CURO (CURO) - 2023 Q3 - Quarterly Report

Store Operations - As of September 30, 2023, the company operated over 490 store locations across 13 U.S. states and nearly 150 stores in eight Canadian provinces[205]. Financial Performance - Total revenue for the three months ended September 30, 2023, decreased by $18.5 million, or 9.9%, to$ 167.9 million compared to the prior-year period[215]. - Total revenue for the nine months ended September 30, 2023, decreased by $233.3 million, or 31.6%, to$ 504.2 million compared to the prior-year period[218]. - Total revenue for Q3 2023 was $167.9 million, a decrease of 9.9% compared to$ 186.4 million in Q3 2022[223]. - Revenues for the three months ended September 30, 2023 were $171.5 million, a decrease of$ 14.9 million, or 8.0%, compared to the prior-year period[261]. Revenue Breakdown - Installment revenue for the three months ended September 30, 2023, decreased by $11.0 million, or 10.7%, primarily due to the sale of the Legacy U.S. Direct Lending Business[216]. - Revolving LOC revenue for the nine months ended September 30, 2023, decreased by$ 51.0 million, or 25.4%, primarily due to the impact of the sale of the Legacy U.S. Direct Lending Business[219]. - Interest and fees revenue decreased by $12.4 million, or 8.0%, from$ 155.9 million in Q3 2022 to $143.5 million in Q3 2023[223]. - Insurance and other income for the three months ended September 30, 2023, decreased by$ 6.1 million, or 20.0%, compared to the prior-year period[217]. Expenses and Losses - Operating expenses totaled $94.2 million in Q3 2023, an 8.4% decrease from$ 102.8 million in Q3 2022[223]. - Salaries and benefits increased by $3.0 million, or 6.0%, to$ 52.1 million in Q3 2023, primarily due to restructuring costs[227]. - Advertising expenses decreased by $1.9 million, or 39.7%, to$ 2.8 million in Q3 2023, attributed to changes in marketing strategy[227]. - Provision for losses decreased by $16.0 million, or 24.6%, from$ 65.0 million in Q3 2022 to $49.0 million in Q3 2023, reflecting credit improvement[227]. - Operating expenses for the three months ended September 30, 2023 decreased by$ 8.6 million, or 8.4%, compared to the prior-year period[232]. - Direct operations expense increased by $3.9 million, or 46.9%, for the three months ended September 30, 2023, primarily due to increased technology costs[233]. - Other operating expenses decreased by$ 11.4 million, or 50.4%, for the three months ended September 30, 2023, mainly due to reduced professional fees related to the First Heritage acquisition[234]. - Other expenses for the three months ended September 30, 2023 were $57.3 million, an increase of$ 81.5 million compared to the prior-year period, driven by a 46.2% increase in interest expense[235]. - Provision for losses decreased by $116.3 million, or 41.9%, for the nine months ended September 30, 2023, primarily due to the divestiture of the Legacy U.S. Direct Lending Business[240]. - Operating expenses for the nine months ended September 30, 2023 decreased by$ 96.1 million, or 25.0%, compared to the prior-year period[241]. - Interest expense for the nine months ended September 30, 2023 increased by $46.5 million, or 44.7%, compared to the prior-year period[250]. Compliance and Regulatory Issues - The company received a Market Cap Notice from the NYSE on October 16, 2023, indicating non-compliance with minimum market capitalization requirements, with an average market capitalization of approximately$ 44.7 million[209]. - The company has until April 27, 2024, to regain compliance with stock price requirements following a Stock Price Notice received on October 27, 2023[210]. - The company is subject to potential regulatory changes in Canada that may reduce the maximum allowable interest rate on loans from 60% to 35%[287]. - The company expects that any regulatory changes could adversely affect the pricing for newly originated loans and may require reevaluation of underwriting criteria[288]. Cash Flow and Debt - Net cash provided by continuing operating activities for the nine months ended September 30, 2023 was $38.1 million, primarily due to non-cash reconciling items of$ 233.0 million[269]. - Net cash used in continuing investing activities for the same period was $117.8 million, mainly due to net origination of loans of$ 106.6 million and cash purchases of property, equipment, and software totaling $9.2 million[275]. - Net cash provided by continuing financing activities was$ 106.0 million, primarily from $115.0 million in net proceeds from credit facilities[276]. - Available unrestricted cash on hand as of September 30, 2023 was$ 82.6 million, which is expected to provide sufficient liquidity for at least the next 12 months[271]. - The company has a total corporate debt balance of $1.1 billion, with interest rates ranging from 7.50% to 18.00%[273]. - The company recorded a provision for credit losses of$ 161.1 million for the nine months ended September 30, 2023[269]. - The company may adjust its lending volume in response to funding shortfalls, which could include tightening credit approval practices[270]. Accounting Standards - The company adopted the CECL accounting standard on January 1, 2023, impacting the provision for losses and credit loss estimates[227]. - The company utilized a systematic methodology for estimating expected credit losses, which includes historical loss experience and macroeconomic factors[284]. Stockholders' Equity - The company reported a stockholders' deficit of $398.0 million as of October 16, 2023[209]. - The effective income tax rate for the nine months ended September 30, 2023 was (23.8)%, lower than the statutory rate of approximately 26.0%[254]. Loans and Receivables - Total gross loans receivable increased to$ 1.25 billion in Q3 2023 from $1.23 billion in Q2 2023[225]. - Gross loans receivable as of September 30, 2023 were$ 1,254.4 million, a slight increase of $6, or 0.0%, compared to December 31, 2022[262]. - The total net charge-offs (NCOs) for Q3 2023 were$ 55.4 million, compared to $57.3 million in Q2 2023[225].