CURO Group Holdings Corp (CURO) 2023 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the CURO Q2 2023 Conference Call. (Operator Instructions) This call is being recorded on Thursday, August 3, 2023. I would now like to turn the conference over to Nick Panarese. Please go ahead.

早安，女士們、先生們，歡迎參加 CURO 2023 年第二季電話會議。 （操作員說明）此電話於 2023 年 8 月 3 日星期四進行錄音。我現在想將會議轉交給 Nick Panarese。請繼續。

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.

謝謝大家，大家早安。 CURO 在今天開市前發布了 2023 年第二季業績，該業績以及補充資訊可在我們的投資者網站 ir.curo.com 上取得。今天與我在一起的有 CURO 執行長 Doug Clark；財務長伊茲‧達伍德 (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 10-Q and Form 10-K 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.

今天的討論將包含基於我們目前所看到的商業環境的前瞻性陳述。因此，它包含某些重要的風險和不確定性。請參閱我們今天早上發布的新聞稿以及表格 10-Q 和表格 10-K，以了解可能導致我們的實際結果與今天討論中描述的事項存在重大差異的具體風險因素的更多資​​訊。本次電話會議中所做的任何前瞻性陳述均基於截至目前的假設，我們不承擔因新資訊或未來事件而更新或修改這些陳述的義務。

In addition to U.S. 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.

除了美國公認會計準則報告之外，我們還在補充資料中提供了某些不符合公認會計原則的財務指標。我們相信這些非公認會計原則衡量標準可以增強對我們績效的了解。這些 GAAP 和非 GAAP 指標之間的調整包含在補充資料的附錄中。有了這個，我想把電話轉給道格。

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.

謝謝，尼克。大家早安，感謝您今天加入我們。在第二季度，我們繼續執行第一季概述的業務計劃。我們的核心基本面、應收帳款、收入、淨沖銷和營運費用比我們之前第二季的預期更有利。這是因為我們專注於負責任的成長、維持信貸品質、收緊營運費用並啟動某些行銷計劃。

On Slide 3 of the earnings presentation, you can see some of these accomplishments from the quarter. While we remain 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.

在收益簡報的投影片 3 中，您可以看到本季取得的一些成就。儘管我們仍然嚴格控制貸款發放，但鑑於宏觀環境仍然不確定，我們已開始將 5 月底籌集的資金投入使用。在通常季節性放緩的季度，我們的應收帳款環比增長了 4%。

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.

我們還在多項營運措施上取得了重大進展，包括技術基礎設施的持續現代化，其中包括過渡到雲端以及將我們的美國分支機構轉換為單一貸款管理系統，我們預計將於 2023 年末完成。

We also pursued continued enhancements of the digital customer experience and introduce improvements to our credit risk capabilities. These initiatives will allow us to refine our focus on responsible growth in our direct lending business.

我們也不斷增強數位客戶體驗，並改善我們的信用風險能力。這些舉措將使我們能夠更加專注於直接貸款業務的負責任成長。

As reflected in the press release, we have reached an agreement to sell our Flexiti business for approximately CAD 55 million, which we believe is the best option for our company. Our consolidated results this quarter included a full quarter of Flexiti in Q3 will also include partial results, and we anticipate Q4, our consolidated financial results will no longer include Flexiti.

正如新聞稿中所反映的，我們已達成協議，以約 5500 萬加元的價格出售我們的 Flexiti 業務，我們認為這對我們公司來說是最佳選擇。我們本季的綜合業績包括了 Flexiti 的完整季度業績，第三季度也將包括部分業績，並且我們預計第四季度，我們的綜合財務業績將不再包括 Flexiti。

Turning to Slide 4. 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 continued to improve the overall risk profile of our U.S. portfolio through these efforts.

轉向投影片 4。本季末，我們的應收貸款總額超過 21 億美元，比上一季成長 4%。我們將繼續平衡穩定的需求與負責任的成長，特別是隨著我們在第三季逐步增加行銷。在美國，我們將成長計畫的重點放在接近優質的大額貸款和擔保貸款投資組合上，同時透過這些努力繼續改善我們美國投資組合的整體風險狀況。

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.

