Curo — Q3 2023 Earnings Presentation
20 slides from Curo's earnings presentation, Nov 2, 2023
Slide 1: Q3 2023 Earnings Presentation
Q3 2023 Earnings Presentation November 2, 2023
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: Current and prior period financial information is presented on a continuing operations basis, which excludes the results and pos
Slide 3: 3Q23 Highlights
3Q23 Highlights Strengthen our Foundation Execute with ExcellenceGrow Responsibly 3 • Receivables growth of 2% sequentially ◦ 5% growth in the U.S. ◦ 2% growth in Canada on a constant currency basis • Converted U.S. operations to a single loan management system • Recurring operating expenses decline
Slide 4: Direct Lending Gross Loans Receivable
Direct Lending Gross Loans Receivable $1,204 $1,254 $1,210 $1,228 $1,254 739 773 715 719 752 465 481 495 509 503 U.S. Canada 3Q22 4Q22 1Q23 2Q23 3Q23 Continued responsible receivables growth 4 ($ Millions) Note: In 3Q23, Loans receivable in Canada grew 2% vs prior quarter on a constant currency basi
Slide 5: Total Direct Lending NCOs
Total Direct Lending NCOs $55 $65 $65 $57 $55 18.4% 20.9% 21.5% 18.8% 17.7% 3Q22 4Q22 1Q23 2Q23 3Q23 Canada $28 $30 $28 $27 $27 23.6% 25.6% 24.1% 21.5% 21.3% 3Q22 4Q22 1Q23 2Q23 3Q23 U.S. $28 $35 $38 $30 $28 15.6% 18.4% 20.2% 16.9% 15.2% 3Q22 4Q22 1Q23 2Q23 3Q23 Credit quality improves year-over-yea
Slide 6: Core delinquencies remain stable
Canada $22 $19 $40 $42 $44 4.8% 4.0% 8.1% 8.3% 8.8% 3Q22 4Q22 1Q23 2Q23 3Q23 U.S. $78 $77 $60 $59 $63 10.5% 9.9% 8.4% 8.2% 8.3% 3Q22 4Q22 1Q23 2Q23 3Q23 Core delinquencies remain stable Highlights: • U.S. delinquency rates remained stable • Canadian increase primarily driven by installment and singl
Slide 7: Quarterly Financial Results
% Change ($Millions, except per share data) 3Q23 2Q23 3Q22 Q/Q Y/Y Revenue $168 $167 $186 1 % (10) % Recourse (Unsecured) Interest Expense1 28 25 20 12 % 40 % Non-recourse (Secured) Interest Expense 28 26 18 8 % 56 % Net Interest Income $112 $117 $148 (4) % (24) % Operating Expenses 94 91 103 3 % (9
Slide 8: Decline in allowance rate driven by improving late-stage roll rates
8 Decline in allowance rate driven improving late-stage roll rates Highlights: • Allowance for credit losses decreased primarily due to improving late-stage roll rates and estimated future macroeconomic impacts on credit losses, partially offset by portfolio growth during the quarter $70 $81 $203 $2
Slide 9: Net Interest Margin decreased slightly
9 Net Interest Margin decreased slightly due to increased debt levels and higher rates $113 $96 $80 $84 $85 38.2% 30.9% 26.5% 27.6% 27.1% Net Interest Income, Post charge-offs, excluding Recourse Interest Expense Net Interest Margin, Post Charge-offs, excluding Recourse Interest Expense 3Q22 4Q22 1Q
Slide 10: Continued focus on expense management
Continued focus on expense management Highlights: • Operating expenses decreased vs prior quarter, when excluding $6.5M of non-recurring charges included in 3Q23 reported results • Includes $13M and $10M of non-recurring charges during 4Q22 and 1Q23, respectively ($ Millions) 10 Operating Expenses $
Slide 11: Net Leverage & Interest Coverage; Liquidity and Capacity
Net Leverage & Interest Coverage 9.2x 16.1x 13.5x 19.5x 15.7x 1.3x 0.7x 0.8x 0.5x 0.6x Net Leverage Interest Coverage Ratio 3Q22 4Q22 1Q23 2Q23 3Q23 Liquidity and Capacity 1 See Appendix for definition of Net Leverage and Interest Coverage, which are Non-GAAP financial measures 2 Represents facility
Slide 12: Outlook
Outlook Strengthen our Foundation Execute with ExcellenceGrow Responsibly Cost of funds: ~$60M $90-$140M of unrestricted cash 4Q23 Targets: EOP Receivables: $1.26-$1.28B Revenue: $165-$175M Net Charge-off %: 16.5-18.5% Operating Expenses: $85-$95M 12 $90-$140M quarterly unrestricted cash balance Ful
Slide 13: Performance KPIs and Long-Term Path to Profitability
13 Performance KPIs 3Q23 Annualized Inflection point1 Long-term Target Range NIM, post charge-offs (excl. recourse interest)1 27% 28-30% 28-31% OpEx Ratio 30% 20-24% 20-22% Pre-tax ROA3 (3)% 4-10% 6-11% Net Leverage n/a n/a 5.0x-6.0x Average Receivables $1.25B ~$1.5B Pro-forma Pre-tax Income (excl.
Slide 14: Appendix
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Slide 15: Reconciliation of Non-GAAP Metrics: Credit Changes
15 Reconciliation of Non-GAAP Metrics: Credit Changes Net Charge-offs and Credit Changes ($Millions) 3Q22 4Q22 1Q23 2Q23 3Q23 Provision for Losses $65 $78 $48 $64 $49 Net Charge-offs $(55) $(65) $(47) $(57) $(55) Credit Changes $10 $13 $1 $7 $(6)
Slide 16: Reconciliation of Non-GAAP Metrics: OpEx Ratio
16 Reconciliation of Non-GAAP Metrics: OpEx Ratio, excluding non-recurring items ($Millions) 3Q23 Operating Expenses $94.2 Non-recurring expenses $(6.5) Operating expenses, excluding non-recurring expenses $87.7 Average Gross Receivables $1,241 OpEx Ratio, excluding non-recurring expenses; annualize
Slide 17: Direct Lending Revenue and Receivables by Geography
17 Direct Lending Revenue and Receivables by Geography Note: The above table may not sum due to rounding 3Q23 Direct Lending by Geography ($Millions) U.S. Canada Total Revenue $88 $80 $168 Less: Net Charge-offs 28 27 55 Less: Credit Changes (4) (2) (6) Net Revenue $64 $55 $119 Gross Loans Receivable
Slide 18: Reconciliation of Non-GAAP Metrics: Net Leverage and Interest Coverage
18 Reconciliation of Non-GAAP Metrics: Net Leverage and Interest Coverage Ratio 1 Includes changes in allowance for loan losses 2 Goodwill impairment charge recorded on the U.S Direct Lending reporting unit during Q422 3 Estimated fair value of share-based awards was recognized as non-cash compensat
Slide 19: Debt Summary
19 Debt Summary ($Millions, rounded) Fixed / Variable Final Maturity Date2 Effective Interest Rate Borrowing Capacity Outstanding as of 09/30/23 Corporate Debt: 1.0L Term Loan Fixed Aug-27 18.0% n/a $173 1.5L Senior Notes Fixed Aug-28 7.5% n/a $682 2.0L Senior Notes Fixed Aug-28 7.5% n/a $318 Fundin
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