CURO Group Holdings Corp.

Thank you and good morning everyone. After the market closed yesterday, CURO released results for the fourth quarter and full year 2020, 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 Gayhardt; President and Chief Operating Officer, Bill Baker; Chief Financial Officer, Roger Dean; and Chief Accounting Officer, Dave Strano. This call is being webcast and will be archived on the Investors section of our website.

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 last night 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 obligations to update 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 yesterday’s press release.

With that, I would like to turn the call over to Don.

Thanks Matt. Good morning and thank you for joining us today.

I hope to find you all healthy and safe. Before we begin our fourth quarter update I would like to point out we began to put a supplemental investor presentation to highlight key trends through last week.

We'll be referencing this presentation in our remarks and you can find it on the Events and Presentation section of our IR website. After a year unlike any in our history, we exited 2020 encouraged by the resilience we have demonstrated, we are cautiously optimistic about our opportunities for 2021 and beyond.

In the fourth quarter of 2020 we delivered quarterly sequential loan growth of 11.3% compared to 1.6% quarterly sequential growth in the fourth quarter of 2019. Our overall loan balances finished the year 19.5% below prior year levels, 11.7% excluding California’s installment loans.

Loan balances in Canada increased 9.2% year-over-year and 13% sequentially. U.S.

loan balances are still well below 2019 levels grew 9.2% sequentially in the fourth quarter, driven by our online lending platform. Despite COVID-19 impacts, the lowered loan demand and loan balances after the first quarter of 2020, historically good credit performance, and strict expense management allowed us to post solid quarterly earnings while significantly increasing cash and liquidity levels.

In addition to being pleased with our business resiliency during a difficult year, we're excited by the tremendous value realization of our investment in Katapult and by our addition of point of sale, buy now pay later, and credit card capabilities in Canada with the acquisition of Flexiti. Starting with Katapult, as we announced in December, Katapult reached an agreement to merge with FinServ in December.

FinServ is a special purpose acquisition company or SPAC, and the merger was the first step in a process that resulted in Katapult becoming a publicly traded company in the first half of 2021. At closing, subject to SPAC related redemptions, we expect to receive about $130 million in cash and approximately 21% or 20.4 million shares of the public entity.

In addition, based upon the trading price of the public shares, we could receive up to 3 million additional common shares. At FinServ’s recent trading price, all of these earn out shares would vest and increase the total value of our investment to approximately $520 million.

We're obviously proud of Katapult’s accomplishments and are extremely happy with the return on our $27.5 million cash investment in this business. We're also pleased to have the opportunity to retain a meaningful ownership stake in Katapult and representation on the company's Board of Directors.

We believe that this investment allows CURO and its stakeholders to participate in the rapidly growing e-commerce point of sale finance space. Back at CURO and as we noted previously, the impacts of COVID-19 reduced demand, but provided us with ample liquidity for future growth and investments.

Along these lines we were very excited to announce earlier this week that they reached an agreement to acquire Flexiti. As we publicly discussed on Monday, Flexiti is an emerging growth, point of sale, buy now pay later provider in Canada integrated with over 2000 merchant partners and available at nearly 6000 merchant locations and e-commerce sites.

Flexiti’s originations have grown from $49 million in 2017 to an estimated $292 million in 2020. Moreover, simply annualizing fourth quarter 2020 origination suggests an annual origination run rate close to $475 million.

The Flexiti acquisition affords us access to the full spectrum of Canadian consumers across credit tiers. Flexiti has been recognized for its product innovation and rapid growth and we're happy to have the company’s creative and talented management team to the CURO family.

As we said in the context of our own business in Canada, the Canadian market is a large growing addressable market. There's limited competition at scale in Canada, and we now have omni-channel capabilities to reach customers in all of the ways in which they access credit.

This acquisition increases CURO’s long-term growth profile and provides further product and geographical diversification while reducing regulatory challenges. It also clearly aligns with our expressed interest in growing in Canada in cards, there is where we expect to remain active moving forward.

Moving to the final quarter of 2020, our results were impacted by three things. First, the previously mentioned increase in loan demand compared to the prior quarter; secondly, reduced quarantine and stay at home orders; and finally, continued historically low delinquencies and net charge-off rates.

Canada remained a bright spot posting another quarter of sequential loan, revenue, and bottom line growth. Canada's $22.2 million of adjusted EBITDA for the quarter was the single highest quarterly earnings we have reported for that business segment.