在加拿大的直接貸款業務中，我們也看到新客戶和現有客戶對開放式產品的強勁需求。我們的美國貸款管理系統轉換將使用單一平台簡化美國分行營運的管理，並將創建一個更穩定的營運平台，從而能夠快速部署系統增強功能。這一轉變也將使我們能夠將我們的營運模式擴展到針對美國所有分支機構的小額和大額貸款的整體貸款方法，這將提高效率、促進成長並改善服務。

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 derisk and simplify the predictability of our business results.

我們繼續致力於在美國和加拿大推出新的擔保貸款產品，例如我們預計今年稍後推出的汽車擔保產品。這些產品應該使我們能夠降低整體信用風險，同時增加我們與有擔保客戶的平均餘額。除了增加擔保貸款外，我們仍致力於增加餘額較大和期限較長的產品組合，這將繼續降低風險並簡化我們業務成果的可預測性。

Despite the ongoing macroeconomic uncertainty in the U.S. 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.

儘管美國和加拿大的宏觀經濟持續存在不確定性，但我們的消費者在需求和信貸表現方面仍然保持相對較好的勢頭。雖然我們沒有看到意外的消費者壓力，但我們的團隊不斷監控我們的客戶數據以及整個行業的趨勢，以確保我們領先於任何潛在的負面結果。

As a reminder, our direct lending portfolio was split between the U.S. and Canada, each of which are impacted by different macroeconomic factors.

提醒一下，我們的直接貸款投資組合分為美國和加拿大，每個國家都受到不同宏觀經濟因素的影響。

Turning to Slide 5. Our credit quality continues to improve, driven by tightening in underwriting we began in 2022, along with the positive impact from the enhancements to our customer servicing capabilities. Excluding the change in charge-off 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.

轉向投影片 5。在我們於 2022 年開始收緊核保的推動下，以及我們客戶服務能力增強的正面影響，我們的信用品質持續改善。剔除我們上季直接貸款業務核銷政策的變化，淨核銷率提高了270個基點，顯示美國和加拿大都有所改善。

Moving to Slide 6, you can see the delinquency trends also remained consistent with the prior quarter.

轉到投影片 6，您可以看到拖欠趨勢也與上一季保持一致。

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.

總而言之，今年上半年，我們在卓越執行、加強基礎和負責任成長方面取得了有意義的進展。我們對美國和加拿大的成長機會感到鼓舞。我現在將把它交給 Izzy，向您提供有關我們第二季度結果的更多詳細信息，然後我將提出一些最終想法。

Thanks, Doug, and good morning, everyone. As Doug highlighted, we maintained positive momentum in Q2, evidenced by solid core results that were more favorable than our expectations. Second quarter gross loan receivables of $2.14 billion were slightly above both the prior quarter and the high end of our guidance, but they remain below year-end 2022.

謝謝，道格，大家早安。正如道格所強調的那樣，我們在第二季度保持了積極的勢頭，比我們預期更有利的堅實核心業績證明了這一點。第二季應收貸款總額為 21.4 億美元，略高於上一季和我們指引的上限，但仍低於 2022 年底的水準。

Slide 8 of the earnings presentation shows summary of results for the quarter. Revenue of $209 million was flat sequentially, but towards the higher end of our expectations. The flat quarter-over-quarter results were driven mainly by continued execution of our strategy to migrate towards longer-term and lower-risk products.

收益報告的幻燈片 8 顯示了本季的業績摘要。營收為 2.09 億美元，與上一季持平，但接近我們預期的較高端。季度業績持平的主要原因是我們繼續執行向長期和低風險產品遷移的策略。

Our net interest margin post charge-offs, a key indicator of our risk-adjusted return on our assets was flat versus prior quarter at 14%, excluding the impact of the change in charge-off policy during Q1.

我們的沖銷後淨利差是我們風險調整後資產報酬率的關鍵指標，與上一季持平，為 14%，不包括第一季沖銷政策變化的影響。

Net revenue post provision expense was $130 million plus $146 million in the prior quarter, primarily driven by a higher provision for loan loss expense due to a catch-up in provisions as Q1 2023 was artificially lower due to changes in direct lending charge-off policies. Our pretax loss post provision was $57 million or $48 million, excluding $9 million in debt modification fees.

