Delaware | 90-0934597 | |||||||
(State or other jurisdiction
Of incorporation or organization) |
(I.R.S. Employer Identification No.) | |||||||
3615 North Ridge Road, Wichita, KS
|
67205 | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common stock, $0.001 par value per share | CURO | New York Stock Exchange |
Large accelerated filer | ☐ | Accelerated filer | ☒ | |||||||||||
Non-accelerated filer | ☐ | |||||||||||||
Smaller reporting company | ☒ | Emerging growth company | ☐ |
Page | |||||||||||||||||||||||
Item 1.
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Financial Statements (unaudited)
|
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June 30, 2021 and December 31, 2020 | |||||||||||||||||||||||
Three and six months ended June 30, 2021 and 2020
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Three and six months ended June 30, 2021 and 2020 | |||||||||||||||||||||||
Three and six months ended June 30, 2021 and 2020 | |||||||||||||||||||||||
Item 2. | |||||||||||||||||||||||
Item 3. | |||||||||||||||||||||||
Item 4. | |||||||||||||||||||||||
Item 1. | |||||||||||||||||||||||
Item 1A. | |||||||||||||||||||||||
Item 2. | |||||||||||||||||||||||
Item 3. | |||||||||||||||||||||||
Item 4. | |||||||||||||||||||||||
Item 5. | |||||||||||||||||||||||
Item 6. | |||||||||||||||||||||||
Term or abbreviation | Definition | |||||||
12.00% Senior Secured Notes | 12.00% Senior Secured Notes, issued in February and November 2017 for a total of $470.0 million due March 1, 2022, fully extinguished September 2018 | |||||||
2017 Final CFPB Rule | The final rule issued by the CFPB in 2017 regarding Payday, Vehicle Title and Certain high Cost Installment loans | |||||||
2019 Proposed Rule | The subsequent CFPB rulemaking process which proposed to rescind the mandatory underwriting provisions of the 2017 Final CFPB Rule | |||||||
2020 Form 10-K | Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 5, 2021 | |||||||
7.50% Senior Secured Notes | 7.50% Senior Secured Notes, which we expect to close on July 30, 2021, for $750.0 million, which mature on August 2028 | |||||||
8.25% Senior Secured Notes | 8.25% Senior Secured Notes, issued in August 2018 for $690.0 million, which mature on September 1, 2025 | |||||||
Ad Astra | Ad Astra Recovery Services, Inc., which, prior to acquisition in January 2020, was our exclusive provider of third-party collection services for the U.S. business | |||||||
Adjusted EBITDA | EBITDA plus or minus certain non-cash and other adjusting items; Refer to "Supplemental Non-GAAP Financial Information" for additional details | |||||||
ALL | Allowance for loan losses | |||||||
Allowance coverage | Allowance for loan losses as a percentage of gross loans receivable | |||||||
AOCI | Accumulated Other Comprehensive Income (Loss) | |||||||
ASC | Accounting Standards Codification | |||||||
ASU | Accounting Standards Update | |||||||
Average gross loans receivable | Utilized to calculate product yield and NCO rates; calculated as average of beginning of quarter and end of quarter gross loans receivable | |||||||
BNPL | Buy-Now-Pay-Later | |||||||
bps | Basis points | |||||||
C$ | Canadian dollar | |||||||
CAB | Credit access bureau | |||||||
CARES Act | Coronavirus Aid, Relief, and Economic Security Act enacted by the U.S. Federal government on March 27, 2020 in response to the COVID-19 pandemic | |||||||
Cash Money | Cash Money Cheque Cashing Inc., a wholly-owned Canadian subsidiary of the Company | |||||||
Cash Money Revolving Credit Facility | C$10.0 million revolving credit facility with Royal Bank of Canada | |||||||
CDOR | Canadian Dollar Offered Rate | |||||||
CFPB | Consumer Financial Protection Bureau | |||||||
CFTC | CURO Financial Technologies Corp., a wholly-owned subsidiary of the Company | |||||||
CODM | Chief Operating Decision Maker | |||||||
Condensed Consolidated Financial Statements | The condensed consolidated financial statements presented in this Form 10-Q | |||||||
CSO | Credit services organization | |||||||
EBITDA | Earnings Before Interest, Taxes, Depreciation and Amortization | |||||||
Exchange Act | Securities Exchange Act of 1934, as amended | |||||||
FASB | Financial Accounting Standards Board | |||||||
FinServ | FinServ Acquisition Corp., a publicly traded special purpose acquisition company (trading symbol FSRV) | |||||||
FinTech | Financial Technology; the term used to describe any technology that delivers financial services through software, such as online banking, mobile payment apps or cryptocurrency | |||||||
Flexiti | Flexiti Financial Inc., a wholly-owned Canadian subsidiary of the Company, which we acquired on March 10, 2021 | |||||||
Form 10-Q | Quarterly Report on Form 10-Q for the six month period ended June 30, 2021 | |||||||
Gross Combined Loans Receivable | Gross loans receivable plus loans originated by third-party lenders which are Guaranteed by the Company | |||||||
Guaranteed by the Company | Loans originated by third-party lenders through CSO program which we guarantee but are not included in the Condensed Consolidated Financial Statements |
Term or abbreviation | Definition | |||||||
Katapult | Katapult Holdings, Inc. a lease-to-own platform for online platform for online, brick and mortar and omni-channel retailers. On June 9, 2021, Katapult merged with FinServ and is now a publicly traded company (NASDAQ: KPLT) | |||||||
LFL | LFL Group, Canada's largest home furnishings retailer. | |||||||
MDR | Merchant discount revenue | |||||||
NCO | Net charge-off; total charge-offs less total recoveries | |||||||
NOL | Net operating loss | |||||||
Non-Recourse Canada SPV Facility | A four-year revolving credit facility with Waterfall Asset Management, LLC with capacity up to C$250.0 million | |||||||
Non-Recourse Flexiti SPE Facility | A revolving credit facility, entered into concurrent with the acquisition of Flexiti, with capacity up to C$421.0 million for Class A borrowings and C$79.0 million for Class B borrowings. | |||||||
Non-Recourse U.S. SPV Facility | A four-year, asset-backed revolving credit facility with Atalaya Capital Management with capacity up to $200.0 million if certain conditions are met | |||||||
POS | Point-of-sale | |||||||
ROU | Right of use | |||||||
RSU | Restricted Stock Unit | |||||||
SEC | Securities and Exchange Commission | |||||||
Senior Revolver | Senior Secured Revolving Loan Facility with borrowing capacity of $50.0 million | |||||||
Sequential | The change from one quarter to the next quarter | |||||||
SPAC | Special Purpose Acquisition Company | |||||||
SRC | Smaller Reporting Company as defined by the SEC | |||||||
TDR | Troubled Debt Restructuring. Debt restructuring in which a concession is granted to the borrower as a result of economic or legal reasons related to the borrower's financial difficulties | |||||||
U.K. Subsidiaries | Collectively, Curo Transatlantic Limited and SRC Transatlantic Limited | |||||||
U.S. | United States of America | |||||||
U.S. GAAP | Generally accepted accounting principles in the United States | |||||||
Verge Credit loans | Loans originated and funded by a third-party bank | |||||||
VIE | Variable Interest Entity; our wholly-owned, bankruptcy-remote special purpose subsidiaries |
June 30, 2021 (unaudited) |
December 31,
2020 |
||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 276,367 | $ | 213,343 | |||||||
Restricted cash (includes restricted cash of consolidated VIEs of $43,553 and $31,994 as of June 30, 2021 and December 31, 2020, respectively)
|
69,299 | 54,765 | |||||||||
Gross loans receivable (includes loans of consolidated VIEs of $592,283 and $360,431 as of June 30, 2021 and December 31, 2020, respectively)
|
769,228 | 553,722 | |||||||||
Less: allowance for loan losses (includes allowance for losses of consolidated VIEs of $44,605 and $54,129 as of June 30, 2021 and December 31, 2020, respectively)
|
(67,861) | (86,162) | |||||||||
Loans receivable, net
|
701,367 | 467,560 | |||||||||
Income taxes receivable | 2,175 | 32,062 | |||||||||
Prepaid expenses and other (includes prepaid expenses and other of consolidated VIEs of $0 and $388 as of June 30, 2021 and December 31, 2020, respectively)
|
31,209 | 27,994 | |||||||||
Property and equipment, net | 51,170 | 59,749 | |||||||||
Investments in Katapult | 16,501 | 27,370 | |||||||||
Right of use asset - operating leases | 106,698 | 115,032 | |||||||||
Deferred tax assets | 6,264 | — | |||||||||
Goodwill and intangibles, net | 274,119 | 176,516 | |||||||||
Other assets | 9,296 | 8,595 | |||||||||
Total Assets | $ | 1,544,465 | $ | 1,182,986 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Liabilities | |||||||||||
Accounts payable and accrued liabilities (includes accounts payable and accrued liabilities of consolidated VIEs of $6,078 and $34,055 as of June 30, 2021 and December 31, 2020, respectively)
|
$ | 64,406 | $ | 49,624 | |||||||
Deferred revenue | 10,394 | 5,394 | |||||||||
Lease liability - operating leases | 113,415 | 122,648 | |||||||||
Contingent consideration related to acquisition | 21,239 | — | |||||||||
Accrued interest (includes accrued interest of consolidated VIEs of $1,435 and $1,147 as of June 30, 2021 and December 31, 2020, respectively)
|
20,411 | 20,123 | |||||||||
Liability for losses on CSO lender-owned consumer loans | 5,265 | 7,228 | |||||||||
Debt (includes debt and issuance costs of consolidated VIEs of $349,311 and $11,077 as of June 30, 2021 and $147,427 and $7,766 as of December 31, 2020, respectively)
|
1,019,127 | 819,661 | |||||||||
Other long-term liabilities | 13,796 | 15,382 | |||||||||
Deferred tax liabilities | 9,710 | 11,021 | |||||||||
Total Liabilities | 1,277,763 | 1,051,081 | |||||||||
Commitments and contingencies (Note 12) | |||||||||||
Stockholders' Equity | |||||||||||
Preferred stock - $0.001 par value, 25,000,000 shares authorized; no shares were issued
|
— | — | |||||||||
Common stock - $0.001 par value; 225,000,000 shares authorized; 47,939,331 and 47,525,807 shares issued; and 41,679,541 and 41,370,504 shares outstanding at the respective period ends
|
9 | 9 | |||||||||
Treasury stock, at cost - 6,259,790 and 6,155,303 shares at the respective period ends
|
(79,604) | (77,852) | |||||||||
Paid-in capital | 84,490 | 79,812 | |||||||||
Retained earnings | 283,370 | 160,068 | |||||||||
Accumulated other comprehensive loss | (21,563) | (30,132) | |||||||||
Total Stockholders' Equity | 266,702 | 131,905 | |||||||||
Total Liabilities and Stockholders' Equity | $ | 1,544,465 | $ | 1,182,986 |
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Revenue | $ | 187,693 | $ | 182,509 | $ | 384,244 | $ | 463,315 | |||||||||||||||
Provision for loan losses | 45,165 | 50,693 | 81,310 | 164,229 | |||||||||||||||||||
Net revenue | 142,528 | 131,816 | 302,934 | 299,086 | |||||||||||||||||||
Cost of providing services | |||||||||||||||||||||||
Salaries and benefits | 26,056 | 24,723 | 50,971 | 50,730 | |||||||||||||||||||
Occupancy and office | 17,745 | 16,843 | 36,049 | 36,533 | |||||||||||||||||||
Other costs of providing services | 7,033 | 8,001 | 14,124 | 17,656 | |||||||||||||||||||
Advertising | 7,043 | 5,750 | 15,127 | 17,969 | |||||||||||||||||||
Total cost of providing services | 57,877 | 55,317 | 116,271 | 122,888 | |||||||||||||||||||
Gross margin | 84,651 | 76,499 | 186,663 | 176,198 | |||||||||||||||||||
Operating expense (income) | |||||||||||||||||||||||