We believe that our strong results in Canada reflect two principal factors; first, our strong market position and market leading omni-channel product offerings and second, the more pronounced economic rebound in Canada through the year-end. However, like many places there has been COVID resurgence in Canada and more specifically Ontario since year-end which has led to restrictions on business and personal activity with the impact on the first half of 2021 yet to be determined.

Getting into the details a bit more, on a consolidated basis we experienced steady weekly increases in loan applications and new loan volume overall as we moved through the fourth quarter. While these trends were still well below the same period a year ago, they have for now turned positive.

Our total managed loan balances increased 11.3% from the third quarter of 2020 with growth of 9.2% in the U.S. and 13% in Canada.

While managed loan balances were still down 19.5% year-over-year due to the impacts of COVID, the 11.3% sequential increase in this year's fourth quarter was better than the 1.6% sequential growth in last year's fourth quarter. Further, the year-over-year decline was 11.7% without the impact of the runoff from our California installment portfolios due to regulatory changes there.

An unprecedented improvement in credit quality partially offset the impact of lower loan volume and loan demand on revenue. Total delinquencies were down more than 25% year-over-year.

For most of the fourth quarter and through the week ended January 29th total delinquencies were still down 27% compared to the same period a year ago. Putting together the pieces from a P&L perspective for the fourth quarter, we posted a revenue decline of 33.2% year-over-year primarily due to COVID-19’s impact on loan demand as well as the impact of California regulatory change that went into effect at the start of 2020.

Adjusted EBITDA declined $33.2 million or 49.2%, while net revenue declined $39.8 million year-over-year. The net revenue decline was partially reduced by lower advertising costs as demand has returned slowly.

While we did keep some of the cost reduction efforts in place in the fourth quarter as previously described, we incurred some additional variable compensation and strategic consulting expenses with an eye towards 2021 and forward. As a result adjusted EPS declined $0.20 per share for the fourth quarter.

We said before the non-prime consumers consistently showed greater ability to manage credit as measured by the relative change in their delinquency and charge off data during economic downturns in prime and near prime customers. Our experience in this crisis certainly provides additional support for this view.

Our delinquencies and net charges in the U.S. and Canada stayed low despite much of the government stimulus burning off.

The behavior of our customers through this also demonstrates the value of our omni-channel platform and the investments we have made to allow for a seamless transition from our store to digital channels. In the U.S.

68% of transactions occurred online during the fourth quarter of 2020 compared to 57% in the first quarter of 2020. In Canada where online adoption has lagged in the U.S., we saw a similar mix shift toward online with 35% of transactions conducted online during the fourth quarter of 2020 compared to 23% in the first quarter of the year.

As we look ahead to the rest of 2021, while COVID vaccine distribution progress is very promising, the timing of the re-opening of the U.S. and Canadian economies remains uncertain.

In some respect it feels like the end of the pandemic has been a couple months away for the past six months. In addition, in the U.S.

there is significant uncertainty surrounding the timing and magnitude of additional stimulus and the impact of this year’s delayed tax season. Therefore, for now we plan to continue our recent practice of providing business updates as we move through the quarter.

We remain prepared for a wide range of outcomes and are continuing to focus on supporting our customers and communities through this unprecedented time. While we exited 2020 with an upward trajectory for earning asset growth to the extent that the U.S.

Congress passes additional stimulus measures as is widely anticipated, our U.S. loan balances could again contract in the first half of 2021 putting continued pressure on revenue and earnings levels for our U.S.

business. However, this will also support our continued strong credit performance as well as our cash balances and liquidity.

To close, while there are certainly some ongoing headwinds from COVID and potential changes on the regulatory front that may impact portions of our business, I'm optimistic about the work that we've done to continue to move the company forward. We continue to invest in our internal technology and risk and analytics platforms.

The strength of these platforms has helped us to quickly migrate customers to our online channel and to continually refine our credit decisioning, creating new product opportunities in all of our geographies. We've grown our Canadian operations which accounted for approximately 65% of our consolidated quarterly adjusted EBITDA and 55.2% of our gross combined loan balances at the end of the fourth quarter.

And pro forma for the Flexiti acquisition, this percentage increase is approximately 66% of our loan balances. We've also grown and enhanced our card offerings.

We've also started to realize significant value from our investment in Katapult and its market leading e-commerce lease to own solution. And finally, we continue to evaluate the number of opportunities for both new organic initiatives and strategic acquisitions that could offer further growth and diversification of our business lines.

I'd like to close by thanking our 3,900 team members who despite the challenges created by the pandemic, continued to meet our customer’s everyday needs for financial services and execute on our strategic priorities, all while helping customers navigate financial hardship and other challenges. We believe that the strength of our company lies in our people and our culture.

