(State or other jurisdiction Of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Large accelerated filer | ☐ | ☒ | ||||||||||||
Non-accelerated filer | ☐ | |||||||||||||
Smaller reporting company | Emerging growth company |
Page | |||||||||||||||||||||||
Item 1. | |||||||||||||||||||||||
Item 2. | |||||||||||||||||||||||
Item 3. | |||||||||||||||||||||||
Item 4. | |||||||||||||||||||||||
Item 1. | |||||||||||||||||||||||
Item 1A. | |||||||||||||||||||||||
Item 2. | |||||||||||||||||||||||
Item 3. | |||||||||||||||||||||||
Item 4. | |||||||||||||||||||||||
Item 5. | |||||||||||||||||||||||
Item 6. | Exhibits, Financial Statement Schedules | ||||||||||||||||||||||
Term or abbreviation | Definition | |||||||
2022 Form 10-K | Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 10, 2023 | |||||||
7.50% Senior Secured Notes | 7.50% Senior Secured Notes, issued in July 2021 for $750.0 million, which mature in August 2028 | |||||||
ABL | Asset-Backed Lending | |||||||
ACL | Allowance for credit losses | |||||||
AOCI | Accumulated other comprehensive income (loss) | |||||||
ASC | Accounting Standards Codification | |||||||
ASU | Accounting Standards Update | |||||||
Average gross loans receivable | Utilized to calculate product yield and NCO rates; calculated as average of beginning of quarter and end of quarter gross loans receivable | |||||||
BNPL | Buy-Now-Pay-Later | |||||||
bps | Basis points | |||||||
C$ | Canadian dollar | |||||||
Canada SPV | A four-year revolving credit facility with capacity up to C$400.0 million | |||||||
CECL | In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU requires an impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected rather than incurred losses, with an anticipated result of more timely loss recognition. This guidance is effective for us on January 1, 2023. | |||||||
CDOR | Canadian Dollar Offered Rate | |||||||
CODM | Chief Operating Decision Maker | |||||||
CSO | Credit services organization | |||||||
Exchange Act | Securities Exchange Act of 1934, as amended | |||||||
FASB | Financial Accounting Standards Board | |||||||
First Heritage | First Heritage Credit, LLC, a wholly-owned U.S. subsidiary of the Company, which we acquired in July 2022 | |||||||
First Heritage SPV | A revolving credit facility, entered into concurrent with the acquisition of First Heritage, with capacity up to $225.0 million | |||||||
Flexiti | Flexiti Financial Inc., a wholly-owned Canadian subsidiary of the Company, which we acquired on March 10, 2021 | |||||||
Flexiti Securitization | A non-recourse revolving credit facility, entered into on December 9, 2021, with capacity up to C$526.5 million | |||||||
Flexiti SPV | A revolving credit facility, entered into concurrent with the acquisition of Flexiti, with capacity up to C$535.0 million | |||||||
Form 10-Q | This report on Form 10-Q for the quarter ended March 31, 2023 | |||||||
Heights | SouthernCo, Inc., a Delaware corporation d/b/a Heights Finance, a wholly-owned U.S. subsidiary of the Company, which we acquired in December 2021 | |||||||
Heights Finance SPV | A non-recourse revolving credit facility, entered into concurrent with the acquisition of Heights Finance, with capacity up to $350.0 million. This facility was extinguished on July 15, 2022 when we entered into a new non-recourse revolving warehouse facility, see "Heights SPV." | |||||||
Heights SPV | A revolving credit facility, entered into to replace the incumbent lender's facility and finance future loans originated by Heights, with capacity up to $425.0 million | |||||||
Katapult | Katapult Holdings, Inc., a lease-to-own platform for online, brick and mortar and omni-channel retailers | |||||||
Legacy U.S. Direct Lending Business | The Legacy U.S. Direct Lending Business historically operated under the Speedy Cash, Rapid Cash and Avio Credit brands. We sold the Legacy U.S. Direct Lending Business to Community Choice Financial on July 8, 2022. | |||||||
NCO | Net charge-off; which equals total charge-offs less total recoveries | |||||||
POS | Point-of-sale | |||||||
ROU | Right of use | |||||||
RSU | Restricted Stock Unit | |||||||
SEC | Securities and Exchange Commission |
Term or abbreviation | Definition | |||||||
Senior Revolver | Senior Secured Revolving Loan Facility with borrowing capacity of $40.0 million | |||||||
SOFR | Secured Overnight Financing Rate | |||||||
SPV | Special Purpose Vehicle | |||||||
SRC | Smaller Reporting Company as defined by the SEC | |||||||
U.S. | United States of America | |||||||
U.S. GAAP | Generally Accepted Accounting Principles in the U.S. | |||||||
VIE | Variable Interest Entity; our wholly-owned, bankruptcy-remote special purpose subsidiaries |
March 31, 2023 (unaudited) | December 31, 2022 | ||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash (includes restricted cash of consolidated VIEs of $ | |||||||||||
Gross loans receivable (includes loans of consolidated VIEs of $ | |||||||||||
Less: Allowance for credit losses (includes allowance for credit losses of consolidated VIEs of $ | ( | ( | |||||||||
Loans receivable, net | |||||||||||
Income taxes receivable | |||||||||||
Prepaid expenses and other (includes prepaid expenses and other of consolidated VIEs of $ | |||||||||||
Property and equipment, net | |||||||||||
Investment in Katapult | |||||||||||
Right of use asset - operating leases | |||||||||||
Deferred tax assets | |||||||||||
Goodwill | |||||||||||
Intangibles, net | |||||||||||
Other assets | |||||||||||
Total Assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Liabilities | |||||||||||
Accounts payable and accrued liabilities (includes accounts payable and accrued liabilities of consolidated VIEs of $ | $ | $ | |||||||||
Deferred revenue | |||||||||||
Lease liability - operating leases | |||||||||||
Contingent consideration related to acquisition | |||||||||||
Accrued interest (includes accrued interest of consolidated VIEs of $ | |||||||||||
Debt (includes debt and issuance costs of consolidated VIEs of $ | |||||||||||
Other long-term liabilities | |||||||||||
Total Liabilities | |||||||||||
Commitments and contingencies (Note 7) | |||||||||||
Stockholders' Equity | |||||||||||
Preferred stock - $ | |||||||||||
Common stock - $ | |||||||||||
Treasury stock, at cost - | ( | ( | |||||||||
Paid-in capital | |||||||||||
(Accumulated deficit)/retained earnings | ( | ||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total Stockholders' (Deficit) Equity | ( | ( | |||||||||
Total Liabilities and Stockholders' (Deficit) Equity | $ | $ |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Revenue | |||||||||||
Interest and fees revenue | $ | $ | |||||||||
Insurance and other income | |||||||||||
Total revenue | |||||||||||
Provision for losses | |||||||||||
Net revenue | |||||||||||
Operating Expenses | |||||||||||
Salaries and benefits | |||||||||||
Occupancy | |||||||||||
Advertising | |||||||||||
Direct operations | |||||||||||
Depreciation and amortization | |||||||||||
Other operating expense | |||||||||||
Total operating expenses | |||||||||||
Other expense (income) | |||||||||||
Interest expense | |||||||||||
Loss (income) from equity method investment | ( | ||||||||||
Loss (gain) on change in fair value of contingent consideration | ( | ||||||||||
Gain on sale of business | |||||||||||
Total other expense | |||||||||||
(Loss) income before income taxes | ( | ||||||||||
Provision for income taxes | |||||||||||
Net (loss) income | $ | ( | $ | ||||||||
(Loss) earnings per share: | |||||||||||
Basic (loss) earnings per share | $ | ( | $ | ||||||||
Diluted (loss) earnings per share | $ | ( | $ | ||||||||
Weighted average common shares outstanding: | |||||||||||
Basic | |||||||||||
Diluted |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net (loss) income | $ | ( | $ | ||||||||
Other comprehensive (loss) income, net of tax: | |||||||||||
Change in derivative instruments designated as cash flow hedges, net of tax | ( | ||||||||||
Foreign currency translation adjustment, net of tax | |||||||||||
Other comprehensive (loss) income, net of tax | ( | ||||||||||
Comprehensive (loss) income | $ | ( | $ |
Common Stock | Treasury Stock, at cost | Paid-in capital | Retained Earnings (Deficit) | AOCI | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||
Shares Outstanding | Par Value | ||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2022 | $ | $ | ( | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||
Cumulative effect of Adoption of , net of tax | ( | ( | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
Dividends | ( | ( | |||||||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Net settlement of share-based awards | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||
Balances at March 31, 2023 | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||
Common Stock | Treasury Stock, at cost | Paid-in capital | Retained Earnings | AOCI | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||
Shares Outstanding | Par Value | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Dividends | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Proceeds from exercise of stock options | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
Net settlement of share-based awards | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities | |||||||||||
Net (loss) income | $ | ( | $ | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Provision for losses | |||||||||||
Amortization of debt issuance costs and bond discount | |||||||||||
Deferred income tax benefit | ( | ||||||||||
Loss on disposal of property and equipment | ( | ||||||||||
Loss from equity method investment | ( | ||||||||||
Change in fair value of contingent consideration | ( | ||||||||||
Share-based compensation | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accrued interest on loans receivable | ( | ||||||||||
Prepaid expenses and other assets | |||||||||||
Accounts payable and accrued liabilities | ( | ||||||||||
Deferred revenue | |||||||||||
Income taxes payable | ( | ||||||||||
Income taxes receivable | |||||||||||
Accrued interest | ( | ( | |||||||||
Other long-term liabilities | ( | ( | |||||||||
Net cash (used in) provided by operating activities | ( | ||||||||||
Cash flows from investing activities | |||||||||||
Purchase of property, equipment and software | ( | ( | |||||||||
Loans receivable originated or acquired | ( | ( | |||||||||
Loans receivable repaid | |||||||||||
Divestiture of Legacy U.S. Direct Lending Business, net of cash provided | ( | ||||||||||
Net cash provided by (used in) investing activities | ( | ||||||||||
Cash flows from financing activities | |||||||||||
Proceeds from SPV and SPE facilities | |||||||||||
Payments on SPV and SPE facilities | ( | ( | |||||||||
Debt issuance costs paid | ( | ( | |||||||||
Proceeds from credit facilities | |||||||||||
Payments on credit facilities | ( | ||||||||||
Payments to net share settle equity awards | ( | ( | |||||||||
Repurchase of common stock | ( | ||||||||||
Dividends paid to stockholders | ( | ( | |||||||||
Net cash provided by financing activities | |||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | |||||||||||
Net increase in cash, cash equivalents and restricted cash | |||||||||||
Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ |
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash (includes restricted cash of consolidated VIEs of $ | ||||||||||||||
Total cash, cash equivalents and restricted cash used in the Statement of Cash Flows | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Revolving LOC | $ | $ | ||||||||||||
Installment | ||||||||||||||
Total interest and fees revenue | ||||||||||||||
Insurance and other income | ||||||||||||||
Total revenue | $ | $ |
March 31, 2023 | ||||||||||||||||||||
Revolving LOC | Installment | Total | ||||||||||||||||||
Current loans receivable | $ | $ | $ | |||||||||||||||||
1-30 days past-due | ||||||||||||||||||||
Delinquent: | ||||||||||||||||||||
31-60 days past-due | ||||||||||||||||||||
61-90 days past-due | ||||||||||||||||||||
91 + days past-due | ||||||||||||||||||||
Total delinquent loans receivable | ||||||||||||||||||||
Total loans receivable | ||||||||||||||||||||
Less: allowance for credit losses | ( | ( | ( | |||||||||||||||||
Loans receivable, net | $ | $ | $ | |||||||||||||||||
December 31, 2022 | ||||||||||||||||||||
Revolving LOC | Installment | Total | ||||||||||||||||||
Current loans receivable | $ | $ | $ | |||||||||||||||||
1-30 days past-due | ||||||||||||||||||||
Delinquent: | ||||||||||||||||||||
31-60 days past-due | ||||||||||||||||||||
61-90 days past-due | ||||||||||||||||||||
91 + days past-due | ||||||||||||||||||||
Delinquent loans receivable | ||||||||||||||||||||
Total loans receivable | ||||||||||||||||||||
Less: allowance for credit losses | ( | ( | ( | |||||||||||||||||
Loans receivable, net | $ | $ | $ | |||||||||||||||||
Three Months Ended March 31, 2023 | ||||||||||||||
Revolving LOC | Installment | Other | Total | |||||||||||
Allowance for credit losses: | ||||||||||||||
Balance, beginning of period, prior to adoption of ASU 2016-13 | $ | $ | $ | $ | ||||||||||
Impact of adoption of ASU 2016-13 | ||||||||||||||
Balance, January 1, 2023 | ||||||||||||||
Charge-offs | ( | ( | ( | ( | ||||||||||
Recoveries | ||||||||||||||
Net charge-offs | ( | ( | ( | ( | ||||||||||
Provision for losses | ||||||||||||||
Effect of foreign currency translation | ||||||||||||||
Balance, end of period | $ | $ | $ | $ |
Three Months Ended March 31, 2022 | ||||||||||||||
Revolving LOC | Installment | Other | Total | |||||||||||
Allowance for credit losses: | ||||||||||||||
Balance, beginning of period | $ | $ | $ | $ | ||||||||||
Charge-offs | ( | ( | ( | ( | ||||||||||
Recoveries | ||||||||||||||
Net charge-offs | ( | ( | ( | ( | ||||||||||
Provision for losses | ||||||||||||||
Effect of foreign currency translation | ||||||||||||||
Balance, end of period | $ | $ | $ | $ | ||||||||||
Liability for losses on CSO lender-owned consumer loans: | ||||||||||||||
Balance, beginning of period | $ | $ | $ | $ | ||||||||||
Decrease in liability | ||||||||||||||
Balance, end of period | $ | $ | $ | $ |
Gross loans receivables by origination year, as of March 31, 2023 | |||||||||||||||||||||||
Delinquent | |||||||||||||||||||||||
Current | 1-30 days past-due | 31-60 days past-due | 61-90 days past-due | 91+ days past due | Total Delinquent | Total Loans Receivable | |||||||||||||||||
Revolving LOC | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
Installment loans | |||||||||||||||||||||||
2023 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
2022 | |||||||||||||||||||||||
2021 | |||||||||||||||||||||||
2020 | |||||||||||||||||||||||
2019 | |||||||||||||||||||||||
Prior | |||||||||||||||||||||||
Total installment loans | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
Total loans receivables | $ | $ | $ | $ | $ | $ | $ |
Activity by origination year, for the three months ended March 31, 2023 | |||||||||||
Gross charge offs | Gross recoveries | Net charge-offs | |||||||||
Revolving LOC | $ | ( | $ | $ | ( | ||||||
Installment loans | |||||||||||
2023 | $ | ( | $ | $ | ( | ||||||
2022 | ( | ( | |||||||||
2021 | ( | ( | |||||||||
2020 | ( | ( | |||||||||
2019 | ( | ||||||||||
Prior | ( | ||||||||||
Total installment loans | $ | ( | $ | $ | ( | ||||||
Total loans receivables | $ | ( | $ | $ | ( |
March 31, 2023 | ||||||||||||||||||||
31-60 days past-due | 61-90 days past-due | 91 + days past-due | Total past due | 90 or more days delinquent and accruing | Total non-accruing (1) | |||||||||||||||
Revolving LOC | $ | $ | $ | $ | $ | $ | ||||||||||||||
Installment | $ | |||||||||||||||||||
Total delinquent loans | $ | $ | $ | $ | $ | $ | ||||||||||||||
Percentage of total loan receivables | % | % | % | % | % | % | ||||||||||||||
(1) The gross interest income that was recognized related to non-accruing loans was $ |
Three Months Ended March 31, 2023 | ||||||||
