CURO (US:CURO)2020-03-09 21:20Revenue Generation - Approximately 80.0% of consolidated revenues were generated from services provided within the U.S. for the year ended December 31, 2019[34]. - Revenue generated through the online channel represented 46% of consolidated revenue for the year ended December 31, 2019, totaling $521.0 million[36][44]. - Installment and Open-End loans accounted for 77.6% of consolidated revenue for the year ended December 31, 2019, up from 19% in 2010[57]. - The company’s Installment and Open-End loans grew from $50.0 million in Q3 2017 to $266.6 million in Q4 2019 in Canada[43]. - In California, the company’s installment loans generated 12.2% of total consolidated revenue for the year ended December 31, 2019, with gross loans receivable amounting to $71.4 million and $36.5 million for unsecured and secured loans, respectively[136]. - Revenues generated in Ontario represented approximately 67.8% of Canadian revenues and 13.6% of total consolidated revenues for the year ended December 31, 2019[156]. - Revenues in Alberta were approximately 16.4% of Canadian revenues and 3.3% of total consolidated revenues for the year ended December 31, 2019[161]. - As of December 31, 2019, revenues in British Columbia accounted for approximately 8.7% of total Canadian revenues and 1.7% of total consolidated revenues[153]. Loan Details - The average loan size for Unsecured Installment loans was $607, while for Secured Installment loans it was $1,326 as of December 31, 2019[37]. - The average loan amount for Unsecured and Secured Installment loans for the year ended December 31, 2019, was $607 and $1,326, respectively[67]. - The average tenure for U.S. store managers was approximately nine years as of December 31, 2019, indicating strong management stability[51]. Company Operations - The company operated 416 stores across 14 U.S. states and seven provinces in Canada as of December 31, 2019[35]. - The company operated 202 stores in Canada as of December 31, 2019, with 133 located in Ontario[156]. - The company employs approximately 4,000 employees, with about 3,000 working in stores[83]. Financial Performance - The compound annual growth rate for revenue, Adjusted EBITDA, and Adjusted Net Income from 2010 to 2019 was 21.1%, 20.5%, and 21.6%, respectively[54]. - The company has raised nearly $2.2 billion of debt financing since 2010, including $690.0 million of 8.25% Senior Secured Notes due 2025[53]. Marketing and Customer Acquisition - The company employs a multi-channel marketing approach, including sponsorships of major events like NASCAR, to enhance brand awareness and customer acquisition[70]. - The company aims to enhance its proprietary risk scoring models to improve performance metrics and drive margin expansion and earnings growth[64]. - The company has increased credit limits for customers through proprietary underwriting, resulting in improved loan-vintage and portfolio performance[67]. Regulatory Environment - The 2017 Final CFPB Rule's Mandatory Underwriting Provisions require lenders to determine consumers' ability to repay loans, impacting covered short-term loans (45 days or less) and longer-term balloon-payment loans[94]. - The 2019 Proposed CFPB Rule aims to rescind the Mandatory Underwriting Provisions, which the CFPB believes restricts access to credit and competition in certain states[100]. - The 2017 Final CFPB Rule includes a "full payment test" and a "principal-payoff option" for lenders, affecting how loans can be issued without an ability-to-repay analysis[98][99]. - The CFPB's enforcement powers allow for monetary penalties ranging from approximately $5,100 to $1.2 million per day for violations, which could materially affect the company[107]. - The CFPB's proposed debt collection rule may impose new restrictions on communication and collection practices, potentially requiring significant changes for the company's recently acquired Ad Astra subsidiary[106]. - The 2017 Final CFPB Rule mandates registration of consumer reporting agencies, which could impact the company's ability to issue certain loans if not complied with[105]. - The Military Lending Act imposes a 36% cap on annual percentage rates for loans to active-duty military members, affecting the company's loan offerings since 2016[115]. - The company is making enhancements to compliance procedures and consumer disclosures to meet CFPB expectations, which may increase costs and reduce revenues[111]. - The company must comply with the Fair Credit Reporting Act (FCRA), which regulates the use of consumer reports and requires notices for adverse actions based on third-party information[118]. - The company is subject to the California Consumer Privacy Act (CCPA), which imposes expanded obligations regarding consumer personal information and provides civil penalties for violations[140]. - The company has faced regulatory changes, such as Ohio's House Bill 123, which significantly limited fees and terms on short-term loans, impacting its operations in that state[134]. - The company is required to establish an anti-money-laundering program under the USA PATRIOT Act, including internal policies and reporting suspicious transactions over $2,000[126]. - The company is subject to various state and local regulations that can change and may materially affect its operations[147]. Interest Rate and Currency Sensitivity - A 1% increase in the average market interest rate would lead to an annual interest expense increase of $1.2 million[543]. - The weighted average interest rate on the $112.2 million of variable debt for the Non-Recourse Canada SPV Facility was approximately 8.9% for the year ended December 31, 2019[545]. - A 10% decline in average foreign exchange rates against the U.S. dollar would decrease revenue by $22.9 million and net income by $4.4 million from Canadian operations[546]. - The company entered into a 4-year C$175.0 million interest rate cap agreement to mitigate exposure to interest rate fluctuations[543]. - The company does not believe there is material interest rate sensitivity associated with its customer loan portfolio due to their short duration[544]. - Derivative instruments are recorded at fair value on the balance sheet, impacting other comprehensive income but not net earnings if perfectly effective[548]. - The company may purchase derivatives to hedge against foreign exchange rate risks, focusing on existing short-term exposures and anticipated cash flows[547]. Collection Strategies - The company acquired Ad Astra, a third-party collection agency, to enhance its collections strategy after 91 days of delinquency[78].