I'm confident that together we will continue to manage through these unprecedented times and emerge even stronger and more nimble than before. And finally this week, we announced a number of promotions and one that I'm particularly happy about is that my partner, Bill Baker, has been promoted to President and Chief Operating Officer.

Many of you on this call have gotten to know Bill, and I think this promotion is incredibly well-deserved. Bill is enormously talented and tech savvy, and he's spearheading some of our most important new product and process initiatives while continuing to oversee our branch and contact center operations.

He's been at CURO for over 15 years and really, most importantly, he really embodies the kind of serving leader that we want to attract, retain, and promote as we continue to grow CURO. With that, I will turn it over to Roger.

Thanks, Don and good morning. Consolidated revenue for the fourth quarter of 2020 was $202.1 million, down 33.2% compared to last year's fourth quarter.

U.S. loan balances and revenue decreased 39.2% and 39% respectively year-over-year, primarily due to the impact of COVID and some additional pressure from the run off of the California installment portfolios.

California installment balances finished 2020 at $37.3 million, and we expect the remaining balances to run off in the first half of 2021. Excluding California installment loan balances, U.S.

loan balances finished down $102 million or 30.7% year-over-year but grew $29.4 million from the end of third quarter. Canada loan balances increased 9.2% year-over-year, including a $51.2 million increase in open end balances offset by a $17.7 million decline in single paid balances, primarily from COVID-19 impacts.

Sequential growth in Canada continue to be strong at 13%. Consolidated, adjusted EBITDA came in at 34.3 million, down 33.2 million or 49.2%, as revenue declined from lower loan balances were offset by lower provision for loan loss and cost reductions.

As a result, Q4 adjusted earnings per share was $0.20. Taking this by country, I'll start in Canada where again the year-over-year performance continued to stand out despite COVID headwinds.

In Canada, revenue declined 10.5% compared to the prior year quarter entirely due to lower demand for the single pay product from COVID-19 impacts. Our open-end loan book in Canada increased 28.3% year-over-year, with revenue up 14.1% for the same period.

Net revenue increased 3.4%, largely due to a 326 basis point improvement and a net charge off rate year-over-year. Despite COVID-19 impacts, Canada posted annual adjusted EBITDA of $62.8 million, up 6.7% versus 2019 and exited 2020 with Q4 year-over-year loan growth of 9.2%.

In the U.S., the impact of COVID-19 in the fourth quarter remained more pronounced than in Canada, with revenue down 39% from the prior year and adjusted EBITDA down $35.1 million or 74.2%. In addition to COVID impacts, U.S.

comps were affected by the aforementioned runoff of our California installment loan portfolios. Loss rates in the U.S.

improved 420 basis points year-over-year so even with the sequential loan growth, the loan loss provision was down 47% like for like. The resulting $41.2 million decline in risk adjusted revenue translated to a $35.1 million decline in U.S.

adjusted EBITDA with risk adjusted revenue declines mitigated partially by lower advertising costs and expense management. I'll expand a bit on trends and key drivers for the quarter.

First, demand and loan volume. Page 5 of our supplemental earnings presentation recaps the weekly trends through last week indexed to the weekend on March 7th of last year.

Weekly application volume has returned steadily and loan balances have grown modestly week to week, more so in Canada. We finished January 2021 with loan balances in Canada flat to the end of the year and the U.S.

down modestly from the end of the year, but this was consistent with the same monthly sequential trend for January a year ago. As we moved through the fourth quarter, the percentage of loans originated to new customers increased to an average of 13.6%, up from the 12.5% in the fourth quarter of 2019 and up from 11.5% in the third quarter of 2020.

Second, delinquency and credit trends, Page 6 of our earnings supplement highlights weekly delinquency trends by bucket. As we move through January 2021, delinquency levels have been stable to December generally and through the week ended January 29th, total delinquency levels still remain over 27% better than the comparable period a year ago.

Our fourth quarter consolidated company earned net charge off rate declined 730 basis points year-over-year, with a 326 basis point improvement in Canada and a 420 basis point improvement in the U.S. Third, turning to the provision for loan losses, our allowance coverage rates declined modestly from third quarter of 2020 but we built allowance overall as the provision for loan losses exceeded net charge-offs by 4.8 million for the fourth quarter.