Amount | % of Loan Receivables | |||||||
Revolving LOC modifications | ||||||||
Principal / accrued interest forgiven | $ | — | % | |||||
Installment modifications | ||||||||
Principal / accrued interest forgiven | — | % | ||||||
Total modifications | $ | % |
Amortized Cost Basis, as of March 31, 2023 | ||||||||||||||||||||
Delinquent | ||||||||||||||||||||
Current | 1-30 days past-due | 31-60 days past-due | 61-90 days past-due | 91+ days past-due | Total delinquent | |||||||||||||||
Revolving LOC | $ | $ | $ | $ | $ | $ | ||||||||||||||
Installment | $ | $ | ||||||||||||||||||
Total delinquent modified loans | $ | $ | $ | |||||||||||||||||
Percentage of total loan receivables | % | % | % | — | % | % | % |
Three Months Ended March 31, 2023 | ||||||||
Number of Accounts defaulted (charged-off) | Value of accounts defaulted (charged-off) | |||||||
Revolving LOC | $ | |||||||
Installment | ||||||||
Total defaults | $ |
March 31, 2022 | ||||||||
Current TDR gross receivables | $ | |||||||
Delinquent TDR gross receivables | ||||||||
Total TDR gross receivables | ||||||||
Less: Impairment included in the allowance for credit losses | ( | |||||||
Less: Additional allowance | ( | |||||||
Outstanding TDR receivables, net of impairment | $ |
Three Months Ended March 31, | ||||||||
2022 | ||||||||
Pre-modification TDR loans receivable | $ | |||||||
Post-modification TDR loans receivable | ||||||||
Total concessions included in gross charge-offs | $ |
Three Months Ended March 31, | ||||||||
2022 | ||||||||
Average outstanding TDR loans receivable | $ | |||||||
Interest income recognized | $ | |||||||
Number of TDR loans |
March 31, 2023 | December 31, 2022 | |||||||||||||
Assets | ||||||||||||||
Restricted cash | $ | $ | ||||||||||||
Loans receivable, net | ||||||||||||||
Prepaid expenses and other | ||||||||||||||
Deferred tax assets | ||||||||||||||
Total Assets | $ | $ | ||||||||||||
Liabilities | ||||||||||||||
Accounts payable and accrued liabilities | $ | $ | ||||||||||||
Deferred revenue | ||||||||||||||
Accrued interest | ||||||||||||||
Income taxes payable | ||||||||||||||
Debt | ||||||||||||||
Total Liabilities | $ | $ |
Direct Lending | Canada POS Lending | Total | |||||||||||||||
Goodwill at December 31, 2022 | $ | $ | $ | ||||||||||||||
Foreign currency translation | |||||||||||||||||
Goodwill at March 31, 2023 | $ | $ | $ | ||||||||||||||
Estimated Fair Value | |||||||||||||||||
Carrying Value March 31, 2023 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets: | |||||||||||||||||
Cash Surrender Value of Life Insurance | $ | $ | $ | $ | $ | ||||||||||||
Derivative asset | |||||||||||||||||
Financial liabilities: | |||||||||||||||||
Non-qualified deferred compensation plan | $ | $ | $ | $ | |||||||||||||
Contingent consideration related to acquisition | |||||||||||||||||
Derivative liability |
Estimated Fair Value | |||||||||||||||||
Carrying Value December 31, 2022 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets: | |||||||||||||||||
Cash Surrender Value of Life Insurance | $ | $ | $ | $ | $ | ||||||||||||
Derivative asset | |||||||||||||||||
Financial liabilities: | |||||||||||||||||
Non-qualified deferred compensation plan | $ | $ | $ | $ | $ | ||||||||||||
Contingent consideration related to acquisition |
Estimated Fair Value | |||||||||||||||||
Carrying Value March 31, 2023 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets: | |||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | ||||||||||||
Restricted cash | |||||||||||||||||
Loans receivable, net | |||||||||||||||||
Investment in Katapult | |||||||||||||||||
Financial liabilities: | |||||||||||||||||
$ | $ | $ | $ | $ | |||||||||||||
Heights SPV | |||||||||||||||||
First Heritage SPV | |||||||||||||||||
Flexiti SPV | |||||||||||||||||
Flexiti Securitization | |||||||||||||||||
Canada SPV | |||||||||||||||||
Senior Revolver | |||||||||||||||||
Estimated Fair Value | |||||||||||||||||
Carrying Value December 31, 2022 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets: | |||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | ||||||||||||
Restricted cash | |||||||||||||||||
Loans receivable, net | |||||||||||||||||
Investment in Katapult | |||||||||||||||||
Financial liabilities: | |||||||||||||||||
$ | $ | $ | $ | $ | |||||||||||||
Heights SPV | |||||||||||||||||
First Heritage SPV | |||||||||||||||||
Flexiti SPV | |||||||||||||||||
Flexiti Securitization | |||||||||||||||||
Canada SPV | |||||||||||||||||
Senior Revolver |
Investment in Katapult | ||||||||
Balance at December 31, 2021 | $ | |||||||
Equity method income - Q1 2022 | ||||||||
Balance at March 31, 2022 | ||||||||
Equity method loss - Q2 2022 | ( | |||||||
Balance at June 30, 2022 | ||||||||
Equity method loss - Q3 2022 | ( | |||||||
Balance at September 30, 2022 | ||||||||
Equity method loss - Q4 2022 | ( | |||||||
Balance at December 31, 2022 | ||||||||
Equity method loss - Q1 2023 | ( | |||||||
Balance at March 31, 2023 | $ | |||||||
Effective interest rate | Outstanding as of | ||||||||||||||||||||||
Maturity Date | Borrowing Capacity | March 31, 2023 | December 31, 2022 | ||||||||||||||||||||
Corporate Debt: | |||||||||||||||||||||||
August 1, 2028 | % | $ | $ | ||||||||||||||||||||
Total corporate debt | |||||||||||||||||||||||
Funding Debt: | |||||||||||||||||||||||
Heights SPV | July 15, 2025 | 1-Mo SOFR + | $ | $ | $ | ||||||||||||||||||
First Heritage SPV | July 13, 2025 | 1-Mo SOFR + | $ | ||||||||||||||||||||
Flexiti SPV (1) | September 29, 2025 | Weighted average interest rate (2)(3) | C$ | ||||||||||||||||||||
Flexiti Securitization (1) (4) | December 9, 2025 | 1-Mo CDOR + | C$ | ||||||||||||||||||||
Canada SPV (1) | August 2, 2026 | 3-Mo CDOR + | C$ | ||||||||||||||||||||
Senior Revolver | August 31, 2023 | 1-Mo SOFR + | $ | ||||||||||||||||||||
Total funding debt | $ | $ | |||||||||||||||||||||
Less: debt issuance costs | ( | ( | |||||||||||||||||||||
Total Debt | $ | $ | |||||||||||||||||||||
(1) Capacity amounts are denominated in Canadian dollars, whereas outstanding balances as of March 31, 2023 and December 31, 2022 are denominated in U.S. dollars. The exchange rate applied at March 31, 2023 was | |||||||||||||||||||||||
(2) The weighted average interest rate does not include the impact of the amortization of deferred loan origination costs or debt discounts. | |||||||||||||||||||||||
(3) Swapped to fixed rate via interest rate swap hedging arrangement entered into on July 7, 2022 for Flexiti Securitization and October 11, 2022 for Flexiti SPV. | |||||||||||||||||||||||
(4) The effective rate is | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net (loss) income | $ | ( | $ | ||||||||
Weighted average common shares - basic | |||||||||||
Dilutive effect of stock options and restricted stock units | |||||||||||
Weighted average common shares - diluted | |||||||||||
(Loss) earnings per share: | |||||||||||
Basic (loss) earnings per share | $ | ( | $ | ||||||||
Diluted (loss) earnings per share | $ | ( | $ | ||||||||
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Operating lease costs: | ||||||||
Third-Party | $ | |||||||
Related-Party | ||||||||
Total operating lease costs | $ | |||||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ | $ | ||||||
ROU assets obtained | $ | ( | $ | |||||
Weighted average remaining lease term - Operating leases | ||||||||
Weighted average discount rate - Operating leases | % | % |
Third-Party | Related-Party | Total | ||||||||||||||||||
Remainder of 2023 | $ | $ | $ | |||||||||||||||||
2024 | ||||||||||||||||||||
2025 | ||||||||||||||||||||
2026 | ||||||||||||||||||||
2027 | ||||||||||||||||||||
2028 | ||||||||||||||||||||
Thereafter | ||||||||||||||||||||
Total | ||||||||||||||||||||
Less: Imputed interest | ( | ( | ( | |||||||||||||||||
Operating lease liabilities | $ | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Revenues by segment: (1) | ||||||||||||||
Direct Lending | $ | $ | ||||||||||||
Canada POS Lending | ||||||||||||||
Consolidated revenue | $ | $ | ||||||||||||
Net revenues by segment: | ||||||||||||||
Direct Lending | $ | $ | ||||||||||||
Canada POS Lending | ||||||||||||||
Consolidated net revenue | $ | $ | ||||||||||||
Segment (loss) income before income taxes: | ||||||||||||||
Direct Lending | $ | ( | $ | |||||||||||
Canada POS Lending | ( | ( | ||||||||||||
Consolidated (loss) income before income taxes | $ | ( | $ | |||||||||||
Expenditures for long-lived assets by segment: | ||||||||||||||
Direct Lending | $ | $ | ||||||||||||
Canada POS Lending | ||||||||||||||
Consolidated expenditures for long-lived assets | $ | $ | ||||||||||||
(1) For revenue by product, see Note 2, "Loans Receivable and Revenue." |
March 31, 2023 | December 31, 2022 | |||||||||||||
Direct Lending | $ | $ | ||||||||||||
Canada POS Lending | ||||||||||||||
Total gross loans receivable | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
U.S. | $ | $ | ||||||||||||
Canada | ||||||||||||||
Total revenue | $ | $ |
March 31, 2023 | December 31, 2022 | |||||||||||||
U.S. | $ | $ | ||||||||||||
Canada | ||||||||||||||
Total gross loans receivable | $ | $ |
March 31, 2023 | December 31, 2022 | |||||||||||||
U.S. | $ | $ | ||||||||||||
Canada | ||||||||||||||
Total net long-lived assets | $ | $ |
Amounts acquired on July 13, 2022 | |||||
Assets | |||||
Cash and cash equivalents | $ | ||||
Restricted cash | |||||
Gross loans receivable(1) | |||||
Prepaid expenses and other | |||||
Property and equipment | |||||
Right-of-use assets | |||||
Intangibles, net | |||||
Total assets | $ | ||||
Liabilities | |||||
Accounts payable and accrued liabilities | $ | ||||
Lease liabilities | |||||
Debt | |||||
Total liabilities | $ | ||||
Net assets acquired | $ | ||||
Total consideration paid | |||||
Goodwill | $ | ||||
(1) The gross contractual loans receivables as of July 13, 2022 were $ |
Fair Value | Useful Life | |||||||
Trade name | $ | |||||||
Customer relationships | ||||||||
Total identified intangible assets | $ |
Amounts acquired on December 27, 2021 | Measurement period adjustments | Amounts acquired on December 27, 2021 (as adjusted) | |||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | $ | — | $ | |||||||
Restricted cash | — | ||||||||||
Gross loans receivable(1) | ( | ||||||||||
Income tax receivable | |||||||||||
Prepaid expenses and other | — | ||||||||||
Property and equipment | — | ||||||||||
Right-of-use assets | — | ||||||||||
Intangibles, net | — | ||||||||||
Deferred tax asset | |||||||||||
Other assets | — | ||||||||||
Total assets | $ | $ | ( | $ | |||||||
Liabilities | |||||||||||
Accounts payable and accrued liabilities | $ | $ | $ | ||||||||
Lease liabilities | — | ||||||||||
Deferred tax liability | ( | ||||||||||
Accrued interest on debt | — | ||||||||||
Debt | — | ||||||||||
Total liabilities | $ | $ | $ | ||||||||
Net assets acquired | $ | $ | ( | $ | |||||||
Total consideration paid | |||||||||||
Goodwill | $ | $ | |||||||||
(1) The gross contractual loans receivables as of December 27, 2021 were $ |
Amounts divested of on July 8, 2022 | Subsequent adjustments | Amounts divested of on July 8, 2022 (as adjusted) | |||||||||
Assets | |||||||||||
Cash, cash equivalents and restricted cash | $ | $ | — | $ | |||||||
Loans receivable | — | ||||||||||
Right of use asset | — | ||||||||||
Goodwill | — | ||||||||||
Other assets (1) | ( | ||||||||||
Total assets | $ | $ | ( | $ | |||||||
Liabilities | |||||||||||
Accounts payable and accrued liabilities | $ | ( | $ | — | $ | ( | |||||
Right of use liability | ( | — | ( | ||||||||
Liability for losses on CSO lender-owned consumer loans | ( | — | ( | ||||||||
Other long term liabilities (2) | ( | — | ( | ||||||||
Total liabilities | $ | ( | $ | — | $ | ( | |||||
Net assets sold | $ | $ | |||||||||
Total proceeds | ( | ||||||||||
Total pretax gain on sale of business | $ | $ | |||||||||
(1) Includes income tax receivable, property and equipment, intangibles, deferred tax assets and other assets. | |||||||||||
(2) Includes deferred revenue, income taxes payable, deferred tax liability and other long-term liabilities |
Employee Termination Benefits | Lease Exit Costs | Total Restructuring Costs | |||||||||
Salaries and Benefits | $ | $ | $ | ||||||||
Other Operating Expense | |||||||||||
Total | $ | $ | $ |
Accrued restructuring costs as of December 31, 2022 | $ | ||||
Restructuring costs incurred during the three months ended March 31, 2023 | |||||
Amount paid during the three months ended March 31, 2023 | ( | ||||
Accrued restructuring costs as of March 31, 2023 | $ |
For the Three Months Ended | ||||||||||||||||||||||||||||||||
March 31, 2023 | March 31, 2022 | |||||||||||||||||||||||||||||||
(in thousands) | Direct Lending | Canada POS Lending | Total | % of Total | Direct Lending | Canada POS Lending | Total | % of Total | ||||||||||||||||||||||||
Revolving LOC | $ | 49,092 | $ | 35,133 | $ | 84,225 | 40.2 | % | $ | 72,368 | $ | 18,655 | $ | 91,023 | 31.4 | % | ||||||||||||||||
Installment | 95,212 | — | 95,212 | 45.5 | % | 173,933 | — | $ | 173,933 | 59.9 | % | |||||||||||||||||||||
Total interest and fees revenue | 144,304 | 35,133 | 179,437 | 85.7 | % | 246,301 | 18,655 | 264,956 | 91.3 | % | ||||||||||||||||||||||
Insurance and other income | 25,064 | 4,972 | 30,036 | 14.3 | % | 23,586 | 1,654 | 25,240 | 8.7 | % | ||||||||||||||||||||||
Total revenue | $ | 169,368 | $ | 40,105 | $ | 209,473 | 100.0 | % | $ | 269,887 | $ | 20,309 | $ | 290,196 | 100.0 | % |
(in thousands, unaudited) | Three Months Ended March 31, | ||||||||||||||||
2023 | 2022 | Change $ | Change % | ||||||||||||||
Revenue | |||||||||||||||||
Interest and fees revenue | $ | 179,437 | $ | 264,956 | $ | (85,519) | (32.3) | % | |||||||||
Insurance and other income | 30,036 | 25,240 | 4,796 | 19.0 | % | ||||||||||||
Total revenue | 209,473 | 290,196 | (80,723) | (27.8) | % | ||||||||||||
Provision for losses | 62,932 | 97,531 | (34,599) | (35.5) | % | ||||||||||||
Net revenue | 146,541 | 192,665 | (46,124) | (23.9) | % | ||||||||||||
Operating Expenses | |||||||||||||||||
Salaries and benefits | 64,805 | 79,729 | (14,924) | (18.7) | % | ||||||||||||
Occupancy | 11,672 | 17,037 | (5,365) | (31.5) | % | ||||||||||||
Advertising | 2,175 | 10,500 | (8,325) | (79.3) | % | ||||||||||||
Direct operations | 13,092 | 20,274 | (7,182) | (35.4) | % | ||||||||||||
Depreciation and amortization | 9,021 | 9,814 | (793) | (8.1) | % | ||||||||||||
Other operating expense | 17,433 | 16,377 | 1,056 | 6.4 | % | ||||||||||||
Total operating expenses | 118,198 | 153,731 | (35,533) | (23.1) | % | ||||||||||||
Other expense (income) | |||||||||||||||||
Interest expense | 58,943 | 38,341 | 20,602 | 53.7 | % | ||||||||||||
Loss (income) from equity method investment | 3,413 | (1,584) | 4,997 | # | |||||||||||||
Loss (gain) on change in fair value of contingent consideration | 2,728 | (265) | 2,993 | # | |||||||||||||
Gain on sale of business | 2,027 | — | 2,027 | # | |||||||||||||
Total other expense | 67,111 | 36,492 | 30,619 | 83.9 | % | ||||||||||||
(Loss) income before income taxes | (38,768) | 2,442 | (41,210) | # | |||||||||||||
Provision for income taxes | 20,703 | 1,106 | 19,597 | # | |||||||||||||
Net (loss) income | $ | (59,471) | $ | 1,336 | $ | (60,807) | # | ||||||||||
#- Change greater than 100% or not meaningful |
(in thousands, except percentages, unaudited) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022(1) | Q1 2022 | |||||||||||||||
Gross loans receivable (5) | ||||||||||||||||||||
Revolving LOC | $ | 461,443 | $ | 451,077 | $ | 439,117 | $ | 501,209 | $ | 473,562 | ||||||||||
Installment loans | 748,133 | 803,318 | 765,041 | 652,467 | 613,231 | |||||||||||||||
Total gross loans receivable | $ | 1,209,576 | $ | 1,254,395 | $ | 1,204,158 | $ | 1,153,676 | $ | 1,086,793 | ||||||||||
Lending Revenue | ||||||||||||||||||||
Revolving LOC | $ | 49,092 | $ | 49,915 | $ | 52,461 | $ | 75,736 | $ | 72,368 | ||||||||||
Installment loans | 95,212 | 100,435 | 103,478 | 181,747 | 173,934 | |||||||||||||||
