CURO (CURO) - 2020 Q1 - Quarterly Report

Revenue Performance - Total revenue for the three months ended March 31, 2020, grew by $2.9 million, or 1.0%, to $280.8 million compared to the prior-year period[169]. - U.S. revenues declined by 1.9%, while Canadian revenues increased by 13.9% during the same period[169]. - Revenue from Company Owned Unsecured Installment loans was $55,569,000 for Q1 2020, down from $65,542,000 in Q1 2019, representing a decrease of 15.2%[184]. - Net revenue from Guaranteed Unsecured Installment loans was $40,502,000 in Q1 2020, up from $42,814,000 in Q1 2019, a decrease of 5.4%[184]. - Canadian revenue increased by 13.9% primarily due to growth in Open-End loans and the sale of payment protection insurance[201]. - For the three months ended March 31, 2020, revenues in Canada on a constant currency basis were $59,563,000, representing a 14.9% increase from $51,820,000 in the same period of 2019[250]. Loan Performance - Unsecured Installment revenue decreased by 9.8% and Secured Installment revenue decreased by 4.3% due to regulatory changes in California and Ohio[169]. - Open-End loans in Canada grew by $56.2 million, or 30.5%, with related revenue growth of $8.7 million, or 43.0%[169]. - Gross combined loans receivable increased by $5.3 million, or 0.9%, to $620.4 million as of March 31, 2020, driven by growth in Open-End loans[176]. - The past-due balances for Unsecured Installment loans increased from 14.2% in Q4 2019 to 16.9% in Q1 2020, indicating a rise in delinquency rates[182]. - Open-End gross loans receivable as of March 31, 2020, was $314.0 million, compared to $240.8 million in the first quarter of 2019, reflecting significant growth[194]. - The consolidated Open-End net charge-off (NCO) rate improved by 160 basis points year-over-year to 18.0% as of March 31, 2020, due to seasoning of the Canada portfolio[191]. Loss Provisions and Allowances - Provision for losses for Company Owned Unsecured Installment loans was $26,182,000 in Q1 2020, compared to $33,845,000 in Q1 2019, a decrease of 22.7%[184]. - The provision for losses increased to $113.536 million, up from $102.385 million year-over-year, indicating a rise of about 10.5%[263]. - The Single-Pay Allowance for loan losses as a percentage of Single-Pay gross loans receivable increased from 7.2% to 8.6% due to allowance build[197]. - The Allowance for loan losses as a percentage of Secured Installment gross combined loans receivable increased from 11.9% in Q1 2019 to 13.1% in Q1 2020[186]. - The provision for losses increased by $10.1 million, or 58.0%, to $27.5 million, primarily due to a $6.7 million Allowance Build, despite improved loss rates[226]. Operational Changes and Initiatives - The company established an enhanced Customer Care Program to assist customers facing economic challenges due to COVID-19[163]. - The company acquired Ad Astra on January 3, 2020, to bring U.S. servicing and recovery in-house, enhancing operational and financial synergies[166]. - Non-advertising costs of providing services decreased by $6.9 million, or 11.1%, to $55.4 million for the three months ended March 31, 2020[203]. - Advertising costs increased by $4.4 million, or 56.9%, year-over-year due to improved underwriting and evaluation of seasonal opportunities[204]. - Corporate, district and other expenses were $42.8 million for the three months ended March 31, 2020, a decrease of $6.3 million, or 12.8%, compared to the prior-year period[206]. Financial Position and Cash Flow - Total assets increased to $1,066,766 thousand, up from $1,081,895 thousand year-over-year[259]. - Cash and restricted cash combined totaled $180,241 thousand, a decrease from $110,021 thousand[261]. - Total liabilities amounted to $1,007,195 thousand, reflecting a decrease from $1,031,382 thousand[261]. - The company issued $690 million in 8.25% Senior Secured Notes due September 2025 to refinance existing debt and for general corporate purposes[252]. - Net cash provided by continuing operating activities for the three months ended March 31, 2020 was $151.9 million, primarily due to non-cash reconciling items of $137.7 million, including a provision for loan losses of $113.5 million[272]. Income and Earnings - Net income from continuing operations for the three months ended March 31, 2020, was $36.0 million, a 25.6% increase from $28.7 million in the prior year[200]. - Adjusted Net Income decreased by $5.7 million, or 15.0%, to $32.3 million, while Diluted Earnings per Share increased by $0.25, or 41.0%, to $0.86[239]. - EBITDA for the three months ended March 31, 2020, was $59.8 million, a decrease of $1.5 million, or 2.5%, compared to the prior year[241]. - Adjusted EBITDA decreased by $7.1 million, or 9.7%, to $65.8 million, with an Adjusted EBITDA Margin of 23.4%[241]. - The company reported a net income attributable to CURO of $36.305 million, compared to $37.048 million in the prior year, reflecting a slight decrease of about 2%[263]. Regulatory and Market Environment - The company is reviewing the impact of the LIBOR phase-out, expected to be phased out by the end of 2021, but does not anticipate a material impact[292]. - There have been no significant developments in the regulatory environment and compliance since December 31, 2019[288]. - Changes in macroeconomic factors could increase the likelihood of future impairment for the Canada reporting unit[287]. - The company continues to monitor market risks, with no material changes since the last reporting period[291].