

that’s – credit again, bit. that. Some probably think say, which that quality but normalize ticks how for also rate will And the not – externality waiting of for obligations we’re the we up off people I little a them, at pay

pay promotional Our balanced more just tick have credit charge-offs. – a it bit somebody no up period, losses you little somebody if in because pays the obviously, as off

reasonably a those little into high but be So we – balance. to roll a of a of want there’ll percentage a bit

of So we – we’re a in in of direct-to-consumer let space. position, direct lending, in direct sort market point levels top a three lending. Bill in Canada. leader think confidence from provider about a market of We sale the kind maybe – I’ll but bit a I’ll in talk little just our And think they’re

Bill Baker

Bob. morning, Good Sure.

experience of which For really I’ll and be understands, a our our I is predictability second team. us, the it’s that But confidence And a got and team stickiness driver the is few and think I the tenure think who think of the good We’ve I brief. first operating it’s product. things, and open-end the product. is

got I really think the well models refined. we’ve

experienced as customers to as province, properly. generating growth was you gives can point go footprint even think numbers helps a on And many in is LendDirect. very footprint I us in far point operating our would marketing use the smaller to expand and be Don which terrific more And more. which much and team to how LendDirect explaining in in keep where further. see as the as by the dollars with Ontario the leverage the last third growth to draw year open year Those least obviously, just decision then brand a product had online customers helping customers perhaps that that on the Money us made and that long Cash is it. led all our the the the at it XX and it locations,

Bob Napoli

you. Thank

Phase should The the long-term near-term opportunity? is business, First the what for question. testing have credit I near-term Just how cost, mean, What rollout? the – far – follow-up opportunity and we aggressive what done? you is much that long-term as how is a think card, So is about what

Bill Baker

I’m that to one happy well. take Yes, as

of But that to pretty at pilot we that works, do couple to structure right next the phase the ramp on have really making months. point, we’ll are quickly. workflows, in based sure credit now, of and continue we ability testing, So just the for the all a product, the

customer our experience with good thus works lot I at that of got gone the everything sure well with That want on up. think reasonably the We’ve credit team – So has right, bank bottomed we everything, right, perspective. comfortable point everything a partner far. a experience to that this make has is that experience is card from

a course, costs processing those middle to us So marketing you’ve really be that a continue targets the evaluating those volume – perspective. we’ve do the from costs. back I to your see we those. are to be the that and half then confidence the need to first channels, opening hit to it’s we – costs with product rollout, year, model in the bank all got be more aggressive you of and into you’ll as the And are got have baked for internal team And successful. get The of see think all, new quarter I really understand But think so.

Bob Napoli

you. Thank

Operator

from comes today Moshe ahead. with question go next our And Orenbuch Please Suisse. Credit

Moshe Orenbuch

take on call a And the U.S. on little did a bit detail – a could on of can lot you’re get back maybe about of plans I going where to it’s business. mean of the you time you what a two-year – to Maybe within Thanks. or and what side you the are us Great. talk expand little what kind – you and your just just get it kind tell and think frame? to a Canadian maybe that to think

Don Gayhardt

the Credit can the saw We a California, – sequential if we balances. regulatory Virginia in. Maybe morning. But else the run-off saw change, biggest growth ones the Moshe, Don. it’s I’ll will you give ex for chime in little then bank from product. the so Verge color. X% – Good anyone and out portfolios

absent we’d extended of said of I see to like portfolios we in time. year, think growth, the sequential sort period core for X% some runoffs last to XX% the

a quarter – so lot. think we’re far tracking I So is the first

think have season. a our is to lot space of tax different this very going a be there’s I about talked in people

credit, cetera. on how guidance impact that’s just paydowns the of and part tax to tax with season So caution that’s what and last child U.S. credit year, our payout the business, et going refund the on is

will a we going for prepared have of seen be it’s time. but we’ve in bit and kind about than a really year some that So certainly it, a a long of – of thoughts different we’ve bunch outcomes, a anything different get little to

