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5/2/2022
Good day and welcome to the Curo Holdings first quarter 2022 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Tamara Schultz, Curo's Chief Accounting Officer. Please go ahead.
Thank you, and good afternoon, everyone. After the market closed today, Curo released its results for the first quarter 2022, which are available on the Investors section of our website at ir.curo.com. With me on today's call are Curo's Chief Executive Officer, Don Gayhart, and Chief Financial Officer, Roger Deen. Before I turn the call over to Don, I'd like to note that today's discussion will contain forward-looking statements based on the business environment as we currently see it. As such, it does include certain risks and uncertainties. Please refer to our press release issued this afternoon and our forms 10-K and 10-Q for more information on the specific risk factors that could cause our actual results to differ materially from the projections described in today's discussion. Any forward-looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update or revise these statements as a result of new information or future events. In addition to U.S. GAAP reporting, we report certain financial measures that do not conform to generally accepted accounting principles. We believe these non-GAAP measures enhance the understanding of our performance. Reconciliations between these GAAP and non-GAAP measures are included in the tables found in today's press release. Before we begin, I'd like to remind you that we have provided a supplemental investor presentation that we will reference in our remarks, and that you can find it in the events and presentation section of our IR website. With that, I would like to turn the call over to Don.
Thanks, Tamara. Good afternoon, everyone, and thank you for joining us today. I'll start with something we haven't been able to say since the fourth quarter of 2019. This quarter seemed more normal and points to the tremendous long-term growth and value creation opportunities from our strategic repositioning of Curo. Our loan book more than doubled versus the same quarter a year ago, partly because of the acquired heights in the fourth quarter of last year, which added approximately $470 million of loans. But unpacking the year-over-year loan growth at the business level, Flexity was up 169%. Canada direct lending was up 30%. Legacy direct lending, excluding the runoff portfolios, was up 34%. And consolidated loan balances were up a very healthy 5.2% sequentially, with Canada growing and the U.S. impacted by the Q1 tax refund season. Tax season came in mostly in line with our internal forecast, as we expected slightly smaller refunds than in years past due to the taxability of certain pandemic-related benefits. Smaller refunds reduced our collection rates modestly, but of course led to a smaller reduction in loan balances than in years past. I should also note that Heights customers who have higher income and credit scores are much less likely to receive tax refunds, in particular, larger earned income tax credits. As a reminder, tax refund season is not a phenomenon that we or our customers see in Canada. Of course, with this growth comes upfront and normal loan loss provisioning. We point out in our release and at the top chart of page four of our investor presentation that normal loss provisioning this quarter compared to government stimulus impacted provisioning in the first quarter of 2021 produced a $28.7 million pre-tax earnings squaring year over year. And we have included additional charge-offs and provision detail for each of our business units. Roger will cover the numbers in more detail later. You'll see on slide eight of our investor presentation that we revised our 2022 and 23 outlook for our Canadian businesses. It's important to note that the revised outlook reflects updated high-level thinking on the macro environment and recent trends, mostly a more cautious view of revenue growth and net charge-off levels. Expanding on this a bit, both the U.S. and Canadian economies are performing fairly well right now with job and income growth. However, both central banks are increasing base rates at meaningful close in an effort to tamp down inflation and engineer a soft landing. We expect rising inflation and interest rates will impact our consumer spending and borrowing habits, but to what degree remains unknown as we are facing a set of converging factors. Typically, when we see rising inflation coupled with positive employment trends, this is a sweet spot for our business where we see good demand along with good credit performance. The unknown factor facing this scenario is that the U.S. and Canadian economies dip into recessions, and we start to see job growth slow. Many forecasters have increased the probability of recession in late 22 or 23, so this has caused us to tamper with some of our top-line and credit performance expectations. Also, rates are rising, and it's far too early to tell where the Fed and the Bank of Canada end up on their benchmark rates. Using the current forward rate curves, which has steepened meaningfully in the past month, we would see an impact of approximately $8 million in 2022 and $15 million in 2023. Put another way, each 25 basis point increase in the benchmark rates result in about $2.5 million of additional annual interest expense using current debt balances. A reminder here of our current debt balance, approximately 50% consists of fixed rate senior notes and the rest in variable rate asset-backed facilities in the U.S. and Canada. With respect to our Flexity business, we're very pleased with the work being done by our whole team in Toronto to scale and support a business that is tripling its year-over-year rate of originations. But overall retail sales in Canada have seen some softening as well as a shift from larger ticket hard and white goods, which are Flexity's primary channels, to apparel and cosmetics, as well as a further shift to travel, dining, and other service-based expenditures. Finally, I should note that we share some of the optimism that's being expressed in some of the earnings reports about the overall help of consumer balance sheets and wage gains that is driving more loan demand. However, in our view, a bit more of a balanced approach is called for, and we tried to reflect that in a revised outlook. And I continue to remain confident in our outlook, given the strength of our businesses and consistent focus on discipline, long-term execution, and prudent credit management. I'll now turn the call over to Roger to review the details for our first quarter 2022 results.