Consolidated allowance coverage was 15.6% at the end of fourth quarter 2020, compared to 16.2% at the end of the third quarter of 2020. The impact of changes in delinquencies and lower net charge-off rates was offset qualitatively in our allowance evaluation by continued high levels of uncertainty for employment trends and expiring unemployment supplements, stimulus and the impact of modifying loans.

Loans modified under our customer care program made up 3.6% of our loan balances at the end of the fourth quarter, which is down from 4.1% at the end of the third quarter of 2020. Fourth, the operating expense reductions.

As discussed on our last two quarterly conference calls, we took actions in mid-March to reduce operating expenses across several major categories, including advertising, variable compensation, a freeze on hiring, suspension of merit increases, and savings from work from home initiatives. Most of those actions remained in effect for all of fourth quarter.

During the fourth quarter, we encourage some discretionary variable compensation costs and some non-recurring spend for long-term strategic planning while otherwise maintaining the COVID-19 cost saving initiatives. On Slide 18 of our investor presentation, we provided outlook for 2021 run rate operating expenses on a quarterly basis as we returned to normalized levels for items like performance-based compensation.

We ended the fourth quarter with $213.3 million in cash and $310.5 million of liquidity, including undrawn capacity on revolving credit facilities. We'll use $85 million of cash when Flexiti closes later this quarter.

Then when the Katapult transaction closes in early second quarter, we estimate we'll receive about $90 million or so of cash net of cash taxes. So about a wash in terms of the resulting cash balances.

As we move through the first half of 2021, we will continue to evaluate the use of the resulting excess cash for corporate purposes ranging from funding regrowth of our loan book, to investing in new and existing organic growth initiatives, to strategic M&A. As Don mentioned, due to continued uncertainties related to COVID-19, including a timeline for full reopening of the markets we serve and impacts from governmental stimulus, we are not in a position to offer 2021 guidance at this point.

However, we expect our operating trends in 2021 to continue to be influenced by the timing and magnitude of governmental stimulus and the duration of the pandemic. U.S.

loan demand moderated in early January, but bounced back slightly over the last couple of weeks, which we attribute to additional U.S. federal stimulus payments in late December and early January.

In other words, about $600 for most eligible people. Canada demand last month was affected by a return to lockdown measures in several major markets, including Ontario.

Because of these factors and expected additional U.S. stimulus measures, loan demand will likely remain constrained in the first half of 2021.

Other variables which could affect the pace of recovery, include the timing and magnitude of U.S. income tax refunds.

Based on fourth quarter net income and strong cash flows our Board of Directors declared quarterly dividend of $0.055 per share to be paid on March 2nd to shareholders of record as of February 16th. This concludes our prepared remarks and we'll now ask the operator to begin Q&A.

Okay, great. Thanks very much.

And congrats guys on strong results and especially to you Bill on the well-deserved promotion. I guess Don and Roger, you guys talked about the cash position, sounds like it's likely to increase during the first half at least of 2021 and Roger, you specifically mentioned a couple of potential uses, but kind of didn't mention kind of debt and equity.

I mean maybe can you guys talk about what you're seeing that makes you think about the uses in the standpoint of opportunities, are there other things out there, I mean, you've done a tremendous amount so far, so maybe you could just talk about that a little bit more, please?

Moshe I will start then Roger can fill in some details. So, we're -- I think we've said we're for a while in terms of strategy, cards, Canada, Katapult.

Honesty Katapult's going to turn into a realization opportunity as opposed to an investment opportunity. But, in both organically and in terms of M&A, when we continue the cards in Canada it is continuing to be interesting to us and we will evaluate opportunities I guess, kind of M&A opportunities if they come about.

So, there's nothing, I don't think there's anything that is sort of imminent from us. I think it's just -- we're just going to keep looking at the market.

And then obviously we've got -- Katapult won't close until probably into the early the second quarter, and Flexiti we've got a good bit of work to do with them in terms of integration and not that there will be a ton of integration, but just help and support them to grow that business. So, don't just -- there is not a lot of specifics to offer right now, other than are -- we'll continue to evaluate stuff as it comes up and hope that we can find some things that fit into our -- both organic growth opportunities and M&A opportunities to fit in with our longer-term strategy.

Okay. And is there anything from the standpoint of looking at your debt that makes sense to do with some of that cash or is that not something you're doing near-term?

I think it's probably -- it's probably something we'll -- once Katapult closes, I think, we'll continue to evaluate that. But probably not something that we'll do much on until into the second quarter to even just sort of evaluating it in a serious way.

Got you. And just as kind of from a big picture standpoint, there's a lot of uncertainty between the risk of near-term shutdowns and the payments of additional stimulus.