Total lending revenue | $ | 144,304 | $ | 150,350 | $ | 155,939 | $ | 257,483 | $ | 246,302 | ||||||||||
Lending Provision | ||||||||||||||||||||
Revolving LOC | $ | 15,539 | $ | 29,620 | $ | 28,408 | $ | 34,472 | $ | 28,734 | ||||||||||
Installment loans | 31,139 | 46,442 | 33,511 | 86,485 | 57,435 | |||||||||||||||
Total lending provision | $ | 46,678 | $ | 76,062 | $ | 61,919 | $ | 120,957 | $ | 86,169 | ||||||||||
NCOs (2) (5) | ||||||||||||||||||||
Revolving LOC | $ | 6,234 | $ | 26,715 | $ | 24,793 | $ | 30,408 | $ | 31,645 | ||||||||||
Installment loans | 41,078 | 38,168 | 29,783 | 43,661 | 38,894 | |||||||||||||||
Total NCOs | $ | 47,312 | $ | 64,883 | $ 54,576 | $ | 74,069 | $ | 70,539 | |||||||||||
NCO rate (annualized) (2) (3) (5) | ||||||||||||||||||||
Revolving LOC | 5.5 | % | 23.8% | 20.9% | 25.0% | 27.6 | % | |||||||||||||
Installment loans | 21.5 | % | 19.3% | 16.7% | 27.7% | 25.3 | % | |||||||||||||
Total NCO rate | 15.6 | % | 20.9% | 18.4% | 26.5% | 26.3 | % | |||||||||||||
ACL rate (4) (5) (6) | ||||||||||||||||||||
Revolving LOC | 25.6 | % | 8.4 | % | 7.9 | % | 9.3 | % | 9.2 | % | ||||||||||
Installment loans | 11.3 | % | 5.4 | % | 4.6 | % | 6.9 | % | 4.4 | % | ||||||||||
Total ACL rate | 16.8 | % | 6.5 | % | 5.8 | % | 7.9 | % | 6.5 | % | ||||||||||
31+ days past-due rate (4) (5) | ||||||||||||||||||||
Revolving LOC | 8.4 | % | 4.1 | % | 5.1 | % | 5.8 | % | 5.8 | % | ||||||||||
Installment loans | 8.2 | % | 9.6 | % | 10.2 | % | 9.7 | % | 9.3 | % | ||||||||||
Total past-due rate | 8.3 | % | 7.6 | % | 8.3 | % | 8.0 | % | 7.8 | % | ||||||||||
(1) Includes loan balances and activity classified as Held for Sale. | ||||||||||||||||||||
(2) NCOs presented above include $0.0 million, $0.0 million, $0.5 million, $10.3 million and $5.0 million for the three months ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, respectively, related to the purchase accounting fair value discount, which are excluded from provision. | ||||||||||||||||||||
(3) We calculate NCO rate as total quarterly NCOs divided by Average gross loans receivable, then we annualize the rate. The amount and timing of recoveries are impacted by our collection strategies, which are based on customer behavior and risk profile and include direct customer communications and the periodic sale of charged off loans. | ||||||||||||||||||||
(4) We calculate (i) ACL rate and (ii) 31+ days past-due rate as the respective totals divided by gross loans receivable at each respective quarter end. | ||||||||||||||||||||
(5) All balances in connection with the CSO program were disposed of on July 8, 2022 upon the completion of the divestiture of the Legacy U.S. Direct Lending Business, as such these balances have been excluded from this amount. | ||||||||||||||||||||
(6) We adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on January 1, 2023, which requires us to estimate the lifetime expected credit loss on financial instruments. Our previous model required the recognition of credit losses when it was probable that a loss had been incurred. |
Three Months Ended March 31, | ||||||||||||||
(dollars in thousands, unaudited) | 2023 | 2022 | Change $ | Change % | ||||||||||
Revenue | ||||||||||||||
Interest and Fees Revenue | $ | 144,304 | $ | 246,301 | $ | (101,997) | (41.4) | % | ||||||
Insurance and other income | 25,064 | 23,586 | 1,478 | 6.3 | % | |||||||||
Total Revenue | 169,368 | 269,887 | (100,519) | (37.2) | % | |||||||||
Provision for Losses | 48,364 | 88,817 | (40,453) | (45.5) | % | |||||||||
Net Revenue | 121,004 | 181,070 | (60,066) | (33.2) | % | |||||||||
Operating expenses | ||||||||||||||
Salaries and Benefits | 56,619 | 73,059 | (16,440) | (22.5) | % | |||||||||
Occupancy | 11,344 | 16,811 | (5,467) | (32.5) | % | |||||||||
Advertising Expense | 1,999 | 10,200 | (8,201) | (80.4) | % | |||||||||
Direct Operations | 9,745 | 16,527 | (6,782) | (41.0) | % | |||||||||
Amortization and Depreciation | 5,390 | 5,682 | (292) | (5.1) | % | |||||||||
Other operating expenses | 18,054 | 15,684 | 2,370 | 15.1 | % | |||||||||
Total operating expenses | 103,151 | 137,963 | (34,812) | (25.2) | % | |||||||||
Other expense (income) | ||||||||||||||
Interest Expense | 44,045 | 31,715 | 12,330 | 38.9 | % | |||||||||
Loss (income) from equity method investment | 3,413 | (1,584) | 4,997 | # | ||||||||||
Gain on sale of business | 2,027 | — | 2,027 | # | ||||||||||
Total other expense | 49,485 | 30,131 | 19,354 | 64.2 | % | |||||||||
Segment (loss) income before income taxes | $ | (31,632) | $ | 12,976 | $ | (44,608) | # | |||||||
#- Change greater than 100% or not meaningful |
(in thousands, except percentages, unaudited) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | |||||||||||||||
Revolving LOC | ||||||||||||||||||||
Gross loans receivable | $ | 853,253 | $ | 833,438 | $ | 690,270 | $ | 627,163 | $ | 541,776 | ||||||||||
Lending revenue | $ | 35,133 | $ | 31,255 | $ | 24,575 | $ | 20,846 | $ | 18,655 | ||||||||||
Lending provision | $ | 14,568 | $ | 17,125 | $ | 13,379 | $ | 5,963 | $ | 8,714 | ||||||||||
NCOs | $ | 11,719 | $ | 8,672 | $ | 6,114 | $ | 3,537 | $ | 2,727 | ||||||||||
NCO rate (annualized) (1) | 5.6 | % | 4.4 | % | 3.6 | % | 2.4 | % | 2.0 | % | ||||||||||
ACL rate (2) (3) | 6.7 | % | 4.9 | % | 4.8 | % | 4.5 | % | 5.1 | % | ||||||||||
31+ days past-due rate (2) | 3.9 | % | 2.9 | % | 3.6 | % | 2.8 | % | 1.8 | % | ||||||||||
(1) We calculate NCO rate as total quarterly NCOs divided by Average gross loans receivable then we annualized the rate. The amount and timing of recoveries are impacted by our collection strategies, which are based on customer behavior and risk profile and include direct customer communications and the periodic sale of charged off loans. | ||||||||||||||||||||
(2) We calculate (i) ACL rate and (ii) 31+ days past-due rate as the respective totals divided by gross loans receivable at each respective quarter end. | ||||||||||||||||||||
(3) We adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on January 1, 2023, which requires us to estimate the lifetime expected credit loss on financial instruments. Our previous model required the recognition of credit losses when it was probable that a loss had been incurred. |
Three Months Ended March 31, | ||||||||||||||
(dollars in thousands, unaudited) | 2023 | 2022 | Change $ | Change % | ||||||||||
Revenue | ||||||||||||||
Interest and fees revenue | $ | 35,133 | $ | 18,655 | $ | 16,478 | 88.3 | % | ||||||
Insurance and other income | 4,972 | 1,654 | 3,318 | # | ||||||||||
Total revenue | 40,105 | 20,309 | 19,796 | 97.5 | % | |||||||||
Provision for losses | 14,568 | 8,714 | 5,854 | 67.2 | % | |||||||||
Net revenue | 25,537 | 11,595 | 13,942 | # | ||||||||||
Operating expenses | ||||||||||||||
Salaries and benefits | 8,186 | 6,670 | 1,516 | 22.7 | % | |||||||||
Occupancy | 328 | 226 | 102 | 45.1 | % | |||||||||
Advertising | 176 | 300 | (124) | (41.3) | % | |||||||||
Direct operations | 3,347 | 3,747 | (400) | (10.7) | % | |||||||||
Depreciation and amortization | 3,631 | 4,132 | (501) | (12.1) | % | |||||||||
Other operating expense | (621) | 693 | (1,314) | # | ||||||||||
Total operating expenses | 15,047 | 15,768 | (721) | (4.6) | % | |||||||||
Other expense (income) | ||||||||||||||
Interest expense | 14,898 | 6,626 | 8,272 | # | ||||||||||
Loss (gain) on change in fair value of contingent consideration | 2,728 | (265) | 2,993 | # | ||||||||||
Total other expense | 17,626 | 6,361 | 11,265 | # | ||||||||||
Segment loss before income taxes | $ | (7,136) | $ | (10,534) | $ | 3,398 | (32.3) | % | ||||||
#- Change greater than 100% or not meaningful |
Three Months Ended March 31, | |||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||
Average Exchange Rates for the Canadian Dollar | 0.7397 | 0.7893 | (0.0496) | (6.3) | % | ||||||||||||
March 31, | December 31, | Change | |||||||||||||||
2023 | 2022 | $ | % | ||||||||||||||
Exchange Rate for the Canadian Dollar | 0.7422 | 0.7365 | 0.0057 | 0.8 | % | ||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||||||||
Direct Lending – constant currency basis: | ||||||||||||||||||||
Revenues | $ | 174,549 | 269,887 | $ | (95,338) | (35.3) | % | |||||||||||||
Net revenue | 124,740 | 181,070 | (56,330) | (31.1) | % | |||||||||||||||
Segment (loss) income before income taxes | (30,279) | 12,976 | (43,255) | (333.3) | % | |||||||||||||||
Canada POS Lending – constant currency basis: | ||||||||||||||||||||
Revenues | $ | 42,798 | 20,309 | $ | 22,489 | 110.7 | % | |||||||||||||
Net revenue | 27,248 | 11,595 | 15,653 | 135.0 | % | |||||||||||||||
Segment loss before income taxes | (7,657) | (10,534) | 2,877 | (27.3) | % | |||||||||||||||
March 31, | December 31, | Change | ||||||||||||||||||
2023 | 2022 | $ | % | |||||||||||||||||
Direct Lending – constant currency basis: | ||||||||||||||||||||
Gross loans receivable | $ | 1,205,786 | $ | 1,254,395 | $ | (48,609) | (3.9) | % | ||||||||||||
Canada POS Lending – constant currency basis: | ||||||||||||||||||||
Gross loans receivable | $ | 846,717 | $ | 833,438 | $ | 13,279 | 1.6 | % | ||||||||||||
Capacity | Interest Rate | Maturity | Balance as of March 31, 2023 (in USD) | ||||||||||||||
7.50% Senior Secured Notes (due 2028) (2) | $1.0 billion | 7.50% | August 1, 2028 | $ | 983,553 | ||||||||||||
Heights SPV | $425.0 million | 1-Mo SOFR + 4.25% | July 15, 2025 | 403,696 | |||||||||||||
First Heritage SPV | $225.0 million | 1-Mo SOFR + 4.25% | July 13, 2025 | 170,050 | |||||||||||||
Flexiti SPV(1) | C$535.0 million | Weighted average interest rate (3)(4) 8.27% | September 29, 2025 | 351,543 | |||||||||||||
Flexiti Securitization(1) | C$526.5 million | 1-Mo CDOR + 3.59%)(5) | December 9, 2025 | 387,314 | |||||||||||||
Canada SPV(1) | C$400.0 million | 3-Mo CDOR + 6.00% | August 2, 2026 | 291,107 | |||||||||||||
Senior Revolver | $40.0 million | 1-Mo SOFR + 5.00% | August 31, 2023 | 40,000 | |||||||||||||
(1) Capacity amounts are denominated in Canadian dollars, while outstanding balances as of March 31, 2023 are denominated in U.S. dollars. | |||||||||||||||||
(2) On July 30, 2021, we closed our $750 million aggregate principal amount of new 7.50% Senior Secured Notes, which was used to redeem our $690.0 million 8.25% Senior Secured Notes due 2025. On December 27, 2021, we issued an additional $250.0 million of our 7.50% Senior Secured Notes for a total capacity of $1.0 billion. | |||||||||||||||||
(3) The weighted average interest rate does not include the impact of the amortization of deferred loan origination costs or debt discounts. | |||||||||||||||||
(4) Swapped to fixed rate via interest rate swap hedging arrangement that terminates on September 29, 2025 for Flexiti SPV and December 9, 2025 for Flexiti Securitization. |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Net cash (used in) provided by operating activities | $ | (4,143) | $ | 83,733 | ||||||||||
Net cash provided by (used in) investing activities | 7,006 | (187,670) | ||||||||||||
Net cash provided by financing activities | 9,091 | 110,322 | ||||||||||||
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 | 5/17/18 | ||||||||||||||
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 March 31, 2023, filed with the SEC on May 10, 2023, formatted in Extensible Business Reporting Language (“XBRL”) includes: (i) Condensed Consolidated Balance Sheets at March 31, 2023 and December 31, 2022, (ii) Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 and (v) Notes to Condensed Consolidated Financial Statements* | Filed herewith | |||||||||||||||
By: | /s/ Ismail Dawood | ||||||||||
Ismail Dawood | |||||||||||
Chief Financial Officer |
By: | /s/ Ismail Dawood | ||||
Ismail Dawood | |||||
Executive Vice President and Chief Financial Officer |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
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Statement of Comprehensive Income [Abstract] | ||
Net (loss) income | $ (59,471) | $ 1,336 |
Other comprehensive (loss) income, net of tax: | ||
Change in derivative instruments designated as cash flow hedges, net of tax | (2,750) | 0 |
Foreign currency translation adjustment, net of tax | 30 | 6,633 |
Other comprehensive (loss) income, net of tax | (2,720) | 6,633 |
Comprehensive (loss) income | $ (62,191) | $ 7,969 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
Jul. 31, 2021 |
---|---|---|---|---|---|
Restricted cash | $ 123,282 | $ 91,745 | $ 110,118 | ||
Total cash, cash equivalents and restricted cash used in the Statement of Cash Flows | $ 178,217 | 165,677 | 170,327 | $ 162,075 | |
Senior Secured Notes Due 2028 | Senior Notes | |||||
Stated interest rate (as percent) | 7.50% | 7.50% | 7.50% | ||
Variable Interest Entity | |||||
Restricted cash | $ 92,185 | $ 52,277 | $ 64,141 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS |
3 Months Ended |
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Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS | NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS Nature of Operations The terms “CURO" and the “Company” refer to CURO Group Holdings Corp. and its direct and indirect subsidiaries as a combined entity, except where otherwise stated. The Company is a tech-enabled, omni-channel consumer credit lender serving U.S. and Canadian customers for over 25 years. Our roots in the consumer finance market run deep. We have worked diligently to provide customers a variety of convenient, easily accessible financial services. Our decades of alternative data power a hard-to-replicate underwriting and scoring engine, mitigating risk across the full spectrum of credit products. Basis of Presentation The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with U.S. GAAP and the accounting policies described in its 2022 Form 10-K. Interim results of operations are not necessarily indicative of results that might be expected for future interim periods or for the year ending December 31, 2023. While certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, the Company believes that the disclosures are adequate to enable a reasonable understanding of the information presented. Additionally, the Company qualifies as an SRC, which allows registrants to report information under scaled disclosure requirements. SRC status is determined on an annual basis as of June 30th. The Company met the definition of an SRC as of June 30, 2022 and will evaluate its status as of June 30, 2023. The unaudited Condensed Consolidated Financial Statements and the accompanying notes reflect adjustments of a normal and recurring nature, which are, in the opinion of management, necessary to present fairly the Company's results of operations, financial position and cash flows for the periods presented. Revised Revenue Presentation Beginning January 1, 2023, the Company began reporting "Insurance and other income" in place of the previously reported "Insurance premiums and commissions" and "Other revenue" line items in the unaudited Condensed Consolidated Statements of Operations. Prior period amounts have been reclassified to conform with current period presentation. Beginning September 30, 2022, the Company began reporting "Loss (gain) on change in fair value of contingent consideration" separately on the unaudited Condensed Consolidated Statements of Operations compared to historical presentation within Other operating expense. Prior period amounts have been reclassified to conform with current period presentation. Principles of Consolidation The unaudited Condensed Consolidated Financial Statements reflect the accounts of CURO and its direct and indirect subsidiaries, including Heights, which we acquired on December 27, 2021, and First Heritage, which we acquired on July 13, 2022. Refer to Note 13, "Acquisitions and Divestiture" for further disclosures related to these acquisitions. Intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of the unaudited Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Some