CURO Group Holdings Corp. Announces Second Quarter 2019 Financial Results and Raises 2019 Guidance

WICHITA, Kan.–(BUSINESS WIRE)–CURO Group Holdings Corp. (NYSE: CURO) (“CURO” or the “Company”), a market leader in providing short-term credit to underbanked consumers, today announced financial results for its second quarter ended June 30, 2019.

“We are pleased to report another very solid quarter with momentum that raises our expectations for full-year 2019 earnings,” said Don Gayhardt, President and Chief Executive Officer. “Our Canadian business posted year-over-year non-GAAP Adjusted EBITDA growth of 19.1% on continued improvement in credit quality. Our U.S. business continues to perform well with year-over-year 10.5% revenue growth on 11.0% loan growth. We believe that general economic conditions continue to be favorable for our customers and we are very focused on making disciplined credit and customer acquisition spending decisions. Our strong operating cost controls are helping to drive efficiencies and operating leverage, which helped us to grow non-GAAP Adjusted Diluted Earnings per Share by 20.9% year-over-year, to $0.52 per share for the quarter.”

Consolidated Summary Results – Unaudited

 

 

For the Three Months Ended (1)

 

For the Six Months Ended (1)

(in thousands, except per share data)

 

6/30/2019

6/30/2018

Variance

 

6/30/2019

6/30/2018

Variance

Revenue

 

$

264,300

 

$

237,169

 

11.4

%

 

$

542,239

 

$

488,012

 

11.1

%

Gross margin

 

81,181

 

77,348

 

5.0

%

 

186,678

 

183,194

 

1.9

%

Company Owned gross loans receivable

 

609,593

 

420,588

 

44.9

%

 

609,593

 

420,588

 

44.9

%

Net income from continuing operations

 

17,667

 

18,718

 

(5.6

)%

 

46,340

 

43,631

 

6.2

%

Adjusted Net Income (2)

 

24,437

 

20,834

 

17.3

%

 

62,387

 

58,046

 

7.5

%

Diluted Earnings per Share from continuing operations

 

$

0.38

 

$

0.39

 

(2.6

)%

 

$

0.98

 

$

0.92

 

6.5

%

Adjusted Diluted Earnings per Share (2)

 

$

0.52

 

$

0.43

 

20.9

%

 

$

1.32

 

$

1.21

 

9.1

%

EBITDA (2)

 

46,794

 

48,838

 

(4.2

)%

 

108,123

 

112,107

 

(3.6

)%

Adjusted EBITDA (2)

 

53,689

 

51,110

 

5.0

%

 

126,543

 

127,861

 

(1.0

)%

Weighted Average Shares – diluted

 

47,107

 

47,996

 

 

 

47,335

 

47,757

 

 

(1) Excludes discontinued operations; see “Results of Discontinued Operations” for additional details of the impact of discontinued operations

(2) These are non-GAAP metrics; see “Results of Operations – CURO Group Consolidated Operations” for a reconciliation to the nearest GAAP metric for each of these non-GAAP metrics; see “Non-GAAP Financial Measures” for definition of non-GAAP metric.

Second quarter 2019 developments include:

  • At $264.3 million our revenue was a record for a second quarter period. Revenue increased $27.1 million, or 11.4%, over the prior-year period, driven primarily by organic growth in the U.S. and Open-End growth in Canada. Year-over-year comparisons included an estimated $12 million benefit from the Open-End loss recognition change (“Q1 2019 Open-End Loss Recognition Change”) discussed below offset by a similar increase in provision expense.
  • Growth in Company Owned gross loans receivable and Gross combined loans receivables of 44.9% and 38.2%, respectively, versus the prior-year period. Year-over-year comparisons benefited from the Q1 2019 Open-End Loss Recognition Change. Excluding the impact of this change, Company Owned gross loans receivable and Gross combined loans receivables grew 36.3% and 30.8%, respectively.
  • Consolidated quarterly net charge-off (“NCO”) rates improved over 270 bps compared to the same quarter a year ago, with all products improving except U.S. Unsecured Installment loans. Year-over-year NCO rate comparisons for U.S. Unsecured Installment loans continue to be negatively affected by credit-line increase initiatives and mix shift.
  • Adjusted Diluted Earnings per Share of $0.52, an increase of 20.9% over the prior-year period; Diluted Earnings per Share from continuing operations of $0.38, a decrease of 2.6% versus the prior-year period
  • Under the terms of our $50 million share repurchase program that was announced in April 2019 and commenced in June 2019, the Company purchased in the open market 1,038,500 shares through July 26, 2019.