I keep thinking that, when you looked at the stimulus payments that were received almost a year ago, clearly the outlook for consumers was incredibly uncertain and while at the moment, it's not certain, is this something -- I mean, how do you think about your customer’s kind of mindset in terms of their willingness to think about borrowing money when that outlook starts to stabilize like -- are we, I mean, is that something that we could expect in 2021 and how do you think about that?

Yeah, so the thing -- I guess the stimulus from -- just caught the April-May stimulus, was it -- it came at a time when I think customers generally were -- our customer were in good shape like for like, they had income tax refunds. So that just sort of if you look kind of through the year on kind of the seasonality, it hit at a time when consumers -- our consumers more typically -- would typically have a bit more liquidity.

So it kind of added to that and at a time when everybody is sort of just kind of stopped and there was no -- the discretionary spending, kind of fell off dramatically, eating out and travel and that kind of stuff. So, I think if you roll that forward to the year-end stimulus, which was much smaller, that obviously came at a time when there was more uncertainty and obviously our customers were, and just consumers in general were just in a different spot in terms of liquidity, and sort of their outlook.

So we felt like that stimulus, the second stimulus kind of burned off, I guess, a bit more quickly. And it wasn't sort of saved and then spent, I think it was more kind of readily expect to catch up on maybe some past few balances.

So, I think looking into 2021, I think depending on the timing of it, and what the payment is, what the eligibility levels are in terms of income, I think you're going to, and where the economy is in terms of reopening, I think it's going to probably tend to look more like the latter stimulus, in terms of the kind of personal balance sheets where we save the personal balance sheets, when people put forward together. Our customer would get us, I guess I'd call it just want a third stimulus payment.

So I think, I don't think anything has -- I think fundamentally, from there we see the jobs recovery, I just have -- just a glance on the jobs support thing and I think the economy is making, kind of taking baby steps forward. But if that thing hold and you start to get the jobs back in retail and restaurants and all the hospitality jobs, I think that points to a pretty good second half.

And I think that the consumers will be back spending and borrowing again. It's just the timing of that.

I think I said in my remarks, it feels like we've been kind of get into the end of the pandemic in a couple of months for the last six months, it just keeps -- feels like it gets kind of pushed down a little bit more. So for now it does feel like the vaccines can really kind of get distributed right then we should see a pretty strong second half.

And I think the borrowing and that will include consumer spending and consumer borrowing across the credit spectrum.

Thank you.

Hey, good morning. Congratulations on navigating a turbulent year and let me add my congratulations to Bill on the promotion.

Start off in the U.S. I think, both Don and Roger talked about tax refunds, but can you give us a sense for the outlook, I know you mentioned they'd be, delayed but give us a sense for timing and potentially the magnitude, and if there's going to be any impacts on tax refunds as a result of all the stimulus from 2020?

Good morning Kyle, it's Bill. Thank you for the kind words there.

I think that's one of the -- as Don mentioned, that's one of the uncertainties we're trying to plot. I mean, there's obviously a delay in when people can file for their tax refunds, but I think the bigger question is how it impacts when the earned income credit refunds are released.

As has been the case in previous years and although you could file at the end of January, typically those refunds were not released until late February due to the IRS reviewing them there historically has been a higher amount of fraud with those. So reviews go to the IRS [indiscernible] holding those, and essentially releasing them all at once.

So the question is if you can file now mid-February instead of at the end of January, how long would they hold those? And we continued to ask the questions and stay close to tax preparation companies and look for guidance from the IRS.

But I don't think we've seen anything to date, but if you just sort of run the calendar out it seems like having earned income credit refunds released in mid-March could be a likely outcome. As far as the impact, I think -- I don't know how much the stimulus really impacts that.

It's really more of a question of employment and the people weren't working, how does that factor into their refund. But I don't think that there's an impact to the earned income credit.

And I think just the point sort of complicates it is, if that is the timing of tax refunds for our customer mid-March, does that coincide with another stimulus payment. And then what that does to demand over a number of months because if a customer gets a $4,000 or $5,000 tax refund and then gets a $2,200 direct payment, obviously that's going to depress loan demand for some time, even if the economy is recovering and people are getting back to work.

So just one of the things that we're staying really close to.

I appreciate that, a lot of moving parts there. And then shifting to Canada, excuse my ignorance here, but is there any talk of incremental stimulus in Canada?

I know you mentioned that their economy has recovered faster than ours, but anything potentially on the horizon there?