Corporate, district and other expenses | 59,621 | 36,781 | 108,461 | 79,588 | |||||||||||||||||||
Interest expense | 23,440 | 18,311 | 42,979 | 35,635 | |||||||||||||||||||
(Income) loss from equity method investment | (1,712) | (741) | (2,258) | 877 | |||||||||||||||||||
Gain from equity method investment | (135,387) | — | (135,387) | — | |||||||||||||||||||
Total operating (income) expense | (54,038) | 54,351 | 13,795 | 116,100 | |||||||||||||||||||
Income from continuing operations before income taxes | 138,689 | 22,148 | 172,868 | 60,098 | |||||||||||||||||||
Provision for income taxes | 34,172 | 1,068 | 42,616 | 3,005 | |||||||||||||||||||
Net income from continuing operations | 104,517 | 21,080 | 130,252 | 57,093 | |||||||||||||||||||
Net income from discontinued operations, before income tax | — | 1,324 | — | 1,714 | |||||||||||||||||||
Income tax expense related to disposition | — | 331 | — | 429 | |||||||||||||||||||
Net income from discontinued operations | — | 993 | — | 1,285 | |||||||||||||||||||
Net income | $ | 104,517 | $ | 22,073 | $ | 130,252 | $ | 58,378 | |||||||||||||||
Basic earnings per share: | |||||||||||||||||||||||
Continuing operations | $ | 2.51 | $ | 0.52 | $ | 3.13 | $ | 1.40 | |||||||||||||||
Discontinued operations | — | 0.02 | — | 0.03 | |||||||||||||||||||
Basic earnings per share | $ | 2.51 | $ | 0.54 | $ | 3.13 | $ | 1.43 | |||||||||||||||
Diluted earnings per share: | |||||||||||||||||||||||
Continuing operations | $ | 2.39 | $ | 0.51 | $ | 2.99 | $ | 1.37 | |||||||||||||||
Discontinued operations | — | 0.02 | — | 0.03 | |||||||||||||||||||
Diluted earnings per share | $ | 2.39 | $ | 0.53 | $ | 2.99 | $ | 1.40 | |||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||
Basic | 41,655 | 40,810 | 41,580 | 40,814 | |||||||||||||||||||
Diluted | 43,672 | 41,545 | 43,556 | 41,686 |
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Net income | $ | 104,517 | $ | 22,073 | $ | 130,252 | $ | 58,378 | |||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||
Foreign currency translation adjustment, net of $0 tax in all periods
|
4,714 | 10,261 | 8,569 | (11,932) | |||||||||||||||||||
Other comprehensive income (loss) | 4,714 | 10,261 | 8,569 | (11,932) | |||||||||||||||||||
Comprehensive income | $ | 109,231 | $ | 32,334 | $ | 138,821 | $ | 46,446 |
Six Months Ended
June 30, |
|||||||||||
2021 | 2020 | ||||||||||
Cash flows from operating activities | |||||||||||
Net income from continuing operations | $ | 130,252 | $ | 57,093 | |||||||
Adjustments to reconcile net income to net cash provided by continuing operating activities:
|
|||||||||||
Depreciation and amortization | 12,400 | 8,954 | |||||||||
Provision for loan losses | 81,310 | 164,229 | |||||||||
Amortization of debt issuance costs and bond discount | 2,954 | 1,600 | |||||||||
Deferred income tax (benefit) expense | (3,481) | 9,861 | |||||||||
Loss on disposal of property and equipment | 4,322 | 116 | |||||||||
(Income) loss from equity method investment | (2,258) | 877 | |||||||||
Gain from equity method investment | (135,387) | — | |||||||||
Share-based compensation | 6,150 | 6,504 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accrued interest on loans receivable | 30,527 | 28,654 | |||||||||
Prepaid expenses and other assets | (2,320) | 3,286 | |||||||||
Accounts payable and accrued liabilities | 4,303 | 965 | |||||||||
Deferred revenue | 4,999 | (5,040) | |||||||||
Income taxes receivable | 29,910 | (7,413) | |||||||||
Accrued interest | 271 | 200 | |||||||||
Other long-term liabilities | (1,057) | 914 | |||||||||
Net cash provided by continuing operating activities | 162,895 | 270,800 | |||||||||
Net cash provided by discontinued operating activities | — | 1,714 | |||||||||
Net cash provided by operating activities | 162,895 | 272,514 | |||||||||
Cash flows from investing activities | |||||||||||
Purchase of property and equipment | (7,169) | (4,724) | |||||||||
Loans receivable originated or acquired
|
(563,327) | (648,044) | |||||||||
Loans receivable repaid
|
421,123 | 616,223 | |||||||||
Proceeds from Investment in Katapult | 146,878 | — | |||||||||
Acquisition of Ad Astra, net of acquiree's cash received
|
— | (14,418) | |||||||||
Acquisition of Flexiti, net of acquiree's cash received | (91,203) | — | |||||||||
Net cash used in continuing investing activities (1)
|
(93,698) | (50,963) | |||||||||
Cash flows from financing activities | |||||||||||
Proceeds from Non-Recourse SPV and SPE facilities | 26,990 | 58,386 | |||||||||
Payments on Non-Recourse SPV and SPE facilities | (9,229) | (41,812) | |||||||||
Debt issuance costs paid | — | (3,531) | |||||||||
Proceeds from credit facilities | 20,934 | 69,778 | |||||||||
Payments on credit facilities | (20,934) | (69,778) | |||||||||
Proceeds from exercise of stock options | 239 | 126 | |||||||||
Payments to net share settle restricted stock units vesting | (1,711) | (638) | |||||||||
Repurchase of common stock | (1,251) | (5,908) | |||||||||
Dividends paid to stockholders | (6,950) | (4,500) | |||||||||
Net cash provided by continuing financing activities (1)
|
8,088 | 2,123 | |||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 273 | (1,079) | |||||||||
Net increase in cash, cash equivalents and restricted cash | 77,558 | 222,595 | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 268,108 | 110,021 | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 345,666 | $ | 332,616 | |||||||
(1) Investing activities and Financing activities were not impacted by discontinued operations |
June 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
Cash and cash equivalents | $ | 276,367 | $ | 269,342 | ||||||||||
Restricted cash (includes restricted cash of consolidated VIEs of $43,553 and $39,248 as of June 30, 2021 and June 30, 2020, respectively)
|
69,299 | 63,274 | ||||||||||||
Total cash, cash equivalents and restricted cash used in the Statement of Cash Flows | $ | 345,666 | $ | 332,616 | ||||||||||
June 30, 2021 | ||||||||||||||||||||||||||
Revolving LOC | Unsecured Installment | Secured Installment | Total Installment - Company Owned | Total | ||||||||||||||||||||||
Delinquent loans receivable | ||||||||||||||||||||||||||
0-30 days past due | $ | 22,288 | $ | 8,474 | $ | 2,835 | $ | 11,309 | $ | 33,597 | ||||||||||||||||
31-60 days past due | 8,659 | 5,767 | 1,307 | 7,074 | 15,733 | |||||||||||||||||||||
61 + days past due | 12,986 | 6,794 | 1,434 | 8,228 | 21,214 | |||||||||||||||||||||
Total delinquent loans receivable | $ | 43,933 | $ | 21,035 | $ | 5,576 | $ | 26,611 | $ | 70,544 | ||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||
Revolving LOC | Unsecured Installment | Secured Installment |
Single-Pay(1)
|
Total Installment - Company Owned | Total | ||||||||||||||||||||||||
Current loans receivable | $ | 321,105 | $ | 78,235 | $ | 40,358 | $ | 43,780 | $ | 162,373 | $ | 483,478 | |||||||||||||||||
Delinquent loans receivable | 37,779 | 24,190 | 8,275 | — | 32,465 | 70,244 | |||||||||||||||||||||||
Total loans receivable | 358,884 | 102,425 | 48,633 | 43,780 | 194,838 | 553,722 | |||||||||||||||||||||||
Less: allowance for losses | (51,958) | (24,073) | (7,047) | (3,084) | (34,204) | (86,162) | |||||||||||||||||||||||
Loans receivable, net | $ | 306,926 | $ | 78,352 | $ | 41,586 | $ | 40,696 | $ | 160,634 | $ | 467,560 | |||||||||||||||||
(1) Of the $43.8 million of Single-Pay receivables, $11.2 million relate to mandated extended payment options for certain Canada Single-Pay loans.
|
December 31, 2020 | ||||||||||||||||||||||||||
Revolving LOC | Unsecured Installment | Secured Installment | Total Installment - Company Owned | Total | ||||||||||||||||||||||
Delinquent loans receivable | ||||||||||||||||||||||||||
0-30 days past due | $ | 17,517 | $ | 10,361 | $ | 3,764 | $ | 14,125 | $ | 31,642 | ||||||||||||||||
31-60 days past due | 9,276 | 7,124 | 2,199 | 9,323 | 18,599 | |||||||||||||||||||||
61 + days past due | 10,986 | 6,705 | 2,312 | 9,017 | 20,003 | |||||||||||||||||||||
Total delinquent loans receivable | $ | 37,779 | $ | 24,190 | $ | 8,275 | $ | 32,465 | $ | 70,244 | ||||||||||||||||
June 30, 2021 | ||||||||||||||||||||
Unsecured Installment | Secured Installment | Total Installment - Guaranteed by the Company | ||||||||||||||||||
Current loans receivable Guaranteed by the Company | $ | 29,981 | $ | 658 | $ | 30,639 | ||||||||||||||
Delinquent loans receivable Guaranteed by the Company | 6,359 | 95 | 6,454 | |||||||||||||||||
Total loans receivable Guaranteed by the Company | 36,340 | 753 | 37,093 | |||||||||||||||||
Less: Liability for losses on CSO lender-owned consumer loans | (5,234) | (31) | (5,265) | |||||||||||||||||
Loans receivable Guaranteed by the Company, net | $ | 31,106 | $ | 722 | $ | 31,828 |
June 30, 2021 | ||||||||||||||
Unsecured Installment | Secured Installment | Total Installment - Guaranteed by the Company | ||||||||||||
Delinquent loans receivable | ||||||||||||||
0-30 days past due | $ | 5,574 | $ | 88 | $ | 5,662 | ||||||||
31-60 days past due | 625 | 4 | 629 | |||||||||||
61+ days past due | 160 | 3 | 163 | |||||||||||
Total delinquent loans receivable | $ | 6,359 | $ | 95 | $ | 6,454 | ||||||||
December 31, 2020 | ||||||||||||||||||||
Unsecured Installment | Secured Installment | Total Installment - Guaranteed by the Company | ||||||||||||||||||
Current loans receivable Guaranteed by the Company | $ | 37,096 | $ | 775 | $ | 37,871 | ||||||||||||||
Delinquent loans receivable Guaranteed by the Company | 6,079 | 155 | 6,234 | |||||||||||||||||
Total loans receivable Guaranteed by the Company | 43,175 | 930 | 44,105 | |||||||||||||||||
Less: Liability for losses on CSO lender-owned consumer loans | (7,160) | (68) | (7,228) | |||||||||||||||||
Loans receivable Guaranteed by the Company, net | $ | 36,015 | $ | 862 | $ | 36,877 |
December 31, 2020 | ||||||||||||||
Unsecured Installment | Secured Installment | Total Installment - Guaranteed by the Company | ||||||||||||
Delinquent loans receivable | ||||||||||||||
0-30 days past due | $ | 5,435 | $ | 103 | $ | 5,538 | ||||||||
31-60 days past due | 490 | 37 | 527 | |||||||||||
61 + days past due | 154 | 15 | 169 | |||||||||||
Total delinquent loans receivable | $ | 6,079 | $ | 155 | $ | 6,234 |
Three Months Ended June 30, 2021 | |||||||||||||||||||||||||||||
Revolving LOC | Unsecured Installment | Secured Installment | Single-Pay | Total Installment | Other | Total | |||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||
Balance, beginning of period | $ | 44,754 | $ | 20,394 | $ | 5,023 | $ | 2,217 | $ | 27,634 | $ | — | $ | 72,388 | |||||||||||||||
Charge-offs | (24,487) | (18,812) | (4,384) | (22,107) | (45,303) | (802) | (70,592) | ||||||||||||||||||||||
Recoveries | 7,280 | 5,383 | 2,216 | 17,574 | 25,173 | 378 | 32,831 | ||||||||||||||||||||||
Net charge-offs | (17,207) | (13,429) | (2,168) | (4,533) | (20,130) | (424) | (37,761) | ||||||||||||||||||||||
Provision for losses | 16,672 | 9,734 | 1,025 | 4,727 | 15,486 | 424 | 32,582 | ||||||||||||||||||||||
Effect of foreign currency translation | 629 | 2 | — | 21 | 23 | — | 652 | ||||||||||||||||||||||
Balance, end of period | $ | 44,848 | $ | 16,701 | $ | 3,880 | $ | 2,432 | $ | 23,013 | $ | — | $ | 67,861 | |||||||||||||||
Liability for losses on CSO lender-owned consumer loans: | |||||||||||||||||||||||||||||
Balance, beginning of period | $ | — | $ | 4,670 | $ | 57 | $ | — | $ | 4,727 | $ | — | $ | 4,727 | |||||||||||||||
Decrease in liability | — | (564) | 26 | — | (538) | — | (538) | ||||||||||||||||||||||