estimates may also affect the reported amounts of revenues and expenses during the periods presented. Significant estimates that the Company made in the accompanying unaudited Condensed Consolidated Financial Statements include ACL, certain assumptions related to equity investments, goodwill and intangibles, accruals related to self-insurance, estimated tax liabilities and the accounting for the First Heritage, Heights and Flexiti acquisitions. Actual results may differ from those estimates. Allowance for Credit Losses The FASB issued an accounting update in June 2016 to change the impairment model for estimating credit losses on financial assets. The previous incurred loss impairment model required the recognition of credit losses when it was probable that a loss had been incurred. The incurred loss model was replaced by the CECL model, which requires entities to estimate the lifetime expected credit loss on financial instruments and to record an allowance to offset the amortized cost basis of the financial asset. The CECL model requires earlier recognition of credit losses as compared to the incurred loss approach. The Company adopted this standard effective January 1, 2023. The initial impact of adoption was a $100.0 million increase to accumulated deficit ($135.2 million increase to the allowance for credit losses, net of $35.2 million in taxes). For the three months ended March 31, 2023, we concluded to record a valuation allowance against the U.S. DTAs. See Note 8 - Income Taxes for further information. As a result, the company decreased the tax impact to Accumulated deficit by $13.0 million as a result of the valuation allowance. As of January 1, 2023, the impact of CECL at adoption was recorded as a $113.0 million increase to Accumulated deficit ($135.2 million increase to the allowance for credit losses, net of $22.2 million in taxes). The ACL on gross loans receivables reduces the outstanding gross loans receivables balance in the unaudited Condensed Consolidated Balance Sheets. After adoption, all changes in the ACL, net of charge-offs and recoveries, are recorded as “Provision for losses” in the unaudited Condensed Consolidated Statements of Operations. The ACL is based on an analysis of historical loss, charge-off rates and recoveries. The Company also considers delinquency trends, impact of new loan products, changes to underwriting criteria or lending policies, changes in jurisdictional regulations or laws, recent credit trends and reasonable and supportable economic forecasts, which cover the life of the loan. The Company will also adjust for quantitative and qualitative factors that are not fully reflected in the historical data. If a loan is deemed to be uncollectible before it is fully reserved based on received information (e.g., receipt of customer bankruptcy notice or death), the Company charges off the loan at that time. The Company charges credit losses, including accrued interest, against the allowance when the account reaches 180 days contractually delinquent, subject to certain exceptions. Any recoveries on loans previously charged to the ACL are credited to the ACL when collected. The Company selected a static pool Probability of Default (“PD”) / Loss Given Default (“LGD”) / Exposure at Default ("EAD") model to estimate its base allowance for credit losses, in which the estimated loss is equal to the product of PD, LGD and EAD. Historical static pools of net loans receivables are tracked over the term of the pools to identify the probability of loss (PD) and the average size of losses, net of recoveries (LGD and EAD). As loans receivable are originated, provisions for credit losses are recorded in amounts sufficient to maintain an ACL at an adequate level to provide for estimated losses over the contractual term of the loan receivables. Subsequent changes to the contractual terms resulting from re-underwriting are not included in the loan receivable’s expected life. The Company uses its historical loss experience to forecast expected credit losses. Historical information about losses generally provides a basis for the estimate of expected credit losses. The Company also considers the need to adjust historical information to reflect the extent to which current conditions differ from the conditions that existed for the period over which historical information was evaluated. These adjustments to historical loss information may be qualitative or quantitative in nature. Reasonable and supportable macroeconomic forecasts are required for the Company’s ACL model. The Company reviews macroeconomic forecasts to use in its ACL. The projected change in creditworthiness is modeled using Congressional Budget Office data such as unemployment rate and personal income. The Company adjusts the historical loss experience by relevant qualitative factors for these expectations. Canada Loss Recognition Effective January 1, 2023, the Company modified the timeframe over which it charges-off loans within the Direct Lending brands in Canada and made related refinements to its loss provisioning methodology. Prior to January 1, 2023, the Company deemed the Direct Lending brands in Canada uncollectible and charged-off on day 91 past-due. As part of our policy alignment within the Direct Lending operating segment, the Company revised its estimates and now considers a loan issued by the Direct Lending brands in Canada loans uncollectible when they have been contractually past-due for more than 180 consecutive days. Consequently, such past-due loans and related accrued interest now remain in loans receivable for 180 days before being charged-off against the ACL. All recoveries on charged-off loans are credited to the ACL when received. The Company evaluates the adequacy of the ACL compared to the related gross loans receivable balances that include accrued interest. The aforementioned change was treated as a change in accounting estimate and applied prospectively effective January 1, 2023. The change affects comparability to prior periods as follows: •Gross loans receivable: balances as of March 31, 2023 include $19.7 million of the Direct Lending brands in Canada loans that are between 91 and 180 days past-due with related accrued interest, while such balances for prior periods do not include any loans that are between 91 and 180 days past-due. •Revenues: for the three month period ended March 31, 2023, revenues include accrued interest on the Direct Lending brands in Canada loans between 91 and 180 days past-due of $2.2 million, while revenues in prior periods do not include any loans that are between 91 and 180 days past-due. •Provision for Losses: effective January 1, 2023, past-due, unpaid balances plus related accrued interest on the Direct Lending brands in Canada loans charge off on day 181. Provision expense is affected by NCOs plus changes to the required ACL. Because NCOs now include unpaid principal and up to 180 days of related accrued interest, as compared to prior periods, NCO amounts and rates are higher and the required ACL as a percentage of gross loans receivable is higher. The Company recognized $18.2 million in charge offs related to the Direct Lending brands in Canada loans and, absent the policy change, would have recognized $27.9 million in charge offs on those loans. Recently Issued Accounting Pronouncements Recently Adopted ASU 2016-13 and subsequent amendments In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent amendments to the guidance: ASU 2018-19 in November 2018, ASU 2019-04 in April 2019, ASU 2019-05 in May 2019, ASU 2019-10 and -11 in November 2019, ASU 2020-02 in February 2020 and ASU 2022-02 in March 2022. As a result of the adoption of CECL on January 1, 2023, through a modified-retrospective approach, the Company recorded an increase to the ACL of $135.2 million and a corresponding one-time, cumulative reduction to retained earnings of $113.0 million (net of $22.2 million in taxes) in the unaudited Condensed Consolidated Balance Sheet as of January 1, 2023. The Company’s ACL increased from 5.8% to 12.6% as a percentage of the amortized cost basis on January 1, 2023. In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which removes the accounting guidance for troubled debt restructurings and requires entities to evaluate whether a modification provided to a customer results in a new loan or continuation of an existing loan. The amendments enhance existing disclosures and require new disclosures for receivables when there has been a modification in contractual cash flows due to a customer experiencing financial difficulties. Additionally, the amendments require public business entities to disclose gross charge-off information by year of origination in the vintage disclosures. This ASU became effective for us on January 1, 2023. We adopted this guidance in the first quarter of 2023 using the modified retrospective method. Adoption of this standard did not have a material impact on our unaudited Condensed Consolidated Financial Statements. As result of the adoption of ASU 2016-13, several of our significant accounting policies have changed to reflect the requirements of the new standard. See above for these updated significant accounting policies as of January 1, 2023. ASU 2021-08 In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with ASC 606, Revenue from Contracts with Customers. This ASU became effective for us on January 1, 2023. The adoption of ASU 2021-08 at January 1, 2023 did not have a material effect on the Company's Condensed Consolidated Financial Statements.
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LOANS RECEIVABLE AND REVENUE |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS RECEIVABLE AND REVENUE | NOTE 2 – LOANS RECEIVABLE AND REVENUE Effective with the sale of the Legacy U.S. Direct Lending Business on July 8, 2022, the Company does not guarantee loans originated by third-party lenders through CSO programs. The Company presents these loans in the below tables, based on historical practice and for comparability purposes. The following table summarizes revenue by product (in thousands):
The following tables summarize loans receivable by product and the related delinquent loans receivable (in thousands):
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VARIABLE INTEREST ENTITIES |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
VARIABLE INTEREST ENTITIES | NOTE 3 – VARIABLE INTEREST ENTITIES As of March 31, 2023, the Company had five credit facilities, whereby certain loans receivable were sold to VIEs to collateralize debt incurred under each facility. See Note 6, "Debt" for additional details on each facility. The Company has determined that it is the primary beneficiary of the VIEs and is required to consolidate them. The Company includes the assets and liabilities related to the VIEs in the unaudited Condensed Consolidated Financial Statements. The assets of a VIE can be used only to settle liabilities of that VIE. Creditors (or beneficial interest holders) of the VIEs do not have recourse to the Company's general credit. The carrying amounts of consolidated VIEs' assets and liabilities were as follows (in thousands):
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GOODWILL |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLES | NOTE 4 – GOODWILL Goodwill The change in the carrying amount of goodwill by reporting unit for the three months ended March 31, 2023 was as follows (in thousands):
The Company tests goodwill at least annually for potential impairment, as of October 1, and more frequently if indicators are present or changes in circumstances suggest that impairment may exist. The potential indicators include, among various factors, declining sales, earnings or cash flows, or the development of a material adverse change in business climate. The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a reporting unit. See Note 1, "Summary of Significant Accounting Policies and Nature of Operations" of the 2022 Form 10-K for additional information on the Company's policy for assessing goodwill for possible impairment. During the fourth quarter of 2022, the Company performed a quantitative assessment for each of its reporting units. Management utilized the income and the guideline public company approaches, in equal weightings, in determining a fair value for each of the three reporting units for purposes of testing the goodwill. The income approach estimates fair value using the present value of future cash flows, whereas, the guideline public company approach estimates fair value using the fair value of publicly traded businesses in a similar line of business. As a result, the Company recognized non-cash pre-tax impairment charges of $107.8 million on the Legacy U.S. Direct Lending reporting unit and $37.4 million on the Canada POS Lending reporting unit during the year ended December 31, 2022, to write down the carrying values of goodwill. Management concluded that the estimated fair value of the Canada Direct Lending reporting unit, now included in the Direct Lending reporting unit, was greater than its carrying value, as of the annual assessment date; as such, no impairment charge was required. Effective the three months ended March 31, 2023, the Company combined the Legacy U.S. Direct Lending and Canada Direct Lending reporting units into a single Direct Lending Reporting unit. Refer to Note 12, "Segment Reporting" for further information. In the first quarter of 2023, the Company performed an interim review of triggering events for the Direct Lending reporting unit, which would indicate whether a quantitative or qualitative assessment of goodwill impairment was necessary. As a result of the interim triggering event review, the Company concluded an additional assessment was not necessary. Heights Acquisition The Company completed the acquisition of Heights on December 27, 2021. Provisional goodwill was estimated at $253.9 million, based on the preliminary valuation. The Company recorded $11.8 million of net adjustments during fiscal year 2022, resulting in a goodwill balance of $265.7 million as of December 31, 2022 upon the conclusion of the measurement period, excluding the impairment charge on the Legacy U.S. Direct Lending reporting unit, now included in the Direct Lending reporting unit, recorded in the fourth quarter of 2022. See Note 13, "Acquisitions and Divestiture" for more information related to the business combination. Legacy U.S. Direct Lending Business Divestiture On July 8, 2022 the Company completed the divestiture of its Legacy U.S. Direct Lending Business to Community Choice Financial, for total sale proceeds of $349.2 million, net of working capital adjustments, comprised of $314.2 million of cash received at close and $35.0 million in cash payable in monthly installment payments over the subsequent 12 months. The divestiture resulted in a gain of $68.4 million during the year ended 2022 which was recorded in "Gain on sale of business" on the unaudited Consolidated Statement of Operations. The Company reduced the gain by $2.0 million in the three months ended March 31, 2023, based on expected uncollectible amounts. As part of the sale, $91.1 million of goodwill was written off. See Note 13,"Acquisitions and Divestiture" for more information related to the divestiture. First Heritage Acquisition On July 13, 2022, CURO closed the acquisition of First Heritage, a consumer lender that provides near-prime installment loans along with customary opt-in insurance and other financial products, for a total purchase price of $140.0 million in cash. Provisional goodwill was recorded at $75.4 million, excluding the impairment charge on the Legacy U.S. Direct Lending reporting unit, now included in the Direct Lending reporting unit, recorded in Q4 2022. See Note 13, "Acquisitions and Divestiture" for more information related to the business combination.