Hey, Kyle it's Don. So I think there's the -- I haven’t done by exact timing, but they did a kind of a follow-up around as well in 4Q.

It was -- in general Canada has a more just kind of call it, the standing social safety net is a bit more, there's a bit more there for consumers, there's a lot of supplements kind of by province for child care, etcetera. So, I think that that was kind of in place and that's part of what helped I think additionally, just kind of doing a better job managing the COVID cases that kind of the standing social safety net help supplemented by this, I think it's called the SERB [ph].

So, there was, I think a little bit of talk about further stimulus there. I think part of it is that if you look on a relative basis they are going to go down a rabbit hole here, but Canada has done a much better job certainly from cases -- for per capita cases standpoint and hospitalizations, etcetera.

But if you look at vaccinations, there are I think about kind of 2% versus 8% or 9% in the U.S. So they're good bit behind us in terms of vaccinations and there is a lot of -- sort of it started with the political sort of finger pointing and starting in that may give rise to some additional stimulus.

But the additional stimulus there as an increase over kind of what the standing net say, social safety net provided is much less than what you -- than what we've seen on a relative basis in the U.S. relative to what the standing safety net against consumers.

Got it, very helpful. And, one last one from me just on the Flexiti business, I guess I'd ask, what is the most comparable business that we'd look at in the U.S., is it kind of a synchrony, an after pay, an affirm, or is Flexiti really a combination of all three of those?

And then a follow-up there would be, would it be possible to integrate kind of a Katapult product on that platform or is there one already there?

Hey, Kyle I guess, the short answer would be, it probably is a bit of a combination. I think, as the business is currently structured and if you look at the product mix now, it's probably closest to a synchrony.

But the growth on the -- which is kind of in six months, no payments, interest free for six months and then it kicks into a, it is not paid off an interest bearing obligation, as a percentage of the total pie there. But if you look at the -- where the mix shift is happening, it's to more of a pay over time or buy now pay later, paying for equal installments product.

So in terms of a Katapult type opportunity, the RTO product there are versions of it in Canada that's something -- some at the retail level. We think that it's simple that the line of credit product -- a line of credit product structure from a credit standpoint to be offered to non-prime consumers, is probably the better option there.

Because it's built on existing platform that Flexiti has a line of credit platform now. We obviously offer a line of credit in Canada, so probably it will look more like a line of credit product, offered to non-prime consumers as opposed to an LTO product.

Got it, very helpful. Thanks for answering my questions.

Okay. Thanks.

Good morning guys. Bill, congratulations on the promotion.

And I wanted to follow-up with you because, Kyle stole my question on the tax season. But one other aspect I just wanted to get your input on.

Obviously you talked about possibly delaying an earned income tax credits and how that would foot up with someone potentially getting their refund. But what about if refunds are different, are you tracking anything related to people not withholding enough money for the federal unemployment benefits that they received, and whether or not your customer can see a shift in their average refund, putting aside for a second the potential for stimulus payments?

Yeah, John it's not really something that we track. Certainly not quantitatively or qualitatively we can review W2's or pay stubs.

But at the end of the day, because the majority of their refund comes through earned income credit, we're not tax advisors or tax specialists. So we don't delve too far into that.

I don't expect a major shift in that arena. I think the bigger question is timing.

The one thing I should've mentioned with the previous question is, what can happen between now and tax refund season, because typically you would see balances pay off and paid out because of refunds. But if that's truly mid-March, it does potentially create an opportunity to grow loan balances between now and then.

It seems unlikely we would actually see a direct payment to customers in February. So what happens in the next few weeks.

I mean, as Don mentioned, we saw the last stimulus we believe burn off pretty quickly and there's been a number of articles about pretty high percentage of renters in the U.S. being behind on rent.

We've worked with trans union, a bit on some macro data, and everything that we look at it looks like that that stimulus went away pretty quickly. And so, there could be an opportunity to grow the book between now and when tax refund season happens and/or another round of stimulus.

And just to follow-up on the timing too. Hasn't there always been kind of a, I want to say a long-standing understanding, but some notion that the later the refunds come the less seasonal pay down consumer lenders see from the refunds, I'm trying to refresh my memory, but that had always, if I'm not mistaken, that was kind of the working assumption that a lot of people would use?

You know, I think it's difficult to tell because the biggest change that we noticed is when they started to hold all of the earned income credit refunds. So you really -- tax season, which for us used to be four to six weeks, now it is typically eight days or something like that.