Year-to-date 2019 developments include:

  • Record first half revenue of $542.2 million, an increase of 11.1% over the prior-year period (including an estimated $21 million benefit from the Q1 2019 Open-End Loss Recognition Change, offset by a similar increase in provision expense).
  • Net Income from continuing operations of $46.3 million, an increase of 6.2% over the prior-year period
  • Adjusted Net Income of $62.4 million, an increase of 7.5% over the prior-year period.
  • Continued success with the Canada Open-End product transition, as the portfolio matures and NCO rates improve.
  • Pay down of our Senior Secured Revolving Loan Facility from $20.0 million to zero, and reduction of the net balances drawn on our Non-Recourse Canada SPV Facility by $20.9 million, to $94.6 million as of June 30, 2019.
  • The successful launch of our new demand deposit account, Revolve Finance, sponsored by Republic Bank of Chicago. Revolve is being rolled out across our U.S. branches, as well as online, and provides customers with a checking account solution that combines a Visa-branded debit card, a number of technology-enabled tools and optional overdraft protection.

Fiscal 2019 Outlook

The Company has increased its full-year 2019 guidance for Adjusted Net Income, Adjusted EBITDA and Adjusted Diluted Earnings per Share from its guidance included in its Current Report on Form 8-K filed with the Securities and Exchange Commission on March 1, 2019, as follows:

  • Revenue in the range of $1.154 billion to $1.170 billion, unchanged from prior guidance
  • Adjusted Net Income in the range of $120 million to $135 million, an increase from prior guidance of $112 million to $128 million
  • Adjusted EBITDA in the range of $250 million to $265 million, an increase from prior guidance of $240 million to $260 million
  • Adjusted Diluted Earnings per Share in the range of $2.55 to $2.80, an increase from prior guidance of $2.35 to $2.65
  • Effective income tax rate in the range of 25% to 27%, unchanged from prior guidance

See “Fiscal 2019 Outlook – Reconciliations” at the end of this release for a reconciliation to the nearest GAAP metric and “Non-GAAP Financial Measures” for a description of non-GAAP metrics.

Discussion of Consolidated Revenue by Product and Segment

Year-over-year comparisons for Open-End were affected by the Q1 2019 Open-End Loss Recognition Change. Throughout the release, financial results of former U.K. operations have been removed for all periods presented, as it was discontinued for accounting and reporting purposes in February 2019.

The following tables summarize revenue by product, including credit services organization (“CSO”) fees, for the periods indicated.

 

 

Three Months Ended

 

 

June 30, 2019

 

June 30, 2018

(in thousands, unaudited)

 

U.S.

Canada

Total

 

U.S.

Canada

Total

Unsecured Installment

 

$

120,482

 

$

1,630

 

$

122,112

 

 

$

111,244

 

$

3,692

 

$

114,936

 

Secured Installment

 

26,076

 

 

26,076

 

 

25,777

 

 

25,777

 

Open-End

 

32,318

 

22,654

 

54,972

 

 

23,261

 

3,961

 

27,222

 

Single-Pay

 

26,425

 

19,103

 

45,528

 

 

24,978

 

33,347

 

58,325

 

Ancillary

 

4,745

 

10,867

 

15,612

 

 

4,866

 

6,043

 

10,909

 

Total revenue

 

$

210,046

 

$

54,254

 

$

264,300

 

 

$

190,126

 

$

47,043

 

$

237,169

 

During the three months ended June 30, 2019, total revenue grew $27.1 million, or 11.4%, to $264.3 million, compared to the prior-year period, predominantly driven by growth in Unsecured Installment loans in the U.S. and Open-End loans in both countries. Geographically, total revenue in the U.S. and Canada grew 10.5% and 15.3%, respectively. From a product perspective, Unsecured Installment revenues rose 6.2%, driven by related loan growth, while Secured Installment revenues and related receivables were consistent year-over-year. Year-over-year Canadian Single-Pay usage and product profitability were negatively impacted by regulatory changes in Ontario effective July 1, 2018, and the strategic transition of qualifying customers to Open-End loans. Open-End revenues rose 101.9% on organic growth in legacy states and the newer Virginia market in the U.S. Open-End loan growth in Canada was driven primarily by the introduction of Open-End loans in Ontario during the third quarter of 2018. Open-End loans in Canada grew $35.1 million, or 19.1%, sequentially (defined within this release as the change from the first quarter of 2019 to the second quarter of 2019, or comparable periods for 2018 sequential metrics). Single-Pay loan balances stabilized in Canada sequentially. Ancillary revenues increased 43.1% versus the same quarter a year ago, primarily due to the sale of insurance products to Installment and Open-End loan customers in Canada.