Balance, end of period | $ | — | $ | 5,234 | $ | 31 | $ | — | $ | 5,265 | $ | — | $ | 5,265 |
Three Months Ended
June 30, 2020 |
|||||||||||||||||||||||||||||
Revolving LOC | Unsecured Installment | Secured Installment | Single-Pay | Total Installment | Other | Total | |||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||
Balance, beginning of period | $ | 56,458 | $ | 28,965 | $ | 9,726 | $ | 4,693 | $ | 43,384 | $ | — | $ | 99,842 | |||||||||||||||
Charge-offs | (37,784) | (30,129) | (11,747) | (21,168) | (63,044) | (750) | (101,578) | ||||||||||||||||||||||
Recoveries | 6,100 | 7,019 | 2,961 | 21,766 | 31,746 | 398 | 38,244 | ||||||||||||||||||||||
Net charge-offs | (31,684) | (23,110) | (8,786) | 598 | (31,298) | (352) | (63,334) | ||||||||||||||||||||||
Provision for losses | 21,341 | 12,584 | 6,943 | (2,588) | 16,939 | 352 | 38,632 | ||||||||||||||||||||||
Effect of foreign currency translation | 1,204 | 12 | — | 99 | 111 | — | 1,315 | ||||||||||||||||||||||
Balance, end of period | $ | 47,319 | $ | 18,451 | $ | 7,883 | $ | 2,802 | $ | 29,136 | $ | — | $ | 76,455 | |||||||||||||||
Liability for losses on CSO lender-owned consumer loans: | |||||||||||||||||||||||||||||
Balance, beginning of period | $ | — | $ | 9,142 | $ | 47 | $ | — | $ | 9,189 | $ | — | $ | 9,189 | |||||||||||||||
Decrease in liability | — | 4,014 | 11 | — | 4,025 | — | 4,025 | ||||||||||||||||||||||
Balance, end of period | $ | — | $ | 5,128 | $ | 36 | $ | — | $ | 5,164 | $ | — | $ | 5,164 |
Six Months Ended
June 30, 2021 |
|||||||||||||||||||||||||||||
Revolving LOC | Unsecured Installment | Secured Installment | Single-Pay | Total Installment | Other | Total | |||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||
Balance, beginning of period | $ | 51,958 | $ | 24,073 | $ | 7,047 | $ | 3,084 | $ | 34,204 | $ | — | $ | 86,162 | |||||||||||||||
Charge-offs | (53,201) | (39,937) | (10,727) | (44,040) | (94,704) | (1,656) | (149,561) | ||||||||||||||||||||||
Recoveries | 14,787 | 12,000 | 4,760 | 38,828 | 55,588 | 930 | 71,305 | ||||||||||||||||||||||
Net charge-offs | (38,414) | (27,937) | (5,967) | (5,212) | (39,116) | (726) | (78,256) | ||||||||||||||||||||||
Provision for losses | 30,474 | 20,559 | 2,800 | 4,520 | 27,879 | 726 | 59,079 | ||||||||||||||||||||||
Effect of foreign currency translation | 830 | 6 | — | 40 | 46 | — | 876 | ||||||||||||||||||||||
Balance, end of period | $ | 44,848 | $ | 16,701 | $ | 3,880 | $ | 2,432 | $ | 23,013 | $ | — | $ | 67,861 | |||||||||||||||
Liability for losses on CSO lender-owned consumer loans: | |||||||||||||||||||||||||||||
Balance, beginning of period | $ | — | $ | 7,160 | $ | 68 | $ | — | $ | 7,228 | $ | — | $ | 7,228 | |||||||||||||||
Decrease in liability | — | 1,926 | 37 | — | 1,963 | — | 1,963 | ||||||||||||||||||||||
Balance, end of period | $ | — | $ | 5,234 | $ | 31 | $ | — | $ | 5,265 | $ | — | $ | 5,265 |
Six Months Ended
June 30, 2020 |
|||||||||||||||||||||||||||||
Revolving LOC | Unsecured Installment | Secured Installment | Single-Pay | Total Installment | Other | Total | |||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||
Balance, beginning of period | $ | 55,074 | $ | 35,587 | $ | 10,305 | $ | 5,869 | $ | 51,761 | $ | — | $ | 106,835 | |||||||||||||||
Charge-offs | (81,293) | (68,687) | (24,857) | (61,689) | (155,233) | (2,028) | (238,554) | ||||||||||||||||||||||
Recoveries | 12,511 | 12,802 | 5,870 | 51,770 | 70,442 | 977 | 83,930 | ||||||||||||||||||||||
Net charge-offs | (68,782) | (55,885) | (18,987) | (9,919) | (84,791) | (1,051) | (154,624) | ||||||||||||||||||||||
Provision for losses | 62,332 | 38,766 | 16,565 | 7,051 | 62,382 | 1,051 | 125,765 | ||||||||||||||||||||||
Effect of foreign currency translation | (1,305) | (17) | — | (199) | (216) | — | (1,521) | ||||||||||||||||||||||
Balance, end of period | $ | 47,319 | $ | 18,451 | $ | 7,883 | $ | 2,802 | $ | 29,136 | $ | — | $ | 76,455 | |||||||||||||||
Liability for losses on CSO lender-owned consumer loans: | |||||||||||||||||||||||||||||
Balance, beginning of period | $ | — | $ | 10,553 | $ | 70 | $ | — | $ | 10,623 | $ | — | $ | 10,623 | |||||||||||||||
Decrease in liability | — | 5,425 | 34 | — | 5,459 | — | 5,459 | ||||||||||||||||||||||
Balance, end of period | $ | — | $ | 5,128 | $ | 36 | $ | — | $ | 5,164 | $ | — | $ | 5,164 |
As of
June 30, 2021
|
As of
December 31, 2020 |
||||||||||
Current TDR gross receivables | $ | 12,137 | $ | 13,563 | |||||||
Delinquent TDR gross receivables | 4,293 | 6,309 | |||||||||
Total TDR gross receivables | 16,430 | 19,872 | |||||||||
Less: Impairment included in the allowance for loan losses | (2,455) | (3,482) | |||||||||
Less: Additional allowance | (3,130) | (4,497) | |||||||||
Outstanding TDR receivables, net of impairment | $ | 10,845 | $ | 11,893 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Pre-modification TDR loans receivable | $ | 3,504 | $ | 24,069 | $ | 8,367 | $ | 24,069 | ||||||||||||||||||
Post-modification TDR loans receivable | 3,197 | 21,390 | 7,472 | 21,390 | ||||||||||||||||||||||
Total concessions included in gross charge-offs | $ | 307 | $ | 2,679 | $ | 895 | $ | 2,679 |
June 30, 2021 | December 31, 2020 | |||||||||||||
8.25% Senior Secured Notes
|
$ | 680,893 | $ | 680,000 | ||||||||||
Non-Recourse U.S. SPV Facility | 44,489 | 43,586 | ||||||||||||
Non-Recourse Canada SPV Facility | 98,881 | 96,075 | ||||||||||||
Non-Recourse Flexiti SPE Facility | 194,864 | — | ||||||||||||
Debt | $ | 1,019,127 | $ | 819,661 |
Number of RSUs | |||||||||||||||||
Time-Based | Market-Based | Performance-Based |
Weighted Average
Grant Date Fair Value per Share |
||||||||||||||
December 31, 2020 | 1,012,792 | 758,713 | — | $ | 10.26 | ||||||||||||
Granted | 1,010,075 | 299,053 | 253,310 | 15.28 | |||||||||||||
Vested | (468,626) | — | — | 11.06 | |||||||||||||
Forfeited | (42,737) | (48,252) | — | 10.91 | |||||||||||||
June 30, 2021 | 1,511,504 | 1,009,514 | 253,310 | $ | 12.93 |
Estimated Fair Value | |||||||||||||||||
Carrying Value June 30,
2021 |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets: | |||||||||||||||||
Cash Surrender Value of Life Insurance | $ | 7,838 | $ | 7,838 | $ | — | $ | — | $ | 7,838 | |||||||
Financial liabilities: | |||||||||||||||||
Non-qualified deferred compensation plan | $ | 4,854 | $ | 4,854 | $ | — | $ | — | $ | 4,854 | |||||||
Contingent consideration related to acquisition | 21,239 | — | — | 21,239 | 21,239 |
Estimated Fair Value | |||||||||||||||||
Carrying Value December 31,
2020 |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets: | |||||||||||||||||
Cash Surrender Value of Life Insurance | $ | 7,140 | $ | 7,140 | $ | — | $ | — | $ | 7,140 | |||||||
Financial liabilities: | |||||||||||||||||
Non-qualified deferred compensation plan | $ | 4,690 | $ | 4,690 | $ | — | $ | — | $ | 4,690 | |||||||
Estimated Fair Value | |||||||||||||||||
Carrying Value June 30,
2021 |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets: | |||||||||||||||||
Cash and cash equivalents | $ | 276,367 | $ | 276,367 | $ | — | $ | — | $ | 276,367 | |||||||
Restricted cash | 69,299 | 69,299 | — | — | 69,299 | ||||||||||||
Loans receivable, net | 701,367 | — | — | 701,367 | 701,367 | ||||||||||||
Financial liabilities: | |||||||||||||||||
Liability for losses on CSO lender-owned consumer loans
|
$ | 5,265 | $ | — | $ | — | $ | 5,265 | $ | 5,265 | |||||||
8.25% Senior Secured Notes
|
680,893 | — | 714,150 | — | 714,150 | ||||||||||||
Non-Recourse U.S. SPV facility | 44,489 | — | — | 49,456 | 49,456 | ||||||||||||
Non-Recourse Canada SPV facility | 98,881 | — | — | 100,209 | 100,209 | ||||||||||||
Non-Recourse Flexiti SPE facility | 194,864 | — | — | 199,646 | 199,646 | ||||||||||||
Estimated Fair Value | |||||||||||||||||
Carrying Value December 31,
2020 |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets: | |||||||||||||||||
Cash and cash equivalents | $ | 213,343 | $ | 213,343 | $ | — | $ | — | $ | 213,343 | |||||||
Restricted cash | 54,765 | 54,765 | — | — | 54,765 | ||||||||||||
Loans receivable, net | 467,560 | — | — | 467,560 | 467,560 | ||||||||||||
Financial liabilities: | |||||||||||||||||
Liability for losses on CSO lender-owned consumer loans | $ | 7,228 | $ | — | $ | — | $ | 7,228 | $ | 7,228 | |||||||
8.25% Senior Secured Notes
|
680,000 | — | 646,000 | — | 646,000 | ||||||||||||
Non-Recourse U.S. SPV facility | 43,586 | — | — | 49,456 | 49,456 | ||||||||||||
Non-Recourse Canada SPV facility | 96,075 | — | — | 97,971 | 97,971 | ||||||||||||
Equity Method Investment |
Measurement Alternative (1)
|
Total Investment in Katapult | ||||||||||||||||||
Balance at December 31, 2019 | $ | 10,068 | $ | — | $ | 10,068 | ||||||||||||||
Equity method (loss) - Q1 2020 | (1,618) | — | (1,618) | |||||||||||||||||
Balance at March 31, 2020 | 8,450 | — | 8,450 | |||||||||||||||||
Equity method income - Q2 2020 | 741 | 741 | ||||||||||||||||||
Balance at June 30, 2020 | 9,191 | — | 9,191 | |||||||||||||||||
Equity method income - Q3 2020 | 3,530 | — | 3,530 | |||||||||||||||||
Accounting policy change for certain securities from equity method investment to measurement alternative | (12,452) | 12,452 | — | |||||||||||||||||
Purchases of common stock warrants and preferred shares | 4,030 | 7,157 | 11,187 | |||||||||||||||||
Balance at September 30, 2020 | 4,299 | 19,609 | 23,908 | |||||||||||||||||
Equity method income - Q4 2020 | 1,893 | — | 1,893 | |||||||||||||||||
Purchases of common stock | 1,570 | — | 1,570 | |||||||||||||||||
Balance at December 31, 2020 | 7,762 | 19,609 | 27,371 | |||||||||||||||||
Equity method income - Q1 2021 | 546 | — | 546 | |||||||||||||||||
Balance at March 31, 2021 | 8,308 | 19,609 | 27,917 | |||||||||||||||||
Equity method income - Q2 2021 | 1,712 | — | 1,712 | |||||||||||||||||
Conversion of investment(2)
|
6,481 | (19,609) | (13,128) | |||||||||||||||||
Balance at June 30, 2021 | $ | 16,501 | $ | — | $ | 16,501 | ||||||||||||||
Classification as of December 31, 2020 | Level 3, not carried at fair value | Level 3, carried at measurement alternative | ||||||||||||||||||
Classification as of June 30, 2021 | Level 3, not carried at fair value | N/A | ||||||||||||||||||
(1) The Company elected to measure this equity security without a readily determinable fair value equal to its cost minus impairment. If the Company identifies an observable price change in orderly transactions for the identical or a similar investment of the same issuer, it will measure the equity security at fair value as of the date that the observable transaction occurred.
|
||||||||||||||||||||
(2) On June 9, 2021, Katapult completed its previously announced merger with FinServ. As required by the merger agreement, immediately prior to the completion of the merger, the Company converted all of its preferred shares and exercised all common stock warrants. Upon this transaction, the Company’s entire investment in Katapult is accounted for under the equity method of accounting. The Company then exchanged all common shares of Katapult, immediately prior to its merger with FinServ, for $146.9 million in cash and 18.9 million common shares of the resulting public company, Katapult (NASDAQ: KPLT). The Company recorded a related net gain of $135.4 million on its equity method investment in Katapult, based on the pro rata cost basis of the investment and the discharge of the guarantee provided, for the three months ended June 30, 2021.