Thanks, Don, and good afternoon. Adjusted net income for the quarter was $6.3 million, or 15 cents adjusted diluted earnings per share, compared to 69 cents adjusted diluted earnings per share in the first quarter of 2021. The primary driver of the year-over-year decline in earnings was stimulus impacted compared to normalized loss provisioning that Don mentioned earlier. Interest cost was also higher by $18.8 million, because of the senior notes tack on that we did in the fourth quarter to finance in part the acquisition of Heights and higher utilization of non-recourse asset-backed facilities to support loan growth, including the related facility assumed in the Heights acquisition. Total revenues in the first quarter increased $94 million or 48% year over year. Heights added 66 million of revenue And we also had a full quarter of Canada point-of-sale lending, which contributed $20 million of revenue this first quarter compared to $1.6 million in a partial quarter of the first quarter of 2021. Canada direct lending revenue rose 22% year-over-year, and U.S. direct lending, excluding the runoff portfolios and excluding heights, grew 12%. versus the first quarter of last year. Our U.S. runoff portfolios, and if you'll recall, those portfolios are comprised of California and Illinois installment loans, Virginia open-end line of credit, and Verge. Those contributed 6.4 million of net revenue in this first quarter compared to $14 million of net revenue in the first quarter of 2021. Consolidated operating expenses for the quarter increased 46.2 million, or 43.1%, compared to the prior year, driven entirely by the expense base that we acquired with Heights, that was 33.8 million, and a full quarter of Flexity this year, adding 15.5 million. Excluding the lack of year-over-year comparability for the Heights and Flexity acquisitions, operating expenses were flat. as cost savings from store closures in the middle of last year offset normal growth in variable costs and compensation. Sequentially, recurring operating expenses, excluding heights, decreased by $4 million. Don already covered loan growth by business, so I'll talk a little more about credit quality. Our credit metric trends in Q1 were consistent with what many of our peers have seen overall, continuing trends towards normalization but still favorable to pre-pandemic run rates. Our consolidated quarterly net charge-off rates for the first quarter improved year over year by 90 basis points from portfolio mix shift to lower loss rate products. Looking at it by business, U.S. net charge-off rates improved 150 basis points year over year, while past due rates increased by 90 basis points to a year ago. Sequentially, U.S. net charge-off and past due rates also improved meaningfully. Both comparisons are affected by our heights acquisition at the end of December. So, if we take heights out of the numbers, U.S. net charge-off rates were 440 basis points higher year-over-year, while past due rates were 240 basis points higher. But sequentially, U.S. net charge-off rates were down 380 basis points, and the past due rate was down 30 basis points. Canada direct lending net charge-off rates increased 170 basis points, and the past year rate was up 160 basis points compared to Q1 of last year. We saw more normal post-holiday seasonality in the Canadian direct lending portfolio in the middle of Q1, but as we've moved through Q2, so far we've seen delinquencies trend back down comfortably. For Canada point of sale, we've had very stable and consistent net charge off and past due rate trends over the past three quarters. We had 60.2 million in unrestricted cash and $118 million of additional liquidity, including undrawn capacity on revolving credit facilities and borrowing base levels at March 31st, 2022. We are currently working on a very attractive refinancing and expansion of Heights non-recourse asset-backed warehouse facility and accessing asset-backed securitization for that business in the second half of 2022. We also announced earlier this quarter that we expanded the capacity under our Canadian SPV facility by $50 million Canadian. Finally, during the quarter, we repurchased just over 824,000 shares and the Board authorized our quarterly dividend at 11 cents per share. This concludes our prepared remarks, and we'll now ask the operator to begin Q&A.
Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question will come from John Hecht with Jefferies. Please go ahead.
Afternoon, guys, and thanks for taking my questions. First one is just, you know, Roger, you did mention, you know, that from an expense perspective, not a lot of comps just given some of the new, kind of divisions you guys have bought and are growing. Is this a good kind of base case for expenses? And then any comments on kind of inflation or just sort of growth expectations with respect to expenses this year?
Roger, are you on mute maybe?
Sorry, forgive me. I was on mute. Sorry about that. No, I think, John, I think Q1 – Q1 is a pretty good run rate from a quarterly perspective. There wasn't anything – if you take the recurring expenses, which are reconciled back in the appendix of the deck, you know, Flexity's expenses were a little lower than they were – total expenses were down sequentially if you take heights out. I'll come back to heights in a minute. But if you take heights out, total expenses were down sequentially from Q4. That is largely – That's largely variable compensation. We did overachieve our plan. That's all in the proxy. And so we had some backloaded, a little bit more variable compensation expense in the fourth quarter than the normal run rate. And a couple other things. And, by the way, flexities seasonally, flexities expenses in the fourth quarter to support the holiday season are higher than they would be in the first quarter. So if you look at our numbers, I think I said, excluding heights, the expenses were down $4 million sequentially. But if you kind of establish that as the run rate X heights, and then heights was about $33, $34 million, and, you know, I think there's going to be some, you know, that the heights number is certainly not going to go up materially. And, you know, there are some, there's continually, you know, we'll be working through some combined cost synergies, there that we look like, as you know, we've only owned them since the end of December. So, you know, we're on our way, but not all the way there. So overall, you know, again, you know, I think Q1 is a good, you know, good run rate proxy for the quarterlies for the rest of this year.
Okay, that's helpful. And then, I mean, you know, with Heights and, you know, some of the new stuff you guys have bought in Canada, you've got a number of different channels to grow and, you know, customer acquisition channels. I'm wondering, can you comment on, you know, customer acquisition specifically, you know, customer acquisition costs, the methods of customer acquisitions and so forth, and any channels that are, you know, growing at different paces or more, you know, attractive paces than you would have expected?
Yeah, it's not fun. I think, well, obviously in some of the new stuff, You know, Flexity is a merchant-based, you know, relationship. But we do get some traffic to Flexity.com. And as we've rolled out and ramped up the LFL relationship, which I feel like I did a reminder for Ben, it is the largest home furnishings retailer in Canada. So we've been featured in a lot of their advertising there. uh both but printing online we've been able to get some some traffic to flexi.com directly um and we have some we're we're testing ways to uh to grow that uh we've got a good team up there a good marketing team with some good digital experience so um but i think the the you know the main focus of that business continues to be just just ramping up and rolling out the regional relations as we've added and as you mentioned we're probably you know, up about, you know, we've tripled their origination by year over year in the first quarter there. So that's been easy to main focus, although we are starting to put some more money and some more energy and effort into the, call it the direct-to-consumer and deflexi.com online brand. Heights is, you know, is a retail business. I think most people will, they'll be either sort of shopping for applications online calling the branches. So it's really not a walk-in business per se, but most of them, unless it's a certain kind of a key transaction, most of the loan transactions there are branch visit loans. We are, you know, we have some work to do before we can sort of fully, I think, take advantage of some of the digital capabilities that we have and sort of, I guess, just kind of sharing those with certainly is we're looking, we're working on adding some centralized collections, adding some more centralized underwriting, and then adding to their digital capabilities. You know, up to and including, you know, in the, you know, in our mind, you know, not too distributionally, we'd be able to close certain kinds of loan transactions completely online, like we do in the legacy, you know, U.S. direct lending business. But I would say in terms of money being spent on either flexibility or height, it's a little early. I think it's much more sort of, you know, planning and development to make sure that we kind of get it right when we do all that. And one thing I would just mention as well is one of the exciting parts about both of those is, you know, there's certain in some of the high-cost lending channels, you're limited, you know, if it's Google or, you know, there's certain where you can put your apps, et cetera. And Flexity and a large measure of the loan portfolio and the products at Heights are not burned by those same kind of restrictions. So we're kind of excited to be out with those businesses and grow those to be able to use a wider variety of channels than we've been able to use in the legacy direct lending business.