淨收入計提撥備費用為1.3 億美元，加上上一季的1.46 億美元，主要是由於直接貸款沖銷政策變化導致2023 年第一季的撥備追趕導致貸款損失撥備增加，導致貸款損失撥備增加。 。我們的撥備後稅前虧損為 5,700 萬美元或 4,800 萬美元，不包括 900 萬美元的債務修改費用。

Interest expense continued to be impacted by rising benchmark rates as well as higher debt levels, increasing to $66 million from $59 million sequentially. Reported operating expenses of $108 million decreased 8% sequentially from $118 million. Excluding a $10 million onetime restructuring charge recognized in Q1 '23, operating expenses were flat sequentially despite the impact of our annual merit increase, inflationary pressure on wages, increased originations and servicing costs due to loan growth and higher expenses from system conversions in Q2. Our operating expense ratio improved to 21% from 23% sequentially. Other expenses of $12 million primarily represent debt modification expenses and miscellaneous expenses related to the sale of our legacy U.S. direct lending business and catapult losses.

利息支出持續受到基準利率上升和債務水準上升的影響，從上一季的 5,900 萬美元增加到 6,600 萬美元。報告的營運費用為 1.08 億美元，較上一季的 1.18 億美元下降 8%。除去23 年第一季確認的1,000 萬美元一次性重組費用，儘管受到年度績效成長、薪資通膨壓力、貸款成長導致的發起和服務成本增加以及第二季系統轉換費用增加的影響，營運費用仍與上一季持平。我們的營業費用率從上一季的 23% 提高到 21%。 1,200 萬美元的其他費用主要包括債務修改費用以及與出售我們遺留的美國直接貸款業務和彈射器損失相關的雜項費用。

Net charge-offs of $68 million increased sequentially from $59 million and our reported net charge-off rate was 13% versus 11.5% sequentially. On a normalized basis, charge-offs decreased by 214 basis points. We remain optimistic that our focus on responsible asset growth and the actions we have taken on collections should continue to drive relatively stable credit quality.

淨沖銷額從 5,900 萬美元增加到 6,800 萬美元，我們報告的淨沖銷率為 13%，而上一季的淨沖銷率為 11.5%。在標準化基礎上，核銷減少了 214 個基點。我們仍然樂觀地認為，我們對負責任資產成長的關注以及我們在催收方面採取的行動將繼續推動相對穩定的信貸品質。

Net loss for the quarter was $59.3 million or $1.45 per diluted share. Pre-provision net income remained relatively flat at $23 million this quarter.

本季淨虧損為 5,930 萬美元，或攤薄後每股虧損 1.45 美元。本季撥備前淨利保持相對平穩，為 2,300 萬美元。

Turning to our segment results on Slide 9. If you recall, last quarter, we realigned our external presentation to match how we manage our direct lending business. We combined our U.S. direct lending and Canada direct lending into one direct lending segment and also remove the reporting of adjusted net income, essentially providing performance detail by geography. This simplifies the process of modeling the company going forward.

轉向幻燈片 9 上的部門業績。如果您還記得，上個季度，我們重新調整了外部演示文稿，以匹配我們管理直接貸款業務的方式。我們將美國直接貸款和加拿大直接貸款合併為一個直接貸款部分，並刪除了調整後淨收入的報告，本質上是按地理位置提供業績詳細資訊。這簡化了公司未來的建模過程。

On Slide 10, you can see more detail on our allowance. There was no significant change in allowance as a percent of gross loans since adopting CECL last quarter. The $13 million increase in dollar allowance was primarily driven by Canada point-of-sale loan growth and the updated Fed forecast for unemployment in the CECL model.

在投影片 10 上，您可以看到有關我們津貼的更多詳細資訊。自從上季採用 CECL 以來，準備金佔貸款總額的百分比並沒有發生重大變化。美元津貼增加 1300 萬美元主要是由於加拿大銷售點貸款成長以及聯準會在 CECL 模型中更新的失業率預測。

Turning to Slide 11. Net interest income increased sequentially and net interest margin remained stable versus prior quarter when excluding the change in the charge-off policy for Q1, even as interest expense increased sequentially.