 

 

Six Months Ended

 

 

June 30, 2019

 

June 30, 2018

(in thousands, unaudited)

 

U.S.

Canada

Total

 

U.S.

Canada

Total

Unsecured Installment

 

$

254,485

 

$

3,405

 

$

257,890

 

 

$

231,720

 

$

8,595

 

$

240,315

 

Secured Installment

 

53,553

 

 

53,553

 

 

52,633

 

 

52,633

 

Open-End

 

64,911

 

42,930

 

107,841

 

 

49,095

 

5,350

 

54,445

 

Single-Pay

 

53,593

 

38,696

 

92,289

 

 

51,043

 

67,639

 

118,682

 

Ancillary

 

9,623

 

21,043

 

30,666

 

 

10,228

 

11,709

 

21,937

 

Total revenue

 

$

436,165

 

$

106,074

 

$

542,239

 

 

$

394,719

 

$

93,293

 

$

488,012

 

For the six months ended June 30, 2019, total revenue grew $54.2 million, or 11.1%, to $542.2 million, compared to the prior-year period, predominantly driven by growth in Unsecured Installment loans in the U.S. and Open-End loans in both countries. Geographically, total revenue in the U.S. and Canada grew 10.5% and 13.7%, respectively. From a product perspective, Unsecured Installment revenues rose 7.3%, driven by related loan growth, while Secured Installment revenues and related receivables remained consistent year-over-year. Year-over-year Canadian Single-Pay usage and product profitability were negatively impacted by regulatory changes in Ontario effective July 1, 2018, and the strategic transition of qualifying customers to Open-End loans. Open-End revenues rose 98.1% on organic growth in legacy states and the newer Virginia market in the U.S. Open-End loan growth in Canada was driven primarily by the introduction of Open-End loans in Ontario during the third quarter of 2018. Ancillary revenues increased 39.8% versus the same quarter a year ago, primarily due to the sale of insurance to Installment and Open-End loan customers in Canada.

The following table presents revenue composition, including CSO fees, of the products and services that we currently offer:

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2019

 

2018

 

2019

 

2018

Installment

 

56.1

%

 

59.3

%

 

57.4

%

 

59.9

%

Canada Single-Pay

 

7.2

%

 

14.1

%

 

7.1

%

 

13.9

%

U.S. Single-Pay

 

10.0

%

 

10.5

%

 

9.9

%

 

10.5

%

Open-End

 

20.8

%

 

11.5

%

 

19.9

%

 

11.2

%

Ancillary

 

5.9

%

 

4.6

%

 

5.7

%

 

4.5

%

Total

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

For the three months ended June 30, 2019 and 2018, revenue generated through the online channel as a percentage of consolidated revenue was 44% and 40%, respectively. For the six months ended June 30, 2019 and 2018, revenue generated through the online channel as a percentage of consolidated revenue was 45% and 41%, respectively.

Loan Volume and Portfolio Performance Analysis

The following table summarizes Company Owned gross loans receivable, a GAAP-basis balance sheet measure, with reconciliation to gross combined loans receivable, a non-GAAP measure(1). Gross combined loans receivables include loans originated by third-party lenders through CSO programs, which are not included in the Consolidated Financial Statements but from which we earn revenue by providing a guarantee to the unaffiliated lender:

 

As of

(in millions, unaudited)

June 30,

2019

March 31,

2019

December 31,

2018

September 30,

2018

June 30,

2018

Company Owned gross loans receivable

$

609.6

 

$

553.2

 

$

571.5

 

$

537.8

 

$

420.6

 

Gross loans receivable Guaranteed by the Company

67.3

 

61.9

 

80.4

 

78.8

 

69.2

 

Gross combined loans receivable (1)

$

676.9

 

$

615.1

 

$

651.9

 

$

616.6

 

$

489.8

 

(1) See “Non-GAAP Financial Measures” at the end of this release for definition and more information.