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FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | NOTE 5 – FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Company is required to use valuation techniques that are consistent with the market approach, income approach and/or cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability based on observable market data obtained from independent sources, or unobservable inputs, meaning those that reflect the Company's own judgment about the assumptions market participants would use in pricing the asset or liability based on the best information available for the specific circumstances. Accounting standards establish a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are listed below. Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has access to at the measurement date. Level 2 – Inputs include quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3 – Unobservable inputs reflecting the Company's own judgments about the assumptions market participants would use in pricing the asset or liability as a result of limited market data. The Company develops these inputs based on the best information available, including its own data. Financial Assets and Liabilities Carried at Fair Value The table below presents the assets and liabilities that were carried at fair value on the unaudited Condensed Consolidated Balance Sheets at March 31, 2023 (in thousands):
Derivative Asset and Liability The Company uses interest rate swaps to help manage interest rate risk exposure on variable rate debt. The Company typically classifies these derivatives as Level 2, given that significant inputs can be observed in a liquid market and the model itself does not require significant judgment. During the year ended December 31, 2022, Flexiti entered into interest rate swaps with a counterparty to protect against the interest rate risk on the Flexiti Securitization variable rate borrowing facility. Flexiti is required to hedge the variable interest rate aspect of the Flexiti SPV under the facility's credit agreement. The derivative asset is included in “ ” and the derivative liability is included in in the Company’s unaudited Condensed Consolidated Balance Sheet. For additional information on the interest rate swaps, refer to Note 6, "Debt." Contingent consideration related to acquisition In connection with the acquisition of Flexiti during the first quarter of 2021, the Company recorded a liability for contingent consideration based on the achievement of revenue less NCOs and loan origination targets over the two years following closing of the acquisition that could result in additional cash consideration up to $32.8 million to Flexiti's former stockholders. The fair value of the liability was estimated using the option-based income approach using a Monte Carlo simulation model discounted back to the reporting date. The significant unobservable inputs (Level 3) used to estimate the fair value included the expected future tax benefits associated with the acquisition, the probability that the risk adjusted-revenue and origination targets will be achieved and discount rates through December 31, 2022. The contingent consideration measured at fair value using unobservable inputs was initially recorded as $20.6 million as of March 31, 2021. At March 31, 2022, the liability recorded was the expected payment based on the actual risk adjusted-revenue and origination targets achieved during the measurement period (Level 3), which ended on March 31, 2022. This liability was changed to a Level 2 estimated fair value at March 31, 2023, because the liability was based on achieved results and no longer includes a forecast component. The liability recorded was $18.1 million as of March 31, 2023. The Company paid $1.0 million of contingent consideration in July 2022, which is included in Contingent consideration related to acquisition in the Company’s unaudited Condensed Consolidated Balance Sheet. For additional information on Flexiti and the related contingent consideration, refer to Note 13, "Acquisitions and Divestiture." Cash Surrender Value of Life Insurance and Non-qualified deferred compensation plan The cash surrender value of life insurance is included in Other assets in the Company’s unaudited Condensed Consolidated Balance Sheets. The non-qualified deferred compensation plan offsetting liability is included in “Accounts payable and accrued liabilities” in the Company’s unaudited Condensed Consolidated Balance Sheets. The table below presents the assets and liabilities that were carried at fair value on the unaudited Condensed Consolidated Balance Sheets at December 31, 2022 (in thousands):
Financial Assets and Liabilities Not Carried at Fair Value The table below presents the assets and liabilities that were not carried at fair value on the unaudited Condensed Consolidated Balance Sheets at March 31, 2023 (in thousands):
The table below presents the assets and liabilities that were not carried at fair value on the unaudited Condensed Consolidated Balance Sheets at December 31, 2022 (in thousands):
Loans Receivable, Net Loans receivable are carried on the unaudited Condensed Consolidated Balance Sheets net of the ACL. The unobservable inputs used to calculate the carrying values include quantitative factors, such as current default trends. Also considered in evaluating the accuracy of the models are changes to the loan portfolio mix, the impact of new loan products, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and macroeconomic conditions, including unemployment rate and customer income. The carrying value of loans receivable approximates their fair value. Refer to Note 2, "Loans Receivable and Revenue" for additional information. 7.50% Senior Secured Notes, Heights SPV, First Heritage SPV, Flexiti SPV, Flexiti Securitization, Canada SPV and Senior Revolver The fair value disclosures for the 7.50% Senior Secured Notes as of March 31, 2023 and December 31, 2022 were based on observable market trading data. The fair values of the Heights SPV, First Heritage SPV, Flexiti SPV, Flexiti Securitization, Canada SPV and Senior Revolver were based on the cash needed for their respective final settlements. Investment in Katapult The table below presents the Company's investment in Katapult (in thousands):
The Company has an equity method investment in Katapult and records its share of earnings and losses on a one-quarter reporting lag. The Company recorded a loss of $3.4 million for the three months ended March 31, 2023 based on its share of Katapult’s earnings. The equity method investment is presented within "Investment in Katapult" on the unaudited Condensed Consolidated Balance Sheets. The Company owns 19.5% of Katapult on a fully diluted basis assuming full pay-out of earn-out shares as of March 31, 2023, and 18.2% excluding pay-out of earn-out shares.
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DEBT |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | NOTE 6 – DEBT The Company's debt instruments and balances outstanding as of March 31, 2023 and December 31, 2022, including maturity date, effective interest rate and borrowing capacity, were as follows (dollars in thousands):
Corporate Debt 7.50% Senior Secured Notes In July 2021, the Company issued $750.0 million of 7.50% Senior Secured Notes which mature on August 1, 2028. Interest on the notes is payable semiannually, in arrears, on February 1 and August 1. In December 2021, the Company issued an additional $250.0 million of 7.50% Senior Secured Notes, also maturing on August 1, 2028, to fund the acquisition of Heights. Refer to Note 14, "Acquisitions and Divestiture" for additional details. In connection with the 7.50% Senior Secured Notes, financing costs of $16.4 million were capitalized, net of amortization, and included in the unaudited Condensed Consolidated Balance Sheets as a component of "Debt." These costs are amortized over the term of the 7.50% Senior Secured Notes as a component of interest expense. Funding Debt As of March 31, 2023, the Company had five credit facilities whereby loans receivable were sold to VIEs to collateralize debt incurred under each facility. The following debt arrangements are issued by the Company’s wholly owned, bankruptcy-remote SPVs, which are considered VIEs under U.S. GAAP and are consolidated into the financial statements of their respective primary beneficiary. These facilities are the (i) Heights SPV, (ii) First Heritage SPV, (iii) Canada SPV, (iv) Flexiti SPV and (v) Flexiti Securitization. For further information on these facilities, refer to Note 3, "Variable Interest Entities." Assets transferred to each SPV are legally isolated from the Company and its affiliates, as well as the claims of the Company’s and its affiliates’ creditors. Further, the assets of each SPV are owned by such SPV and are not available to satisfy the debts or other obligations of the Company or any of its affiliates. These debts are supported by the expected cash flows from the underlying collateralized finance receivables. Advances on the funding debt are determined based on the contractually agreed upon advance rates. Collections on these finance receivables are remitted to restricted cash collection accounts, which totaled $92.2 million and $52.3 million as of March 31, 2023 and December 31, 2022, respectively. The increase in restricted cash is based on the contractual requirements of the SPVs related to the total value and performance of the underlying collateralized finance receivables. Heights SPV On July 15, 2022, the Company entered into a new $425.0 million non-recourse revolving warehouse facility to replace the incumbent lender's facility and finance future loans originated by Heights. The effective interest rate is 1-month SOFR plus 4.25%. The Company also pays a 0.50% per annum commitment fee on the unused portion of the commitments. The warehouse revolving period matures on July 15, 2025. First Heritage SPV On July 13, 2022, concurrently with the closing of the First Heritage acquisition, the Company entered into a $225.0 million non-recourse revolving warehouse facility to replace the incumbent lender's facility and finance future loans originated by First Heritage. The effective interest rate is 1-month SOFR plus 4.25%. The Company also pays a 0.50% per annum commitment fee on the unused portion of the commitments. The warehouse revolving period matures on July 13, 2025. Flexiti SPV On September 29, 2022, Flexiti refinanced and increased its Flexiti SPV to increase the borrowing capacity from C$500.0 million to C$535.0 million and extend its maturity to September 29, 2025. As of March 31, 2023, the weighted average interest rate was 8.27%. Flexiti also pays a 0.50% per annum commitment fee on the unused portion of the commitments. All other material terms of the revolving warehouse credit facility remain unchanged. Flexiti Securitization In December 2021, Flexiti Securitization Limited Partnership, a wholly-owned Canadian subsidiary of the Company, entered into the Flexiti Securitization. The facility provides for C$526.5 million with a maturity of December 9, 2025. As of March 31, 2023, the effective interest was one-month CDOR plus 3.59%. Canada SPV In August 2018, as amended in the fourth quarter of 2021 and first quarter of 2022, CURO Canada Receivables Limited Partnership, a wholly-owned subsidiary of the Company, entered into the Canada SPV. The effective interest rate was 3-month CDOR plus 6.00%. The borrower also pays a 0.50% per annum commitment fee on the unused portion of the commitments. Senior Revolver The Company maintains the Senior Revolver that provides $40.0 million of borrowing capacity, including up to $4.0 million of standby letters of credit, for a one-year term, renewable for successive terms following annual review. The current term expires August 31, 2023. The Senior Revolver accrues interest at one-month SOFR plus 5.00%. Curo Canada Revolving Credit Facility Curo Canada maintained the Curo Canada Revolving Credit Facility, which provides short-term liquidity for the Company's Canadian direct lending operations. The Curo Canada Revolving Credit Facility was collateralized by substantially all of CURO Canada’s assets and contains various covenants. Borrowings under the Curo Canada Revolving Credit Facility bore interest per annum at the prime rate of a Canadian chartered bank plus 1.95%. On December 21, 2022, the borrowing capacity under the Curo Canada Revolving Credit Facility was reduced from C$10.0 million to C$5.0 million, and the facility was cancelled on January 6, 2023. On May 9, 2023 the company finalized certain debt related transactions. Refer Note 16 - Subsequent Events for further information. Derivative Instruments and Hedging Activities During 2022, the Company entered into interest rate swaps to help manage interest rate risk on certain variable rate debt facilities. The Company designated these risk management derivatives as qualifying cash flow hedges under hedge accounting. The derivative assets are included in Other assets on our unaudited Condensed Consolidated Balance Sheet and changes in the fair value of derivatives are recorded as a component of AOCI. During the three months ended March 31, 2023, the hedges were assessed as effective and as such there was no impact to earnings. However, for cash flow hedges during periods in which the forecasted transactions impact earnings, those amounts are reclassified into earnings in the same period during which the forecasted transactions impact earnings. Additionally, they are presented in the same line item in the unaudited Condensed Consolidated Statements of Operations as the earnings effect of the hedged items and reflected in operating activities on the unaudited Condensed Statement of Cash Flows. Interest Rate Swap on Flexiti SPV In accordance with the terms of the Flexiti SPV, on October 11, 2022, Flexiti entered into an interest rate swap due September 29, 2025 on the C$390.0 million, variable rate portion of the borrowing facility, with a notional amount of C$390.0 million. As of March 31, 2023, a $0.5 million interest rate swap is included in and, to reflect the change in fair value during the current period, a $1.0 million loss is recognized in Other comprehensive income on the unaudited Condensed Consolidated Balance Sheet. Interest Rate Swap on Flexiti Securitization In accordance with the terms of the Flexiti Securitization, on July 7, 2022, Flexiti entered into an interest rate swap due December 9, 2025 on the C$526.5 million, variable rate, borrowing facility, with a notional amount of C$526.5 million. As a result of the swap, the effective interest rate is 7.09%. As of March 31, 2023, a $4.2 million interest rate swap is included in and, to reflected the change in fair value during the current period, a $1.8 million loss is recognized in Other comprehensive income on the unaudited Condensed Consolidated Balance Sheet.
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COMMITMENTS AND CONTENGENCIES |
3 Months Ended |
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Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 7 – COMMITMENTS AND CONTINGENCIES Securities Litigation and Enforcement In 2018, a putative securities fraud class action lawsuit was filed against the Company and certain of its directors and officers and other related parties in the United States District Court for the District of Kansas, captioned Yellowdog Partners, LP v. CURO Group Holdings Corp., Donald F. Gayhardt, William Baker and Roger W. Dean, Civil Action No. 18-2662 (the "Yellowdog Action"). The suit alleged the Company made misleading statements and omitted material information regarding the Company's efforts to transition the Canadian inventory of products from Installment loans to Revolving LOC loans. The case was resolved in 2020 for $9.0 million, of which the first $2.5 million was paid by the Company and the remainder paid by the Company's insurance carriers. For the year ended December 31, 2022, there was no further expense related to this litigation. In June and July 2020, three shareholder derivative lawsuits were filed in the United States District Court for the District of Delaware ("Court") against the Company, certain of its directors and officers, and in two of the three lawsuits, a large stockholder. Plaintiffs generally alleged the same underlying facts of the Yellowdog Action. In July 2021, the derivative lawsuits were voluntarily dismissed and plaintiffs refiled two cases in the United States District Court for the District of Kansas. On October 27, 2022, the Court granted final approval of the parties' settlement and dismissed the case with prejudice. The terms of the settlement provided for the implementation of certain corporate governance reforms and a payment of $345.0 thousand in attorneys’ fees and expenses to plaintiffs’ counsel, which was paid by the Company's insurers, and included no admission of liability or wrongdoing by the Company. Other Legal Matters. The Company is a defendant in certain other litigation matters encountered from time-to-time in the ordinary course of business, some of which may be covered to an extent by insurance. While it is difficult to predict the outcome of any particular proceeding, the Company does not believe the result of any of these matters will have a material adverse effect on the Company's business, results of operations or financial condition.
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INCOME TAXES |
3 Months Ended |
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Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 8 – INCOME TAXES The Company's effective income tax rate was (53.4)% and 45.3% for the three months ended March 31, 2023 and 2022, respectively. The effective income tax rate for the three months ended March 31, 2023 was lower compared to the blended federal and state/provincial statutory rate of approximately 26.0%, primarily as a result of recording a valuation allowance against U.S. deferred tax assets ("DTAs") of $29.0 million and lost tax benefits related to share-based compensation of $1.2 million. The effective income tax rate for the three months ended March 31, 2022 was higher compared to the blended federal and state/provincial statutory rates of approximately 26.0%, primarily as a result of lower income before tax combined with $0.3 million lost tax benefits of non-deductible officers’ compensation and $0.3 million tax expense related to share-based compensation. For the period ended March 31, 2023, we continued to evaluate the positive and negative evidence to estimate whether sufficient future sources of income will be generated to permit the use of the existing DTAs in the U.S. During the first quarter of 2023, we have determined that negative evidence outweighs the positive evidence of our ability to realize the U.S. DTAs. On this basis, we recorded a valuation allowance of $41.9 million against the U.S. DTAs, including $29.0 million recorded as Provision for income taxes and $13.0 million in Accumulated deficit related to the adoption of CECL. The Company intends to reinvest Canada earnings indefinitely in its Canadian operations and therefore has not provided for any non-U.S. withholding tax that would be assessed on dividend distributions. If the accumulated earnings in Canada of $218.3 million were distributed to the U.S. legal entities, the Company would be subject to Canadian withholding taxes of an estimated $10.9 million. The determination of the U.S. state income taxes upon a potential foreign earnings distribution is impractical. In the event the earnings are distributed to the U.S. legal entities, the Company will adjust the income tax provision for the applicable period and determine the amount of foreign tax credit that would be available.
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EARNINGS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | NOTE 9 – EARNINGS PER SHARE The following table presents the computation of basic and diluted earnings per share (in thousands, except per share amounts):
Potential shares of common stock that would have the effect of increasing diluted earnings per share or decreasing diluted loss per share are considered to be anti-dilutive; therefore, these shares are not included in calculating diluted earnings per share. For the three months ended March 31, 2023 and 2022, there were 3.6 million and 1.2 million, respectively, of potential shares of common stock excluded from the calculation of diluted earnings per share because their effect was anti-dilutive. The Company utilizes the "control number" concept in the computation of diluted earnings per share to determine whether potential common stock instruments are dilutive. The control number used is income. The control number concept requires that the same number of potentially dilutive securities applied in computing diluted earnings per share is applied to all other categories of income or loss, regardless of their anti-dilutive effect on such categories.