|
Common Stock | Treasury Stock, at cost | Paid-in capital | Retained Earnings (Deficit) |
AOCI (1)
|
Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||
Shares Outstanding | Par Value | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | 41,370,504 | $ | 9 | $ | (77,852) | $ | 79,812 | $ | 160,068 | $ | (30,132) | $ | 131,905 | ||||||||||||||||||||||||||||
Net income | — | — | — | — | 25,735 | — | 25,735 | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | 3,855 | 3,855 | ||||||||||||||||||||||||||||||||||
Dividends | — | — | — | — | (2,368) | — | (2,368) | ||||||||||||||||||||||||||||||||||
Share based compensation expense | — | — | — | 2,683 | — | — | 2,683 | ||||||||||||||||||||||||||||||||||
Proceeds from exercise of stock options | 15,852 | — | — | 48 | — | — | 48 | ||||||||||||||||||||||||||||||||||
Common stock issued for RSUs vesting, net of shares withheld and withholding paid for employee taxes
|
237,423 | — | — | (1,668) | — | — | (1,668) | ||||||||||||||||||||||||||||||||||
Balance at March 31, 2021 | 41,623,779 | $ | 9 | $ | (77,852) | $ | 80,875 | $ | 183,435 | $ | (26,277) | $ | 160,190 | ||||||||||||||||||||||||||||
Net income | — | — | — | — | 104,517 | — | 104,517 | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | 4,714 | 4,714 | ||||||||||||||||||||||||||||||||||
Dividends | — | — | — | — | (4,582) | — | (4,582) | ||||||||||||||||||||||||||||||||||
Share based compensation expense | — | — | — | 3,467 | — | — | 3,467 | ||||||||||||||||||||||||||||||||||
Proceeds from exercise of stock options | 43,920 | — | — | 191 | — | — | 191 | ||||||||||||||||||||||||||||||||||
Repurchase of common stock | (104,487) | — | (1,752) | — | — | — | (1,752) | ||||||||||||||||||||||||||||||||||
Common stock issued for RSUs vesting, net of shares withheld and withholding paid for employee taxes | 116,329 | — | — | (43) | — | — | (43) | ||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | 41,679,541 | $ | 9 | $ | (79,604) | $ | 84,490 | $ | 283,370 | $ | (21,563) | $ | 266,702 | ||||||||||||||||||||||||||||
(1) Accumulated other comprehensive income (loss)
|
Common Stock | Treasury Stock, at cost | Paid-in capital | Retained Earnings (Deficit) |
AOCI (1)
|
Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||
Shares Outstanding | Par Value | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | 41,156,224 | $ | 9 | $ | (72,343) | $ | 68,087 | $ | 93,423 | $ | (38,663) | $ | 50,513 | ||||||||||||||||||||||||||||
Net income from continuing operations | — | — | — | — | 36,013 | — | 36,013 | ||||||||||||||||||||||||||||||||||
Net income from discontinued operations | — | — | — | — | 292 | — | 292 | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | (22,193) | (22,193) | ||||||||||||||||||||||||||||||||||
Dividends | — | — | — | — | (2,256) | — | (2,256) | ||||||||||||||||||||||||||||||||||
Share based compensation expense | — | — | — | 3,194 | — | — | 3,194 | ||||||||||||||||||||||||||||||||||
Proceeds from exercise of stock options | 42,094 | — | — | 126 | — | — | 126 | ||||||||||||||||||||||||||||||||||
Repurchase of common stock | (540,762) | — | (5,509) | — | — | — | (5,509) | ||||||||||||||||||||||||||||||||||
Common stock issued for RSUs vesting, net of shares withheld and withholding paid for employee taxes
|
121,891 | — | — | (609) | — | — | (609) | ||||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | 40,779,447 | $ | 9 | $ | (77,852) | $ | 70,798 | $ | 127,472 | $ | (60,856) | $ | 59,571 | ||||||||||||||||||||||||||||
Net income from continuing operations | — | — | — | — | 21,080 | — | 21,080 | ||||||||||||||||||||||||||||||||||
Net income from discontinued operations | — | — | — | — | 993 | — | 993 | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | 10,261 | 10,261 | ||||||||||||||||||||||||||||||||||
Dividends | — | — | — | — | (2,244) | — | (2,244) | ||||||||||||||||||||||||||||||||||
Share based compensation expense | — | — | — | 3,310 | — | — | 3,310 | ||||||||||||||||||||||||||||||||||
Common stock issued for RSUs vesting, net of shares withheld and withholding paid for employee taxes | 105,098 | — | — | (29) | — | — | (29) | ||||||||||||||||||||||||||||||||||
Balances at June 30, 2020 | 40,884,545 | $ | 9 | $ | (77,852) | $ | 74,079 | $ | 147,301 | $ | (50,595) | $ | 92,942 | ||||||||||||||||||||||||||||
(1) Accumulated other comprehensive income (loss)
|
|||||||||||||||||||||||||||||||||||||||||
Dividends Paid | |||||||||||||||||
Date of declaration | Record date | Date paid | Dividend per share | (in thousands) | |||||||||||||
Q1 2021 | February 4, 2021 | February 16, 2021 | March 2, 2021 | $ | 0.055 | $ | 2,284 | ||||||||||
Q2 2021 | May 3, 2021 | May 14, 2021 | May 27, 2021 | $ | 0.11 | $ | 4,580 | ||||||||||
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Net income from continuing operations | $ | 104,517 | $ | 21,080 | $ | 130,252 | $ | 57,093 | |||||||||||||||
Net income from discontinued operations, net of tax | — | 993 | — | 1,285 | |||||||||||||||||||
Net income | $ | 104,517 | $ | 22,073 | $ | 130,252 | $ | 58,378 | |||||||||||||||
Weighted average common shares - basic | 41,655 | 40,810 | 41,580 | 40,814 | |||||||||||||||||||
Dilutive effect of stock options and restricted stock units | 2,017 | 735 | 1,976 | 872 | |||||||||||||||||||
Weighted average common shares - diluted | 43,672 | 41,545 | 43,556 | 41,686 | |||||||||||||||||||
Basic earnings per share: | |||||||||||||||||||||||
Continuing operations | $ | 2.51 | $ | 0.52 | $ | 3.13 | $ | 1.40 | |||||||||||||||
Discontinued operations | — | 0.02 | — | 0.03 | |||||||||||||||||||
Basic earnings per share | $ | 2.51 | $ | 0.54 | $ | 3.13 | $ | 1.43 | |||||||||||||||
Diluted earnings per share: | |||||||||||||||||||||||
Continuing operations | $ | 2.39 | $ | 0.51 | $ | 2.99 | $ | 1.37 | |||||||||||||||
Discontinued operations | — | 0.02 | — | 0.03 | |||||||||||||||||||
Diluted earnings per share | $ | 2.39 | $ | 0.53 | $ | 2.99 | $ | 1.40 | |||||||||||||||
Three Months Ended
June 30, |
Six Months Ended
June 30, |
|||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Revenues by segment: (1)
|
||||||||||||||||||||||||||
U.S. | $ | 118,794 | $ | 137,320 | $ | 255,286 | $ | 359,088 | ||||||||||||||||||
Canada Direct Lending | 61,880 | 45,189 | 120,320 | 104,227 | ||||||||||||||||||||||
Canada POS Lending | 7,019 | — | 8,638 | — | ||||||||||||||||||||||
Consolidated revenue | $ | 187,693 | $ | 182,509 | $ | 384,244 | $ | 463,315 | ||||||||||||||||||
Net revenues by segment: | ||||||||||||||||||||||||||
U.S. | $ | 85,172 | $ | 95,790 | $ | 195,608 | $ | 231,517 | ||||||||||||||||||
Canada Direct Lending | 53,324 | 36,026 | 102,530 | 67,569 | ||||||||||||||||||||||
Canada POS Lending | 4,032 | — | 4,796 | — | ||||||||||||||||||||||
Consolidated net revenue | $ | 142,528 | $ | 131,816 | $ | 302,934 | $ | 299,086 | ||||||||||||||||||
Gross margin by segment: | ||||||||||||||||||||||||||
U.S. | $ | 47,246 | $ | 56,860 | $ | 118,386 | $ | 144,400 | ||||||||||||||||||
Canada Direct Lending | 33,863 | 19,639 | 64,083 | 31,798 | ||||||||||||||||||||||
Canada POS Lending | 3,542 | — | 4,194 | — | ||||||||||||||||||||||
Consolidated gross margin | $ | 84,651 | $ | 76,499 | $ | 186,663 | $ | 176,198 | ||||||||||||||||||
Segment operating (loss) income: | ||||||||||||||||||||||||||
U.S. | $ | 123,277 | $ | 11,857 | $ | 138,008 | $ | 45,283 | ||||||||||||||||||
Canada Direct Lending | 25,343 | 10,291 | 47,590 | 14,815 | ||||||||||||||||||||||
Canada POS Lending | (9,931) | — | (12,730) | — | ||||||||||||||||||||||
Consolidated operating income | $ | 138,689 | $ | 22,148 | $ | 172,868 | $ | 60,098 | ||||||||||||||||||
Expenditures for long-lived assets by segment: | ||||||||||||||||||||||||||
U.S. | $ | 2,162 | $ | 248 | $ | 4,824 | $ | 4,528 | ||||||||||||||||||
Canada Direct Lending | 361 | 144 | 510 | 697 | ||||||||||||||||||||||
Canada POS Lending | 2,112 | — | 2,531 | — | ||||||||||||||||||||||
Consolidated expenditures for long-lived assets | $ | 4,635 | $ | 392 | $ | 7,865 | $ | 5,225 | ||||||||||||||||||
(1) For revenue by product, see Note 3, "Loans Receivable and Revenue."
|
June 30,
2021 |
December 31,
2020 |
|||||||||||||
U.S. | $ | 186,511 | $ | 223,451 | ||||||||||
Canada Direct Lending | 361,264 | 330,271 | ||||||||||||
Canada POS Lending | 221,453 | — | ||||||||||||
Total gross loans receivable | $ | 769,228 | $ | 553,722 |
June 30,
2021 |
December 31,
2020 |
|||||||||||||
U.S. | $ | 28,399 | $ | 36,258 | ||||||||||
Canada Direct Lending | 22,270 | 23,491 | ||||||||||||
Canada POS Lending | 501 | — | ||||||||||||
Total net long-lived assets | $ | 51,170 | $ | 59,749 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||
Operating lease costs: | |||||||||||||||||
Third-Party
|
$ | 7,959 | $ | 7,576 | $ | 15,962 | $ | 15,221 | |||||||||
Related-Party
|
849 | 845 | 1,696 | 1,691 | |||||||||||||
Total operating lease costs | $ | 8,808 | $ | 8,421 | $ | 17,658 | $ | 16,912 | |||||||||
Operating cash flow - Operating leases | $ | 18,303 | $ | 16,545 | |||||||||||||
New ROU assets - Operating leases | $ | 4,964 | $ | 6,922 | |||||||||||||
Weighted average remaining lease term - Operating leases | 5.4 years | 6.1 years | |||||||||||||||
Weighted average discount rate - Operating leases | 9.4 | % | 10.3 | % |
Third-Party | Related-Party | Total | ||||||||||||||||||
Remainder of 2021 | $ | 16,391 | $ | 1,899 | $ | 18,290 | ||||||||||||||
2022 | 30,144 | 3,678 | 33,822 | |||||||||||||||||
2023 | 24,889 | 1,333 | 26,222 | |||||||||||||||||
2024 | 19,137 | 973 | 20,110 | |||||||||||||||||
2025 | 13,581 | 870 | 14,451 | |||||||||||||||||
2026 | 9,483 | 883 | 10,366 | |||||||||||||||||
Thereafter | 21,239 | 1,794 | 23,033 | |||||||||||||||||
Total | 134,864 | 11,430 | 146,294 | |||||||||||||||||
Less: Imputed interest | (30,439) | (2,440) | (32,879) | |||||||||||||||||
Operating lease liabilities | $ | 104,425 | $ | 8,990 | $ | 113,415 | ||||||||||||||
U.S. | Canada Direct Lending | Canada POS Lending | Total | ||||||||||||||||||||
Goodwill at December 31, 2020 | $ | 105,922 | $ | 30,169 | $ | — | $ | 136,091 | |||||||||||||||
Acquisition (Note 16) | — | — | 44,901 | 44,901 | |||||||||||||||||||
Foreign currency translation | — | 689 | 585 | 1,274 | |||||||||||||||||||
Measurement period adjustment | — | — | (4,980) | (4,980) | |||||||||||||||||||
Goodwill at June 30, 2021 | $ | 105,922 | $ | 30,858 | $ | 40,506 | $ | 177,286 |
Fair Value | Useful Life | ||||||||||||||||
Developed technology | $ | 31,827 | 5.0 years | ||||||||||||||
Merchant relationships | 19,684 | 8.0 years | |||||||||||||||
Customer relationships | 2,937 | 8.0 years | |||||||||||||||
Total identified intangible assets | $ | 54,448 |
(in thousands) | Amounts acquired on January 3, 2020 | ||||
Assets | |||||
Cash and cash equivalents
|
$ | 3,360 | |||
Accounts receivable
|
465 | ||||
Property and equipment
|
358 | ||||
Intangible assets
|
1,101 | ||||
Goodwill
|
14,791 | ||||
Operating lease asset
|
235 | ||||
Total assets | $ | 20,310 | |||
Liabilities | |||||
Accounts payable and accrued liabilities
|
$ | 2,264 | |||
Operating lease liabilities
|
235 | ||||
Total liabilities | $ | 2,499 | |||
Total cash consideration transferred | $ | 17,811 |
(in thousands) |
Three Months Ended
June 30, 2021 |
||||
Store closure costs | |||||
Severance and employee costs | $ | 940 | |||
Lease termination costs | 565 | ||||