Gross combined loans receivable by product are presented below (year-over-year and sequential comparisons for Open-End are affected by the Q1 2019 Open-End Loss Recognition Change):

 

As of

(in millions, unaudited)

June 30,

2019

March 31,

2019

December 31,

2018

September 30,

2018

June 30,

2018

Unsecured Installment

$

164.7

 

$

161.7

 

$

190.4

 

$

185.1

 

$

160.3

 

Secured Installment

85.5

 

81.0

 

93.0

 

91.2

 

84.6

 

Single-Pay

76.1

 

69.7

 

80.8

 

77.4

 

84.7

 

Open-End

283.3

 

240.8

 

207.3

 

184.1

 

91.0

 

CSO

67.3

 

61.9

 

80.4

 

78.8

 

69.2

 

Total

$

676.9

 

$

615.1

 

$

651.9

 

$

616.6

 

$

489.8

 

Gross combined loans receivable increased $187.2 million, or 38.2%, to $676.9 million as of June 30, 2019, from $489.8 million as of June 30, 2018. Geographically, gross combined loans receivable grew 11.0% and 120.1%, respectively, in the U.S. and Canada, explained further by product in the following sections.

Unsecured Installment Loans

Unsecured Installment revenue and gross combined loans receivable increased from the prior-year quarter due to growth in the U.S., primarily in California and Texas. Unsecured Installment gross combined loans receivable grew $3.1 million, or 1.4%, compared to June 30, 2018, despite a decline in Canada of $9.1 million due to mix shift to Open-End loans. In the U.S., Unsecured Installment gross combined loans receivable increased 6.0% year-over-year. Unsecured Installment loans Guaranteed by the Company declined $1.3 million year-over-year due to a regulatory change in Ohio and the subsequent conversion of Ohio CSO volume to Company-Owned loans, partially offset by growth in Texas.

The NCO rate for Company Owned Unsecured Installment gross loans receivables in the second quarter of 2019 increased approximately 281 bps from the second quarter of 2018, due to geographic mix shift from Canada to the U.S. and increases in U.S. NCO rates due to product and credit policy decisions. Canada Unsecured Installment balances declined $9.1 million compared to the prior year due to shifting customer preferences from Unsecured Installment to Open-End, while U.S. balances grew $13.5 million due to customer demand. As a result, the U.S. percentage mix of total Company Owned Unsecured Installment gross loans receivable rose from 85.4% last year to 91.3% this year. NCO rates in the U.S. are higher than Canada, so the relative growth in the U.S. balances resulted in an overall increase in the consolidated NCO rate for Company Owned Unsecured Installment loans. In addition, the NCO rate in the U.S. rose from 18.6% in the second quarter of 2018 to 21.3% in the second quarter of 2019, due primarily to credit-line increases and expansion of the Avio brand. As an immature portfolio, Avio has higher relative NCO rates.

The Unsecured Installment Allowance for loan losses as a percentage of Company Owned Unsecured Installment gross loans receivable (“allowance coverage”) increased sequentially from 20.8% as of March 31, 2019 to 21.4%, as of June 30, 2019, primarily as a result of related higher NCO rates as the past due rate rose only 60 bps versus the same quarter a year ago.

NCO rates for Unsecured Installment loans Guaranteed by the Company increased 150 bps compared to the same quarter in 2018 because of credit-line increases and wind down of the Ohio portfolio. The CSO liability for losses remained consistent sequentially from 14.4% last quarter to 14.5% during the second quarter of 2019 as the past due rate was flat to the second quarter of last year.

 

2019

 

2018

(dollars in thousands, unaudited)

Second Quarter

First Quarter

 

Fourth Quarter

Third Quarter

Second Quarter

Unsecured Installment loans:

 

 

 

 

 

 

Revenue – Company Owned

$

59,814

 

$

65,542

 

 

$

69,748

 

$

64,146

 

$

54,868

 

Provision for losses – Company Owned

33,514

 

33,845

 

 

39,565

 

32,946

 

23,219

 

Net revenue – Company Owned

$

26,300

 

$

31,697

 

 

$

30,183

 

$

31,200

 

$

31,649

 

Net charge-offs – Company Owned

$

31,970

 

$

37,919

 

 

$

37,951

 

$

27,308

 

$

26,527

 

Revenue – Guaranteed by the Company

$

62,298

 

$

70,236

 

 

$

75,559

 

$

73,514

 

$

60,069

 

Provision for losses – Guaranteed by the Company

28,336

 