Great. Appreciate all the details. Thanks.
Our next question will come from John Rowan with Jannie. Please go ahead.
Good afternoon, guys. Don, I just want to kind of go over, you know, some of the guidance that you had previously provided, you know, specifically the $3 plus whatever number was for guidance or for heights previously. I mean, are you backing away from that or is that still a target for 2023? I just... I want to understand how you're looking at the, you know, the 2023 number with everything in it.
Yeah, so we're certainly by, you know, we're, I guess, you know, we didn't address a revised outlook for heights, so we're certainly, you know, affirming the outlook that we gave for heights when we announced that deal and closed that deal in December, so which, Roger, I think it was you know, in the 55, 56 million periods of pre-tax, I think going to 75 or 76 in 2023. So, you know, we feel good about where heights is. And then, and so we still, you know, as a reminder, we still have never, just because of the, you know, the difficulties in forecasting the legacy of the U.S. direct lending business coming out of the pandemic, I know you said at the top of the call, it feels like we're getting more normal numbers now, a more normal kind of quarter. But exactly how that business builds back, I think, you know, in light of what is, you know, some more uncertain economic times, we're still, you know, not prepared to sort of give an outlook on that business. We did reduce our Canadian direct lending businesses a little bit for the direct lending business a bit for a little bit higher credit costs as well as, just interest expense increases with the forward curves going up so much in Canada and the U.S. By that, the same, you know, looking out, it's kind of, you know, 225, 350 basis points. And then on the flexibility side, we just looked at, you know, I think we talked about in the last call, you know, the sale volumes have been running a little bit behind what we'd like, and that's just retail in general in Canada. People spend more money on on dining out and travel, et cetera, and not on vendor sets and furniture, et cetera. And then while the credit quality is excellent, as you can see, then our earnings relief, they're still running around 50 basis points a quarter and charge-offs there. But that means fewer accounts are rolling to interest-bearing. So typically, they're going to be 90 days same as cash, and that rolls to an interest-bearing account. We're seeing fewer of those roll, so they're being paid off earlier which benefits credit a lot, but it hurts us a bit on the top line yield. So, you know, I think that even if you look at the, if you roll those numbers out for 23, you know, I think a $3 number, and again, depends on where the U.S. legacy business and how that business ends up performing. But that number certainly, you know, we think absolutely in view for us in 23. Again, assuming we get a somewhat normal kind of, kind of, return to loan volumes and credit in the U.S., which I think the first quarter was a pretty good down payment on that.
So, obviously, you know, we have guidance for Canada, right? You're standing by your guidance for heights. The wild card has always been, and this is nothing new, what happens in the U.S. How do you feel about the U.S., right? There was a relatively modest segment operating loss for the quarter, if I'm reading the supplemental correctly. If I'm not mistaken, I believe in the last few quarters it was a bigger number. So maybe just give us an idea of the trajectory in the U.S. and, you know, whether or not, you know, what it's going to take to turn that business profitable.
So, yeah, you can see the provision impact in that business on page four. Actually, for all the businesses on page four of the deck. But, again, it's – Roger, we have the operating numbers, but does that include the bond interest? I mean, is it fully burdened by that? Yeah, yeah, yeah.
It's – yeah, in all periods. So, obviously, the interest expense for that is on that business, but – and it went up. So, we had a meaningful improvement, obviously, sequentially from Q4 in the pre-tax and the EBITDA for the U.S. legacy business business. But, you know, I think it's pretty much what we've talked about, which is, and I think we've said, because of the year-over-year provisioning, and you saw a big chunk of that this quarter, you know, with allowance release and provision being a credit, you know, or a tailwind in Q1 of last year and a headwind this year, you know, that's going to, that delta year-over-year in the second half of the year kind of normalizes, But, you know, the business will continue to make, you know, a little more money, I think, each quarter. But it's never, you know, at like for like, the 22, we've said a number of times, 22 will never approach 21. But, you know, assuming that we can grow the loans and get the provision, you know, normalized and get a lot of the upfront provisioning behind us, then 23 should, you know, 23 should start to look normal again. Mm-hmm.