Net accelerated depreciation and write-off of ROU assets and lease liabilities | 4,258 | ||||
Total store closure costs (1)
|
$ | 5,763 | |||
(1) All costs were recorded within "Corporate, district and other expenses" on the Statement of Operations and related to the U.S. reporting segment. |
Three Months Ended | ||||||||||||||||||||||||||||||||||||||
June 30, 2021 | June 30, 2020 | |||||||||||||||||||||||||||||||||||||
(in thousands, unaudited) | U.S. | Canada Direct Lending | Canada POS Lending | Total | % of Total | U.S. | Canada Direct Lending | Canada POS Lending | Total | % of Total | ||||||||||||||||||||||||||||
Revolving LOC | $ 24,091 | $ 37,450 | $ 6,495 | $ 68,036 | 36.3 | % | $ 30,917 | $ 25,819 | $ — | $ 56,736 | 31.1 | % | ||||||||||||||||||||||||||
Installment | 90,826 | 10,541 | — | 101,367 | 54.0 | % | 102,861 | 9,701 | — | 112,562 | 61.7 | % | ||||||||||||||||||||||||||
Ancillary | 3,877 | 13,889 | 524 | 18,290 | 9.7 | % | 3,542 | 9,669 | — | 13,211 | 7.2 | % | ||||||||||||||||||||||||||
Total revenue | $ 118,794 | $ 61,880 | $ 7,019 | $ 187,693 | 100.0 | % | $ 137,320 | $ 45,189 | $ — | $ 182,509 | 100.0 | % |
Six Months Ended | ||||||||||||||||||||||||||||||||||||||
June 30, 2021 | June 30, 2020 | |||||||||||||||||||||||||||||||||||||
(in thousands, unaudited) | U.S. | Canada Direct Lending | Canada POS Lending | Total | % of Total | U.S. | Canada Direct Lending | Canada POS Lending | Total | % of Total | ||||||||||||||||||||||||||||
Revolving LOC | $ 51,014 | $ 71,818 | $ 7,939 | $ 130,771 | 34.0 | % | $ 72,907 | $ 54,811 | $ — | $ 127,718 | 27.6 | % | ||||||||||||||||||||||||||
Installment | 196,767 | 20,988 | — | 217,755 | 56.7 | % | 278,130 | 28,284 | — | 306,414 | 66.1 | % | ||||||||||||||||||||||||||
Ancillary | 7,505 | 27,514 | 699 | 35,718 | 9.3 | % | 8,051 | 21,132 | — | 29,183 | 6.3 | % | ||||||||||||||||||||||||||
Total revenue | $ 255,286 | $ 120,320 | $ 8,638 | $ 384,244 | 100.0 | % | $ 359,088 | $ 104,227 | $ — | $ 463,315 | 100.0 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Online revenue as a percentage of consolidated revenue | 47.6 | % | 47.1 | % | 49.3 | % | 47.3 | % | ||||||||||||||||||
Online transactions as a percentage of consolidated transactions | 58.3 | % | 57.6 | % | 60.1 | % | 51.8 | % |
As of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company Owned gross loans receivable | $ | 769,228 | $ | 731,014 | $ | 553,722 | $ | 497,442 | $ | 456,512 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross loans receivable Guaranteed by the Company | 37,093 | 32,439 | 44,105 | 39,768 | 34,092 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross combined loans receivable (1)
|
$ | 806,321 | $ | 763,453 | $ | 597,827 | $ | 537,210 | $ | 490,604 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) See "Non-GAAP Financial Measures" below for definition and additional information. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
2021 | 2020 | Change $ | Change % | 2021 | 2020 | Change $ | Change % | |||||||||||||||||||||||||
Revenue | $ 187,693 | $ 182,509 | $ 5,184 | 2.8 | % | $ 384,244 | $ 463,315 | ($ 79,071) | (17.1) | % | ||||||||||||||||||||||
Provision for losses | 45,165 | 50,693 | (5,528) | (10.9) | % | 81,310 | 164,229 | (82,919) | (50.5) | % | ||||||||||||||||||||||
Net revenue | 142,528 | 131,816 | 10,712 | 8.1 | % | 302,934 | 299,086 | 3,848 | 1.3 | % | ||||||||||||||||||||||
Advertising | 7,043 | 5,750 | 1,293 | 22.5 | % | 15,127 | 17,969 | (2,842) | (15.8) | % | ||||||||||||||||||||||
Non-advertising costs of providing services | 50,834 | 49,567 | 1,267 | 2.6 | % | 101,144 | 104,919 | (3,775) | (3.6) | % | ||||||||||||||||||||||
Total cost of providing services | 57,877 | 55,317 | 2,560 | 4.6 | % | 116,271 | 122,888 | (6,617) | (5.4) | % | ||||||||||||||||||||||
Gross margin | 84,651 | 76,499 | 8,152 | 10.7 | % | 186,663 | 176,198 | 10,465 | 5.9 | % | ||||||||||||||||||||||
Operating expense (income) | ||||||||||||||||||||||||||||||||
Corporate, district and other expenses | 59,621 | 36,781 | 22,840 | 62.1 | % | 108,461 | 79,588 | 28,873 | 36.3 | % | ||||||||||||||||||||||
Interest expense | 23,440 | 18,311 | 5,129 | 28.0 | % | 42,979 | 35,635 | 7,344 | 20.6 | % | ||||||||||||||||||||||
(Income) loss from equity method investment | (1,712) | (741) | (971) | # | (2,258) | 877 | (3,135) | # | ||||||||||||||||||||||||
Gain on equity method investment | (135,387) | — | (135,387) | # | (135,387) | — | (135,387) | # | ||||||||||||||||||||||||
Total operating (income) expense | (54,038) | 54,351 | (108,389) | # | 13,795 | 116,100 | (102,305) | (88.1) | % | |||||||||||||||||||||||
Income from continuing operations before income taxes | 138,689 | 22,148 | 116,541 | # | 172,868 | 60,098 | 112,770 | # | ||||||||||||||||||||||||
Provision for income taxes | 34,172 | 1,068 | 33,104 | # | 42,616 | 3,005 | 39,611 | # | ||||||||||||||||||||||||
Net income from continuing operations | 104,517 | 21,080 | 83,437 | # | 130,252 | 57,093 | 73,159 | # | ||||||||||||||||||||||||
Net income from discontinued operations, net of tax | — | 993 | (993) | # | — | 1,285 | (1,285) | # | ||||||||||||||||||||||||
Net income | $ 104,517 | $ 22,073 | $ 82,444 | # | $ 130,252 | $ 58,378 | $ 71,874 | # | ||||||||||||||||||||||||
# - Variance greater than 100% or not meaningful |
(in thousands, except percentages) | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | |||||||||||||||||||||
Gross combined loans receivable (1)
|
||||||||||||||||||||||||||
Revolving LOC | $ 47,277 | $ 43,387 | $ 55,561 | $ 56,727 | $ 53,239 | |||||||||||||||||||||
Installment loans - Company Owned | 139,234 | 142,396 | 167,890 | 148,569 | 146,495 | |||||||||||||||||||||
Total U.S. Company Owned gross loans receivable | 186,511 | 185,783 | 223,451 | 205,296 | 199,734 | |||||||||||||||||||||
Installment loans - Guaranteed by the Company (2)
|
37,093 | 32,439 | 44,105 | 39,768 | 34,092 | |||||||||||||||||||||
Total U.S. gross combined loans receivable (1)
|
$ 223,604 | $ 218,222 | $ 267,556 | $ 245,064 | $ 233,826 | |||||||||||||||||||||
Lending Revenue: | ||||||||||||||||||||||||||
Revolving LOC | $ 24,091 | $ 26,923 | $ 31,111 | $ 30,431 | $ 30,917 | |||||||||||||||||||||
Installment loans - Company Owned | 55,918 | 64,516 | 68,927 | 62,215 | 65,104 | |||||||||||||||||||||
Installment loans - Guaranteed by the Company (2)
|
34,908 | 41,425 | 42,972 | 36,731 | 37,757 |
(in thousands, except percentages) | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | |||||||||||||||||||||
Total U.S. lending revenue | $ 114,917 | $ 132,864 | $ 143,010 | $ 129,377 | $ 133,778 | |||||||||||||||||||||
Lending Provision: | ||||||||||||||||||||||||||
Revolving LOC | $ 6,621 | $ 5,039 | $ 11,583 | $ 11,904 | $ 11,984 | |||||||||||||||||||||
Installment loans - Company Owned | 14,048 | 11,159 | 24,629 | 16,259 | 17,550 | |||||||||||||||||||||
Installment loans - Guaranteed by the Company (2)
|
12,583 | 9,648 | 22,621 | 14,936 | 11,713 | |||||||||||||||||||||
Total U.S. lending provision | $ 33,252 | $ 25,846 | $ 58,833 | $ 43,099 | $ 41,247 | |||||||||||||||||||||
Lending Net Revenue | ||||||||||||||||||||||||||
Revolving LOC | $ 17,470 | $ 21,884 | $ 19,528 | $ 18,527 | $ 18,933 | |||||||||||||||||||||
Installment loans - Company Owned | 41,870 | 53,357 | 44,298 | 45,956 | 47,554 | |||||||||||||||||||||
Installment loans - Guaranteed by the Company (2)
|
22,325 | 31,777 | 20,351 | 21,795 | 26,044 | |||||||||||||||||||||
Total U.S. lending net revenue | $ 81,665 | $ 107,018 | $ 84,177 | $ 86,278 | $ 92,531 | |||||||||||||||||||||
NCOs | ||||||||||||||||||||||||||
Revolving LOC | $ 7,271 | $ 9,904 | $ 12,500 | $ 10,595 | $ 20,090 | |||||||||||||||||||||
Installment loans - Company Owned | 18,617 | 17,313 | 19,620 | 16,758 | 29,905 | |||||||||||||||||||||
Installment loans - Guaranteed by the Company (2)
|
12,044 | 12,150 | 21,590 | 13,902 | 15,738 | |||||||||||||||||||||
Total U.S. NCOs | $ 37,932 | $ 39,367 | $ 53,710 | $ 41,255 | $ 65,733 | |||||||||||||||||||||
NCO rate (3)
|
||||||||||||||||||||||||||
Revolving LOC | 16.0% | 20.0% | 22.3% | 19.3% | 31.7% | |||||||||||||||||||||
Installment loans - Company Owned | 13.2% | 11.2% | 12.4% | 11.4% | 16.6% | |||||||||||||||||||||
Total U.S. Company Owned NCO rate | 13.9% | 13.3% | 15.0% | 13.5% | 20.5% | |||||||||||||||||||||
Installment loans - Guaranteed by the Company (2)
|
34.6% | 31.7% | 51.5% | 37.6% | 35.0% | |||||||||||||||||||||
Total U.S. NCO rate | 17.2% | 16.2% | 21.0% | 17.2% | 22.8% | |||||||||||||||||||||
ALL and CSO Liability for Losses (4)
|
||||||||||||||||||||||||||
Revolving LOC | $ 13,669 | $ 14,319 | $ 19,185 | $ 20,101 | $ 18,793 | |||||||||||||||||||||
Installment loans - Company Owned | 21,246 | 25,815 | 31,971 | 26,961 | 27,112 | |||||||||||||||||||||
Installment loans - Guaranteed by the Company (2)
|
5,265 | 4,727 | 7,228 | 6,198 | 5,164 |
(in thousands, except percentages) | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | |||||||||||||||||||||
Gross loans receivable | ||||||||||||||||||||||||||
Canada Direct Lending Revolving LOC | $ 337,700 | $ 319,307 | $ 303,323 | $ 265,507 | $ 231,917 | |||||||||||||||||||||
Canada Direct Lending Installment loans | 23,564 | 24,385 | 26,948 | 26,639 | 24,861 | |||||||||||||||||||||
Total Canada Direct Lending gross loans receivable | $ 361,264 | $ 343,692 | $ 330,271 | $ 292,146 | $ 256,778 | |||||||||||||||||||||
Total Canada POS Lending gross loans receivable | $ 221,500 | $ 201 | $ — | $ — | $ — | |||||||||||||||||||||
Lending Revenue: | ||||||||||||||||||||||||||
Canada Direct Lending Revolving LOC | $ 37,450 | $ 34,368 | $ 31,962 | $ 28,280 | $ 25,819 | |||||||||||||||||||||
Canada Direct Lending Installment loans | 10,541 | 10,447 | 11,106 | 10,238 | 9,701 | |||||||||||||||||||||
Total Canada Direct Lending - lending revenue | $ 47,991 | $ 44,815 | $ 43,068 | $ 38,518 | $ 35,520 | |||||||||||||||||||||
Canada POS Lending - lending revenue | $ 6,495 | $ 1,383 | $ — | $ — | $ — | |||||||||||||||||||||
Lending Provision: | ||||||||||||||||||||||||||
Canada Direct Lending Revolving LOC | $ 7,066 | $ 7,909 | $ 8,679 | $ 9,751 | $ 9,357 | |||||||||||||||||||||
Canada Direct Lending Installment loans | 1,438 | 1,234 | 1,972 | 1,426 | (263) | |||||||||||||||||||||
Total Canada Direct Lending - lending provision | $ 8,504 | $ 9,143 | $ 10,651 | $ 11,177 | $ 9,094 | |||||||||||||||||||||
Canada POS Lending - lending provision | $ 2,986 | $ 855 | $ — | $ — | $ — | |||||||||||||||||||||
Lending Net Revenue | ||||||||||||||||||||||||||
Canada Direct Lending Revolving LOC | $ 30,384 | $ 26,459 | $ 23,283 | $ 18,529 | $ 16,462 | |||||||||||||||||||||
Canada Direct Lending Installment loans | 9,103 | 9,213 | 9,134 | 8,812 | 9,964 | |||||||||||||||||||||
Total Canada Direct Lending - lending net revenue | $ 39,487 | $ 35,672 | $ 32,417 | $ 27,341 | $ 26,426 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
(dollars in thousands, unaudited) | 2021 | 2020 | Change $ | Change % | 2021 | 2020 | Change $ | Change % | |||||||||||||||||||||
Revenue | $ 61,880 | $ 45,189 | $ 16,691 | 36.9 | % | $ 120,320 | $ 104,227 | $ 16,093 | 15.4 | % | |||||||||||||||||||
Provision for losses | 8,556 | 9,163 | (607) | (6.6) | % | 17,790 | 36,658 | (18,868) | (51.5) | % | |||||||||||||||||||
Net revenue | 53,324 | 36,026 | 17,298 | 48.0 | % | 102,530 | 67,569 | 34,961 | 51.7 | % | |||||||||||||||||||