growth. I impact. tax an tax if that you we that is So – going to think – And continue can see can to but if sequential – if have obviously season season the aside, good

the in for well in working retail in we’re that U.S. of us. short the balance Canada So depends – X.X Canada the past the you’re jobs And U.S., number says X.X there’s the Actually, believe, I a number the maybe those looking to people still key million, jobs. than – are is U.S., COVID macro, million in the million lot base a the in XX% the for that of – of people think but actually year, of the X for lot on that’s that’s year working factors before going And still now lot be were restaurant, – of you U.S. jobs growth the a we’re hospitality The a in kind more working Canada pre-COVID. still customer sorting U.S. in we’re with at

we that pieces a of going of those have see of from kind a a remember, But we kind horizon, regulatory we’re you Verge the standpoint, just business have feel that, that some California, nice continues said horizon. out – two-year back provided – that to we we close, pretty still of gap would in business, benefit So Virginia, to think I there. sort to two-year build portfolios and

is smaller products think it back level a so it sort the paid the off kind good products. COVID question I off these is the it’s to two-year depressed a though pay because So kind balances the a ticket, stayed where I of impacts larger kind of of of – the build think from lower-yielding products and have larger balance, the higher-yielding more demand from than is

Roger, Bill, on know, you have don’t any that? I comments So

Bill Baker

covered. ahead, you think Go I Roger.

Roger Dean

of we online going thing to noting we’re trends an on product obviously volume California obviously, because diligent installment going because and other of to more in also the – cost think the not that’s business Sorry. those the with is have with in more structure have and Yes, continue and worth be that I future. to evaluating

So portfolio that of runoff evaluating decisions influences cost lot as well. a structure around

Moshe Orenbuch

kind normal do provisioning. that there just they differences in XXXX? think just you in about I But that levels? And maybe overall Thanks. year-over-year terms talked trends follow-up, into normalization. quarter it. your are just you’ve at of credit Got were in relatively come? that I the fourth delinquencies the roughly – and you about more to maybe just understand Like mean of talked delinquency a stable the as about we performance, Is Like of how

Bill Baker

through is But prepared chime But things perform pandemic, a Maybe would mix. both at it about This customer were look perspective we tactics. lot we I’ll those in. the new move a to and lot to just if expect And significant a channel of that we a we just more on model of let of liquidation few learned that in that, And I’ll recovery of period. which the pre-pandemic. talked drive and share delinquency the is from a lot then you think mix, into basis, a – we you I and those if per go efficiencies – where a the continue unit that maintain is portion Bill. into do and I as remarks, what to others things, "normal" the a the be above just think we risk – look well credit levels, our

Moshe Orenbuch

Great, thanks.

Operator

Thank you.

John Our next question today at Please comes ahead. Hecht Jefferies. from go

John Hecht

different action I I I very at Thanks before, because, just talked worth things. seeing we’re would interested of than of a yes, seeing noting I – now you that inflation think in kind segments? the are that develops? think this assume affect much. impact changes point-of-sale. it might and call update Don, mean, you segment the how guys. as call inflation morning, I’m about intimated lending that can’t in Good Are real-time in I time remember the the has of does impact and any point kind how or you impacts last different

Don Gayhardt

do different right, think to not you hit a complications, the Yes. has I’ll I this it’s in way of because segments. different on different that I it’s just try it – that’s impacts – some in mean, –