轉向幻燈片 11。在排除第一季沖銷政策變化的情況下，淨利息收入環比增長，淨息差與上一季相比保持穩定，儘管利息支出環比增加。

Let's turn to Slide 12 and go through a bit more detail on operating expenses. On the left side of the page, you can see that during Q2, our consolidated operating expenses on a reported basis continue to improve to $108 million from $118 million sequentially. Excluding the impact of restructuring expenses in Q1, expenses were flat sequentially and below our expectations, partially driven by delayed advertising and marketing expenses as we are finishing our branch conversions. However, we expect to increase advertising and marketing expenses in Q3.

讓我們轉向投影片 12，詳細了解營運費用。在頁面左側，您可以看到在第二季度，我們報告的綜合營運費用繼續從上一季的 1.18 億美元增加到 1.08 億美元。排除第一季重組費用的影響，費用環比持平，低於我們的預期，部分原因是我們正在完成分公司轉換，導致廣告和行銷費用延遲。然而，我們預計第三季的廣告和行銷費用將增加。

On the right-hand side of the page, you can see our operating expense ratio trends by our 2 businesses. Similar to last quarter, our operating expense ratio in direct lending continued to improve though we had a modest uptick in our Canada point-of-sale business.

在頁面右側，您可以看到我們 2 項業務的營業費用率趨勢。與上季類似，儘管我們的加拿大銷售點業務略有上升，但我們的直接貸款營運費用率持續改善。

As we have highlighted before, one of our key priorities is to improve operating efficiency over the long-term by driving scale and continued expense management, which allows us to invest in branch conversions and other efficiency efforts.

正如我們之前所強調的，我們的關鍵優先事項之一是透過推動規模和持續的費用管理來提高長期營運效率，這使我們能夠投資於分支機構轉換和其他效率工作。

On Slide 13, you can see our leverage and liquidity summary. On the left-hand side, net leverage increased in Q2 due to additional liquidity and capital raise in May 2023 and our interest coverage ratio ticked down slightly. On the right-hand side of the slide, total cash and capacity also improved.

在投影片 13 上，您可以看到我們的槓桿率和流動性摘要。在左側，由於 2023 年 5 月的額外流動性和融資，第二季的淨槓桿率增加，而且我們的利息覆蓋率略有下降。在幻燈片的右側，總現金和產能也有所改善。

Lastly, moving to our outlook for the second quarter on Slide 14. For Q3 2023, we expect receivables to be in the range of $2.15 billion to $2.25 billion and for revenue to be in the range of $210 million to $220 million. Net charge-offs are expected to be between 12.5% and 15.5%. Our operating expense is expected to be in the range of $108 million to $118 million on a reported basis.

最後，轉向投影片14 對第二季度的展望。對於2023 年第三季度，我們預計應收帳款將在21.5 億美元至22.5 億美元之間，營收將在2.1 億美元至2.2 億美元之間。淨沖銷預計在 12.5% 至 15.5% 之間。根據報告，我們的營運費用預計在 1.08 億美元至 1.18 億美元之間。

With that, I will turn it back over to Doug for some final comments.

至此，我將把它轉回道格以徵求一些最終意見。

Thanks, Izzy. The CURO team continued to execute our strategy during Q2, and I remain very enthusiastic about our long-term opportunity. With overall consumer credit performance in line with our expectations, we do have the confidence to continue to move forward with responsible growth. With that, I would like to open up the call for Q&A. Operator?

謝謝，伊茲。 CURO 團隊在第二季度繼續執行我們的策略，我仍然對我們的長期機會充滿熱情。由於整體消費信貸表現符合我們的預期，我們確實有信心繼續以負責任的成長方式前進。至此，我想開始問答環節。操作員？

John, are you on the line?

約翰，你在線嗎？

Yes. Can you guys hear me?

是的。你們聽得到我說話嗎？

(technical difficulty)

（技術難度）

They should able hear you now. Just one moment.

