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Press Release: CURO Group Holdings Corp. -6-

· 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)% Provision for income taxes 3,712 9,819 (6,107) (62.2)% 5,895 38,557 (32,662) (84.7)% Interest expense 18,691 17,686 1,005 5.7% 72,709 69,763 2,946 4.2% Depreciation and amortization 4,186 4,450 (264) (5.9)% 17,498 18,630 (1,132) (6.1)% -------- -------- ---------- --------- --------- ---------- EBITDA 31,063 61,526 (30,463) (49.5)% 170,550 230,848 (60,298) (26.1)% 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 compensation (4) 3,014 2,736 12,910 10,323 Canada GST adjustment (5) -- -- 2,160 -- Other adjustments (9) (12) (64) 627 27 -------- -------- ---------- --------- --------- ---------- Adjusted EBITDA $ 34,332 $ 67,534 ($ 33,202) (49.2)% $ 187,363 $ 261,132 ($ 73,769) (28.2)% -------- -------- ---------- --------- --------- ---------- Adjusted EBITDA Margin 17.0% 22.3% 22.1% 22.9% -------------------- -------- -------- ---------- ---------- --------- --------- ---------- ---------- (1) Legal and other costs for the year ended December 31, 2020 included (i) costs for certain litigation and related matters of $2.4 million, (ii) legal and advisory costs related to the Katapult and Flexiti transactions of $2.7 million, and (iii) severance costs for certain corporate employees of $0.5 million. Legal and other costs for the year ended December 31, 2019 included (i) costs related to certain securities litigation and related matters of $2.5 million, (ii) legal and advisory costs of $0.3 million related to the repurchase of shares from FFL, (iii) $1.8 million due to eliminating 121 positions in North America in the first quarter, and (iv) $0.3 million of legal and advisory costs related to the purchase of Ad Astra. (2) U.K. related costs of $8.8 million for the year ended December 31, 2019 relate to placing the U.K. subsidiaries into administration on February 25, 2019, which included $7.6 million to obtain consent from the holders of the 8.25% Senior Secured Notes to deconsolidate the U.K. segment and $1.2 million for other costs. (3) The income from equity method investment for the year ended December 31, 2020 of $4.5 million includes our share of the estimated U.S. GAAP net income of Katapult. The loss from equity method investment for the year ended December 31, 2019 of $6.3 million includes (i) our share of the estimated U.S. GAAP net loss of Katapult and (ii) a $3.7 million market value adjustment recognized during the second quarter of 2019 as a result of an equity raising round from April through July of 2019 that implied a value per share less than the value per share raised in prior raises. (4) The estimated fair value of share-based awards is recognized as non-cash compensation expense on a straight-line basis over the vesting period. (5) We received a Notice of Adjustment from Canadian tax authority auditors in the second quarter 2020 related to the treatment of certain expenses in prior years for purposes of calculating the Goods and Services Tax ("GST") due. (6) During the year ended December 31, 2020, a Texas court ruling related to the apportionment of income to the state for another company resulted in a change in estimate regarding the realization of a tax benefit previously taken. Accordingly, we recorded a $1.1 million liability for our estimated exposure related to this position. Also in the year ended December 31, 2020, we released a $4.6 million valuation allowance related to Net Operating Losses ("NOLs") for certain entities in Canada. (7) On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was enacted by the U.S. Federal government in response to the COVID-19 pandemic. The CARES Act, among other things, allows NOLs incurred in 2018, 2019 and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. For the year ended December 31, 2020, we recorded an income tax benefit of $11.3 million related to the carryback of NOL from tax years 2018 and 2019. (8) Cumulative tax effect of adjustments included in Reconciliation of Net income from continuing operations to EBITDA and Adjusted EBITDA table is calculated using the estimated incremental tax rate by country. Fourth quarter 2020 cumulative tax effect is impacted by certain non-deductible transaction costs included within Legal and other costs, share-based compensation vesting below share value at grant date, and IRS compensation deductibility limits. (9) Other adjustments primarily include the intercompany foreign-currency exchange impact.(4) 3,014 2,736 12,910 10,323 Intangible asset amortization 705 576 2,951 2,884 Canada GST adjustment (5) -- -- 2,160 -- Income tax valuations (6) -- -- (3,472) -- Impact of tax law changes (7) -- -- (11,251) -- Cumulative tax effect of adjustments (8) 96 (1,426) (4,534) (6,980) ------- -------- -------- --------- Adjusted Net Income $ 8,556 $ 34,793 ($ 26,237) (75.4)% $ 74,328 $ 130,059 ($ 55,731) (42.9)% Net income from continuing operations $ 4,474 $ 29,571 $ 74,448 $ 103,898 Diluted Weighted Average Shares Outstanding 42,579 43,243 42,091 45,974 Diluted Earnings per Share from continuing operations $ 0.11 $ 0.68 ($ 0.57) (83.8)% $ 1.77 $ 2.26 ($ 0.49) (21.7)% Per Share impact of adjustments to Net income from continuing operations 0.09 0.12 -- 0.57 ------- -------- -------- --------- Adjusted Diluted Earnings per Share $ 0.20 $ 0.80 ($ 0.60) (75.0)% $ 1.77 $ 2.83 ($ 1.06) (37.5)% ----------------- ------- -------- ---------- ------ -------- --------- ---------- ------ Note: Footnotes follow Reconciliation of Net income table immediately below

Reconciliation of Net Income from Continuing Operations to EBITDA and Adjusted EBITDA, Non-GAAP Measures

For the Three Months Ended December 31, 2020 and 2019

Revenue and Net Revenue

Revenue decreased 33.2% to $202.1 million for the three months ended December 31, 2020, from $302.3 million for the three months ended December 31, 2019, as a result of the declines in combined gross loan receivables discussed previously. Year over year, U.S. and Canada revenues decreased 39.0% and 10.5% (11.7% on a constant-currency basis), respectively. As previously mentioned, COVID-19 impacts on year over year results for Canada were less pronounced compared to the U.S. due to the faster reopening of Canadian markets and the continued growth of our Open-End loans in Canada.

Provision for losses decreased by $60.5 million, or 46.4%, for the three months ended December 31, 2020 compared to the prior-year period. The decrease in provision for loan losses was due to lower loan balances in 2020, resulting from COVID-19 Impacts, compared to 2019 and significantly improved NCO rates year over year as discussed in more detail in the "Loan Volume and Portfolio Performance Analysis" and "Segment Analysis" sections.

Cost of Providing Services

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