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Press Release: CURO Group Holdings Corp. -5-

· 02/04/2021 16:00
Three Months Ended December 31, Year Ended December 31, ---------------- (in thousands, except per share data, unaudited) 2020 2019 Change $ Change % 2020 2019 Change $ Change % ---------------- ------- -------- ---------- ---------- -------- --------- ---------- ---------- Net income from continuing operations $ 4,474 $ 29,571 ($ 25,097) (84.9)% $ 74,448 $ 103,898 ($ 29,450) (28.3)% Adjustments: Legal and other costs (1) 2,160 2,173 5,662 4,795 U.K. related costs (2) -- -- -- 8,844 (Income) loss from equity method investment (3) (1,893) 1,163 (4,546) 6,295 Share-based compensationThree Months Ended December 31, Year Ended December 31, ---------------- (in thousands, unaudited) 2020 2019 Change $ Change % 2020 2019 Change $ Change % ---------------- --------- --------- ----------- ---------- --------- ----------- ----------- ---------- Revenue $ 202,078 $ 302,294 ($ 100,216) (33.2)% $ 847,396 $ 1,141,797 ($ 294,401) (25.8)% Provision for losses 69,832 130,289 (60,457) (46.4)% 288,811 468,551 (179,740) (38.4)% --------- --------- ----------- --------- ----------- ----------- Net revenue 132,246 172,005 (39,759) (23.1)% 558,585 673,246 (114,661) (17.0)% --------- --------- ----------- --------- ----------- ----------- Advertising 12,158 16,408 (4,250) (25.9)% 44,552 53,398 (8,846) (16.6)% Non-advertising costs of providing services 51,497 60,298 (8,801) (14.6)% 205,674 241,232 (35,558) (14.7)% --------- --------- ----------- --------- ----------- ----------- Total cost of providing services 63,655 76,706 (13,051) (17.0)% 250,226 294,630 (44,404) (15.1)% --------- --------- ----------- --------- ----------- ----------- Gross margin 68,591 95,299 (26,708) (28.0)% 308,359 378,616 (70,257) (18.6)% Operating expense Corporate, district and other expenses 43,607 37,060 6,547 17.7% 159,853 160,103 (250) (0.2)% Interest expense 18,691 17,686 1,005 5.7% 72,709 69,763 2,946 4.2% (Income) loss from equity method investment (1,893) 1,163 (3,056) # (4,546) 6,295 (10,841) # --------- --------- ----------- --------- ----------- ----------- Total operating expense 60,405 55,909 4,496 8.0% 228,016 236,161 (8,145) (3.4)% --------- --------- ----------- --------- ----------- ----------- Income from continuing operations before income taxes 8,186 39,390 (31,204) (79.2)% 80,343 142,455 (62,112) (43.6)% Provision for income taxes 3,712 9,819 (6,107) (62.2)% 5,895 38,557 (32,662) (84.7)% --------- --------- ----------- --------- ----------- ----------- Net income from continuing operations 4,474 29,571 (25,097) (84.9)% 74,448 103,898 (29,450) (28.3)% Net income from discontinued operations, net of tax -- 647 (647) # 1,285 7,590 (6,305) (83.1)% --------- --------- ----------- --------- ----------- ----------- Net income $ 4,474 $ 30,218 ($ 25,744) (85.2)% $ 75,733 $ 111,488 ($ 35,755) (32.1)% ----------------- --------- --------- ----------- ------ --------- ----------- ----------- ------ # - Variance greater than 100% or not meaningful2020 2019 (dollars in thousands, Fourth Third Second First Fourth unaudited) Quarter Quarter Quarter Quarter Quarter ----------------------- -------- --------- -------- --------- --------- Single-pay loans: Revenue $ 27,460 $ 25,084 $ 22,732 $ 45,157 $ 49,844 Provision for losses 6,153 4,799 (2,588) 9,639 12,289 -------- --------- -------- --------- --------- Net revenue $ 21,307 $ 20,285 $ 25,320 $ 35,518 $ 37,555 ======== ========= ======== ========= ========= Net charge-offs $ 6,367 $ 4,439 ($ 598) $ 10,517 $ 12,145 Single-Pay gross loan balances: Single-Pay gross loans receivable $ 43,780 $ 41,274 $ 36,130 $ 54,728 $ 81,447 Average Single-Pay gross loans receivable (1) $ 42,527 $ 38,702 $ 45,429 $ 68,088 $ 78,787 Single-Pay Allowance for loan losses $ 3,084 $ 3,197 $ 2,802 $ 4,693 $ 