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Press Release: CURO Group Holdings Corp. -2-

· 02/04/2021 16:00
Three Months Ended December 31, Year Ended December 31, 2020 2019 2020 2019 ------------ ------------- ------------ ----------- Online revenues as a percentage of consolidated revenue 50.9% 46.9% 48.5% 45.6% Online transactions as a percentage of consolidated transactions 58.5% 48.1% 54.7% 45.8% -------------- ----- ---- ------ ---- ------ --- ------For the Year Ended December 31, 2020 December 31, 2019 (in thousands, % of % of unaudited) U.S. Canada Total Total U.S. Canada Total Total --------------- --------- --------- --------- --------- --------- --------- ----------- --------- Open-End $ 134,449 $ 115,053 $ 249,502 29.4% $ 147,794 $ 97,462 $ 245,256 21.5% Unsecured Installment 333,991 5,125 339,116 40.0% 523,979 6,751 530,730 46.5% Secured Installment 79,136 -- 79,136 9.3% 110,513 -- 110,513 9.7% Single-Pay 75,930 44,503 120,433 14.2% 112,925 78,524 191,449 16.8% Ancillary 15,018 44,191 59,209 7.0% 18,295 45,554 63,849 5.6% --------- --------- --------- ----- --------- --------- ----------- ----- Total revenue $ 638,524 $ 208,872 $ 847,396 100.0% $ 913,506 $ 228,291 $ 1,141,797 100.0% ---------------- --------- --------- --------- ----- --------- --------- ----------- -----Three Months Ended December 31, 2020 December 31, 2019 (in thousands, % of % of unaudited) U.S. Canada Total Total U.S. Canada Total Total --------------- --------- -------- --------- --------- --------- -------- --------- --------- Open-End $ 31,111 $ 31,962 $ 63,073 31.2% $ 43,278 $ 28,017 $ 71,295 23.6% Unsecured Installment 77,733 1,055 78,788 39.0% 133,953 1,658 135,611 44.9% Secured Installment 16,757 -- 16,757 8.3% 28,690 -- 28,690 9.5% Single-Pay 17,409 10,051 27,460 13.6% 30,192 19,652 49,844 16.5% Ancillary 3,578 12,422 16,000 7.9% 4,159 12,695 16,854 5.6% --------- -------- --------- ----- --------- -------- --------- ----- Total revenue $ 146,588 $ 55,490 $ 202,078 100.0% $ 240,272 $ 62,022 $ 302,294 100.0% ---------------- --------- -------- --------- ----- --------- -------- --------- -----

Throughout this release, we exclude financial results of our former U.K. operations for all periods presented, as they were discontinued for accounting and reporting purposes in February 2019. See "Results of Discontinued Operations" below for additional information.

The COVID-19 pandemic began to have a pervasive impact in March 2020. Year-over-year comparisons for the three months and year ended December 31, 2020 were impacted by factors related to COVID-19, such as lower consumer demand, increased or accelerated repayments and favorable payment trends as customers benefited from government stimulus programs at the start of the pandemic, our decision to tighten credit, favorable credit performance as a result of these factors, and our approach to managing expenses (collectively, "COVID-19 Impacts"). Sequential loan growth, transaction volume and the related financial results of operations for the three months ended December 31, 2020 were impacted positively by normal seasonality and selectively returning credit scoring to pre-COVID-19 levels, together with continued historically low delinquencies and NCO rates.

Consolidated Revenue by Product and Segment

The following table summarizes revenue by product, including credit services organization ("CSO") fees, for the period indicated:

During the three months ended December 31, 2020, total revenue declined $100.2 million, or 33.2%, to $202.1 million, compared to the prior-year period. Geographically, U.S. and Canada revenues declined 39.0% and 10.5%, respectively. COVID-19 Impacts on year-over-year results for Canada were less than the U.S. due to the faster reopening of major markets and the continued popularity and growth of Open-End loans in Canada. Sequentially, total revenue increased $20.1 million, or 11.0%, primarily from sequential growth in Open-End and Unsecured Installment loan balances compared to the third quarter of 2020.