And, John, again, just to make the point, I think one of the ways we look at the business today now is we take sort of direct lending, like you take the Heights business, Canada direct lending, the Flexity business, and then the U.S. direct lending business without the burden of the interest expense. That kind of fits up a whole code because we look at those businesses, they all have financing facilities, non-recourse financing facilities. and we deduct the interest expense of those from their pre-tax earnings from an internal work. So if you add the $75 million in interest expense on the bonds back to the U.S. segment, you can sort of see the level at which it's – it's not that the business unit, the operations aren't profitable. They're quite profitable. It's just that the way it's presented, the burden, that business burden with all that interest expense.
Okay, and is there any, thanks for that explanation, are you guys writing any guidance for 2Q at this time?
Not yet, not right now, no.
Okay, all right, thank you.
Thanks, John.
Our next question will come from Bob Napoli with William Blair. Please go ahead.
Hi, this is Spencer James. I'm for Bob Napoli. Thank you for taking the question. Could you just remind us, how Heights is positioned relative to how that business was positioned pre-pandemic. Does your guidance for this year for Heights imply it being ahead of where it was in 2019? And then in that context, what are the drivers you're seeing for the revenue growth for Heights into 23?
Yeah, thanks. It's a good question. So, no, we absolutely see it being ahead. And again, it was a private company. But no, we see it well ahead. 2021 for them was ahead. They showed relatively consistent earnings growth, even with a little bit of a pandemic-related slowdown. But remember, this is a higher credit quality customer, the small loan customer there. And that book is going to be you know, kind of low 600s, and the large loan customer is going to be, you know, 20 to 30 points higher there from a FICO perspective. So, as I mentioned, not as – so there's not as much seasonal pay down with tax refunds, et cetera. So it's a very different product and a very different customer than our legacy U.S. business. So they continue to see good growth. They're earning assets for March of 22. So March 3 of 22 versus – March of 21 when they were private, we're up 23.2% year over year. Revenue is not quite the same, but some of it's mixed shift to some of the larger lower yielding loans, but a very good performance in that business. And I think that we are in the process of opening a number of branches. We're probably going to be in four new states by the end of the year. We're trying to be Again, all of this is – I think everybody's kind of looking at the macro and making sure that you're not – in terms of volume and customers, we're being a little bit more measured than maybe we have been in the fall just because we're looking at the macro. But I think you're still going to see us opening branches, expanding into new states, and, again, more emphasis – and we said it's a time-closed deal – more emphasis on that larger loan product as opposed to the smaller loan products. So larger loans, lower yields, longer terms. And those products also, again, just because of the pandemic, they didn't seem nearly as like, you know, there's stuff for us that paid down the fastest for the smaller balance, higher yielding products that we offer in our legacy business. Those paid down, there's almost a linear relationship. The lower price of the product, the larger the loan, the longer the term, those experienced lower returns. pay down rates and the Heights small or the large business kind of if you were to sort of plot them on that same curve they would show that same kind of behavior so we haven't had to deal with they haven't had to deal with the same kind of pay downs that we did in the U.S.
Okay that makes a lot of sense thank you and so if I'm hearing you correctly there's no changes to the plans to open new stores in Ontario and also new branches for Heights in the United States is it the outlook there the same as it was last quarter?
Yep. It's still the same. Yep. Yep. That's our, what are primarily on our lender at brand in Ontario and then the Heights brand. Okay.
Thank you. And then I'll just sneak in one more quickly. Uh, any comments on, uh, for the Flexity business customers propensity to run a revolving balance? Um, I know that some of those, uh, customers take longer to ramp up. Any change to how you're seeing customers running a balance versus paying it down more quickly?
