CURO (US:CURO)2023-11-05 04:39Financial Data and Key Metrics Changes - The overall loan portfolio grew by 2% sequentially and 8% on an annualized basis, driven by a 5% increase in the U.S. loan book and a 2% increase in Canada on a constant currency basis [8] - Revenue for Q3 2023 was $168 million, slightly up from the prior quarter, while net revenue post provision expense was $119 million compared to $103 million in the prior quarter [10] - The net loss from continuing operations for the quarter was $34 million or $0.81 per diluted share [12] - Interest expense increased to $56 million from $51 million in the prior quarter due to higher debt levels and rates [11] - Pre-provision income increased by $3 million from the prior quarter to $16 million [11] Business Line Data and Key Metrics Changes - The U.S. operations completed a major milestone by converting the entire branch network to a single loan management system, enhancing efficiency and servicing [9] - Net charge-offs improved to $55 million, a $2 million improvement sequentially, with a reported net charge-off rate of 17.7% compared to 18.8% in the prior quarter [11] Market Data and Key Metrics Changes - The company expects receivables to be in the range of $1.26 billion to $1.28 billion for Q4 2023, with revenue projected between $165 million to $175 million [18] - The company anticipates net charge-offs to be between 16.5% to 18.5% for Q4 2023 [18] Company Strategy and Development Direction - The company has closed the sale of its Flexiti point-of-sale business, allowing it to focus exclusively on direct lending in the U.S. and Canada [7] - The management emphasized responsible growth of the loan portfolio and improving overall credit profiles in both geographies [8] - The company plans to modify several U.S. lending facilities in Q4 2023 to create additional capacity for growth [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stabilization of delinquency rates and improvement in net charge-offs, indicating a positive trend in credit performance [24] - The company expects to grow receivables by 8% to 12% in 2024, with a net interest margin post charge-offs projected to be in the range of 26% to 28% [29] - Management noted that the current macro environment remains stable, which is crucial for the company's outlook [44] Other Important Information - The company raised capital in May and closed the sale of Flexiti, strengthening its liquidity position [17] - The anticipated tax refund of approximately $38 million is expected in the second half of 2024 [28] Q&A Session Summary Question: Inquiry about overall credit management and differences between U.S. and Canada - Management indicated that improvements in credit are due to a combination of execution in the new loan management system and a stable macro backdrop, with noticeable improvements in U.S. vintage curves post-tightening [34][36] Question: Modifications to ABS structures - Management discussed creating capacity for growth in secured loan programs and transitioning to a U.S. direct lending facility that separates secured and unsecured loans [38][39] Question: Corporate taxes and liquidity position - Management confirmed that while the company is in a loss position for U.S. tax purposes, it is profitable in Canada, expecting cash outflow for Canadian taxes [42]