Advertising | 778 | 481 | 297 | 61.7 | % | 1,682 | 1,755 | (73) | (4.2) | % | |||||||||||||||||||
Non-advertising costs of providing services | 18,683 | 15,906 | 2,777 | 17.5 | % | 36,765 | 34,016 | 2,749 | 8.1 | % | |||||||||||||||||||
Total cost of providing services | 19,461 | 16,387 | 3,074 | 18.8 | % | 38,447 | 35,771 | 2,676 | 7.5 | % | |||||||||||||||||||
Gross margin | 33,863 | 19,639 | 14,224 | 72.4 | % | 64,083 | 31,798 | 32,285 | # | ||||||||||||||||||||
Corporate, district and other expenses | 6,022 | 7,150 | (1,128) | (15.8) | % | 11,640 | 12,307 | (667) | (5.4) | % | |||||||||||||||||||
Interest expense | 2,498 | 2,198 | 300 | 13.6 | % | 4,853 | 4,676 | 177 | 3.8 | % | |||||||||||||||||||
Total operating expense | 8,520 | 9,348 | (828) | (8.9) | % | 16,493 | 16,983 | (490) | (2.9) | % | |||||||||||||||||||
Segment operating income | 25,343 | 10,291 | 15,052 | # | 47,590 | 14,815 | 32,775 | # | |||||||||||||||||||||
Interest expense | 2,498 | 2,198 | 300 | 13.6 | % | 4,853 | 4,676 | 177 | 3.8 | % | |||||||||||||||||||
Depreciation and amortization | 1,144 | 1,108 | 36 | 3.2 | % | 2,270 | 2,268 | 2 | 0.1 | % | |||||||||||||||||||
EBITDA (1)
|
28,985 | 13,597 | 15,388 | # | 54,713 | 21,759 | 32,954 | # | |||||||||||||||||||||
Canada GST adjustment | — | 2,160 | (2,160) | — | 2,160 | (2,160) | |||||||||||||||||||||||
Other adjustments | 107 | 281 | (174) | 148 | 437 | (289) | |||||||||||||||||||||||
Adjusted EBITDA (1)
|
$ 29,092 | $ 16,038 | $ 13,054 | 81.4 | % | $ 54,861 | $ 24,356 | $ 30,505 | 125.2 | % | |||||||||||||||||||
# - Variance greater than 100% or not meaningful. | |||||||||||||||||||||||||||||
(1) These are non-GAAP metrics. For a description of each non-GAAP addback, see the applicable reconciliations contained under "Results of Consolidated Operations." For a description of each non-GAAP metric, see "Non-GAAP Financial Measures." |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
(dollars in thousands, unaudited) | 2021 | 2021 | |||||||||||||||||||||||||||
Revenue | $ 7,019 | $ 8,638 | |||||||||||||||||||||||||||
Provision for losses | 2,987 | 3,842 | |||||||||||||||||||||||||||
Net revenue | 4,032 | 4,796 | |||||||||||||||||||||||||||
Advertising | 176 | 215 | |||||||||||||||||||||||||||
Non-advertising costs of providing services | 314 | 387 | |||||||||||||||||||||||||||
Total cost of providing services | 490 | 602 | |||||||||||||||||||||||||||
Gross margin | 3,542 | 4,194 | |||||||||||||||||||||||||||
Corporate, district and other expenses | 9,869 | 12,494 | |||||||||||||||||||||||||||
Interest expense | 3,604 | 4,430 | |||||||||||||||||||||||||||
Total operating expense | 13,473 | 16,924 | |||||||||||||||||||||||||||
Segment operating loss | (9,931) | (12,730) | |||||||||||||||||||||||||||
Interest expense | 3,604 | 4,430 | |||||||||||||||||||||||||||
Depreciation and amortization | 3,283 | 3,996 | |||||||||||||||||||||||||||
EBITDA (1)
|
(3,044) | (4,304) | |||||||||||||||||||||||||||
Acquisition accounting adjustment | 5,495 | 5,495 | |||||||||||||||||||||||||||
Other adjustments | (17) | (17) | |||||||||||||||||||||||||||
Adjusted EBITDA (1)
|
$ 2,434 | $ 1,174 | |||||||||||||||||||||||||||
# - Variance greater than 100% or not meaningful. | |||||||||||||||||||||||||||||
(1) These are non-GAAP metrics. For a description of each non-GAAP addback, see the applicable reconciliations contained under "Consolidated Results of Operations." For a description of each non-GAAP metric, see "Non-GAAP Financial Measures." |
Three Months Ended
June 30, |
Six Months Ended
June 30, |
|||||||||||||||||||||||||||||||
(in thousands, unaudited) | 2021 | 2020 | Change $ | Change % | 2021 | 2020 | Change $ | Change % | ||||||||||||||||||||||||
Net income from continuing operations | $ 104,517 | $ 21,080 | $ 83,437 | # | $ 130,252 | $ 57,093 | $ 73,159 | # | ||||||||||||||||||||||||
Provision for income taxes | 34,172 | 1,068 | 33,104 | # | 42,616 | 3,005 | 39,611 | # | ||||||||||||||||||||||||
Interest expense | 23,440 | 18,311 | 5,129 | 28.0 | % | 42,979 | 35,635 | 7,344 | 20.6 | % | ||||||||||||||||||||||
Depreciation and amortization | 7,435 | 4,417 | 3,018 | 68.3 | % | 12,400 | 8,954 | 3,446 | 38.5 | % | ||||||||||||||||||||||
EBITDA | 169,564 | 44,876 | 124,688 | # | 228,247 | 104,687 | 123,560 | # | ||||||||||||||||||||||||
Restructuring costs (1)
|
5,763 | — | 5,763 | — | ||||||||||||||||||||||||||||
Legal and other costs (2)
|
— | 847 | — | 1,750 | ||||||||||||||||||||||||||||
(Income) loss from equity method investment (3)
|
(1,712) | (741) | (2,258) | 877 | ||||||||||||||||||||||||||||
Gain from equity method investment (4)
|
(135,387) | — | (135,387) | — | ||||||||||||||||||||||||||||
Transaction costs (5)
|
3,181 | 91 | 6,341 | 337 | ||||||||||||||||||||||||||||
Acquisition-related adjustments (6)
|
5,495 | — | 5,495 | — | ||||||||||||||||||||||||||||
Share-based compensation (7)
|
3,467 | 3,310 | 6,150 | 6,504 | ||||||||||||||||||||||||||||
Canada GST adjustment (9)
|
— | 2,160 | — | 2,160 | ||||||||||||||||||||||||||||
Other adjustments (13)
|
(69) | 586 | (274) | 601 | ||||||||||||||||||||||||||||
Adjusted EBITDA | $ 50,302 | $ 51,129 | ($ 827) | (1.6) | % | $ 114,077 | $ 116,916 | ($ 2,839) | (2.4) | % | ||||||||||||||||||||||
Adjusted EBITDA Margin | 26.8 | % | 28.0 | % | 29.7 | % | 25.2 | % | ||||||||||||||||||||||||
# - Change greater than 100% or not meaningful |
(1) | Restructuring costs for the three and six months ended June 30, 2021 resulted from U.S. store closures and consisted of (i) severance costs for store employees, (ii) lease termination costs, and (iii) accelerated depreciation, partially offset by the net write-off of ROU assets and lease liabilities. | ||||
(2) | Legal and other costs for the six months ended June 30, 2020 included (i) settlement costs related to certain legal matters (ii) costs for certain securities litigation and related matters and (iii) severance costs for certain corporate employees. | ||||
(3) |
The amount reported is our share of the estimated U.S. GAAP net (income) loss of Katapult.
|
||||
(4) |
During the three months ended June 30, 2021, we recorded an additional gain on our investment in Katapult of $135.4 million. The gain represents cash we received, net of the basis of our investment in Katapult, upon the completion of the business combination between Katapult and FinServ. Refer to "Katapult Update for the Three and Six Months Ended June 30, 2021 and 2020" for additional details.
|
||||
(5) |
Transaction costs for the six months ended June 30, 2021 relate to Katapult and FinServ business combination and the Flexiti acquisition.
Transaction costs for the six months ended June 30, 2020 relate to the acquisition of Ad Astra.
|
||||
(6) | Acquisition-related adjustments for the six months ended June 30, 2021 relate to the acquired Flexiti loan portfolio as of March 10, 2021. Refer to "Consolidated Revenue by Product and Segment" for additional details. | ||||
(7) | The estimated fair value of share-based awards is recognized as non-cash compensation expense on a straight-line basis over the vesting period. | ||||
(8) | The intangible asset amortization primarily includes amortization of identifiable intangible assets established in connection with the acquisition of Flexiti. | ||||
(9) |
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 GST due.
|
||||
(10) |
In the second quarter of 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, which was settled in April 2021. Also in the second quarter of 2020, we released a $4.6 million valuation allowance related to NOLs for certain entities in Canada.
|
||||
(11) | On March 27, 2020, the 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 six months ended June 30, 2020, we recorded an income tax benefit of $9.1 million related to the carryback of NOL from tax years 2018 and 2019. | ||||
(12) |
Cumulative tax effect of adjustments included in Reconciliation of Net income from continuing operations Adjusted Net Income table is calculated using the estimated incremental tax rate by country.
|
||||
(13) | Other adjustments primarily include the intercompany foreign-currency exchange impact. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
2021 | 2020 | $ Change | % Change | 2021 | 2020 | $ Change | % Change | ||||||||||||||||||||||||||||
Average Exchange Rates for the Canadian Dollar | 0.8141 | 0.7215 | 0.0926 | 12.8 | % | $ | 0.8019 | $ | 0.7335 | $0.0684 | 9.3 | % | |||||||||||||||||||||||
June 30, | December 31, | Change | |||||||||||||||
2021 | 2020 | $ | % | ||||||||||||||
Exchange Rate for the Canadian Dollar | 0.8042 | 0.7863 | 0.0179 | 2.3 | % | ||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
2021 | 2020 | $ Change | % Change | 2021 | 2020 | $ Change | % Change | |||||||||||||||||||||||||||||||
Canada Direct Lending – constant currency basis: | ||||||||||||||||||||||||||||||||||||||
Revenues | $ | 54,838 | $ | 45,189 | $ | 9,649 | 21.4 | % | $ | 110,027 | $ | 104,227 | $ | 5,800 | 5.6 | % | ||||||||||||||||||||||
Gross Margin | 29,993 | 19,639 | 10,354 | 52.7 | % | 58,524 | 31,798 | 26,726 | 84.0 | % | ||||||||||||||||||||||||||||
June 30, | December 31, | Change | |||||||||||||||||||||
2021 | 2020 | $ | % | ||||||||||||||||||||
Canada Direct Lending – constant currency basis: | |||||||||||||||||||||||
Gross loans receivable | $ | 353,196 | $ | 330,271 | $ | 22,925 | 6.9 | % | |||||||||||||||
Capacity | Interest Rate | Maturity | Counter-parties | Balance as of June 30, 2021 (in USD) | ||||||||||||||||
Non-Recourse Canada SPV Facility (1)
|
C$175.0 million | 3-Mo CDOR + 6.75% | September 2, 2023 | Waterfall Asset Management | $ 98,881 | |||||||||||||||
Senior Secured Revolving Credit Facility | $50.0 million | 1-Mo LIBOR + 5.00% | June 30, 2022 | BayCoast Bank; Stride Bank; Hancock-Whitney Bank; Metropolitan Commercial Bank | — | |||||||||||||||
Non-Recourse U.S. SPV Facility | $200.0 million |
1-Mo LIBOR + 6.25%(2)
|
April 8, 2024 | Atalaya Capital Management, MetaBank | 44,489 | |||||||||||||||
Non-Recourse Flexiti SPE Facility (1)(3)
|
C$500.0 million | 3-Mo CDOR + 4.40% | March 10, 2024 | Credit Suisse (Class A); SPF (Class B) | 194,864 | |||||||||||||||
Cash Money Revolving Credit Facility (1)
|
C$10.0 million | Canada Prime Rate +1.95% | On-demand | Royal Bank of Canada | — | |||||||||||||||
8.25% Senior Secured Notes (due 2025) (4)
|
$690.0 million | 8.25% | September 1, 2025 | 680,893 | ||||||||||||||||
(1) Capacity amounts are denominated in Canadian dollars, while outstanding balances as of June 30, 2021 are denominated in U.S. dollars. | ||||||||||||||||||||
(2) The Non-Recourse U.S. SPV Facility initially provided for $100.0 million of borrowing capacity, which increased to $200.0 million on July 31, 2020 following additional commitments. As of June 30, 2021 interest accrues at an annual rate of one-month LIBOR (with a floor of 1.65%) plus 6.25%.
|
||||||||||||||||||||
(3) The current Non-Recourse Flexiti SPE Facility was entered into concurrent with the Flexiti acquisition. Interest accrues at an annual rate of three-month CDOR plus 4.40%. | ||||||||||||||||||||
(4) On July 16, 2021, we announced the pricing of our $750 million aggregate principal amount of new 7.50% Senior Secured Notes, which will be used to redeem our $690.0 million 8.25% Senior Secured Notes upon the expected closing on July 30, 2021.