From a product perspective, Open-End revenues increased sequentially $4.4 million, or 7.4%, on related loan growth of $36.7 million, or 11.4%, primarily due to normal seasonality and growth in Open-End loans in Canada. Open-End loan balances in Canada grew $51.2 million, or 20.3%, from December 31, 2019, with related revenue growth of $3.9 million, or 14.1%. Open-End growth in Canada was partially offset by a decrease in U.S. Open-End loans of $27.8 million, or 33.4%, with a related revenue decrease of $12.2 million, or 28.1%. Open-End loan balances in both countries were also affected by COVID-19 Impacts; namely, our decision to initially tighten credit, reduced application volumes and lower utilization of approved credit lines.

For the three months ended December 31, 2020, Unsecured Installment and Secured Installment revenues decreased $56.8 million, or 41.9%, and $11.9 million, or 41.6%, respectively, compared to the prior-year period because of COVID-19 Impacts and regulatory changes in California that were effective January 1, 2020. Excluding California, Unsecured Installment and Secured Installment revenues decreased $41.4 million, or 36.8%, and $6.6 million, or 33.1%, respectively. For the three months ended December 31, 2020, Installment revenues increased sequentially $11.4 million, or 13.6%, on related loan growth of $21.5 million, or 12.4%, primarily driven by growth in the Verge Credit brand

Single-Pay revenue declined $22.4 million, or 44.9%, for the three months ended December 31, 2020, compared to the prior-year period, primarily due to COVID-19 impacts on loan volumes and balances, which declined $37.7 million, or 46.2%, year over year. Single-Pay loan volumes in both the U.S. and Canada were particularly affected by the broad reduction in storefront usage by customers during periods of self-quarantine and stay-at-home orders, periodic store closures for COVID-19 protocols, and increased pay-downs as a result of government stimulus programs. For the three months ended December 31, 2020, Single-Pay revenues increased sequentially $2.4 million, or 9.5%, on related loan growth of $2.5 million, or 6.1%, as a result of normal seasonality and reduced quarantine and stay-at-home restrictions.

Ancillary revenues, which include the sale of insurance products to Open-End and Installment loan customers in Canada, decreased $0.9 million, or 5.1%, versus the prior-year period, stemming primarily from lower check cashing fees. Canada insurance revenue was flat year over year with higher premium revenue offset by higher customer claims. Sequentially, ancillary revenues increased $1.9 million, or 13.4%, for the three months ended December 31, 2020, due to the aforementioned growth in Canada Open-End loans.

The following table summarizes revenue by product, including CSO fees, for the period indicated:

Full-year comparisons also were influenced by COVID-19 Impacts. For the year ended December 31, 2020, total revenue declined $294.4 million, or 25.8%, to $847.4 million, compared to the prior year. Geographically, U.S. and Canada revenues declined 30.1% and 8.5%, respectively. COVID-19 Impacts on year-over-year results for Canada were less than the U.S. due to the faster reopening of major markets and the continued popularity and growth of Open-End loans in Canada.

From a product perspective, Open-End revenues grew $4.2 million, or 1.7%, compared to the prior year, primarily due to $51.2 million, or 20.3%, of Open-End loan growth in Canada, partially offset by a $27.8 million, or 33.4%, loan balance decline in the U.S.

For the year ended December 31, 2020, Unsecured Installment and Secured Installment revenues decreased 36.1% and 28.4%, respectively, because of COVID-19 Impacts, regulatory changes in California that became effective January 1, 2020 and regulatory changes for CSOs in Ohio that were effective May 1, 2019. Excluding California, Unsecured Installment and Secured Installment revenue decreased 32.0% and 18.9%, respectively.

Single-Pay revenue declined $71.0 million, or 37.1%, for the year ended December 31, 2020, compared to the prior year, primarily due to COVID-19 impacts on loan volume and balances, which declined $37.7 million, or 46.2%. Single-Pay loan volumes were particularly affected by the broad reduction in storefront usage in both the U.S. and Canada by customers during periods of self-quarantine and stay-at-home orders, periodic closures of our stores for cleaning purposes, and increased pay-downs as a result of government stimulus programs.

Ancillary revenues, which include the sale of insurance products to Open-End and Installment loan customers in Canada, decreased $4.6 million, or 7.3%, versus the prior year, primarily stemming from lower check cashing fees.

The following table presents online revenue and online transaction compositions, including CSO fees, of the products and services that we currently offer:

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