AOV, certain So and average stuff your about the et but appliances, either point-of-sales – to appliances, side, obviously, your in furniture or with lumber you’re ticket, up because chips going cetera. go in is talking

it’s So again, that that that’s standpoint credit we AOV. that a And quality inflation I would adjust I how customer. said say, about I pretty side. underwriting the remember, from – in mindful as prime a you’re something think the some seeing we’ve got be to

adding prime are But that, non-prime our customer. now Flexiti on partners a at working the includes some now, closely the and we stuff to for with non-prime underwriting. we’re So a overwhelming, that’s XXX,

there absorb ability it’s for Canada price expected disposal the see income increases. do this have? So the and I’m rate with of And X.X% Canada maybe I increase the much was seeing in And the there. keep of sort about in some X.X%, think it about talking sort we’re was rate to meaning sequential more going wage So U.S., kind is a of from are XXXX, year. they forecasts going And to – up inflation price fourth but – lot in quarter. the to flex when are how but think net they just that moderation of fell I

So like I I haven’t the the since inflation I we thing inflation think. us for up going if was high – – think normal in is this – direct-to-consumer always, sort of seen a is something of if a kind school, a side, of are prices again, the in at – on

to period. a the and that kind XX my of prices did I experience – use was Katrina. So $X. gas And during the of there with in I life. a as that I obviously that business – I is of experience, – have shocks capacity, there this sort But aren’t price spike. back my prior job, gas And in at long a gas think et prices all I remember and Katrina example went one look I though, refinery impact $X.XX in my of in days spike because that’s is as hit disrupted and on of the cetera to use went have big don’t impact credit lot that the

gas tightly the prices again. prices tight that in have but again, it sort adapt fashion, said budgets a income. kind ability generally. disposable moving to are of more think I flex ability think are And I our live in customers more it gives in But an they their again, of up So more ingrained have manage up to I sort customers because, of they normal than

don’t I and not not delinquency seeing seeing are any – – we’re over seeing any So would we’re performance. that bleed say think I the in NCO of we

off. I is balances there think normal more is to cash of post-COVID to and just of kind as starts like what’s kind burn returned of happening excess – bank you

John Hecht

a are spectrum? related up putting you guys California to talked that Okay. in or branches? whole branches? helpful very so commentary. the And we new then dozen of questions kind of modeling. where are Is then think That’s two where I runoff quick Verge, And like to new you and

Don Gayhardt

to about want talk Roger, run portfolio you off? the

Roger Dean

I muted. was sorry, Yes,

ended Forgive me. perspective, Yes, at total, XXXX, for John, for just balances those those about million. balances, $XX runoff in

So we’re would it started – million. at started about XXXX, have $XX

California, and sticks And so bank – Illinois, how the the the long then of out tiny, one – obviously, includes that was and because thing that Virginia. product. product, Verge

still So that XXXX, year, the still we of $XX a end quarter the We have million by end the receivables that by running left. of probably down. of think of

John Hecht

Okay.

Bill Baker

on the some mostly filling will the in Ontario those the is and outside question the a all to John, then, out province Greater And be surrounding branches, of Toronto moving One area, LendDirect, couple of parts. the markets.

markets open a year. We’re outside for expansion then couple of us. cash states new will the Heights this some of in to primarily monies be four going again And

John Hecht

Okay, that, guys. great. Thanks. Appreciate

Operator

Please next our ahead. And from today go question John comes Janney. Rowan at

John Rowan

guys. morning, Good

Don Gayhardt

morning, John. good Hi,

John Rowan

I of Two missed call. very beginning questions. the the

of Don, longer-term where an We Heights? wanted is to since of just I of So you update number, that pre-Heights. inclusive on did wondering that. share for get there’s haven’t $X you it update had the address update kind to number guidance? an if I’m think that a XXXX an

Don Gayhardt

I addressed addressed we really other than U.S. And it think John, we business. the mean, sort direct pieces I Yes. lending specifically. component of the – didn’t the

modestly talked guide XXXX. the As higher we then so And combined we talked guide Heights to about for Canadian guide about XXXX. and businesses – for Heights for interest for in the

pretty recovery real little heard and of that in answer can see and consistent can the a kind can from sort So business – me subsidiary number for kind and get this – in growth a I talking about of is talked asset still we sort of in credit we again, – say the plug going do official certainly about the XXXX you see of the we’re think But Heights couple on cautious of next over period, you that that if recovery want to – that if a of achievable. U.S. we’re the would of business, business, some about that we just kind Heights you be of pretty up where about the the is if saying pieces. we sort we – our And balances piece an sequential of numbers we’re obviously. talk we to earning is feeling two-year bunch in again, absolutely can is if two-year recovery not U.S. see I $X of a the decent again, add the we performance, plus of growth a that belief think the growth a the factors over for