Yeah, it's, we're starting, we're seeing gradual improvement, but it's, again, and you can, if you look at the, you know, we just plot that, we give you on page four, the very bottom right corner of page four, we give you the charge off rate by segment, and you can see that Plexi's gone, it's actually, it's gone down even from from TrueQ of last year, which was a pretty good quarter from a credit quality standpoint. So the credit quality continues to get better there. But that's a function. That's almost the inverse of what we're talking about. So we'd rather see on balance. Obviously, you're annualizing 50 basis point charge-offs. We think charge-offs, and rather than run over time in that business, we'd like to see them run kind of 4% to 5%. And some of that's going to be We're adding some year prime and subprime to the product mix there. But we think that the right sort of – and that's kind of a start. If you look at that business at the time, that's a more normalized charge-off pattern. And we think that the business model works because you then add – if you add more in charge-offs, you're going to add a lot – you're going to add a proportionately larger amount in yields. So you're kind of – net, you know, your net margin after credit provision is going to go up. So right now our margin, while again it's great to have, you know, 50 basis point charge-offs in a quarter, and so the kind of second quarter, over time we'd like to see that float up so more of those balances could float into the revolving and we earn interest income in addition to the To the merchants just kind of just it's just a quick reminder good question a lot business Now this is the private legal card business and now it has I guess some some products similarities Similarities that might line up with with buy now pay later companies. This is probably not some you know a buy now pay later business. This is promotional You know the interest rate financing very typical in 90 days in this cash 180 days in his cash on larger ticket purchases, so this is a furniture, appliances, and electronics. This is, you know, not $200, you know, break $200 of spend into four payments or, you know, four kind of biweekly payments. It's a very different business than the buy now, pay later models that are quite prevalent right now. And we think very much it lines more up with sort of a, you know, what kind of what, you know, the OG monogram card business and, and ADS and those private label card businesses and that kind of business model.
Thank you. Again, if you have a question, please press star then one. Our next question will come from Moshi Arnbook with Credit Suites. Please go ahead.
Great, thanks. Most of my questions have been asked and answered, but maybe could you talk a little bit, you know, maybe in more detail about the plans for growth and flex, you know, and flexity, you know, given the, you know, the various things you've already talked about. I think you made a small acquisition that kind of is, you know, kind of goes on that platform, you know, of a portfolio. And obviously, there will be, you know, you'll be operating in a higher rate environment. So, you know, does that have any implications, you know, from a competitive standpoint? Just talk about that a little bit. Thanks.
Yeah, so we did buy a portfolio as part of sort of onboarding Michael Hill, which is an Australian-based jewelry chain that has operations in Canada. We bought their existing point-of-sale portfolio. I think it was $11 million to $12 million Canadian. Yeah. And that's the strategy. We'll certainly, if that's what a merchant is part of, in most cases we can sort of transition. They'll stop offering – the financing relationship with the, you know, with the incumbent lender, and we'll start issuing flexi cards. But this is just a different option to kind of provide retail with a little more liquidity up front. We're happy to entertain that. So, you know, I think we are in Canadian dollars. Roger, I think we just, you know, sort of passed about $700 million in Canadian outstandings just recently. And I think by the end of the year, that business will probably be – it will certainly be north of a billion in receivables. And that's – the biggest chunk of that is going to be the LFL business that we added, but some other good-sized merchants. We continue to say we have not – we don't forecast – we forecast growth, organic growth from existing merchant relationships. But we haven't built into any of the numbers we've talked about of flexing any new merchants. And we continue to feel like we're in position at some point down the road to add some additional like that. Now, whether it's going to be something of a scale of LFL, that's probably more than unlikely just because of the size of that business. But if we look to... to sort of annualize or get a full year of contribution from the business we have now. And that's how we kind of get to that business being from a REV standpoint, you know, getting into, you know, into the high 300s in 2023 or so. You know, I think it's, you know, hopefully there'll be some other stuff. Again, the caution, which is if we add new relationships, they're generally going to be diluted in the near term, mostly just to some extent, mostly just a provisioning exercise early on. But, you know, that's a business that is, at the end, we think if we get to a billion receivables, we would be the fourth largest provider retail credit card originator in Canada. I know one of them is Canada Tire. I can't remember how many others. But because all of those cards are general purpose cards, so it's a MasterCard visa where you can go, you know, people can use the card for gas and groceries, and they have rewards, features, et cetera, we would be the number one private label issuer. So our card just only works in the network. One of the things we continue to sort of Analyze and think about is it, does it make sense for us to have our, to turn our card into a general purpose card? So you can use your FlexiD card with the MasterCard base and use it for purchases outside of the network. So there's a lot of cost considerations that obviously would be more volume and if it's done properly, it's a very cheap way to originate a general purpose card. which is what, as I said, I'm going to just point out, there's a lot of larger companies that have very big general purpose cards that originated on a retail platform. So that's something we're taking a hard look at right now.
Great. Thanks very much.
This concludes our question and answer session. I would like to turn the conference back to Don Gayhart for any closing remarks.
Great. Thanks, everybody. We appreciate your joining us. We look forward to talking to you again after our second quarter results. Thanks a lot. Bye.
The conference is now concluded. Thank you for attending today's presentation.