|
Six Months Ended June 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
Net cash provided by operating activities from continuing operations | $ | 162,895 | $ | 270,800 | ||||||||||
Net cash used in investing activities from continuing operations | (93,698) | (50,963) | ||||||||||||
Net cash provided by financing activities from continuing operations | 8,088 | 2,123 | ||||||||||||
June 30, 2021 | ||||||||||||||||||||||||||
(dollars in thousands) | CURO |
Subsidiary
Guarantors |
U.S. SPV | Canada SPV | Flexiti SPE |
Subsidiary
Non-Guarantors |
Eliminations |
CURO
Consolidated |
||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 209,964 | $ | — | $ | — | $ | — | $ | 66,403 | $ | — | $ | 276,367 | ||||||||||
Restricted cash | — | 22,346 | 8,846 | 28,892 | 5,815 | 3,400 | — | 69,299 | ||||||||||||||||||
Loans receivable, net | — | 99,126 | 52,469 | 278,333 | 216,876 | 54,563 | — | 701,367 | ||||||||||||||||||
Income taxes receivable | 25,916 | (24,447) | — | — | — | 706 | — | 2,175 | ||||||||||||||||||
Prepaid expenses and other | — | 18,622 | — | (11) | 21 | 12,577 | — | 31,209 | ||||||||||||||||||
Property and equipment, net | — | 28,399 | — | — | — | 22,771 | — | 51,170 | ||||||||||||||||||
Investment in Katapult | — | 16,501 | — | — | — | — | — | 16,501 | ||||||||||||||||||
Right of use asset - operating leases | — | 65,552 | — | — | — | 41,146 | — | 106,698 | ||||||||||||||||||
Deferred tax assets | 13,757 | (13,757) | — | — | — | 6,264 | — | 6,264 | ||||||||||||||||||
Goodwill and Intangibles, net | — | 125,367 | — | — | — | 148,752 | — | 274,119 | ||||||||||||||||||
Intercompany receivable | — | 274,280 | — | — | — | 97,676 | (371,956) | — | ||||||||||||||||||
Investment in subsidiaries | 350,422 | — | — | — | — | — | (350,422) | — | ||||||||||||||||||
Other assets | — | 8,588 | — | — | — | 708 | — | 9,296 | ||||||||||||||||||
Total assets | $ | 390,095 | $ | 830,541 | $ | 61,315 | $ | 307,214 | $ | 222,712 | $ | 454,966 | $ | (722,378) | $ | 1,544,465 | ||||||||||
Liabilities and Stockholders' equity (deficit): | ||||||||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 432 | $ | 42,056 | $ | — | $ | 2,487 | $ | 3,591 | $ | 15,840 | $ | — | $ | 64,406 | ||||||||||
Deferred revenue | — | 3,196 | 84 | 25 | — | 7,089 | — | 10,394 | ||||||||||||||||||
Lease liability - operating leases | — | 72,431 | — | — | — | 40,984 | — | 113,415 | ||||||||||||||||||
Contingent consideration related to acquisition | — | — | — | — | — | 21,239 | — | 21,239 | ||||||||||||||||||
Income taxes payable | (63,954) | 63,954 | — | — | — | — | — | — | ||||||||||||||||||
Accrued interest | 18,975 | 1 | 700 | 735 | — | — | — | 20,411 | ||||||||||||||||||
Liability for losses on CSO lender-owned consumer loans | — | 5,265 | — | — | — | — | — | 5,265 | ||||||||||||||||||
Debt | 680,893 | — | 44,489 | 98,882 | 194,863 | — | — | 1,019,127 | ||||||||||||||||||
Intercompany payable | — | 94,845 | (94,846) | 29,913 | (21,759) | 363,803 | (371,956) | — | ||||||||||||||||||
Payable to CURO Holdings Corp. | (523,046) | 523,046 | — | — | — | — | — | — | ||||||||||||||||||
Other long-term liabilities | — | 13,785 | — | — | — | 11 | — | 13,796 | ||||||||||||||||||
Deferred tax liabilities | 10,093 | (1,730) | — | (108) | — | 1,455 | — | 9,710 | ||||||||||||||||||
Total liabilities
|
123,393 | 816,849 | (49,573) | 131,934 | 176,695 | 450,421 | (371,956) | 1,277,763 | ||||||||||||||||||
Stockholders' equity (deficit) | 266,702 | 13,692 | 110,888 | 175,280 | 46,017 | 4,545 | (350,422) | 266,702 | ||||||||||||||||||
Total liabilities and stockholders' equity (deficit) | $ | 390,095 | $ | 830,541 | $ | 61,315 | $ | 307,214 | $ | 222,712 | $ | 454,966 | $ | (722,378) | $ | 1,544,465 |
December 31, 2020 | |||||||||||||||||||||||
(dollars in thousands) | CURO |
Subsidiary
Guarantors |
U.S. SPV | Canada SPV |
Subsidiary
Non-Guarantors |
Eliminations |
CURO
Consolidated |
||||||||||||||||
Assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 158,941 | $ | — | $ | — | $ | 54,402 | $ | — | $ | 213,343 | |||||||||
Restricted cash | — | 19,181 | 2,665 | 29,329 | 3,590 | — | 54,765 | ||||||||||||||||
Loans receivable, net | — | 113,940 | 58,355 | 247,947 | 47,318 | — | 467,560 | ||||||||||||||||
Income taxes receivable | 55,460 | (24,444) | — | — | 1,046 | — | 32,062 | ||||||||||||||||
Prepaid expenses and other | — | 19,212 | 396 | (8) | 8,394 | — | 27,994 | ||||||||||||||||
Property and equipment, net | — | 36,258 | — | — | 23,491 | — | 59,749 | ||||||||||||||||
Investments in Katapult | — | 27,370 | — | — | — | — | 27,370 | ||||||||||||||||
Right of use asset - operating leases | — | 73,744 | — | — | 41,288 | — | 115,032 | ||||||||||||||||
Deferred tax asset | 13,757 | (13,757) | — | — | — | — | — | ||||||||||||||||
Goodwill | — | 105,922 | — | — | 30,169 | — | 136,091 | ||||||||||||||||
Other intangibles, net | — | 17,466 | — | — | 22,959 | — | 40,425 | ||||||||||||||||
Intercompany receivable | — | 164,615 | — | — | — | (164,615) | — | ||||||||||||||||
Investment in subsidiaries | 192,011 | — | — | — | — | (192,011) | — | ||||||||||||||||
Other assets | — | 7,898 | — | — | 697 | — | 8,595 | ||||||||||||||||
Total assets | $ | 261,228 | $ | 706,346 | $ | 61,416 | $ | 277,268 | $ | 233,354 | $ | (356,626) | $ | 1,182,986 | |||||||||
Liabilities and Stockholder's equity (deficit): | |||||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 14 | $ | 38,344 | $ | — | $ | 34,055 | $ | (22,789) | $ | — | $ | 49,624 | |||||||||
Deferred revenue | — | 3,546 | 106 | 30 | 1,712 | — | 5,394 | ||||||||||||||||
Lease liability - operating leases | — | 81,435 | — | — | 41,213 | — | 122,648 | ||||||||||||||||
Income taxes payable | (15,916) | 15,916 | — | — | — | — | — | ||||||||||||||||
Accrued interest | 18,975 | 1 | 405 | 742 | — | — | 20,123 | ||||||||||||||||
Liability for losses on CSO lender-owned consumer loans | — | 7,228 | — | — | — | — | 7,228 | ||||||||||||||||
Debt | 680,000 | — | 43,585 | 96,076 | — | — | 819,661 | ||||||||||||||||
Intercompany payable | — | 46,119 | (46,119) | 30,737 | 133,878 | (164,615) | — | ||||||||||||||||
Payable to CURO Group Holdings Corp. | (563,585) | 563,585 | — | — | — | — | — | ||||||||||||||||
Other long-term liabilities | — | 15,276 | — | — | 106 | — | 15,382 | ||||||||||||||||
Deferred tax liabilities | 9,835 | — | — | (105) | 1,291 | — | 11,021 | ||||||||||||||||
Total liabilities
|
129,323 | 771,450 | (2,023) | 161,535 | 155,411 | (164,615) | 1,051,081 | ||||||||||||||||
Stockholders' equity (deficit) | 131,905 | (65,104) | 63,439 | 115,733 | 77,943 | (192,011) | 131,905 | ||||||||||||||||
Total liabilities and stockholders' equity (deficit) | $ | 261,228 | $ | 706,346 | $ | 61,416 | $ | 277,268 | $ | 233,354 | $ | (356,626) | $ | 1,182,986 |
Three Months Ended June 30, 2021 | ||||||||||||||||||||||||||
(dollars in thousands) | CURO |
Subsidiary
Guarantors |
U.S. SPV | Canada SPV | Flexiti SPE |
Subsidiary
Non-Guarantors |
Eliminations |
CURO
Consolidated |
||||||||||||||||||
Revenue | $ | — | $ | 82,321 | $ | 36,473 | $ | 40,407 | $ | 5,627 | $ | 22,865 | $ | — | $ | 187,693 | ||||||||||
Provision for losses | — | 20,197 | 13,425 | 5,612 | 3,029 | 2,902 | — | 45,165 | ||||||||||||||||||
Net revenue | — | 62,124 | 23,048 | 34,795 | 2,598 | 19,963 | — | 142,528 | ||||||||||||||||||
Cost of providing services: | ||||||||||||||||||||||||||
Salaries and benefits | — | 16,306 | — | — | — | 9,750 | — | 26,056 | ||||||||||||||||||
Occupancy and office | — | 10,515 | — | — | — | 7,230 | — | 17,745 | ||||||||||||||||||
Other costs of providing services | — | 5,016 | — | — | — | 2,017 | — | 7,033 | ||||||||||||||||||
Advertising | — | 6,089 | — | — | — | 954 | — | 7,043 | ||||||||||||||||||
Total cost of providing services | — | 37,926 | — | — | — | 19,951 | — | 57,877 | ||||||||||||||||||
Gross margin | — | 24,198 | 23,048 | 34,795 | 2,598 | 12 | — | 84,651 | ||||||||||||||||||
Operating expense (income): | ||||||||||||||||||||||||||
Corporate, district and other expenses | 3,342 | 40,353 | 35 | 183 | 1,958 | 13,750 | — | 59,621 | ||||||||||||||||||
Intercompany management fee | — | (5,388) | — | 1,413 | — | 3,975 | — | — | ||||||||||||||||||
Interest expense (income) | 14,685 | 150 | 2,503 | 2,526 | 3,598 | (22) | — | 23,440 | ||||||||||||||||||
Income from equity method investment | — | (1,712) | — | — | — | — | — | (1,712) | ||||||||||||||||||
Gain from equity method investment | — | (135,387) | — | — | — | — | — | (135,387) | ||||||||||||||||||
Intercompany interest (income) expense | — | (3,806) | — | 603 | — | 3,203 | — | — | ||||||||||||||||||
Total operating expense | 18,027 | (105,790) | 2,538 | 4,725 | 5,556 | 20,906 | — | (54,038) | ||||||||||||||||||
(Loss) income from continuing operations before income taxes | (18,027) | 129,988 | 20,510 | 30,070 | (2,958) | (20,894) | — | 138,689 | ||||||||||||||||||
(Benefit) provision for income taxes | (4,619) | 37,104 | — | — | — | 1,687 | — | 34,172 | ||||||||||||||||||
Net (loss) income from continuing operations | (13,408) | 92,884 | 20,510 | 30,070 | (2,958) | (22,581) | — | 104,517 | ||||||||||||||||||
Equity in net income (loss) of subsidiaries: | ||||||||||||||||||||||||||
CURO | $ | 117,925 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (117,925) | $ | — | ||||||||||
Guarantor Subsidiaries | — | 92,884 | — | — | — | — | (92,884) | — | ||||||||||||||||||
Non-Guarantor Subsidiaries | — | (22,581) | — | — | — | — | 22,581 | — | ||||||||||||||||||
U.S. SPV | — | 20,510 | — | — | — | — | (20,510) | — | ||||||||||||||||||
Canada SPV | — | 30,070 | — | — | — | — | (30,070) | — | ||||||||||||||||||
Flexiti SPE | — | (2,958) | — | — | — | — | 2,958 | — | ||||||||||||||||||
Net income (loss) attributable to CURO | $ | 104,517 | $ | 210,809 | $ | 20,510 | $ | 30,070 | $ | (2,958) | $ | (22,581) | $ | (235,850) | $ | 104,517 |
Three Months Ended June 30, 2020 | |||||||||||||||||||||||
(dollars in thousands) | CURO |
Subsidiary
Guarantors |
U.S. SPV | Canada SPV |
Subsidiary
Non-Guarantors |
Eliminations |
CURO
Consolidated |
||||||||||||||||
Revenue | $ | — | $ | 97,485 | $ | 39,835 | $ | 30,372 | $ | 14,817 | $ | — | $ | 182,509 | |||||||||
Provision for losses | — | 18,352 | 23,178 | 9,244 | (81) | — | 50,693 | ||||||||||||||||
Net revenue | — | 79,133 | 16,657 | 21,128 | 14,898 | — | 131,816 | ||||||||||||||||
Cost of providing services: | |||||||||||||||||||||||
Salaries and benefits | — | 16,663 | — | — | 8,060 | — | 24,723 | ||||||||||||||||
Occupancy and office | — | 10,363 | — | — | 6,480 | — | 16,843 | ||||||||||||||||
Other costs of providing services | — | 6,635 | — | — | 1,366 | — | 8,001 | ||||||||||||||||
Advertising | — | 5,269 | — | — | 481 | — | 5,750 | ||||||||||||||||
Total cost of providing services | — | 38,930 | — | — | 16,387 | — | 55,317 | ||||||||||||||||
Gross margin | — | 40,203 | 16,657 | 21,128 | (1,489) | — | 76,499 | ||||||||||||||||
Operating (income) expense: | |||||||||||||||||||||||
Corporate, district and other expenses | 3,398 | 26,197 | 37 | 104 | 7,045 | — | 36,781 | ||||||||||||||||
Intercompany management fee | — | (3,345) | — | 645 | 2,700 | — | — | ||||||||||||||||
Interest expense | 14,647 | 258 | 1,208 | 2,112 | 86 | — | 18,311 | ||||||||||||||||
Income from equity method investment | — | (741) | — | — | — | — | (741) | ||||||||||||||||
Intercompany interest (income) expense | — | (1,442) | — | 533 | 909 | — | — | ||||||||||||||||
Total operating expense | 18,045 | 20,927 | 1,245 | 3,394 | 10,740 | — | 54,351 | ||||||||||||||||
Income (loss) from continuing operations before income taxes | (18,045) | 19,276 | 15,412 | 17,734 | (12,229) | — | 22,148 | ||||||||||||||||
(Benefit) provision for income taxes | (2,872) | 7,504 | — | — | (3,564) | — | 1,068 | ||||||||||||||||
Net (loss) income from continuing operations | (15,173) | 11,772 | 15,412 | 17,734 | (8,665) | — | 21,080 | ||||||||||||||||
Net income on discontinued operations | — | — | — | — | 993 | — | 993 | ||||||||||||||||
Net income (loss) | (15,173) | 11,772 | 15,412 | 17,734 | (7,672) | — | 22,073 | ||||||||||||||||
Equity in net income (loss) of subsidiaries: | |||||||||||||||||||||||
CFTC | 37,246 | — | — | — | — | (37,246) | — | ||||||||||||||||
Guarantor Subsidiaries | — | 11,772 | — | — | — | (11,772) | — | ||||||||||||||||
Non-Guarantor Subsidiaries | — | (7,672) | — | — | — | 7,672 | — | ||||||||||||||||