他們現在應該可以聽到你的聲音了。只是一個瞬間。

The line was disconnected. I'm going to get back in touch with the host, just bear with me.

線路已斷開。我會再聯絡房東，請耐心等待。

Operator, yes, it's the CURO team, ready for Q&A.

接線員，是的，是 CURO 團隊，準備好進行問答。

Congrats on the strategic results for Flexiti. I guess one question is, you guys are growing. Despite seasonality, the portfolio grew. Maybe where are you getting new customers? And any characteristics around customer acquisition costs or that type of customers you're getting?

恭喜 Flexiti 取得策略成果。我想一個問題是，你們正在成長。儘管存在季節性，但投資組合仍在增長。也許您從哪裡獲得新客戶？客戶獲取成本或您獲得的客戶類型有何特徵？

John, we grew pretty modestly really for the U.S. direct lending business. Now I'm not going to exclude Flexiti. Most of our -- if you look at the growth segments, Flexiti grew I think $50-some million last quarter, while the direct lending grew about $18 million. We are just now starting to ease back into the marketing program. So most of that growth is pure organic growth of either graduating customers or customers tapping in existing credit capabilities.

約翰，我們在美國直接貸款業務方面的成長確實相當有限。現在我不會排除 Flexiti。我們的大部分業務——如果你看看成長部分，我認為 Flexiti 上個季度增長了 5000 萬美元，而直接貸款增長了約 1800 萬美元。我們現在才剛開始放鬆行銷計劃。因此，大部分成長是即將畢業的客戶或利用現有信貸能力的客戶的純粹有機成長。

So in Q3, again, we'll start easing it back into the marketing programs that we have that align to our kind of credit risk appetite.

因此，在第三季度，我們將再次開始將其放回我們現有的符合我們信用風險偏好的行銷計劃中。

Okay. So it's just -- it sounds more organic at this point. And then maybe I think you guys gave some longer-term balance sheet leverage goals now that you're in the process of selling Flexiti, you're going to get a little liquidity from that. How do we think about balance sheet leverage into the later part of this year?

好的。所以現在聽起來比較有機。然後，也許我認為你們現在正在出售 Flexiti，因此給出了一些長期資產負債表槓桿目標，你們將從中獲得一些流動性。我們如何看待今年下半年的資產負債表槓桿？

John, it's Izzy. I'll take that question. Yes, effectively, as part of what we discussed in the capital raise in May and the Flexiti solution. Once it closes, that gives us the amount of capital and our liquidity to basically get us to profitability and then eventually us covering our recourse interest as well. So how the math works out is -- after all the tangible book value adjustments as Flexiti has grown balances and stuff, we expect to net about USD 50 million to USD 60 million in proceeds from the Flexiti sale, net-net, when it's closed. And that gives us the run rate to grow the balance sheet, to add what we call the right leverage. And then basically slowly work our way into profitability. You've seen it like in every quarter, we've made improvements and we expect that trajectory to continue.

約翰，我是伊茲。我來回答這個問題。是的，實際上，這是我們在 5 月的融資和 Flexiti 解決方案中討論的內容的一部分。一旦關閉，我們就會獲得足夠的資本和流動性，基本上可以讓我們獲利，最終我們也可以涵蓋我們的追索權利息。因此，計算結果是——隨著 Flexiti 增加餘額等而進行所有有形賬面價值調整後，我們預計在 Flexiti 銷售結束時，我們將獲得約 5000 萬至 6000 萬美元的淨收益（淨淨收益） 。這給了我們擴大資產負債表的運行速度，增加我們所謂的正確槓桿。然後基本上慢慢地實現盈利。你在每個季度都看到了這一點，我們已經做出了改進，我們預計這種軌跡將繼續下去。

Our overall goal still is, if you look at -- I think it's in the appendix, to hit that direct lending NIM net charge-offs of 26% to 31%, OpEx net 26% to 30%. And we've talked about this in the past, I think John with you and others. The magic number roughly is about $1.5 billion in assets. And we're very, very careful how we get there because just rushing to get there, we don't -- want to make sure we don't take on undue risk that doesn't give us the right risk-adjusted returns.