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | NOTE 10 – LEASES Leases entered into by the Company are primarily for retail stores in certain U.S. states and Canadian provinces. Leases classified as finance leases were immaterial to the Company as of March 31, 2023. Operating leases expire at various times through 2033. Operating leases are included in "Right of use asset - operating leases" and "Lease liability - operating leases" in the unaudited Condensed Consolidated Balance Sheets. Operating lease costs are included in "Occupancy" in the unaudited Condensed Consolidated Statement of Operations. The majority of leases have an original term up to five years plus renewal options under similar terms. During the first quarter of 2023, the Company recorded a $7.5 million expense for lease abandonment costs and a $4.5 million accrual related to planned store closures as of March 31, 2023. For further information, refer to Note 14, "Restructuring." The following table summarizes the operating lease costs and other information for the three months ended March 31, 2023 and 2022 (dollars in thousands):
The following table summarizes the aggregate operating lease payments that the Company was contractually obligated to make under operating leases as of March 31, 2023 (in thousands):
There were no material leases entered into subsequent to the balance sheet date.
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DIVIDENDS |
3 Months Ended |
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Mar. 31, 2023 | |
Equity [Abstract] | |
DIVIDENDS | NOTE 11 – DIVIDENDS Dividend Program In October 2022, the Company's Board of Directors suspended its previously authorized quarterly dividend of $0.11 per share ($0.44 per share annualized). There were no dividends paid in Q1 2023, except those related to previously declared dividends on RSUs vested during the three months ended March 31, 2023 related to the unvested period.
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SEGMENT REPORTING |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | NOTE 12 – SEGMENT REPORTING Segment information is prepared on the same basis that the Company's CODM reviews financial information for operational decision making purposes, including gross revenues, net revenue, gross margin, segment operating income and other items. During the first quarter of 2023, the Company's Chief Executive Officer, who is also the CODM, changed the manner in which he reviews financial information for purposes of assessing business performance, managing the business and allocating resources. In conjunction with this change, the Company realigned its segment structure resulting in the Company having two operating segments: Direct Lending and Canada POS Lending. Direct Lending. The Direct Lending operating segment represents the majority of net revenue and gross profit. This operating segment represents the Revolving LOC, secured and unsecured installment and single-pay loan products, together with the credit protection and other insurance products and other ancillary sales in the U.S. and Canada, which historically was comprised of the U.S. Direct Lending and Canada Direct Lending operating segments. The U.S. and Canada have similar economic and operating characteristics, including the nature of products and services offered, operating procedures and risks, customer bases and shared corporate resources, which led the CODM to conclude that these separate segments combine to form one operating segment. As of March 31, 2023, the Company operated over 490 U.S. retail locations in 13 states. As of March 31, 2023, the Company operated nearly 150 stores across eight Canadian provinces and had an online presence in eight provinces and one territory. Canada POS Lending. As of March 31, 2023, the Company served Canadian customers through POS financing available at over 8,500 retail locations and over 3,600 merchant partners across 10 provinces and two territories. The Company provides Revolving LOC loans and a number of other ancillary financial products. All prior period amounts related to the segment realignment have been retrospectively reclassified throughout to conform to the new presentation. The following table illustrates summarized financial information concerning reportable segments (in thousands):
The following table presents the proportion of gross loans receivable by segment (in thousands):
Geographic Data The following table presents total revenues by geographic region:
The following table presents the proportion of gross loans receivable by geographic region:
The following table presents the Company's net long-lived assets, comprised of property and equipment, by geographic region. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the asset is physically located (in thousands):
The CODM does not review total assets by segment for purposes of allocating resources or decision-making purposes; therefore, total assets by segment are not disclosed.
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ACQUISITIONS AND DIVESTITURE |
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Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS AND DIVESTITURE | NOTE 13 – ACQUISITIONS AND DIVESTITURE ACQUISITIONS First Heritage On July 13, 2022, the Company closed the acquisition of First Heritage, a consumer lender that provides near-prime installment loans along with customary opt-in insurance and other financial products, for a purchase price of $140.0 million in cash, subject to certain customary working capital and other adjustments. The Company began consolidating the financial results of First Heritage in the unaudited Condensed Consolidated Financial Statements on July 13, 2022 within the Direct Lending operating segment. This transaction was accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The Company was the acquirer for purposes of accounting for the business combination. The values assigned to the acquired assets and liabilities assumed are provisional based on the preliminary fair value estimates as of the acquisition date. The values assigned to the assets acquired and liabilities assumed are based on preliminary estimates of fair value available as of the date of this Form 10-Q and may be adjusted during the measurement period of up to 12 months from the date of acquisition as further information becomes available. Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill. As of March 31, 2023, the areas that remain subject to such potential adjustments primarily relate to the valuation of certain loans receivables, intangible assets and certain tax-related balances. The following table presents the preliminary purchase price allocation recorded in the Company’s unaudited Condensed Consolidated Balance Sheet as of the date of acquisition (in thousands):
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (dollars in thousands):
Goodwill of $75.4 million represents the excess of the consideration paid over the fair value of the net tangible and intangible assets acquired. The goodwill was primarily attributable to expected synergies created with the Company’s future product offerings and the value of the combined workforce. Goodwill from this transaction is deductible for income tax purposes. Heights On December 27, 2021, the Company acquired 100% of the outstanding stock of Heights for $360.0 million, consisting of $335.0 million in cash and $25.0 million of the Company's common stock. Heights is a consumer finance company that provides secured and unsecured Installment loans to near-prime and non-prime consumers, and offers customary opt-in insurance and other financial products across 390 branches in 11 U.S. states. The Company began consolidating the financial results of Heights in the unaudited Condensed Consolidated Financial Statements on December 27, 2021 within the Direct Lending operating segment. As of December 31, 2021, the Company completed the determination of the fair values of the acquired identifiable assets and liabilities. During the year ended December 31, 2022, the Company recorded measurement period adjustments that increased goodwill by $11.8 million. The measurement period adjustment related to the fair value of the loan portfolio and would have resulted in $7.7 million of incremental interest and fee revenue during the three months ended March 31, 2022 and no impact on the year ended December 31, 2022. The Company recorded a measurement period adjustment in the fourth quarter of 2022 that decreased goodwill by $3.5 million related to the final true-up of deferred tax balances after the pre-acquisition income tax returns were filed in October 2022. The Company made these measurement period adjustments to reflect the correct deferred tax balances that existed as of the acquisition date and not from events subsequent to such date. Additionally, in the fourth quarter of 2022, a measurement period adjustment was recorded related to tax filings for pre-acquisition activity which resulted in $4.2 million of income tax receivables and an increase to accounts payable for the same amount. As of December 31, 2022, the Company completed the determination of the fair values of the acquired identifiable assets and liabilities. The following table presents the purchase price allocation recorded in the Company’s unaudited Condensed Consolidated Balance Sheet as of the date of acquisition of Heights (in thousands):
DIVESTITURE Legacy U.S. Direct Lending Business On July 8, 2022, the Company completed the divestiture of its Legacy U.S. Direct Lending Business to Community Choice Financial, for total sale proceeds of $349.2 million, net of working capital adjustments, comprised of $314.2 million of cash received at close and $35.0 million in cash payable in monthly installment payments over the subsequent 12 months. The divestiture resulted in a gain of $68.4 million for the year ended December 31, 2022, which was recorded in "Gain on sale of business" on the unaudited Condensed Consolidated Statement of Operations. Per ASC 205: Presentation of Financial Statements, the sale of the business is not classified as discontinued operations in the Company’s operations or financial results. The Company reduced the gain by $2.0 million in the three months ended March 31, 2023 based on expected uncollectible amounts. The following table presents the amounts attributable to each category recorded in the Company’s unaudited Condensed Consolidated Balance Sheet as of the date of divestiture of the Legacy U.S. Direct Lending Business, as adjusted (in thousands):
The Legacy U.S. Direct Lending Business had $36.0 million pre-tax net income for the quarter ended March 31, 2022. Pre-tax net income is comprised of net revenue and expenses directly related to the Legacy U.S. Direct Lending Business, which does not include certain costs recorded in the Legacy U.S. Direct Lending operating segment that are not classified as disposed of, such as interest expense on the 7.50% Senior Secured Notes and certain corporate expenses.
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RESTRUCTURING |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING | NOTE 14 – RESTRUCTURING On October 5, 2022, the Company's Board of Directors approved restructuring actions to reduce operating expenses through store closures and headcount reductions in both the U.S. and Canada, and the elimination of duplicative corporate office functions in the U.S. Both the workforce reduction and store closures were aimed at reducing duplicative corporate functions and stores with overlapping customer populations as a result of the acquisitions of Heights in December of 2021 and First Heritage in July of 2022. For the year ended December 31, 2022, the Company incurred $16.0 million of expense related to our restructuring actions, of which $7.9 million related to employee termination benefits resulting from the workforce reduction of approximately 150 employees, and $8.2 million related to lease abandonment costs resulting from the closure of 89 stores in the U.S. and Canada. For the three months ended March 31, 2023, the Company incurred an additional $10.0 million of expense related to our restructuring actions, of which $2.5 million related to employee termination benefits, and $7.5 million related to lease abandonment costs resulting from the closure of stores in the U.S. and Canada. The following table shows the total restructuring costs incurred during the three months ended March 31, 2023 (in thousands):
The following table shows the total amount incurred and liability, which is recorded in accounts payables and other accrued liabilities in the unaudited Condensed Consolidated Balance Sheets, for restructuring-related costs as of March 31, 2023:
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SHARE REPURCHASE PROGRAM |
3 Months Ended |
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Mar. 31, 2023 | |
Equity [Abstract] | |
SHARE REPURCHASE PROGRAM | NOTE 15 – SHARE REPURCHASE PROGRAM In February 2022, the Company's Board of Directors authorized a new share repurchase program for the repurchase of up to $25.0 million of CURO common stock. In March 2023, the Board of Directors terminated the program. There were no repurchases under this program. In May 2021, the Company's Board of Directors authorized a share repurchase program for up to $50.0 million of its common stock. The program commenced in June 2021 and was completed in February 2022. The Company repurchased 824,477 shares of common stock under the plan at an average price of $15.20 for a total cost of $12.5 million during the three months ended March 31, 2022.
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SUBSEQUENT EVENTS |
3 Months Ended |
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Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 16 – SUBSEQUENT EVENTS $150.0 million Credit Facility On May 9, 2023, the Company finalized a new $150.0 million first lien credit facility ("$150.0 million Credit Facility") agreement with approximately 68.2% of the existing holders of the 7.50% Senior Secured Notes. The Term Loans will be senior secured obligations of the Company and will rank senior in right of payment to all of its existing and future unsecured senior debt. The new $150.0 million Credit Facility will accrue interest at a rate of 18.0% per annum The Company may elect to pay up to 12.00% per annum in kind during the first year following the closing and up to 9.00% per annum in kind thereafter. The $150.0 million Credit Facility will be guaranteed by the Company's existing and future domestic subsidiaries. The proceeds of the $150.0 million Credit Facility will be used to repay in full the Senior Revolver, for general corporate purposes and for payment of fees and expenses relating to the transactions. The $150.0 million Credit Facility will mature in August 2027. The transaction is expected to close shortly, subject to certain customary closing conditions, as well as the closing of the new 1.5 Lien Notes and the Canada SPV II and the execution of the Third Supplemental Indenture described below. 1.5 Lien Notes On May 9, 2023, the Company finalized an exchange agreement with approximately 68.2% of the 7.50% Senior Secured Notes holders, who agreed to exchange approximately $682.3 million aggregate principal amount of the 7.50% Senior Secured Notes for approximately $682.3 million of 7.50% Senior 1.5 Lien Secured Notes due 2028 (the “1.5 Lien Notes”). The 1.5 Lien Notes will retain all the same terms and conditions of the 7.50% Senior Secured Notes except that they will rank senior in lien priority to the remaining $317.7 million 7.50% Senior Secured Notes. The exchange is expected to close shortly, subject to certain customary closing conditions, as well as the closing of the $150.0 million Credit Facility and the Canada SPV II and the execution of the Third Supplemental Indenture described below. Canada SPV II On May 9, 2023, the Company finalized a new C$110.0 million non-recourse revolving warehouse facility (the “Canada SPV II”) to finance future loans in Canada. The effective interest will be three-month CDOR plus 8.00%. The Company will also pay a 0.50% per annum commitment fee on the unused portion of the commitments. The warehouse revolving period will mature in November 2025. The transaction is expected to close shortly, subject to certain customary closing conditions. Third Supplemental Indenture On May 9, 2023, the Company finalized the Third Supplemental Indenture, which will amend the Indenture, dated July 30, 2021, by and between CURO Group Holdings Corp. and TMI Trust Company to, among other things, eliminate or amend substantially all of the restrictive covenants contained in the Indenture other than those related to the payment of principal and interest. The amendment is expected to become effective substantially concurrently with the closing of the $150.0 million Credit Facility and issuance of 1.5 Lien Notes, subject to certain customary closing conditions, as well as the closing of the $150.0 million Credit Facility, the Canada SPV II and the 1.5 Lien Notes described above. Senior Revolver Coincident with the closings of the transactions described above, the Company expects to utilize the proceeds from the $150.0 million Credit Facility to pay off the Senior Revolver. The foregoing transactions are referred to collectively as the “Financing Transactions.”
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with U.S. GAAP and the accounting policies described in its 2022 Form 10-K. Interim results of operations are not necessarily indicative of results that might be expected for future interim periods or for the year ending December 31, 2023. While certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, the Company believes that the disclosures are adequate to enable a reasonable understanding of the information presented. Additionally, the Company qualifies as an SRC, which allows registrants to report information under scaled disclosure requirements. SRC status is determined on an annual basis as of June 30th. The Company met the definition of an SRC as of June 30, 2022 and will evaluate its status as of June 30, 2023. The unaudited Condensed Consolidated Financial Statements and the accompanying notes reflect adjustments of a normal and recurring nature, which are, in the opinion of management, necessary to present fairly the Company's results of operations, financial position and cash flows for the periods presented. Revised Revenue Presentation Beginning January 1, 2023, the Company began reporting "Insurance and other income" in place of the previously reported "Insurance premiums and commissions" and "Other revenue" line items in the unaudited Condensed Consolidated Statements of Operations. Prior period amounts have been reclassified to conform with current period presentation. Beginning September 30, 2022, the Company began reporting "Loss (gain) on change in fair value of contingent consideration" separately on the unaudited Condensed Consolidated Statements of Operations compared to historical presentation within Other operating expense. Prior period amounts have been reclassified to conform with current period presentation.
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Principles of Consolidation | Principles of Consolidation The unaudited Condensed Consolidated Financial Statements reflect the accounts of CURO and its direct and indirect subsidiaries, including Heights, which we acquired on December 27, 2021, and First Heritage, which we acquired on July 13, 2022. Refer to Note 13, "Acquisitions and Divestiture" for further disclosures related to these acquisitions. Intercompany transactions and balances have been eliminated in consolidation.
