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Press Release: CURO Group Holdings Corp. Announces Fourth Quarter and Full Year 2020 Financial Results

· 02/04/2021 16:00
-- Revenue decrease of $294.4 million, or 25.8%, compared to the prior year, due to the aforementioned decrease in loan balances. California Installment revenues, which were impacted by January 1, 2020 regulatory changes, were $67.6 million for the year ended December 31, 2020, compared to $139.5 million for the year ended December 31, 2019. -- Net Revenue decline of $114.7 million, or 17.0%, and gross margin decline of $70.3 million, or 18.6%, year-over-year as the revenue decline was partially offset by lower provision expense. -- Diluted Earnings per Share from continuing operations of $1.77 compared to $2.26 in the prior year. Adjusted Diluted Earnings per Share of $1.77 compared to $2.83 for 2019. -- Ended the fourth quarter of 2020 with $213.3 million in cash and $310.5 million of liquidity (including undrawn capacity on revolving credit facilities, which is subject to continued collateral performance for the asset backed facilities and covenant compliance) compared to $75.2 million in cash and $187.8 million of liquidity at the end of 2019. -- On April 8, 2020, we announced the closing of a new Asset-Backed Revolving Credit Facility to provide financing for U.S. Unsecured Installment and Open-End loans. On July 31, 2020, we closed on additional commitments bringing the total borrowing capacity on the Non-Recourse U.S. SPV Facility up to $200.0 million, dependent upon the borrowing base of eligible collateral. -- Completion of our acquisition of Ad Astra Recovery Services, Inc. ("Ad Astra"), which had been our exclusive provider of third-party collection services for the U.S. business, on January 3, 2020. -- Implemented our COVID-19 Customer Care Program, which enables our team members to provide relief to customers affected by COVID-19 in various ways, ranging from due date extensions, interest or fee forgiveness, payment waivers or extended payment plans, depending on a customer's individual circumstances. As of January 31, 2021, we have granted concessions on more than 84,000 loans, or 16% of our active loans, and waived over $6.0 million in payments and fees. We also temporarily suspended certain returned item fees. -- Instituted a cash dividend policy in the first quarter of 2020, with dividend payments made to stockholders in February, May, August and November 2020.-- Sequential increase (described within this release as the change from the third quarter to the fourth quarter) in Company Owned gross loans receivable and Gross combined loans receivable of $56.3 million, or 11.3%, and $60.6 million, or 11.3%, respectively, compared to $8.2 million, or 1.2%, and $11.8 million, or 1.6%, of sequential growth for the quarter ended December 31, 2019. -- Consolidated Company Owned net charge-off ("NCO") rate decline of 48.3%, or 760 basis points ("bps"), compared to the fourth quarter of 2019. -- Year-over-year reduction in loan balances from COVID-19 effects on customer demand and regulatory changes that became effective January 1, 2020 for Unsecured and Secured Installment loans in California. Company Owned gross loans receivable declined 7.4% in 2020 excluding affected loan portfolios in California. -- Revenue decrease of $100.2 million, or 33.2%, versus the prior-year period, due to the decrease in loan balances, as well as a mix shift toward Canada, where products average less revenue than the U.S. -- Net Revenue decrease of $39.8 million, or 23.1%, year over year, as the impact of lower NCO rates partially mitigated the negative effect of lower loan balances. -- Definitive merger agreement between Katapult Holdings, Inc. ("Katapult") and Finserv Acquisition Corp., ("FinServ"). On our total minority investment of $27.5 million, the merger is expected to provide us a combination of cash and stock consideration between $520 million and $540 million, based on current market prices and subject to FinServ shareholder redemptions. We expect our ownership stake in the resulting publicly traded entity to be no less than 21% of its fully diluted shares. -- Continued growth of our technology, marketing and servicing relationship for Verge Credit loans, issued and funded by a bank. -- Entered into an agreement to acquire Flexiti Financial Inc. ("Flexiti"), an emerging growth Canadian Point-of-Sale / Buy Now Pay Later ("POS/BNPL") provider. Under the terms of the agreement, CURO will acquire Flexiti for cash at closing of $85 million and contingent consideration of up to $36 million based on the achievement of risk-adjusted revenue and origination targets over the next two years. -- Diluted Earnings per Share from continuing operations decreased to $0.11 from $0.68. Adjusted Diluted Earnings per Share decreased to $0.20 compared to $0.80 for the fourth quarter of 2019. -- Our Board of Directors declared a $0.055 per share dividend payable on March 2, 2021 to stockholders of record as of February 16, 2021.Three Months Ended December 31,(1) For the Year Ended December 31,(1) (in thousands, except per share data) 2020 2019 Variance 2020 2019 Variance --------------- --------- --------- ---------- --------- ----------- ---------- Revenue $ 202,078 $ 302,294 (33.2)% $ 847,396 $ 1,141,797 (25.8)% Gross margin 68,591 95,299 (28.0)% 308,359 378,616 (18.6)% Company Owned gross loans receivable 553,722 665,828 (16.8)% 553,722 665,828 (16.8)% Unrestricted Cash 213,343 75,242 183.5% 213,343 75,242 183.5% Net income 4,474 30,218 (85.2)% 75,733 111,488 (32.1)% Adjusted Net Income (2) 8,556 34,793 (75.4)% 74,328 130,059 (42.9)% Diluted Earnings per Share from continuing operations $ 0.11 $ 0.68 (83.8)% $ 1.77 $ 2.26 (21.7)% Adjusted Diluted Earnings per Share (2) $ 0.20 $ 0.80 (75.0)% $ 1.77 $ 2.83 (37.5)% EBITDA (2) 31,063 61,526 (49.5)% 170,550 230,848 (26.1)% Adjusted EBITDA (2) 34,332 67,534 (49.2)% 187,363 261,132 (28.2)% Weighted Average Shares -- diluted 42,579 43,243 42,091 45,974 ---------------- --------- --------- ---------- --------- ----------- ---------- (1) Excludes discontinued operations; see "Results of Discontinued Operations" for additional details. (2) These are non-GAAP metrics. For a reconciliation of each non-GAAP metric to the nearest GAAP metric, see the applicable reconciliations contained under "Results of Operations." For a description of each non-GAAP metric, see "Non-GAAP Financial Measures."WICHITA, Kan.--(BUSINESS WIRE)--February 04, 2021--