27,422

 

 

37,352

 

39,552

 

26,974

 

Net revenue – Guaranteed by the Company

$

33,962

 

$

42,814

 

 

$

38,207

 

$

33,962

 

$

33,095

 

Net charge-offs – Guaranteed by the Company

$

27,486

 

$

30,421

 

 

$

38,522

 

$

37,995

 

$

25,667

 

Unsecured Installment gross combined loans receivable:

 

 

 

 

 

 

Company Owned

$

164,722

 

$

161,716

 

 

$

190,403

 

$

185,130

 

$

160,285

 

Guaranteed by the Company (1)(2)

65,055

 

59,740

 

 

77,451

 

75,807

 

66,351

 

Unsecured Installment gross combined loans receivable (1)(2)

$

229,777

 

$

221,456

 

 

$

267,854

 

$

260,937

 

$

226,636

 

Average gross loans receivable:

 

 

 

 

 

 

Average Unsecured Installment gross loans receivable – Company Owned

$

163,219

 

$

176,060

 

 

$

187,767

 

$

172,708

 

$

158,121

 

Average Unsecured Installment gross loans receivable – Guaranteed by the Company

$

62,398

 

$

68,596

 

 

$

76,629

 

$

71,079

 

$

60,342

 

Allowance for loan losses and CSO liability for losses:

 

 

 

 

 

 

Unsecured Installment Allowance for loan losses (3)

$

35,223

 

$

33,666

 

 

$

37,716

 

$

36,160

 

$

30,291

 

Unsecured Installment CSO liability for losses (3)

$

9,433

 

$

8,583

 

 

$

11,582

 

$

12,750

 

$

11,193

 

Unsecured Installment Allowance for loan losses as a percentage of Unsecured Installment gross loans receivable

21.4

%

20.8

%

 

19.8

%

19.5

%

18.9

%

Unsecured Installment CSO liability for losses as a percentage of Unsecured Installment gross loans guaranteed by the Company

14.5

%

14.4

%

 

15.0

%

16.8

%

16.9

%

Unsecured Installment past-due balances:

 

 

 

 

 

 

Unsecured Installment gross loans receivable

$

38,037

 

$

40,801

 

 

$

49,087

 

$

49,637

 

$

36,125

 

Unsecured Installment gross loans guaranteed by the Company

$

10,087

 

$

7,967

 

 

$

11,708

 

$

12,120

 

$

10,319

 

Past-due Unsecured Installment gross loans receivable — percentage (2)

23.1

%

25.2

%

 

25.8

%

26.8

%

22.5

%

Past-due Unsecured Installment gross loans guaranteed by the Company — percentage (2)

15.5

%

13.3

%

 

15.1

%

16.0

%

15.6

%

Unsecured Installment other information:

 

 

 

 

 

 

OriginationsCompany Owned

$

102,792

 

$

78,515

 

 

$

114,182

 

$

121,415

 

$

114,038

 

Originations – Guaranteed by the Company (1)

$

80,445

 

$

68,899

 

 

$

89,319

 

$

91,828

 

$

84,082

 

Unsecured Installment ratios:

 

 

 

 

 

 

Provision as a percentage of gross loans receivable – Company Owned

20.3

%

20.9

%

 

20.8

%

17.8

%

14.5

%

Provision as a percentage of gross loans receivable – Guaranteed by the Company

43.6

%

45.9

%

 

48.2

%

52.2

%

40.7

%

(1) Includes loans originated by third-party lenders through CSO programs, which are not included in the Consolidated Financial Statements.

(2) Non-GAAP measure – Refer to “Non-GAAP Financial Measures” for further details.

(3) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO liability for losses is reported as a liability on the Consolidated Balance Sheets.

Secured Installment Loans

Secured Installment revenue and related gross combined loans receivable balances as of June 30, 2019 remained consistent year-over-year. Both the NCO and past-due rates decreased modestly year-over-year. Secured Installment Allowance for loan losses and CSO liability for losses as a percentage of Secured Installment gross combined loans receivable decreased sequentially from 11.9% last quarter to 11.5% during the second quarter of 2019, based primarily on NCO rate improvement.