U.S. SPV | — | 15,412 | — | — | — | (15,412) | — | ||||||||||||||||
Canada SPV | — | 17,734 | — | — | (17,734) | — | |||||||||||||||||
Net income (loss) attributable to CURO | $ | 22,073 | $ | 49,018 | $ | 15,412 | $ | 17,734 | $ | (7,672) | $ | (74,492) | $ | 22,073 |
Six Months Ended June 30, 2021 | ||||||||||||||||||||||||||
(dollars in thousands) | CURO |
Subsidiary
Guarantors |
U.S. SPV | Canada SPV | Flexiti SPE |
Subsidiary
Non-Guarantors |
Eliminations |
CURO
Consolidated |
||||||||||||||||||
Revenue | $ | — | $ | 177,132 | $ | 78,154 | $ | 78,360 | $ | 7,009 | $ | 43,589 | $ | — | $ | 384,244 | ||||||||||
Provision for losses | — | 33,184 | 26,494 | 12,628 | 3,838 | 5,166 | — | 81,310 | ||||||||||||||||||
Net revenue | — | 143,948 | 51,660 | 65,732 | 3,171 | 38,423 | — | 302,934 | ||||||||||||||||||
Cost of providing services: | ||||||||||||||||||||||||||
Salaries and benefits | — | 32,280 | — | — | — | 18,691 | — | 50,971 | ||||||||||||||||||
Occupancy and office | — | 21,464 | — | — | — | 14,585 | — | 36,049 | ||||||||||||||||||
Other costs of providing services | — | 10,248 | — | — | — | 3,876 | — | 14,124 | ||||||||||||||||||
Advertising | — | 13,230 | — | — | — | 1,897 | — | 15,127 | ||||||||||||||||||
Total cost of providing services | — | 77,222 | — | — | — | 39,049 | — | 116,271 | ||||||||||||||||||
Gross margin | — | 66,726 | 51,660 | 65,732 | 3,171 | (626) | — | 186,663 | ||||||||||||||||||
Operating expense (income): | ||||||||||||||||||||||||||
Corporate, district and other expenses | 6,041 | 78,202 | 84 | 286 | 2,381 | 21,467 | — | 108,461 | ||||||||||||||||||
Intercompany management fee | — | (10,022) | — | 2,498 | — | 7,524 | — | — | ||||||||||||||||||
Interest expense | 29,356 | 210 | 4,130 | 4,956 | 4,422 | (95) | — | 42,979 | ||||||||||||||||||
Income from equity method investment | — | (2,258) | — | — | — | — | — | (2,258) | ||||||||||||||||||
Gain from equity method investment | — | (135,387) | — | — | — | — | — | (135,387) | ||||||||||||||||||
Intercompany interest (income) expense | — | (7,144) | — | 1,181 | — | 5,963 | — | — | ||||||||||||||||||
Total operating expense | 35,397 | (76,399) | 4,214 | 8,921 | 6,803 | 34,859 | — | 13,795 | ||||||||||||||||||
Income (loss) from continuing operations before income taxes | (35,397) | 143,125 | 47,446 | 56,811 | (3,632) | (35,485) | — | 172,868 | ||||||||||||||||||
(Benefit) provision for income taxes | (9,005) | 46,905 | — | — | — | 4,716 | — | 42,616 | ||||||||||||||||||
Net income (loss) from continuing operations | (26,392) | 96,220 | 47,446 | 56,811 | (3,632) | (40,201) | — | 130,252 | ||||||||||||||||||
Net income on discontinued operations | — | — | — | — | — | — | — | — | ||||||||||||||||||
Net income (loss) | (26,392) | 96,220 | 47,446 | 56,811 | (3,632) | (40,201) | — | 130,252 | ||||||||||||||||||
Equity in net income (loss) of subsidiaries: | ||||||||||||||||||||||||||
CFTC | 156,644 | — | — | — | — | — | (156,644) | — | ||||||||||||||||||
Guarantor Subsidiaries | — | 96,220 | — | — | — | — | (96,220) | — | ||||||||||||||||||
Non-Guarantor Subsidiaries | — | (40,201) | — | — | — | — | 40,201 | — | ||||||||||||||||||
U.S. SPV | — | 47,446 | — | — | — | — | (47,446) | — | ||||||||||||||||||
Canada SPV | — | 56,811 | — | — | — | — | (56,811) | — | ||||||||||||||||||
Canada SPV | — | (3,632) | — | — | — | — | 3,632 | — | ||||||||||||||||||
Net income (loss) attributable to CURO | $ | 130,252 | $ | 252,864 | $ | 47,446 | $ | 56,811 | $ | (3,632) | $ | (40,201) | $ | (313,288) | $ | 130,252 |
Six months ended June 30, 2020 | |||||||||||||||||||||||
(dollars in thousands) | CURO |
Subsidiary
Guarantors |
U.S. SPV | Canada SPV |
Subsidiary
Non-Guarantors |
Eliminations |
CURO
Consolidated |
||||||||||||||||
Revenue | $ | — | $ | 319,253 | $ | 39,835 | $ | 64,398 | $ | 39,829 | $ | — | $ | 463,315 | |||||||||
Provision for losses | — | 104,393 | 23,178 | 28,976 | 7,682 | — | 164,229 | ||||||||||||||||
Net revenue | — | 214,860 | 16,657 | 35,422 | 32,147 | — | 299,086 | ||||||||||||||||
Cost of providing services: | |||||||||||||||||||||||
Salaries and benefits | — | 33,575 | — | — | 17,155 | — | 50,730 | ||||||||||||||||
Occupancy and office | — | 22,488 | — | — | 14,045 | — | 36,533 | ||||||||||||||||
Other costs of providing services | — | 14,840 | — | — | 2,816 | — | 17,656 | ||||||||||||||||
Advertising | — | 16,214 | — | — | 1,755 | — | 17,969 | ||||||||||||||||
Total cost of providing services | — | 87,117 | — | — | 35,771 | — | 122,888 | ||||||||||||||||
Gross margin | — | 127,743 | 16,657 | 35,422 | (3,624) | — | 176,198 | ||||||||||||||||
Operating expense (income): | |||||||||||||||||||||||
Corporate, district and other expenses | 6,791 | 60,453 | 37 | 278 | 12,029 | — | 79,588 | ||||||||||||||||
Intercompany management fee | — | (7,144) | — | 1,375 | 5,769 | — | — | ||||||||||||||||
Interest expense | 29,284 | 467 | 1,208 | 4,733 | (57) | — | 35,635 | ||||||||||||||||
Loss from equity method investment | — | 877 | — | — | — | — | 877 | ||||||||||||||||
Intercompany interest (income) expense | — | (2,883) | — | 1,083 | 1,800 | — | — | ||||||||||||||||
Total operating expense | 36,075 | 51,770 | 1,245 | 7,469 | 19,541 | — | 116,100 | ||||||||||||||||
Income (loss) from continuing operations before income taxes | (36,075) | 75,973 | 15,412 | 27,953 | (23,165) | — | 60,098 | ||||||||||||||||
(Benefit) provision for income taxes | (26,119) | 32,502 | — | — | (3,378) | — | 3,005 | ||||||||||||||||
Net (loss) income from continuing operations | (9,956) | 43,471 | 15,412 | 27,953 | (19,787) | — | 57,093 | ||||||||||||||||
Net income on discontinued operations | — | — | — | — | 1,285 | — | 1,285 | ||||||||||||||||
Net (loss) income | (9,956) | 43,471 | 15,412 | 27,953 | (18,502) | — | 58,378 | ||||||||||||||||
Equity in net income (loss) of subsidiaries: | |||||||||||||||||||||||
CFTC | 68,334 | — | — | — | — | (68,334) | — | ||||||||||||||||
Guarantor Subsidiaries | — | 43,471 | — | — | — | (43,471) | — | ||||||||||||||||
Non-Guarantor Subsidiaries | — | (18,502) | — | — | — | 18,502 | — | ||||||||||||||||
U.S. SPV | — | 15,412 | — | — | — | (15,412) | — | ||||||||||||||||
Canada SPV | — | 27,953 | — | — | — | (27,953) | — | ||||||||||||||||
Net income (loss) attributable to CURO | $ | 58,378 | $ | 111,805 | $ | 15,412 | $ | 27,953 | $ | (18,502) | $ | (136,668) | $ | 58,378 |
Three Months Ended June 30, 2021 | ||||||||||||||||||||||||||
(dollars in thousands) | CURO | Subsidiary Guarantors | U.S. SPV | Canada SPV | Flexiti SPE |
Subsidiary
Non-Guarantors |
Eliminations | CURO Consolidated | ||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||||||
Net cash provided by continuing operating activities | $ | 2,962 | $ | 67,342 | $ | 30,608 | $ | 35,240 | $ | 209 | $ | 24,852 | $ | 1,682 | $ | 162,895 | ||||||||||
Cash flows from investing activities:
|
||||||||||||||||||||||||||
Purchase of property, equipment and software | $ | — | $ | (4,129) | $ | — | $ | — | $ | — | $ | (3,040) | $ | — | $ | (7,169) | ||||||||||
Originations of loans, net | — | (57,989) | (24,427) | (36,343) | (12,116) | (11,329) | — | (142,204) | ||||||||||||||||||
Investments in Katapult | — | 146,878 | — | 146,878 | ||||||||||||||||||||||
Acquisition of Flexiti, net of acquiree's cash received | — | (91,203) | — | — | — | — | — | (91,203) | ||||||||||||||||||
Net cash provided by (used in) continuing investing activities | $ | — | $ | (6,443) | $ | (24,427) | $ | (36,343) | $ | (12,116) | $ | (14,369) | $ | — | $ | (93,698) | ||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||||||
Proceeds from Non-Recourse Flexiti SPE facility | $ | — | $ | — | $ | — | $ | — | $ | 26,990 | $ | — | $ | — | $ | 26,990 | ||||||||||
Payments on Non-Recourse Flexiti SPE facility | — | — | — | — | (9,229) | — | — | (9,229) | ||||||||||||||||||
Proceeds from credit facilities | — | 20,000 | — | — | — | 934 | — | 20,934 | ||||||||||||||||||
Payments on credit facilities | — | (20,000) | — | — | — | (934) | — | (20,934) | ||||||||||||||||||
Payments to net share settle RSUs | (1,711) | — | — | — | — | — | — | (1,711) | ||||||||||||||||||
Proceeds from exercise of stock options | — | 239 | — | — | — | — | — | 239 | ||||||||||||||||||
Repurchase of common stock | (1,251) | — | — | — | — | — | — | (1,251) | ||||||||||||||||||
Dividends paid to CURO Group Holdings Corp. | 6,950 | (6,950) | — | — | — | — | — | — | ||||||||||||||||||
Dividends paid to stockholders | (6,950) | — | — | — | — | — | — | (6,950) | ||||||||||||||||||
Net cash (used in) provided by financing activities | $ | (2,962) | $ | (6,711) | $ | — | $ | — | $ | 17,761 | $ | — | $ | — | $ | 8,088 | ||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | $ | — | $ | — | $ | — | $ | 666 | $ | (39) | $ | 1,328 | $ | (1,682) | $ | 273 | ||||||||||
Net increase in cash, cash equivalents and restricted cash | — | 54,188 | 6,181 | (437) | 5,815 | 11,811 | — | 77,558 | ||||||||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | — | 178,122 | 2,665 | 29,329 | — | 57,992 | — | 268,108 | ||||||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | — | $ | 232,310 | $ | 8,846 | $ | 28,892 | $ | 5,815 | $ | 69,803 | $ | — | $ | 345,666 |
(in thousands) | June 30, 2021 | Percent of Total | December 31, 2020 | Percent of Total | |||||||||||||
U.S. | $ | 105,922 | 59.7 | % | $ | 105,922 | 77.8 | % | |||||||||
Canada Direct Lending | 30,858 | 17.4 | % | 30,169 | 22.2 | % | |||||||||||
Canada POS Lending | 40,506 | 22.8 | % | — | — | % | |||||||||||
Total Goodwill | $ | 177,286 | $ | 136,091 |
Exhibit no. | Exhibit Description | Filed/Incorporated by Reference from Form | Incorporated by Reference from Exhibit Number | Filing Date | |||||||||||||
3.1 | 10-Q | 10.1 | 8/5/2020 | ||||||||||||||
3.2 | 8-K | 3.2 | 12/11/17 | ||||||||||||||
4.1 | S-1 | 4.1 | 11/28/17 | ||||||||||||||
4.2 | S-1 | 4.2 | 11/28/17 | ||||||||||||||
4.3 | S-1 | 4.3 | 10/24/17 | ||||||||||||||
4.4 | 10-K | 4.4 | 3/9/20 | ||||||||||||||
10.1 | Filed herewith | ||||||||||||||||
10.2 | Filed herewith | ||||||||||||||||
10.3 | Filed herewith | ||||||||||||||||
31.1 | Filed herewith | ||||||||||||||||
31.2 | Filed herewith | ||||||||||||||||
32.1 | Filed herewith | ||||||||||||||||
101 |
The following unaudited financial information from the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2021, filed with the SEC on July 28, 2021, formatted in Extensible Business Reporting Language (“XBRL”) includes: (i) Condensed Consolidated Balance Sheets at June 30, 2021 and December 31, 2020, (ii) Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2021 and 2020, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020, and (v) Notes to Condensed Consolidated Financial Statements*
|
Filed herewith | |||||||||||||||
¥ | Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K because they are not material and are of the type of information that the registrant both customarily and actually treats and private and confidential. | ||||||||||||||||
By: | /s/ Roger Dean | ||||||||||
Roger Dean | |||||||||||
Executive Vice President, Chief Financial Officer
and Acting Chief Accounting Officer
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FLEXITI FINANCIAL INC. | |||||
By: | /s/ | ||||
Name: | |||||
Title: | |||||
Date: |
THE BRICK LTD. | |||||
By: | /s/ | ||||
Name: | |||||
Title: | |||||
Date: |
THE BRICK WAREHOUSE LP, by its general partner, THE BRICK GP LTD.
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By: | /s/ | ||||
Name: | |||||
Title: | |||||
Date: |
LEON'S FURNITURE LIMITED | |||||
By: | /s/ Edward F. Leon | ||||
Name: Edward F. Leon | |||||
Title: CEO | |||||
Date: |
Certificate
Number W-5 |
FLEXITI FINANCIAL INC.
(INCORPORATED UNDER THE
CANADA BUSINESS CORPORATIONS ACT) |
372,489
Warrants
|
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LEON’S FURNITURE LTD.
(INCORPORATED UNDER THE ONTARIO BUSINESS CORPORATIONS ACT)
45 Gordon Mackay Road, Toronto, ON M9N 3X3
|
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FLEXITI FINANCIAL INC. | ||||||||||||||
Per: | /s/ | |||||||||||||
Name: | ||||||||||||||
Title: |
LEON’S FURNITURE LTD. | ||||||||||||||
Per: | /s/ | |||||||||||||
Name: | ||||||||||||||
Title: |
By: | /s/ Don Gayhardt | ||||
Don Gayhardt | |||||
Chief Executive Officer
|
By: | /s/ Roger Dean | ||||
Roger Dean | |||||
Treasurer, Executive Vice President, Chief Financial Officer
and Acting Chief Accounting Officer
|