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Use of Estimates | Use of EstimatesThe preparation of the unaudited Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Some estimates may also affect the reported amounts of revenues and expenses during the periods presented. Significant estimates that the Company made in the accompanying unaudited Condensed Consolidated Financial Statements include ACL, certain assumptions related to equity investments, goodwill and intangibles, accruals related to self-insurance, estimated tax liabilities and the accounting for the First Heritage, Heights and Flexiti acquisitions. Actual results may differ from those estimates. |
Allowance for Credit Losses | Allowance for Credit Losses The FASB issued an accounting update in June 2016 to change the impairment model for estimating credit losses on financial assets. The previous incurred loss impairment model required the recognition of credit losses when it was probable that a loss had been incurred. The incurred loss model was replaced by the CECL model, which requires entities to estimate the lifetime expected credit loss on financial instruments and to record an allowance to offset the amortized cost basis of the financial asset. The CECL model requires earlier recognition of credit losses as compared to the incurred loss approach. The Company adopted this standard effective January 1, 2023. The initial impact of adoption was a $100.0 million increase to accumulated deficit ($135.2 million increase to the allowance for credit losses, net of $35.2 million in taxes). For the three months ended March 31, 2023, we concluded to record a valuation allowance against the U.S. DTAs. See Note 8 - Income Taxes for further information. As a result, the company decreased the tax impact to Accumulated deficit by $13.0 million as a result of the valuation allowance. As of January 1, 2023, the impact of CECL at adoption was recorded as a $113.0 million increase to Accumulated deficit ($135.2 million increase to the allowance for credit losses, net of $22.2 million in taxes). The ACL on gross loans receivables reduces the outstanding gross loans receivables balance in the unaudited Condensed Consolidated Balance Sheets. After adoption, all changes in the ACL, net of charge-offs and recoveries, are recorded as “Provision for losses” in the unaudited Condensed Consolidated Statements of Operations. The ACL is based on an analysis of historical loss, charge-off rates and recoveries. The Company also considers delinquency trends, impact of new loan products, changes to underwriting criteria or lending policies, changes in jurisdictional regulations or laws, recent credit trends and reasonable and supportable economic forecasts, which cover the life of the loan. The Company will also adjust for quantitative and qualitative factors that are not fully reflected in the historical data. If a loan is deemed to be uncollectible before it is fully reserved based on received information (e.g., receipt of customer bankruptcy notice or death), the Company charges off the loan at that time. The Company charges credit losses, including accrued interest, against the allowance when the account reaches 180 days contractually delinquent, subject to certain exceptions. Any recoveries on loans previously charged to the ACL are credited to the ACL when collected. The Company selected a static pool Probability of Default (“PD”) / Loss Given Default (“LGD”) / Exposure at Default ("EAD") model to estimate its base allowance for credit losses, in which the estimated loss is equal to the product of PD, LGD and EAD. Historical static pools of net loans receivables are tracked over the term of the pools to identify the probability of loss (PD) and the average size of losses, net of recoveries (LGD and EAD). As loans receivable are originated, provisions for credit losses are recorded in amounts sufficient to maintain an ACL at an adequate level to provide for estimated losses over the contractual term of the loan receivables. Subsequent changes to the contractual terms resulting from re-underwriting are not included in the loan receivable’s expected life. The Company uses its historical loss experience to forecast expected credit losses. Historical information about losses generally provides a basis for the estimate of expected credit losses. The Company also considers the need to adjust historical information to reflect the extent to which current conditions differ from the conditions that existed for the period over which historical information was evaluated. These adjustments to historical loss information may be qualitative or quantitative in nature. Reasonable and supportable macroeconomic forecasts are required for the Company’s ACL model. The Company reviews macroeconomic forecasts to use in its ACL. The projected change in creditworthiness is modeled using Congressional Budget Office data such as unemployment rate and personal income. The Company adjusts the historical loss experience by relevant qualitative factors for these expectations. Canada Loss Recognition Effective January 1, 2023, the Company modified the timeframe over which it charges-off loans within the Direct Lending brands in Canada and made related refinements to its loss provisioning methodology. Prior to January 1, 2023, the Company deemed the Direct Lending brands in Canada uncollectible and charged-off on day 91 past-due. As part of our policy alignment within the Direct Lending operating segment, the Company revised its estimates and now considers a loan issued by the Direct Lending brands in Canada loans uncollectible when they have been contractually past-due for more than 180 consecutive days. Consequently, such past-due loans and related accrued interest now remain in loans receivable for 180 days before being charged-off against the ACL. All recoveries on charged-off loans are credited to the ACL when received. The Company evaluates the adequacy of the ACL compared to the related gross loans receivable balances that include accrued interest. The aforementioned change was treated as a change in accounting estimate and applied prospectively effective January 1, 2023. The change affects comparability to prior periods as follows: •Gross loans receivable: balances as of March 31, 2023 include $19.7 million of the Direct Lending brands in Canada loans that are between 91 and 180 days past-due with related accrued interest, while such balances for prior periods do not include any loans that are between 91 and 180 days past-due. •Revenues: for the three month period ended March 31, 2023, revenues include accrued interest on the Direct Lending brands in Canada loans between 91 and 180 days past-due of $2.2 million, while revenues in prior periods do not include any loans that are between 91 and 180 days past-due. •Provision for Losses: effective January 1, 2023, past-due, unpaid balances plus related accrued interest on the Direct Lending brands in Canada loans charge off on day 181. Provision expense is affected by NCOs plus changes to the required ACL. Because NCOs now include unpaid principal and up to 180 days of related accrued interest, as compared to prior periods, NCO amounts and rates are higher and the required ACL as a percentage of gross loans receivable is higher. The Company recognized $18.2 million in charge offs related to the Direct Lending brands in Canada loans and, absent the policy change, would have recognized $27.9 million in charge offs on those loans.
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Recently Issued Accounting Pronouncements Recently Adopted and Not Yet Adopted | Recently Issued Accounting Pronouncements Recently Adopted ASU 2016-13 and subsequent amendments In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent amendments to the guidance: ASU 2018-19 in November 2018, ASU 2019-04 in April 2019, ASU 2019-05 in May 2019, ASU 2019-10 and -11 in November 2019, ASU 2020-02 in February 2020 and ASU 2022-02 in March 2022. As a result of the adoption of CECL on January 1, 2023, through a modified-retrospective approach, the Company recorded an increase to the ACL of $135.2 million and a corresponding one-time, cumulative reduction to retained earnings of $113.0 million (net of $22.2 million in taxes) in the unaudited Condensed Consolidated Balance Sheet as of January 1, 2023. The Company’s ACL increased from 5.8% to 12.6% as a percentage of the amortized cost basis on January 1, 2023. In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which removes the accounting guidance for troubled debt restructurings and requires entities to evaluate whether a modification provided to a customer results in a new loan or continuation of an existing loan. The amendments enhance existing disclosures and require new disclosures for receivables when there has been a modification in contractual cash flows due to a customer experiencing financial difficulties. Additionally, the amendments require public business entities to disclose gross charge-off information by year of origination in the vintage disclosures. This ASU became effective for us on January 1, 2023. We adopted this guidance in the first quarter of 2023 using the modified retrospective method. Adoption of this standard did not have a material impact on our unaudited Condensed Consolidated Financial Statements. As result of the adoption of ASU 2016-13, several of our significant accounting policies have changed to reflect the requirements of the new standard. See above for these updated significant accounting policies as of January 1, 2023. ASU 2021-08 In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with ASC 606, Revenue from Contracts with Customers. This ASU became effective for us on January 1, 2023. The adoption of ASU 2021-08 at January 1, 2023 did not have a material effect on the Company's Condensed Consolidated Financial Statements.
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Variable Interest Entities | The Company has determined that it is the primary beneficiary of the VIEs and is required to consolidate them. The Company includes the assets and liabilities related to the VIEs in the unaudited Condensed Consolidated Financial Statements. The assets of a VIE can be used only to settle liabilities of that VIE. Creditors (or beneficial interest holders) of the VIEs do not have recourse to the Company's general credit. |
Fair Value Measurements | Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Company is required to use valuation techniques that are consistent with the market approach, income approach and/or cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability based on observable market data obtained from independent sources, or unobservable inputs, meaning those that reflect the Company's own judgment about the assumptions market participants would use in pricing the asset or liability based on the best information available for the specific circumstances. Accounting standards establish a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are listed below. Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has access to at the measurement date. Level 2 – Inputs include quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3 – Unobservable inputs reflecting the Company's own judgments about the assumptions market participants would use in pricing the asset or liability as a result of limited market data. The Company develops these inputs based on the best information available, including its own data.
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LOANS RECEIVABLE AND REVENUE (Tables) |
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Summary of Revenue by Product | The following table summarizes revenue by product (in thousands):
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Summary of Loans Receivable by Product and Related Delinquent Loans | The following tables summarize loans receivable by product and the related delinquent loans receivable (in thousands):
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Summary of Activity in Allowance for Loan Losses, Credit Services Organization Guarantee Liability | The following tables summarize activity in the ACL and the liability for losses in total (in thousands) for the three months ended March 31, 2023, including the impact of the adoption of ASU 2016-13 as discussed in Note 1: Summary of Significant Accounting Policies and Nature of Operations:
The following table presents an analysis of the activity in the ACL and the liability for losses on CSO lender-owned consumer loans in total (in thousands) for the three months ended March 31, 2022, prior to the adoption of ASU 2016-13, as defined by the accounting guidance in effect at that time:
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Schedule of Credit Quality Indicators | The tables below presents key credit quality indicators, by origination year for installment loans, as of and for the three months ended March 31, 2023 (in thousands):
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Summary of Subsequent Defaults | The following table presents the type, number and amount of loans to customers experiencing financial difficulty that modified their loans between January 1, 2023 and March 31, 2023, and experienced a payment default as evidenced by a charged-off during the period presented (dollars in thousands):
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Summary of Outstanding TDR Receivables | The following table provides information on the financial effect of the loan modifications to customers experiencing financial difficulty in the period during the period presented (in thousands):
The following table provides information on the performance of loans modified to customers experiencing financial difficulty which have been modified subsequent to January 1, 2023 and remain outstanding at March 31, 2023 (in thousands):
The table below presents TDRs that are related to the Company's Customer Care Program implemented in response to COVID-19, included in both gross loans receivable and the impairment included in the ACL (in thousands) as of March 31, 2022:
The tables below present loans modified and classified as TDRs during the periods presented (in thousands):
The table below presents the Company's average outstanding TDR loans receivable, interest income recognized on TDR loans and number of TDR loans for the periods presented (dollars in thousands):
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VARIABLE INTEREST ENTITIES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Carrying Amounts of Consolidated VIEs' Assets and Liabilities | The carrying amounts of consolidated VIEs' assets and liabilities were as follows (in thousands):
|
GOODWILL (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The change in the carrying amount of goodwill by reporting unit for the three months ended March 31, 2023 was as follows (in thousands):
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FAIR VALUE MEASUREMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Assets and Liabilities Carried at Fair Value | The table below presents the assets and liabilities that were carried at fair value on the unaudited Condensed Consolidated Balance Sheets at March 31, 2023 (in thousands):
The table below presents the assets and liabilities that were carried at fair value on the unaudited Condensed Consolidated Balance Sheets at December 31, 2022 (in thousands):
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Summary of Assets and Liabilities Not Carried at Fair Value | The table below presents the assets and liabilities that were not carried at fair value on the unaudited Condensed Consolidated Balance Sheets at March 31, 2023 (in thousands):
The table below presents the assets and liabilities that were not carried at fair value on the unaudited Condensed Consolidated Balance Sheets at December 31, 2022 (in thousands):
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Summary of Equity Method Investments | The table below presents the Company's investment in Katapult (in thousands):
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DEBT (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | The Company's debt instruments and balances outstanding as of March 31, 2023 and December 31, 2022, including maturity date, effective interest rate and borrowing capacity, were as follows (dollars in thousands):
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EARNINGS PER SHARE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the computation of basic and diluted earnings per share (in thousands, except per share amounts):
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LEASES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Operating Lease Costs | The following table summarizes the operating lease costs and other information for the three months ended March 31, 2023 and 2022 (dollars in thousands):
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Summary of Future Minimum Lease Payments | The following table summarizes the aggregate operating lease payments that the Company was contractually obligated to make under operating leases as of March 31, 2023 (in thousands):
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SEGMENT REPORTING (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Information by Segment | The following table illustrates summarized financial information concerning reportable segments (in thousands):
The following table presents the proportion of gross loans receivable by segment (in thousands):
Geographic Data The following table presents total revenues by geographic region:
The following table presents the proportion of gross loans receivable by geographic region:
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Summary of Long-lived Assets by Geographic Region | The following table presents the Company's net long-lived assets, comprised of property and equipment, by geographic region. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the asset is physically located (in thousands):
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ACQUISITIONS AND DIVESTITURE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets Acquired and Liabilities Assumed | The following table presents the preliminary purchase price allocation recorded in the Company’s unaudited Condensed Consolidated Balance Sheet as of the date of acquisition (in thousands):
The following table presents the purchase price allocation recorded in the Company’s unaudited Condensed Consolidated Balance Sheet as of the date of acquisition of Heights (in thousands):
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Finite-Lived Intangible Assets Acquired as Part of Business Combination | The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (dollars in thousands):