I mean, it's very, very much compressed because you have all of those refunds going out at one time. Whereas, a number of years ago the refunds would start flowing in late January and go through early to mid-March and that has just been compressed.

So I don't know that we've seen as big of an impact on what you mentioned other than what we cited, which is a real compression, and it happens very quickly. And then it also, the pay downs happen, quickly as well, but you do start to -- it does start to normalize.

Okay. And then, thanks for your answer.

Then, Roger just wanted to -- a couple of questions on the slide in your investor presentation on the Katapult deal. Obviously right now with the FinServ stock at $17 a share, I assume that that is more than enough for you to earn those additional 3 million earn-out chairs, is that correct?

Correct.

And then if given how strong FinServ stock has performed, you have basically two SPAC holder redemption assumptions. I'm going to go ahead and assume that if the stock stays where it is the working assumption would be that the redemptions will be on the low end of that.

Is that -- you obviously can't tell me what redemptions are going to be, no one will know, but I assume that the impetus here is for those shareholders to not redeem?

I mean, based on our -- based on our understanding of everything, that is a predictor of redemptions, everything that's gone on so far would predict very low -- would predict low redemptions.

Okay, alright. Thank you.

Thank you and good morning. Congratulations President Baker, really great to see the promotion.

Thank you.

Just I guess, obviously there's a lot of difficulty predicting the next several quarters. I mean, I guess if you look at the first quarter, you're probably going to have revenue down a little bit of it but credit -- I mean credit probably is going to remain really strong I guess if you have -- I don't want to get too much into some longer-term questions, but it's trying to be like in the ballpark on the first quarter and think that you would expect with the redemption and the additional cash, you're not seeing anything on the credit side that would cause something unusual, in the move and the credit losses?

Yeah. I mean, hey, it's Roger, good morning Bob.

If you look at Page 6 of our investor presentation, we've updated delinquency terms through the end of January last week. And we actually -- they've actually improved.

So, again for Q1, I don't want to -- I always kind of kind of smile when I say it, but we have a 90-day charge-off policy generally. So, for Q1 we're a third of the way through Q1 at this point.

So, but I think that -- but, I think that it points to that direction for all the first half.

So revenues will be down south, right -- so revenues will be down some in the first quarter then -- I mean, I think the world's seen and assuming the world goes the way it looks, a lot of people are thinking, vaccines are getting out, cases are coming down. The world starts to get kind of back to normal by the third quarter or close to normal and probably not fully normal till 2022.

I mean, what really matters here is the earnings power of the company long-term, 2022 earnings power, the Flexiti deal, the cash that we have, we have a strong balance sheet, so there's no questions. The only issues I guess are, the growth rate and the margins of the company as we think about 2022, 2023 and any regulatory with a change in administration are you seeing anything concerning, I mean, obviously the CFPB went through a lot with under the Obama administration, but I'm sure they'll look for things and there's always pressure, but what are you concerned about most on the regulatory side that could change the long-term view of your business?

Hey Bob it's Don. There were a couple of questions in there I think there more than a couple, but I guess lately the sort of the last maybe part of the question first, on CFPB.

To your point, we did manage the business quite successfully through an Obama CFPB. We've invested a ton in terms of our compliance and risk management areas in the business.

There's a lot of much more sophisticated call it kind reg tech -- technologies that we can use to help better identify and manage risk. So I think, I feel good about our ability to manage the business and have decent working relationships with federal regulators to kind of we have a lot of at the state level as well.

So how that all plays out and the timing of it all remains to be seen, but it's certainly not something that and obviously we didn't -- we don't run the business hoping that certain politicians win certain elections, I mean we've got to look -- we've got a longer term kind of view and mandate than that. So, in terms of the rest of it I think to your point, it's just that it seems like we've been in this rolling a little bit better by -- it was going to be the end of the year in 2020.

I don’t know maybe end of the first quarter, end of the second quarter, have a normal summer. And it's just seems like it keeps getting stretched out.

But I think from a competitive standpoint, we feel great about where we are. From a resources standpoint, and sort of people, processes, technologies, and capital we feel great about where we are.

We know that the longer this thing drags on, the more strain it puts on companies that just don't have the liquidity and the balance sheet strength that we have. And we're not alone in that, there are other companies in the sector that are well capitalized, and are kind of poised to grow their business.

And we also know that, so this is for me, I've said this before, this is kind of I've been running a business in this consumer finance, this'll be downturn number four. And we know that -- I don't -- we don't see anything changing the way consumers spend and borrow coming out of this downturn.