 

2019

 

2018

(dollars in thousands, unaudited)

Second Quarter

First Quarter

 

Fourth Quarter

Third Quarter

Second Quarter

Secured Installment loans:

 

 

 

 

 

 

Revenue

$

26,076

 

$

27,477

 

 

$

29,482

 

$

28,562

 

$

25,777

 

Provision for losses

7,821

 

7,080

 

 

12,035

 

10,188

 

7,650

 

Net revenue

$

18,255

 

$

20,397

 

 

$

17,447

 

$

18,374

 

$

18,127

 

Net charge-offs

$

7,630

 

$

9,822

 

 

$

11,132

 

$

9,285

 

$

9,003

 

Secured Installment gross combined loan balances:

 

 

 

 

 

 

Secured Installment gross combined loans receivable (1)(2)

$

87,718

 

$

83,087

 

 

$

95,922

 

$

94,194

 

$

87,434

 

Average Secured Installment gross combined loans receivable

$

85,403

 

$

89,505

 

 

$

95,058

 

$

90,814

 

$

84,984

 

Secured Installment Allowance for loan losses and CSO liability for losses (2)

$

10,067

 

$

9,874

 

 

$

12,616

 

$

11,714

 

$

10,812

 

Secured Installment Allowance for loan losses and CSO liability for losses as a percentage of Secured Installment gross combined loans receivable

11.5

%

11.9

%

 

13.2

%

12.4

%

12.4

%

Secured Installment past-due balances:

 

 

 

 

 

 

Secured Installment past-due gross loans receivable and gross loans guaranteed by the Company

$

14,570

 

$

13,866

 

 

$

17,835

 

$

17,754

 

$

15,246

 

Past-due Secured Installment gross loans receivable and gross loans guaranteed by the Company — percentage (1)

16.6

%

16.7

%

 

18.6

%

18.8

%

17.4

%

Secured Installment other information:

 

 

 

 

 

 

Originations (3)

$

49,051

 

$

33,490

 

 

$

49,217

 

$

51,742

 

$

53,597

 

Secured Installment ratios:

 

 

 

 

 

 

Provision as a percentage of gross combined loans receivable

8.9

%

8.5

%

 

12.5

%

10.8

%

8.7

%

(1) Non-GAAP measure – Refer to “Non-GAAP Financial Measures” for further details.

(2) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO liability for losses is reported as a liability on the Consolidated Balance Sheets.

(3) Includes loans originated by third-party lenders through CSO programs, which are not included in the Consolidated Financial Statements.

Open-End Loans

Open-End loan balances as of June 30, 2019 increased by $192.3 million compared to June 30, 2018, primarily due to the launch of Open-End loans in Canada in late 2017, which accounted for $167.9 million of the year-over-year growth. Also, the Q1 2019 Open-End Loss Recognition Change affected comparability, with the inclusion of $35.4 million of past-due Open-End loans as of June 30, 2019. Open-End balances in Canada grew $35.1 million sequentially from the first quarter of 2019 ($30.8 million on a constant currency basis) due to organic growth of the product. Remaining year-over-year loan growth was driven by the organic growth in seasoned markets, such as Tennessee and Kansas, and the relatively newer Virginia market.

The Open-End NCO rate during the second quarter of 2019 was 9.6%, compared to 16.7% in the same quarter in the prior year, as a result of a modest improvement in the U.S. and overall mix shift to Canada. NCO rates are lower in Canada, and Open-End loans in Canada comprised 77.4% of total Open-End loans as of June 30, 2019, compared to 56.4% as of June 30, 2018. Sequentially, on a non-GAAP pro forma basis, as described below, NCO rates improved 170 bps, primarily on portfolio improvements in Canada.

Q1 2019 Open-End Loss Recognition Change

Effective January 1, 2019, we modified the timeframe in which we charge-off Open-End loans and made related refinements to our loss provisioning methodology. Prior to January 1, 2019, we deemed Open-End loans uncollectible and charged-off when a customer missed a scheduled payment and the loan was considered past due. Because of our continuing shift to Open-End loans in Canada and our analysis of payment patterns on early-stage versus late-stage delinquencies, we revised our estimates and now consider Open-End loans uncollectible when the loan has been contractually past-due for 90 consecutive days. Consequently, past-due Open-End loans and related accrued interest now remain in loans receivable for 90 days before being charged off against the allowance for loan losses.

Contacts

Investor Relations:

Roger Dean

Executive Vice President and Chief Financial Officer

Phone: 844-200-0342

Email: IR@curo.com

Or

Global IR Group

Gar Jackson,

Phone: 949-873-2789

Email: gar@globalirgroup.com

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