CURO Group Holdings Corp. Announces Fourth Quarter and Full Year 2020 Financial Results

CURO Group Holdings Corp. (NYSE: CURO) ("CURO" or the "Company"), a market leader in providing credit to non-prime consumers, today announced financial results for its fourth quarter ended December 31, 2020.

"After being tested on many levels in 2020, we ended the year encouraged by our employees' resiliency and cautiously optimistic about our opportunities for 2021 and beyond," said Don Gayhardt, President and Chief Executive Officer. "In the fourth quarter of 2020, we delivered quarterly sequential loan balance growth of 11.3% compared to 1.6% quarterly sequential growth in the fourth quarter of 2019. While overall loan balances finished the year 19.5% below prior year levels (11.7% excluding regulatory-impacted California installment loans), loan balances in Canada increased 9.2% on the year. Despite COVID-19 impacts that lowered loan demand and balances after the first quarter, historically good credit performance and strict expense management allowed us to post solid quarterly earnings for all of 2020 while significantly increasing cash and liquidity levels."

"As we announced in December, we also unlocked significant shareholder value from our $27.5 million investment in Katapult, a leading e-commerce FinTech platform focused on non-prime consumers. On December 18, 2020, Katapult announced its merger with FinServ Acquisition Corp. (Nasdaq: FSRV), a special purpose acquisition company, as the first step towards becoming a separate, publicly traded company, expected in a few months. Under the terms of Katapult's merger with FinServ, at that time we expect to receive up to $130 million in cash and retain at least 21% ownership of the new public company. This transaction will increase our balance sheet flexibility while maintaining a meaningful equity stake and board representation in Katapult. Based on the market value of FSRV shares as of February 3(rd) , the total value of CURO's stake is over $500 million, including earn-out shares, before taxes."

"Then, as we announced earlier this week, we agreed to acquire Flexiti Financial, one of Canada's fastest-growing POS/BNPL providers with a market-leading omni-channel FinTech platform. This acquisition enhances our value creation opportunities in Canada by allowing us to serve customers across all channels in which they access credit and with an expanded product set. It also increases CURO's long-term growth profile and provides further product and geographical diversification."

Consolidated Summary Results - Unaudited

Fourth quarter 2020 and recent developments include:

Full-year 2020 developments include:

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February 04, 2021 16:00 ET (21:00 GMT)