Obviously the timing and the scale and the scope, etcetera, this is a different one in some respects, but it does have some as it's been dragging on a little bit, we sort of thought maybe on it would be shorter and sharper. But it just kind of dragged on and starting to look more like the last downturn, the 2007, 2008, 2009.

And I think our business and a lot of businesses that our sector did, did quite well in 2010, 2011 and 2012 as consumers returned to spending, regular spending and borrowing patterns and credit remained very good and competition was much more muted because a lot of companies simply couldn't -- didn't survive the financial crisis either at all or certainly in the same shape that they were in going into it.

Any thoughts on the long-term returns of your business and the growth rate as the world gets back to normal whenever that is?

Yeah, it's just hard to say right now. I think the -- as we -- like part of it is just sort of projecting what the world's going to look like.

And then secondly, obviously we've added Flexiti to the mix and we've actually got a lot of both sort of organic growth opportunities and potentially further use of our cash and liquidity to do more M&A. So looking at exactly what the business mix looks like coming out of COVID is a hard one to predict right now.

Great, okay. Thank you.

And yeah, I mean, Katapult, congratulations on that investment in knock on wood, I know you added, I know that CURO was very involved in bringing that organization together and positioning it for the success that seems to be having, and it's an incredible return?

Thanks, thank you Bob.

Hey, thanks. Good morning guys.

And thanks for taking my question. Most of it has been already asked and answered, but maybe just a few follow-ups.

So, you talked a little bit about -- mentioned M&A a couple of times already, and you've shown us great success with a Katapult and monetizing that. And then there's Flexiti acquisition.

I mean, it's nice to see impressive acquisition that's under -- anywhere under 10 times revenues considering where the other guys are trading at. But, when you think about generating a lot of excess cash, you now have this history of incubating businesses, is there -- how's the rest of the potential M&A pipeline, and anything else that you might see out there that might be interesting to incubate?

Yeah. Hey, Vincent it is Don.

You know it is just, I think I said earlier, we are strategic with cards and Canada continues to be interesting, and more broadly we shouldn't -- if consumers are accessing credit through direct to consumer, both retail and online for point of sale and through cards, we want to have revenue and earnings and growth drivers and investments in all three of those verticals in both the U.S. and Canada.

So if you look at kind of a like a six box matrix there, that's strategically where we're sort of positioning the business over the long haul. So, opportunities that fit in those boxes and those are pretty broad and you're catching pretty much every way in which consumers use credit.

But within that, there's a whole bunch of different you can look at that, you can also sort of segment that in terms of near prime and non-prime, and call it underbanked. And so, there's a range of opportunities from a credit standpoint as well.

So you can blow that box up and matrix up and have it look pretty big. So, but generally speaking within that, near prime, non-prime across those three verticals is where we're looking at opportunities.

So it's hard to sort of say exactly, what's going to come about, what things will look like in terms of values and innovation opportunities, etcetera. So, we're just have to -- I think we have to sort of remain opportunistic and willing to kind of move quickly to evaluate opportunities.

But there's also a lot of organic opportunities that we're beginning to invest in more heavily as well, so...

Okay, great. And actually that's a good segue into my next question, which is, I was just wanting to get some more detail about the technology dollars you've planned to invest in for 2021.

You've had fewer assets, good experience developing new products organically, and Bill's been really helpful with that. So is there organic products or development that you're thinking of growing any new products that you think might be interesting and then now that you have Flexiti in Canada, is there something where can that experience be brought over to the U.S.

as well, where you might get into buy now pay later in the U.S.?

Hi Vincent, it's Bill. Thank you.

I think on Flexiti we're really focused on supporting them today in Canada with our current business and their current merchant partners. We've done a lot of work on the addressable market up there.

We think that there's a tremendous opportunity right in front of us. I think the focus will remain with them, just with the business that they have and that we feel they can go win in the near-term.

I think as far as other organic products, we're absolutely interested and working currently on some opportunities on our own platform with the notion that even if we would do M&A, it would just make us that much more educated and a better buyer. But to sit on the sidelines and depend on it, I mean it was not something we wanted to do.

So we're really working those two opportunities in tandem. And like I said, to the extent that we evaluate other businesses, we feel like we can ask better questions and do more diligence and ultimately make a better decision.

All the while if that doesn't pan out, we've got a really nice jumpstart on some of these new opportunities.

Okay. Very helpful.

Thanks so much.

Okay, great. Thanks everybody for joining us again.

There were two calls this week, so appreciate all of your time and attention and we look forward to talking to you after we complete our first quarter. Thanks very much.