5,869 Single-Pay Allowance for loan losses as a percentage of Single-Pay gross loans receivable 7.0% 7.7% 7.8% 8.6% 7.2% NCO rate (2) 15.0% 11.5% (1.3)% 15.4% 15.4% ----------------------- -------- --------- -------- --------- --------- (1) We calculate Average gross loans receivable, which we utilize to calculate product yield and NCO rates, as average of beginning of quarter and end of quarter gross loans receivable. (2) We calculate NCO rate as NCOs divided by Average gross loans receivables.2020 2019 (dollars in thousands, Fourth Third Second First Fourth unaudited) Quarter Quarter Quarter Quarter Quarter ----------------------- -------- --------- -------- --------- --------- Secured Installment loans: Revenue $ 16,757 $ 16,692 $ 19,401 $ 26,286 $ 28,690 Provision for losses 4,028 3,291 7,238 9,682 11,492 -------- --------- -------- --------- --------- Net revenue $ 12,729 $ 13,401 $ 12,163 $ 16,604 $ 17,198 ======== ========= ======== ========= ========= Net charge-offs $ 4,090 $ 4,033 $ 9,092 $ 10,284 $ 11,548 Secured Installment gross combined loan balances: Secured Installment gross combined loans receivable (1)(2) $ 49,563 $ 49,921 $ 54,635 $ 74,405 $ 90,411 Average Secured Installment gross combined loans receivable (3) $ 49,742 $ 52,278 $ 64,520 $ 82,408 $ 91,445 Secured Installment Allowance for loan losses and CSO liability for losses (4) $ 7,115 $ 7,177 $ 7,919 $ 9,773 $ 10,375 Secured Installment Allowance for loan losses and CSO liability for losses as a percentage of Secured Installment gross combined loans receivable (1) 14.4% 14.4% 14.5% 13.1% 11.5% Secured Installment past-due balances: Secured Installment past-due gross combined loans receivable (1)(2) $ 8,430 $ 7,703 $ 9,072 $ 15,612 $ 17,902 Past-due Secured Installment gross combined loans receivable -- percentage (1) 17.0% 15.4% 16.6% 21.0% 19.8% Secured Installment other information: Originations (2) $ 21,884 $ 19,216 $ 11,242 $ 20,990 $ 40,961 Secured Installment ratios: NCO Rate (5) 8.2% 7.7% 14.1% 12.5% 12.6% ----------------------- -------- --------- -------- --------- --------- (1) Non-GAAP measure. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures." (2) Includes loans originated by third-party lenders through CSO programs, which are not included in the Consolidated Financial Statements. (3) Average gross loans receivable calculated as average of beginning of quarter and end of quarter gross loans receivable. (4) We report Allowance for loan losses as a contra-asset reducing gross loans receivable and the CSO liability for losses as a liability on the Consolidated Balance Sheets. (5) We calculate NCO rate as NCOs divided by Average gross loans receivables.

Single-Pay

Single-Pay revenue declined $22.4 million, or 44.9%, year over year, while related receivables declined $37.7 million, or 46.2%, for the three months ended December 31, 2020, primarily due to COVID-19 Impacts. Single-Pay loan volume was particularly affected by the reduction in store traffic as customers self-quarantined and the increased loan repayments funded by government stimulus programs. Sequentially, Single-Pay revenues increased $2.4 million, or 9.5%, on related loan growth of $2.5 million, or 6.1%, due to normal seasonality and reduced quarantine and stay-at-home orders during the fourth quarter. The Single-Pay Allowance for loan losses as a percentage of Single-Pay gross loans receivable, which was consistent year over year, decreased sequentially from 7.7% to 7.0% as of December 31, 2020, due to sustained favorable NCO trends throughout 2020.

Results of Consolidated Operations

Condensed Consolidated Statements of Operations

Reconciliation of Net Income from Continuing Operations and Diluted Earnings per Share to Adjusted Net Income and Adjusted Diluted Earnings per Share, non-GAAP measures

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