我們的總體目標仍然是，如果你看一下——我認為它在附錄中，達到直接貸款淨利差淨沖銷 26% 到 31%，營運支出淨沖銷 26% 到 30%。我們過去已經討論過這個問題，我想約翰也和你以及其他人討論過。這個神奇的數字大約是 15 億美元的資產。我們非常非常小心如何到達那裡，因為只是急於到達那裡，我們不想確保我們不會承擔不適當的風險，而這不會為我們帶來正確的風險調整回報。

So no, it's basically still -- not still, but it's on the path to our execution to get to the right point where hopefully, not 3 to 4 years, we can refinance the debt we have.

所以不，它基本上是靜止的——不是靜止的，但它正在我們的執行之路上，以達到正確的點，希望不是三到四年，我們可以為我們的債務再融資。

Okay. Super helpful in terms of the prework there. And then just -- I mean, you guys talked about the delinquencies, looks like they're stable, if not improving. I mean, you tightened credit. I mean, Izzy, you just even referred to some of your expectations there a bit. I mean, anything to shout out there? Or does it just feel like the consumer is kind of stabilizing as we kind of are deep into this inflation and interest rate cycle and not much to -- maybe not much to focus on and not much to variability for the near-term in terms of credit from your perspective?

好的。對於那裡的準備工作非常有幫助。然後--我的意思是，你們談到了拖欠問題，看起來即使沒有改善，也很穩定。我的意思是，你們收緊了信貸。我的意思是，Izzy，你甚至提到了你的一些期望。我的意思是，有什麼可以大聲喊出來的嗎？或者只是感覺消費者正在趨於穩定，因為我們已經深入到了通膨和利率週期之中，而且短期內可能沒有太多值得關注的變化，也沒有太多變化從你的角度來看信用？

Yes, John, this is Doug again. Yes, I think you're exactly right. I think we're seeing a very stabilized credit environment. Obviously, we took a lot of actions last year that are coming through in the numbers today. But as we sit here today, we're not seeing any unusual stress on the consumer. Demand remains solid. This -- our consumer isn't necessarily the headline consumer that you're seeing as far as the tech layoffs, et cetera, as you know. So we're not seeing anything unusual right now, but obviously, we can always closely monitor it and look at it on a regular basis.

是的，約翰，這又是道格。是的，我認為你是完全正確的。我認為我們正在看到一個非常穩定的信貸環境。顯然，我們去年採取了許多行動，這些行動今天都得到了體現。但當我們今天坐在這裡時，我們並沒有看到消費者面臨任何不尋常的壓力。需求依然強勁。如您所知，就技術裁員等而言，我們的消費者不一定是您所看到的主要消費者。因此，我們現在沒有看到任何異常情況，但顯然，我們始終可以密切監視並定期查看它。

Your next question comes from Vincent Caintic from Stephens.

您的下一個問題來自史蒂芬斯的文森特凱恩蒂克。

Good core results this quarter. It was also good to see the Flexiti sale executed. And so I was wondering in a broad question. Is there any other transition items or large strategic items that you think needs to get done from here in terms of strategic or business reviews or balance sheet changes or anything like that? Or are we -- or are we kind of set steady state going forward?

本季核心業績良好。很高興看到 Flexiti 銷售得以執行。所以我想知道一個廣泛的問題。您認為在策略或業務審查或資產負債表變化或類似方面是否有任何其他過渡專案或大型策略專案需要從這裡完成？或者我們是否——或者我們已經設定了穩定的前進狀態？

Thanks, Vincent. Yes, very steady state head down, chopping wood quite frankly. We just need to execute the plan. And that means really being tight and efficient on our expense structure, making sure we're taking appropriate risk on the credit box and starting to grow back into our balance sheet. So really nothing -- this Flexiti transaction will be kind of the last, I think, in the deal side for a while for CURO.

