Curo — Q4 2023 Earnings Presentation
21 slides from Curo's earnings presentation, Feb 12, 2024
Slide 1: Q4 2023 Earnings Presentation
Q4 2023 Earnings Presentation February 12, 2024
Slide 2: Important Information and Forward-Looking Statements
IMPORTANT: You must read the following information before continuing to the rest of the presentation, which is being provided to you for informational purposes only. Note: Prior period financial information is presented on a continuing operations basis, which excludes the results and positions of th
Slide 3: 4Q23 Highlights
4Q23 Highlights FoundationExecute with ExcellenceGrow Responsibly 3 • Gross Loan Receivables grew 3.3% sequentially ◦ 3.1% growth in the U.S. ◦ 3.6% growth in Canada (1.2% on a constant currency basis) • Operating expenses declined sequentially and year-over- year • Improvement in NCOs sequentially
Slide 4: Solid loan growth across our portfolio
Solid loan growth across our portfolio 4 ($ Millions, as of period end)
Slide 5: Credit quality continues to improve
Credit quality continues to improve Highlights: • Net charge-offs improved sequentially and year-over-year primarily driven by credit tightening, servicing optimization and continued strategic mix shift to larger dollar, longer duration loans ($ Millions) NCOs by Geography 5 1 1Q23 NCOs excluding po
Slide 6: Delinquencies remain stable
Delinquencies remain stable Highlights: • U.S. delinquency rates declined year-over-year • Canadian delinquency rates decreased sequentially driven by improvement in early stage delinquency. Year-over-year comparison not meaningful due to change in policy ($ Millions) 31+ DQs by Geography 6 1 Implem
Slide 7: Summary 4Q23 Results
% Change Y/YQ/Q4Q223Q234Q23($Millions, except per share data) (8)%– %$182$168$168Revenue 40 %– %202828Recourse (Unsecured) Interest Expense1 43 %7 %212830Non-recourse (Secured) Interest Expense (22)%(2) %$141$112$110Net Interest Income (19) %(3) %1129491Operating Expenses (97)%#11013Other Expense #(
Slide 8: Increased allowance due to portfolio loan growth
8 Increased allowance due to portfolio loan growth Highlights: • Allowance rate remains stable • Allowance for credit losses increased $6M primarily driven by portfolio growth during the quarter ($ Millions) 1 CECL was adopted effective January 1, 2023, which resulted in a one-time increase in the a
Slide 9: Net Interest Margin decreased primarily due to product mix shift
9 Net Interest Margin decreased primarily due to product mix shift ($ Millions) Highlights: • Net interest margin, Post charge-offs, excluding Recourse Interest Expense decreased sequentially due to: ◦ Decrease in yields reflects continuing product mix shift to larger balance, longer duration loans,
Slide 10: Continued improvement on expense management
Continued improvement on expense management Highlights: • Operating expenses decreased $3M sequentially and $21M year-over-year • Non-recurring operating expenses were $14.2M for 4Q22, $10.3M for 1Q23, $6.5M for 3Q23 and $7.6M for 4Q23 ($ Millions) 10 1 OpEx Ratio = (Operating Expenses) / (Average R
Slide 11: Liquidity and Capacity
Liquidity and Capacity 1 Represents facility commitments to support growth, less funded amounts 1 11 ($ Millions) Highlights: • Tax refund received during 1Q24. Originally anticipated in 4Q23 • Step up in facility advance rate expected as part of 2024 refinancing
Slide 12: Long-Term Path to Profitability
12 Long-term Target RangeInflection point14Q23 AnnualizedPerformance KPIs 28-31%28-30%27%NIM, post charge-offs (excl. recourse interest)2 20-22%20-24%29%OpEx Ratio 6-11%4-10%(2)%Pre-tax ROA3 5.0x-6.0xn/an/aNet Leverage ~$1.5B$1.28BAverage Receivables ~$100M$(29)MPro-forma Pre-tax Income4 Long-Term P
Slide 13: Outlook
Outlook Foundation Execute with ExcellenceGrow Responsibly 13 $25-$90M quarterly unrestricted cash balance Updated Full Year 20241 7-9% EOP receivables growth NIM, post charge-offs, excl. recourse interest2: 26-28% Operating Expenses: $325-$340M 1 Based on management's expectations for business perf
Slide 14: Appendix
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Slide 15: Reconciliation of Non-GAAP Metrics: OpEx Ratio, excluding non-recurring items
15 Reconciliation of Non-GAAP Metrics: OpEx Ratio, excluding non-recurring items 4Q233Q232Q231Q234Q22($Millions) $91.2$94.2$91.3$103.2$111.6Operating Expenses $(7.6)$(6.5)$0.0$(10.3)$(14.2)Non-recurring expenses $83.6$87.7$91.3$92.9$97.4Operating expenses, excluding non-recurring expenses $1,275$1,2
Slide 16: Direct Lending Revenue and Receivables by Geography
16 Direct Lending Revenue and Receivables by Geography 4Q23 TotalCanadaU.S.($Millions) $168$79$89Revenue $53$24$29Less: Net Charge-offs $5$0$5Less: Allowance Build / (Release) $110$55$56Net Revenue $1,296$521$775Gross Loans Receivable
Slide 17: Reconciliation of Non-GAAP Metrics: Net Leverage and Interest Coverage Ratio
17 Reconciliation of Non-GAAP Metrics: Net Leverage and Interest Coverage Ratio 1 Non-recurring costs include items such as restructuring and other one-time items not associated with our continuing operations 4Q233Q232Q231Q234Q22(USD, $Millions) $(42)$(33)$(51)$(32)$(158)Income (loss) from continuin
Slide 18: Debt Summary
18 Debt Summary Outstandin g as of 12/31/23 Borrowing Capacity Effective Interest Rate Final Maturity Date1 Fixed / Variable ($Millions, rounded) Corporate Debt: $178n/a18.0%Aug-27Fixed1.0L Term Loan $682n/a7.5%Aug-28Fixed1.5L Senior Notes $318n/a7.5%Aug-28Fixed2.0L Senior Notes Funding Debt: $300$3
Slide 19: Projected Cash, Debt and Revenue 2024-2028
1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25 4Q25 2024E 2025E 2026E 2027E 2028E Cash & Cash Equivalents $53.5 $78.3 $87.9 $89.9 $70.2 $79.4 $67.4 $86.3 $89.9 $86.3 $93.9 $114.9 $144.1 Restricted Cash 61.3 66.2 65.0 71.7 68.3 73.2 74.1 74.9 71.7 74.9 76.5 83.2 88.3 Total Cash, Consolidated $114.8 $144.5 $152.9
Slide 20: Projected Cash, Debt and Revenue (alternative case)
1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25 4Q25 2024E 2025E Cash & Cash Equivalents $44.4 $29.3 $34.4 $45.6 $31.4 $58.7 $39.9 $57.2 $45.6 $57.2 Restricted Cash 60.4 62.8 64.1 66.6 65.0 66.0 68.6 74.3 66.6 74.3 Total Cash, Consolidated $104.8 $92.1 $98.6 $112.2 $96.5 $124.7 $108.5 $131.6 $112.2 $131.6 Total
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