CURO (US:CURO)2021-11-01 20:46Revenue Performance - Total revenue for the three months ended September 30, 2021, increased by $27.3 million, or 15.0%, to $209.3 million compared to the prior-year period[213] - Canada Direct Lending revenue rose by $17.0 million, or 34.7%, while Canada POS Lending revenue increased by $11.4 million[213] - U.S. revenue decreased by $1.2 million, or 0.9%, due to regulatory changes in California and Virginia affecting certain products[213] - Total revenue for the nine months ended September 30, 2021, declined by $51.8 million, or 8.0%, to $593.5 million compared to the prior year, with U.S. revenues decreasing by 21.3% and Canada Direct Lending revenues increasing by 21.6%[219] - Revenue for the three months ended September 30, 2021, was $209.3 million, an increase of $27.3 million or 15.0% compared to the same period in 2020[233] - Net revenue for the nine months ended September 30, 2021, was $441.5 million, reflecting an increase of $15.2 million or 3.6% year-over-year[233] - Canada Direct Lending revenue increased by $33.1 million, or 21.6%, to $186.5 million for the nine months ended September 30, 2021, driven by higher consumer demand[303] Loan Balances and Growth - As of September 30, 2021, U.S. Company Owned loan balances increased from $185.8 million to $189.2 million since March 31, 2021[208] - In Canada, Direct Lending gross loans receivable grew by 8.2%, and POS Lending gross loans receivable increased by 36.5%[209] - Gross combined loans receivable increased by $388.6 million, or 72.3%, to $925.8 million as of September 30, 2021, driven by Canada Direct Lending growth of $98.7 million, or 33.8%[230] - Sequentially, gross combined loans receivable increased by $119.5 million, or 14.8%, as consumer demand increased, with Canada POS Lending growth of $80.9 million, or 36.5%[231] - U.S. gross combined loans receivable declined by $12.5 million, or 5.1%, due to COVID-19 impacts and the runoff of California and Virginia loans, but grew by 14.9% when excluding these portfolios[230] Acquisitions and Investments - The acquisition of Flexiti included cash at closing of $86.5 million and contingent cash consideration of up to $32.8 million based on performance targets[204] - The fair value of the acquired loan portfolio from Flexiti was approximately $196.1 million, with a fair value discount of $12.5 million recognized over the expected life of the portfolio[214] - The merger of Katapult and FinServ closed in June 2021, resulting in cash consideration of $146.9 million and a 19.3% ownership in the newly formed public company[257] - The total consideration paid for the acquisition of Flexiti was $113.4 million, including $86.5 million in cash and $20.6 million in contingent cash consideration[360] - The fair value of net assets acquired from Flexiti was $68.5 million, leading to goodwill of $39.9 million[360] Expenses and Losses - Provision for losses increased by $16.0 million, or 29.2%, for the three months ended September 30, 2021, due to changes in loan balances and higher NCO and past-due rates[235] - Corporate, district, and other expenses increased by $25.1 million, or 68.4%, for the three months ended September 30, 2021, mainly due to Flexiti operating expenses following its acquisition[239] - Interest expense for the three months ended September 30, 2021, increased by $7.4 million, or 40.4%, primarily related to debt acquired with the Flexiti acquisition[240] - Loss on extinguishment of debt for the three months ended September 30, 2021, was $40.2 million due to the early redemption of the 8.25% Senior Secured Notes[242] - Provision for losses decreased by $62.9 million or 36.8% for the nine months ended September 30, 2021, primarily due to improved credit quality[282] Credit Performance - The NCO rate for Canada POS Lending was 0.7% in the third quarter of 2021, indicating improved credit performance[209] - The provision for loan losses increased by $2.7 million, or 24.3%, to $14.0 million in Q3 2021, attributed to higher past-due rates rising from 5.7% to 6.5% year over year[292] - The NCO rate for Canada Direct Lending improved from 3.5% to 3.3% sequentially, while the total NCOs for Canada Direct Lending were $12.3 million in Q3 2021[290] - The NCO rate for U.S. Installment loans Guaranteed by the Company increased by 1,550 bps, or 41.2%, year over year[269] Market and Operational Changes - The company closed 49 U.S. stores, representing nearly 25% of its U.S. locations, which generated only 8% of U.S. store revenue in 2020[200] - The company closed 49 U.S. stores, representing nearly 25% of its U.S. locations, which is expected to reduce annual operating costs by approximately $20 million[277] - Online revenue as a percentage of consolidated revenue was 48.0% for the three months ended September 30, 2021, compared to 48.8% for the same period in 2020, reflecting a shift to online channels due to store closures[224] Financial Position and Liquidity - As of September 30, 2021, total liquidity was $377.1 million, including cash on hand of $205.8 million, providing sufficient liquidity for at least the next 12 months[344] - Net cash provided by operating activities for the nine months ended September 30, 2021, was $220.7 million, driven by net income of $88.2 million and non-cash reconciling items of $90.7 million[349] - Net cash used in investing activities for the nine months ended September 30, 2021, was $283.4 million, primarily due to the acquisition of Flexiti and net loan origination[350] - Net cash provided by financing activities for the nine months ended September 30, 2021, was $66.7 million, including proceeds from the Non-Recourse Flexiti SPE Facility and the issuance of Senior Secured Notes[351] Shareholder Returns - The quarterly dividend was increased to $0.11 per share, representing a 100% increase, and a new share repurchase program for up to $50.0 million was authorized[340]