謝謝，文森特。是的，非常穩定地低著頭，坦白地砍柴。我們只需要執行計劃即可。這意味著我們的費用結構要嚴格且高效，確保我們在信貸方面承擔適當的風險，並開始重新成長到我們的資產負債表中。所以真的沒什麼——我認為，這次 Flexiti 交易將是 CURO 一段時間內交易的最後一筆交易。

Okay. That's great. And then kind of related to that, the target ranges that you have, and it's Slide 16 of your deck, all those target ranges, do you -- in order to get to those ranges, are there anything that really needs to happen in terms of getting scale? Or does the macroeconomic environment need to improve with your consumer or are you already kind of underwriting or operating at that level just kind of a matter of time?

好的。那太棒了。然後與此相關的是，你擁有的目標範圍，這是你套牌的幻燈片 16，所有這些目標範圍，為了達到這些範圍，有什麼真正需要發生的事情嗎？獲得規模？或者宏觀經濟環境是否需要隨著您的消費者而改善，或者您是否已經在這種水平上承保或運營只是時間問題？

Yes. Sure, Vincent. By the way, a really good question. I think there's 2 parts to it. So in our long-term direct lending target, there was the OpEx ratio. I believe it's about 23% or 26% in Q2, [at present], 30%. I think there, it's managing expenses. So basically growing scale versus expenses not going up. So I think we're on our path there. We continue to see opportunities and most of it should drop to the bottom line, but there's still room to invest where it drives future efficiency. So that's one half of the equation.

是的。當然，文森特。順便說一下，這是一個非常好的問題。我認為它有兩個部分。因此，在我們的長期直接貸款目標中，有營運支出比率。我相信第二季度大約是 23% 或 26%，[目前] 是 30%。我認為這就是管理費用。所以基本上規模擴大與費用不增加。所以我認為我們正在朝著這個方向前進。我們繼續看到機會，其中大部分應該會下降到底線，但在提高未來效率的方面仍有投資空間。這就是等式的一半。

The second one is our NIM post charge-off target of 26% to 31%. Today, we're at 19%. And there, I think it's the things Doug just mentioned, getting into lower yielding, lower risk, what you call products that improve our overall yield growth in Canada, which has a higher spread. Those are probably 2 of the bigger drivers. So NCO reduction as well as a little yield enhancement net-net with the right growth gets us to our 26% to 31% direct lending.

第二個是我們的淨利差沖銷後目標為 26% 至 31%。今天，我們的比例為 19%。我認為這就是道格剛才提到的，進入低收益、低風險的產品，這些產品可以提高我們在加拿大的整體收益成長，而加拿大的利差較高。這些可能是兩個更大的驅動因素。因此，NCO 的減少以及適當增長的少量淨收益提升使我們的直接貸款率達到 26% 至 31%。

As I mentioned, it's kind of a through-the-cycle target. It's not happening overnight. But that's the progress that we're measuring ourselves against quarter-by-quarter.

正如我所提到的，這是一個貫穿整個週期的目標。這不是一夜之間發生的。但這就是我們逐季度衡量自己的進展。

Your next question comes from John Rowan from Janney.

您的下一個問題來自 Janney 的 John Rowan。

Just to be clear, you said the magic number is $1.5 billion. I assume that's $1.5 billion in direct loan portfolio to turn profitable?

需要澄清的是，您說過這個神奇數字是 15 億美元。我假設 15 億美元的直接貸款組合才能獲利？

Yes, around there, just about -- obviously, going to be off based on the mix of Canada versus U.S. But that's kind of in my mind kind of where we kind of need to get to.

是的，在那附近，顯然，將根據加拿大與美國的混合情況而有所不同，但在我看來，這就是我們需要達到的目標。

Okay. And then you mentioned an auto secured product. I'm just trying to figure out what kind of product this is, right? Is it a high rate kind of traditional auto title loan? Or is it a fully secured, high balance, low APR installment loans secured by an auto title.

好的。然後您提到了一種自動安全產品。我只是想弄清楚這是什麼類型的產品，對嗎？它是一種高利率的傳統汽車產權貸款嗎？或是由汽車產權擔保的完全擔保、高餘額、低年利率的分期貸款。

Yes, the latter, John. I mean, we're focused on -- and we run -- just as a point, we've been running secured programs in the U.S. for some time. But of our total book of 1.2, less than 20% is actually secured. So when you kind of think about long-term growth opportunities, getting into the lower APR, lower charge-off, wider margin, higher balance programs, that's certainly something we're focused on. We've been doing it for several years at the Heights business. We're expanding at the First Heritage. We're introducing it in Canada. So -- but yes, it's the lower APR, lower charge-off program.