John Rowan

is not on on U.S. the basis. is EBITDA, losing There still in operating but the lot of do exclusive turning of where business And obviously, – in I Yes. noise that, that tipping of kind I the on of Realistically, business? U.S. of an Heights U.S. again? the unprofitable the mean, profitable it quarter point mean, money acquisition. see a a adjusted you was business because how

Don Gayhardt

spool the – going little to quarter, a last I’ll during the the We closed on we’d exact terms business. structure through – numbers, said, the of thing the think to kind Roger the talked but specific the Roger – branches thing that to see – which I’m continue number I like sort XX things is of to just of other mentioned, impact. somewhere call, we think season going that year. in neighborhood are say in But So – I get of I’m has cost just continue I out about get other first in we’re and tax evaluate

terms that dynamics willingness consumers’ have there. are the of in online, lending of transactions of – into ability to cost Some obviously still model kind which do variable

The moves come need going And answer, sort you lending cost non-Heights about conclusions of a the additional comment more to precise bit Bill by on a to business. more U.S. of So means. we all I little lending structure be U.S. and like precise on direct to business. we’re that to obviously, give think Roger, some direct make

Roger Dean

I – about might offline. it would be John, we and can talk it Yes, helpful,

Page notes our of for release million. P&L for XX for segment – over on U.S. a we senior QX is loss John. earnings has segment, XX the operating of Page segment including and the the that on loss in look, obviously, capture business But have QX, for $XX the operating our little that Just interest the we earnings the release

John Rowan

one, XXXX, make understood I correct? XXXX, then than And better XQ but guidance. sure just Okay. last XQ I than XQ It’s weaker

Roger Dean

Correct.

John Rowan

Thank you much. very

Operator

[Operator Instructions] Today’s Caintic ahead. next Stephens. question with from Vincent Please comes go

Vincent Caintic

morning. Good trends question seeing. Thanks thanks. acquisition for marketing and questions. been one Hi, taking my about cost customer you’re answered. my Most of that But questions have

been has growth Your great.

some costs spending. of I other about the have maybe fintechs their starting and higher acquisition down to pointed to slow some low-end concerns consumers think

how been Just you have able efficient? generate and wondering you’re particular that Thank keeping what while growth, your marketing you. to seeing

Bill Baker

Vincent. This morning, is Bill. Good

the ability said, very we’ve And And on down so marketing or very throttle – the us, that the that fact what fiddle in we to the long we’re almost was diversified funnel I us think for gives that case up I based quarter. a as have quickly time. think in real it’s fourth seeing

how did to pockets marketing channels increased looks some to and actually the we there for see evaluate like say a And per see addition, funded just what tested vintage. now you performs In higher course, costs. it we’ll aren’t as demand. where that credit of But cost that not what

reasonable to ability for to on real a think cost more based to channels and it us. I be has continues performance, differentiator that and move Our a been

Vincent Caintic

Okay, had. great. Thank That’s you. all I

Operator

to And conference the concludes the turn this like session. I’d our remarks. ladies question-and-answer and final any for over gentlemen, to back team management

Don Gayhardt

Don, it’s for thanks, Hey, everybody, us. joining

you a very report we quarter. to much, again day. great talk our will first have and We Thanks after

Operator

you concludes all We presentation. thank This sir. participation. you, your Thank for today’s

and your disconnect a wonderful now You may have day. lines,

CURO (CUROQ) 9 Feb 222021 Q4 Earnings call transcript