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Schedule of Assets and Liabilities Held-for-Sale | The following table presents the amounts attributable to each category recorded in the Company’s unaudited Condensed Consolidated Balance Sheet as of the date of divestiture of the Legacy U.S. Direct Lending Business, as adjusted (in thousands):
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RESTRUCTURING (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Costs | The following table shows the total restructuring costs incurred during the three months ended March 31, 2023 (in thousands):
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Activity of the Restructuring Reserve | The following table shows the total amount incurred and liability, which is recorded in accounts payables and other accrued liabilities in the unaudited Condensed Consolidated Balance Sheets, for restructuring-related costs as of March 31, 2023:
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LOANS RECEIVABLE AND REVENUE - Revenue by Product (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Revenue from External Customer [Line Items] | ||
Total revenue | $ 209,473 | $ 290,196 |
Consumer Portfolio Segment | ||
Revenue from External Customer [Line Items] | ||
Total revenue | 179,437 | 264,956 |
Consumer Portfolio Segment | Revolving LOC | ||
Revenue from External Customer [Line Items] | ||
Total revenue | 84,225 | 91,023 |
Consumer Portfolio Segment | Installment | ||
Revenue from External Customer [Line Items] | ||
Total revenue | 95,212 | 173,933 |
Unallocated Financing Receivables | Insurance and other income | ||
Revenue from External Customer [Line Items] | ||
Total revenue | $ 30,036 | $ 25,240 |
LOANS RECEIVABLE AND REVENUE - Narrative (Details) - Consumer Portfolio Segment - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Dec. 31, 2022 |
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Credit Services Organization Programs | ||
Financing Receivable, Troubled Debt Restructuring [Line Items] | ||
TDRs that were charged off | $ 3.6 | |
Installment | ||
Financing Receivable, Troubled Debt Restructuring [Line Items] | ||
Loans classified as nonaccrual | $ 54.6 | |
Revolving LOC | ||
Financing Receivable, Troubled Debt Restructuring [Line Items] | ||
Loans classified as nonaccrual | $ 5.3 |
LOANS RECEIVABLE AND REVENUE - Payment Defaults (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
contract
| |
Revolving LOC | Consumer Portfolio Segment | |
Financing Receivable, Modified, Subsequent Default [Line Items] | |
Value of accounts defaulted (charged-off) | $ | $ 54 |
Number of Accounts defaulted (charged-off) | contract | 1,780 |
Installment | Consumer Portfolio Segment | |
Financing Receivable, Modified, Subsequent Default [Line Items] | |
Value of accounts defaulted (charged-off) | $ | $ 2 |
Number of Accounts defaulted (charged-off) | contract | 155 |
Consumer Portfolio Segment | |
Financing Receivable, Modified, Subsequent Default [Line Items] | |
Value of accounts defaulted (charged-off) | $ | $ 56 |
Number of Accounts defaulted (charged-off) | contract | 1,935 |
LOANS RECEIVABLE AND REVENUE - TDR Loans Receivable (Details) - Consumer Portfolio Segment - Credit Services Organization Programs $ in Thousands |
Mar. 31, 2022
USD ($)
|
---|---|
Financing Receivable, Troubled Debt Restructuring [Line Items] | |
Total TDR gross receivables | $ 17,482 |
Less: Impairment included in the allowance for credit losses | (4,031) |
Less: Additional allowance | (1,853) |
Outstanding TDR receivables, net of impairment | 11,598 |
Current | |
Financing Receivable, Troubled Debt Restructuring [Line Items] | |
Total TDR gross receivables | 12,711 |
Total past due | |
Financing Receivable, Troubled Debt Restructuring [Line Items] | |
Total TDR gross receivables | $ 4,771 |
LOANS RECEIVABLE AND REVENUE - New Loans Modified and Classified as TDRs (Details) - Consumer Portfolio Segment - Credit Services Organization Programs $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2022
USD ($)
| |
Financing Receivable, Troubled Debt Restructuring [Line Items] | |
Pre-modification TDR loans receivable | $ 5,271 |
Post-modification TDR loans receivable | 4,791 |
Total concessions included in gross charge-offs | $ 480 |
LOANS RECEIVABLE AND REVENUE - Outstanding TDR Loans Receivable and Interest Income (Details) - Consumer Portfolio Segment - Credit Services Organization Programs $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2022
USD ($)
loan
| |
Financing Receivable, Troubled Debt Restructuring [Line Items] | |
Average outstanding TDR loans receivable | $ 17,064 |
Interest income recognized | $ 4,035 |
Number of TDR loans | loan | 3,424 |
GOODWILL - Schedule of Goodwill (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 276,269 |
Foreign currency translation | 218 |
Goodwill, ending balance | 276,487 |
Direct Lending | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 276,269 |
Foreign currency translation | 218 |
Goodwill, ending balance | 276,487 |
Canada POS Lending | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 0 |
Foreign currency translation | 0 |
Goodwill, ending balance | $ 0 |
FAIR VALUE MEASUREMENTS - Investment in Katapult (Details) - Equity Method Investment - USD ($) $ in Thousands |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Beginning balance | $ 23,915 | $ 25,847 | $ 28,156 | $ 29,484 | $ 27,900 |
Equity method income (loss) | (3,413) | (1,932) | (2,309) | (1,328) | 1,584 |
Ending balance | $ 20,502 | $ 23,915 | $ 25,847 | $ 28,156 | $ 29,484 |
DEBT - Corporate and Funding Debt (Details) $ in Thousands |
Mar. 31, 2023
USD ($)
facility
|
Dec. 31, 2022
USD ($)
|
Mar. 31, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
Jul. 31, 2021
USD ($)
|
---|---|---|---|---|---|
Line of Credit Facility [Line Items] | |||||
Capitalized financing costs | $ 37,541 | $ 37,113 | |||
Number of credit facilities held | facility | 5 | ||||
Restricted cash | $ 123,282 | 91,745 | $ 110,118 | ||
Variable Interest Entity | |||||
Line of Credit Facility [Line Items] | |||||
Number of credit facilities held | facility | 5 | ||||
Restricted cash | $ 92,185 | $ 52,277 | $ 64,141 | ||
Senior Notes | Senior Secured Notes Due 2028 | |||||
Line of Credit Facility [Line Items] | |||||
Stated interest rate (as percent) | 7.50% | 7.50% | 7.50% | ||
Debt instrument, face amount | $ 250,000 | $ 750,000 | |||
Capitalized financing costs | $ 16,400 |
DEBT - Heights SPV (Details) - Heights SPV - Line of Credit - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Jul. 15, 2022 |
|
Debt Instrument [Line Items] | ||
Commitment fee (as percent) | 0.50% | |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Borrowing Capacity | $ 425.0 | |
Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | ||
Debt Instrument [Line Items] | ||
Maximum effective interest rate (as percent) | 4.25% |
DEBT - First Heritage SPV (Details) - First Heritage SPV - Line of Credit - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Jul. 13, 2022 |
|
Debt Instrument [Line Items] | ||
Commitment fee (as percent) | 0.50% | |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Borrowing Capacity | $ 225.0 | |
Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | ||
Debt Instrument [Line Items] | ||
Maximum effective interest rate (as percent) | 4.25% |
DEBT - Flexiti SPV (Details) - Flexiti SPV - CAD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2023 |
Oct. 11, 2022 |
Sep. 29, 2022 |
Sep. 28, 2022 |
|
Debt Instrument [Line Items] | ||||
Weighted average interest rate | 8.27% | |||
Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Commitment fee (as percent) | 0.50% | |||
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Borrowing Capacity | $ 390.0 | $ 535.0 | $ 500.0 | |
Revolving Credit Facility | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Borrowing Capacity | $ 535.0 |
DEBT - Flexiti Securitization (Details) - Flexiti Securitization - CAD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Jul. 07, 2022 |
Dec. 31, 2021 |
|
Canadian Dollar Offered Rate (CDOR) | |||
Debt Instrument [Line Items] | |||
Basis spread (as percent) | 3.59% | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Borrowing Capacity | $ 526.5 | ||
Revolving Credit Facility | Line of Credit | |||
Debt Instrument [Line Items] | |||
Borrowing Capacity | $ 526.5 | $ 526.5 |
DEBT - Canada SPV (Details) - Canada SPV $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2023
CAD ($)
| |
Canadian Dollar Offered Rate (CDOR) | |
Line of Credit Facility [Line Items] | |
Basis spread (as percent) | 6.00% |
Line of Credit | |
Line of Credit Facility [Line Items] | |
Commitment fee (as percent) | 0.50% |
Line of Credit | Revolving Credit Facility | |
Line of Credit Facility [Line Items] | |
Borrowing Capacity | $ 400.0 |
DEBT - Senior Revolver (Details) - Senior Revolver $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
| |
Secured Overnight Financing Rate (SOFR) | |
Debt Instrument [Line Items] | |
Basis spread (as percent) | 5.00% |
Line of Credit | Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Borrowing Capacity | $ 40.0 |
Line of Credit | Letter of Credit | |
Debt Instrument [Line Items] | |
Borrowing Capacity | $ 4.0 |
Debt instrument, term | 1 year |
DEBT - Curo Canada Revolving Credit Facility (Details) - CURO Canada Revolving Credit Facility - CAD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Dec. 21, 2022 |
Dec. 20, 2022 |
|
Prime Rate | |||
Debt Instrument [Line Items] | |||
Basis spread (as percent) | 1.95% | ||
Revolving Credit Facility | Line of Credit | |||
Debt Instrument [Line Items] | |||
Borrowing Capacity | $ 5.0 | $ 10.0 |
COMMITMENTS AND CONTENGENCIES (Details) |
1 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Oct. 27, 2022
USD ($)
|
Jul. 31, 2021
lawsuit
|
Dec. 31, 2022
USD ($)
|
Dec. 31, 2020
USD ($)
|
Jul. 31, 2020
lawsuit
|
|
Loss Contingencies [Line Items] | |||||
Litigation settlement amount | $ 9,000,000 | ||||
Insurance retention | $ 2,500,000 | ||||
Litigation expense incurred | $ 0 | ||||
Legal fees paid by insurers | $ 345,000 | ||||
Shareholder Derivative Lawsuits | |||||
Loss Contingencies [Line Items] | |||||
Number of lawsuits | lawsuit | 3 | ||||
Number of lawsuits refiled | lawsuit | 2 | ||||
Shareholder Derivative Lawsuits With FFL Defendants | |||||
Loss Contingencies [Line Items] | |||||
Number of lawsuits | lawsuit | 2 |
INCOME TAXES (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Income Tax Contingency [Line Items] | ||
Effective income tax rate (as percent) | (53.40%) | 45.30% |
Federal and state/provincial statutory rates | 26.00% | 26.00% |
Valuation allowance | $ 41.9 | |
Tax rate reconciliation, officers' compensation adjustment | $ 0.3 | |
Tax expense (benefit) related to share-based compensation | (1.2) | $ (0.3) |
Undistributed foreign earnings | 218.3 | |
Retained Earnings (Deficit) | ||
Income Tax Contingency [Line Items] | ||
Valuation allowance | 13.0 | |
Income Tax Expense (Benefit) | ||
Income Tax Contingency [Line Items] | ||
Valuation allowance | 29.0 | |
Pro forma | Canada Revenue Agency | ||
Income Tax Contingency [Line Items] | ||
Expected tax if earnings were distributed to the U.S. | $ 10.9 |
EARNINGS PER SHARE - Summary of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Earnings Per Share [Abstract] | ||
Net (loss) income | $ (59,471) | $ 1,336 |
Weight average common shares - basic (in shares) | 40,783 | 40,368 |
Dilutive effect of stock options and restricted stock units (in shares) | 0 | 940 |
Weighted average common shares - diluted (in shares) | 40,783 | 41,308 |
(Loss) earnings per share: | ||
Basic (loss) earnings per share (in usd per share) | $ (1.46) | $ 0.03 |
Diluted (loss) earnings per share (in usd per share) | $ (1.46) | $ 0.03 |
EARNINGS PER SHARE - Narrative (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1.2 | 3.6 |
LEASES - Summary of Operating Lease Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Operating lease costs: | ||
Operating lease cost | $ 6,657 | $ 10,306 |
Cash paid for amounts included in the measurement of operating lease liabilities | 6,560 | 10,925 |
ROU assets obtained | $ (1,287) | $ 5,424 |
Weighted average remaining lease term - Operating leases | 4 years 3 months 18 days | 4 years 10 months 24 days |
Weighted average discount rate - Operating leases | 8.10% | 7.90% |
Third-Party | ||
Operating lease costs: | ||
Operating lease cost | $ 6,500 | $ 9,479 |
Related Party | ||
Operating lease costs: | ||
Operating lease cost | $ 157 | $ 827 |
LEASES - Schedule of Future Minimum Lease Payments (Details) $ in Thousands |
Mar. 31, 2023
USD ($)
|
---|---|
Lessee, Lease, Description [Line Items] | |
Remainder of 2023 | $ 17,248 |
2024 | 17,158 |
2025 | 11,725 |
2026 | 6,660 |
2027 | 4,414 |
2028 | 2,705 |
Thereafter | 6,382 |
Total | 66,292 |
Less: Imputed interest | (10,824) |
Operating lease liabilities | 55,468 |
Third-Party | |
Lessee, Lease, Description [Line Items] | |
Remainder of 2023 | 16,784 |
2024 | 16,525 |
2025 | 11,075 |
2026 | 5,993 |
2027 | 3,728 |
2028 | 2,037 |
Thereafter | 6,056 |
Total | 62,198 |
Less: Imputed interest | (9,725) |
Operating lease liabilities | 52,473 |
Related Party | |
Lessee, Lease, Description [Line Items] | |
Remainder of 2023 | 464 |
2024 | 633 |
2025 | 650 |
2026 | 667 |
2027 | 686 |
2028 | 668 |
Thereafter | 326 |
Total | 4,094 |
Less: Imputed interest | (1,099) |
Operating lease liabilities | $ 2,995 |
LEASES - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2022 |
|
Lessee, Lease, Description [Line Items] | |||
Operating lease original term of contract | 5 years | ||
Restructuring costs incurred during the three months ended March 31, 2023 | $ 9,956 | $ 16,000 | |
Accrual for planned store closures | 4,500 | ||
Lease Exit Costs | |||
Lessee, Lease, Description [Line Items] | |||
Restructuring costs incurred during the three months ended March 31, 2023 | $ 7,500 | $ 7,481 | $ 8,200 |
DIVIDENDS (Details) |
Oct. 31, 2022
$ / shares
|
---|---|
Equity [Abstract] | |
Quarterly cash dividend (in usd per share) | $ 0.11 |
Dividends payable, annualized amount (in usd per share) | $ 0.44 |
ACQUISITIONS AND DIVESTITURE - Schedule of Assets Acquired and Liabilities Assumed - First Heritage Credit (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
Jul. 13, 2022 |
---|---|---|---|
Liabilities | |||
Goodwill | $ 276,487 | $ 276,269 | |
First Heritage SPV | |||
Assets | |||
Cash and cash equivalents | $ 31,396 | ||
Restricted cash | 1,933 | ||
Gross loans receivable | 218,011 | ||
Prepaid expenses and other | 1,285 | ||
Property and equipment | 345 | ||
Right-of-use assets | 4,241 | ||
Intangibles, net | 10,670 | ||
Total assets | 267,880 | ||
Liabilities | |||
Accounts payable and accrued liabilities | 4,270 | ||
Lease liabilities | 4,241 | ||
Debt | 170,392 | ||
Total liabilities | 178,904 | ||
Net assets acquired | 88,976 | ||
Total consideration paid | 164,341 | ||
Goodwill | 75,365 | ||
Gross contractual loans receivable | 236,100 | ||
Estimate of gross contractual loans that will not be collected | $ 18,100 |
ACQUISITIONS AND DIVESTITURE - Components of Identifiable Intangible Assets - First Heritage Credit (Details) - First Heritage SPV $ in Thousands |
Jul. 13, 2022
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Fair Value | $ 10,670 |
Trade name | |
Business Acquisition [Line Items] | |
Fair Value | $ 3,790 |
Useful Life | 10 years |
Customer relationships | |
Business Acquisition [Line Items] | |
Fair Value | $ 6,880 |
Useful Life | 3 years 6 months |
ACQUISITIONS AND DIVESTITURE - Schedule of Assets and Liabilities Divestiture - Legacy U.S. Direct Lending Business (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2023 |
Jul. 08, 2022 |
Mar. 31, 2023 |
Mar. 31, 2022 |
Mar. 31, 2023 |
|
Liabilities | |||||
Total proceeds | $ (2,027) | $ 0 | |||
Total pretax gain on sale of business | (2,027) | $ 0 | |||
Discontinued Operations, Disposed of by Sale | U.S. Legacy Direct Lending Business | |||||
Assets | |||||
Cash, cash equivalents and restricted cash | $ 21,292 | $ 21,292 | 21,292 | $ 21,292 | |
Loans receivable | 162,147 | 162,147 | 162,147 | 162,147 | |
Right of use asset | 39,326 | 39,326 | 39,326 | 39,326 | |
Goodwill | 91,131 | 91,131 | 91,131 | 91,131 | |
Other assets, subsequent adjustments | (2,000) | (2,027) | |||
Other assets | 28,663 | 30,690 | 28,663 | 28,663 | |
Total assets | 342,559 | 344,586 | 342,559 | 342,559 | |
Total assets, subsequent adjustments | (2,027) | ||||
Liabilities | |||||
Accounts payable and accrued liabilities | (8,947) | (8,947) | (8,947) | (8,947) | |
Right of use liability | (43,433) | (43,433) | (43,433) | (43,433) | |
Liability for losses on CSO lender-owned consumer loans | (5,628) | (5,628) | (5,628) | (5,628) | |
Other long term liabilities | (5,815) | (5,815) | (5,815) | (5,815) | |
Total liabilities | (63,823) | (63,823) | (63,823) | (63,823) | |
Net assets sold | 280,763 | 280,763 | 280,763 | 280,763 | |
Total proceeds | 347,179 | 349,206 | |||
Total proceeds, subsequent adjustments | (2,027) | ||||
Gain (Loss) on Disposition of Business, Subsequent Adjustments | |||||
Total pretax gain on sale of business | $ 66,416 | $ 68,443 | $ 68,400 |
RESTRUCTURING - Narrative (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2023
USD ($)
contract
store
|
Dec. 31, 2022
USD ($)
|
Dec. 31, 2022
USD ($)
|
|
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 9,956 | $ 16,000 | |
Workforce reduction, number of employees | contract | 150 | ||
UNITED STATES AND CANADA | |||
Restructuring Cost and Reserve [Line Items] | |||
Number of stores closed | store | 89 | ||
Employee Termination Benefits | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 2,500 | $ 2,475 | 7,900 |
Lease Exit Costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 7,500 | $ 7,481 | $ 8,200 |
RESTRUCTURING - Accrued Restructuring Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Restructuring Reserve [Roll Forward] | ||
Accrued restructuring costs, beginning balance | $ 4,746 | |
Restructuring costs incurred during the three months ended March 31, 2023 | 9,956 | $ 16,000 |
Amount paid during the three months ended March 31, 2023 | (4,641) | |
Accrued restructuring costs, ending balance | $ 10,061 | $ 4,746 |
SHARE REPURCHASE PROGRAM (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 |
Feb. 28, 2022 |
May 31, 2021 |
|
Equity, Class of Treasury Stock [Line Items] | |||
Total authorized repurchase amount for the period presented | $ 50,000 | ||
Total value of shares repurchased | $ 12,530 | ||
Repurchase Program, 2022 | |||
Equity, Class of Treasury Stock [Line Items] | |||
Total authorized repurchase amount for the period presented | $ 25,000 | ||
Repurchase Program, 2021 | |||
Equity, Class of Treasury Stock [Line Items] | |||
Total number of shares repurchased (in shares) | 824,477 | ||
Average price paid per share (in usd per share) | $ 15.20 | ||
Total value of shares repurchased | $ 12,500 |
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