CURO Group Holdings Corp.

Good morning, ladies and gentlemen, and welcome to the Curo Q2 2023 conference call. At this time, all lines are in listen-only mode. Following the presentation, we'll conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 3rd, 2023. I would now like to turn the conference over to Nick Panarese. Please go ahead.

Thank you and good morning, everyone. Curo released its second quarter 2023 results before market opened today, which, along with supplemental information, are available on our investor website at ir.curo.com. With me today are Curo's Chief Executive Officer, Doug Clark, and Chief Financial Officer, Izzy Dawood. Today's discussion will contain forward-looking statements based on the business environment as we currently see it. As such, it includes certain important risks and uncertainties. Please refer to our press release issued this morning and our Form 10Q and Form 10K for more information on the specific risk factors that could cause our actual results to differ materially from the matters described in today's discussion. Any forward-looking statements made 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 US GAAP reporting, we present in the supplemental materials certain financial measures that do not conform to generally accepted accounting principles. We believe these non-GAAP measures enhance the understanding of our performance. Reconciliation between these GAAP and non-GAAP measures are included in the appendix to the supplemental materials. With that, I would like to turn the call over to Doug.

Thanks, Nick. Good morning, everyone, and thank you for joining us today. During the second quarter, we continued to execute on the business plan we outlined in the first quarter. Our core fundamentals, receivables, revenue, net charge-offs, and operating expenses came in more favorable versus our previous Q2 expectations. This was accomplished as we focused on responsible growth, maintaining credit quality, tightening operating expenses, and commencing certain marketing programs. On slide three of the earnings presentation, you can see some of these accomplishments from the quarter. While we remained disciplined with loan originations, given the still uncertain macro environment, we started putting the capital we raised in late May to work. We grew receivables by 4% quarter over quarter during what is generally a seasonally slower quarter. We also made significant progress on multiple operational initiatives, including continued modernization of our technology infrastructure, which includes transitioning to the cloud and converting our U.S. branches into a single loan management system, which we expect to be completed late in 2023. We also pursued continued enhancements of the digital customer experience and introduced improvements to our credit risk capabilities. These initiatives will allow us to refine our focus on responsible growth in our direct lending business. As reflected in the press release, we have reached an agreement to sell our Flexity business for approximately 55 million Canadian, which we believe is the best option for our company. Our consolidated results this quarter included a full quarter of Flexity, and Q3 will also include partial results. And we anticipate Q4, our consolidated financial results, will no longer include Flexity. Turning to slide four, we ended the quarter with over $2.1 billion in gross loans receivable. a 4% increase versus the prior quarter. We will continue to balance solid demand with responsible growth, particularly as we gradually pick up our marketing efforts in Q3. Within the U.S., we focused our growth initiatives towards our near prime large loan and secured loan portfolios as we continue to improve the overall risk profile of our U.S. portfolio through these efforts. In our direct lending business in Canada, we also saw solid demand for our open-ended product with both new and existing customers. Our U.S. loan management system conversion will simplify management of U.S. branch operations using a single platform and will create a more stable operating platform that enables rapid deployment of system enhancements. This conversion will also allow us to scale our operating model to a holistic lending approach for both small and large loans across all U.S. branches. which should increase efficiency, enable growth, and improve servicing. We continue to work on introducing new secured lending products in both the U.S. and Canada, such as an auto-secured product that we expect to roll out later this year. These products should allow us to reduce overall credit risk while increasing our average balances with secured customers. Alongside our increase in secured lending, we remain committed to increasing our mix of larger balance and longer duration products which will continue to de-risk and simplify the predictability of our business results. Despite the ongoing macroeconomic uncertainty in the US and Canada, our consumers continue to hold up relatively well in terms of demand and credit performance. While we have not seen unexpected consumer stress, our team continuously monitors our customer data as well as industry-wide trends to ensure we stay ahead of any potential negative outcomes. As a reminder, our direct lending portfolio was split between the US and Canada, each of which are impacted by different macroeconomic factors. Turning to slide five, our credit quality continues to improve, driven by tightening and underwriting we began in 2022, along with the positive impacts from the enhancements to our customer servicing capabilities. Excluding the change in charge of policy we made in our direct lending business last quarter, The net charge-off ratio improved by 270 basis points, showing improvement in both the U.S. and in Canada. Moving to slide six, you can see the delinquency trends also remain consistent with the prior quarter. To summarize, through the first half of this year, we have made meaningful progress towards executing with excellence and strengthening our foundation and responsible growth. We are encouraged by the growth opportunities that we see in both the U.S. and in Canada. I will now turn it over to Izzy to give you more detail on our Q2 results, and then I'll close with some final thoughts.