是的，是後者，約翰。我的意思是，我們專注於——並且我們運行——就這一點而言，我們已經在美國運行安全專案一段時間了。但在我們 1.2 的總帳本中，實際安全的還不到 20%。因此，當你考慮長期成長機會時，進入較低的年利率、較低的沖銷、更大的利潤、更高的餘額計劃，這肯定是我們關注的重點。我們在高地業務中已經這樣做了好幾年了。我們正在擴大 First Heritage 的規模。我們正在加拿大推出它。所以——但是，是的，這是較低的年利率、較低的沖銷計劃。

Okay. And then lastly for me, the third quarter guidance that you provided, does that assume the inclusion of Flexiti or the divestiture? Because it seems like you're going to have -- you're going to complete the deal before the end of the third quarter, which is why the third quarter would include part of it. I just want to make sure I understand what's in that guidance figure.

好的。最後對我來說，您提供的第三季指導是否假設包括 Flexiti 或剝離？因為看起來你將在第三季末之前完成交易，這就是為什麼第三季將包括其中的一部分。我只是想確保我理解該指導圖中的內容。

Yes. Right now, it assumes we have Flexiti through all of Q3. Right now, anticipate closing would be sometime in September. Obviously, the biggest step is outside of control. It's on the Competition Bureau in Canada, which we believe should be a regular process. So it's going to -- we're going to have Flexiti probably -- for probably half of September, if not most of it, so that the guidance includes that.

是的。現在，假設我們整個第三季都擁有 Flexiti。目前，預計關閉時間為 9 月。顯然，最大的一步就是失控。這是加拿大競爭局的工作，我們認為這應該是常規程序。因此，我們可能會在 9 月的一半時間（如果不是大部分時間）使用 Flexiti，因此指南中也包含了這一點。

If anything changes there, we'll probably put something out to adjust the estimates for Q3.

如果那裡發生任何變化，我們可能會做出一些調整來調整第三季的估計。

There are no further questions at this time. I will now turn it back to Izzy Dawood for closing remarks.

目前沒有其他問題。現在我將把它轉回給伊茲·達烏德（Izzy Dawood）作結束語。

Yes. Thank you, operator. Just a couple of things in our prepared remarks, as you saw the Flexiti announcement came late, so there was a fair amount of scrambling at our end. There are a couple of things that I just want to reiterate. One is, obviously, the net cash proceeds we expect, again, after all said and done with the closing adjustment somewhere between USD 50 million to USD 60 million on our Flexiti sale as we continue to support the growth of that business and we've seen tremendous progress there.

是的。謝謝你，接線生。我們準備好的發言中只有幾件事，正如您所看到的 Flexiti 公告來得較晚，所以我們最後有相當多的混亂。有幾件事我想重申。一是，顯然，我們再次期望淨現金收益，畢竟我們的 Flexiti 銷售的收盤調整在 5000 萬美元至 6000 萬美元之間，因為我們繼續支持該業務的增長，並且我們已經在那裡看到了巨大的進步。

And the second item, which is our year-end forecast for cash, which I've mentioned on our last call, of USD 100 million to USD 140 million, that remains intact as well. So we are on track on both those elements. And obviously, the Flexiti sale has a big role to play in that as well.

第二項是我們對年底現金的預測，我在上次電話會議中提到過，預測為 1 億美元至 1.4 億美元，這項預測也保持不變。因此，我們在這兩方面都步入正軌。顯然，Flexiti 的銷售在這方面也扮演著重要角色。

So with that, I'll turn it back over to the operator.

因此，我會將其轉回給操作員。

Thank you, ladies and gentlemen. This concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

謝謝你們，女士們、先生們。今天的電話會議到此結束。我們感謝您的參與，並請您斷開線路。