Q4 2021 CURO Group Holdings Corp Earnings Call
Speaker 1: Good day and welcome to the Curio
Good day everyone.
So the Shaw runs through 2021 conference call all participants will be in listen only mode.
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Speaker 1: I'd now like to turn the conference over to Matt Keating with the reservations. Please call a head sir.
I'd now like to turn the conference over to Matt can't even with Investor Relations. Please go ahead, sir thank.
Speaker 2: Thank you and good morning everyone. After the market closed yesterday, Curio released results for the fourth quarter and full year 2021, which are available on the investor section of our website at ir.curio.com.
Thank you and good morning, everyone. After the market closed yesterday purely released results for the fourth quarter and full year 2021 which are available on the investors section of our website at IR Dot Dot com.
Speaker 2: With me on today's call are Kirov's Chief Executive Officer Don Gayhart, President and Chief Operating Officer Bill Baker, and Chief Financial Officer Roger Dean. This call is being webcast and will be archived on the investor section of our website.
With me on today's call I'm curious Chief Executive Officer, Don Gayheart, President and Chief Operating Officer, Bill Baker, and Chief Financial Officer, Roger Dean. This call is being webcast and will be archived on the investors section of our website.
Speaker 2: 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.
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.
Speaker 2: As such, it does include certain risks and uncertainties. Please refer to our press release issued last night in 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.
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.
Speaker 2: 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.
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.
Speaker 2: In addition to US GAAP reporting, we report certain financial measures that do not conform to generally accepted accounting.
In addition to U S GAAP reporting we are.
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 tables found in yesterday's press release before we begin I'd like to remind you that we have again provided a supplemental investor presentation, we will reference.
Speaker 2: We believe these non-GAAP measures enhance the understanding of our performance. Reconciliation between these GAAP and non-GAAP measures are included in the tables found in yesterday's press.
Speaker 2: Before we begin, I'd like to remind you that we have again provided a supplemental investor presentation. We will reference this presentation in our remarks, and 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.
This presentation and our remarks and you can find it in the events and presentations section of our website.
With that I would like to turn the call over to Don.
Thanks, Pat Good morning, everyone and thank you for joining us today.
Speaker 3: 2021 was a transformative year for Curo that will dramatically shape our company's prospects and ability to drive shareholder value well into the future.
2021 was a transformative year for sure all that will.
Dramatically shape, our company's prospects and ability to drive shareholder value well into the future.
Made two significant acquisitions, flexi and hate to finance the <unk>.
Speaker 3: Flexity and height finance that diversified our business, enhanced our long-term growth prospects, and positioned us to grow our customer base in the US and Canada, all while reducing our exposure to regulatory uncertainties. We saw very strong growth there.
And part of our business enhance our long term growth prospects and positioned us to grow our customer base in the U S and Canada, all while reducing our exposure to regulatory uncertainties.
Very strong growth in our Canadian direct lending business.
Speaker 3: And after a sustained period of weak demand during my COVID-related stimulus, a legacy US direct lending business is now seeing healthy growth.
And after a sustained period of weak demand driven by Covid related stimulus a legacy U S. Direct lending business is now seeing healthy growth.
Speaker 3: Importantly, our team's focus on executing our strategic priorities meaningfully improved our position in the three main consumer credit verticals that we target. Direct to consumer, point of sale, and card based applications.
Importantly, our teams focus on executing our strategic priorities meaningfully improved our position in the three main consumer credit verticals that we target direct to consumer point of sale and card based applications.
Speaker 3: Our March 2021 acquisition of FlexiD diversified our channel, loan, and revenue mix by adding established point of sale financing capabilities and private label credit cards to our direct lending capabilities in Canada.
Our March 2021 acquisition of flexing diversified our channel loan and revenue mix by adding established point of sale financing capabilities.
LIBOR credit cards to our direct lending capabilities in Canada.
Speaker 3: We believe Flexity signing of LFL Group, Canada's largest home furnishings retailer, to a 10 year exclusive point of sale financing agreement in June of last year positioned the company as the largest provider of point of sale financing in Canada.
We believe flex city, signing a L F L group.
Canada's largest home furnishings retailer to a 10 year exclusive point of sale financing agreement in June of last year positioning the company as the largest provider of point of sale financing in Canada.
For perspective on Flex. These recent growth consider when we close the acquisition in March our acquired loans totaled $196 million and by year end, our gross loans receivable reached $459 million.
Speaker 3: For perspective on Flexity's recent growth, consider when we close the acquisition in March, our acquired loan sold $196 million, and by year-end, our gross loan receivable reached $459 million.
Speaker 3: Flexity ended 2021 in good fashion as gross loans receivable increased $157 million or 52% sequentially during the fourth quarter driven by the onboarding of LFL Group volume and
Flex the ended 2021 and good fashion as gross loans receivable increased $157 million for 52% sequentially. During the fourth quarter driven by the Onboarding of L. F L group volume and seasonal holiday demand.
Our December 2021 acquisition pipe finance significantly strengthened our U S direct to consumer business of Heights, primarily serves near Prime and non prime customers through its network of 390 branches and 11, southern and mid Western States. This acquisition accelerates our transition into <unk>.
Speaker 3: Our December 2021 acquisition of Heights Finance significantly strengthened our US direct to consumer business as Heights primarily serves near prime and non-prime customers through its network of 390 branches in 11 Southern and Midwest states.
Speaker 3: This acquisition accelerated our transition into longer term, higher balance and lower weight credit.
Longer term higher balance and lower rated credit products and offers us opportunities to expand into new geographic markets leverage our omni channel capabilities and cross sell our recently expanded set of card products.
Speaker 3: and offers us opportunities to expand into new geographic markets, leverage our omni-channel capabilities, and cross-sell our recently expanded set of card products.
We're also excited to launch the first phase our new credit card that provides eligible non prime customers with a visa branded credit card.
Speaker 3: our new credit card that provides eligible non-prime customers with a Visa branded credit card. We launched in December in select markets and look forward to the rollout of this product across all of our US business channels this year.
We launched in December in select markets and look forward to the rollout of this product across all of our U S business channels and this year well.
Speaker 3: While we don't expect first phase to affect our earnings meaningfully in 2022, we expect it to be a solid contributor earnings growth in 2023 and beyond.
While we don't expect first phase two effect.
Meaningfully in 2022, we expect it to be a solid contributor to earnings growth in 2023 and beyond.
Along with these two significant acquisitions, our core business ended the year with very good momentum.
Speaker 3: Along with these two significant acquisitions, our core business end of the year was very good moment.
Speaker 3: excluding complexity and height loans, our combined gross loans receivable increase 11% year over year and 6% sequential.
Excluding Flexitarian heights ones, a combined gross loans receivable increased 11% year over year and 6% sequentially. If we also exclude the runoff portfolio in the U S year over year and sequential growth was 23% and 9% respectively.
Speaker 3: If we also exclude the runoff portfolio in the US, year over year and sequential growth is 23% and 9% respectively. During the year we also completed...
During the year. We also completed several key financing initiatives in July we refinanced our senior secured notes, reducing the interest rate by 75 basis points increase in capacity and extending the maturity date to 2028.
Speaker 3: In July , we refinanced our senior secured notes, reducing the interest rate by 75 basis.
Speaker 3: increasing capacity and extending the maturity date to 2020.
Speaker 3: In the fourth quarter, we added $250 million to our senior secured notes in part to finance the Hight
In the fourth quarter, we added $250 million to our senior secured notes.
Parts of finance for Heights acquisition.
Speaker 3: At Flexity, we increased the capacity of our existing warehouse facility and added securitization capacity, bringing Flexity's total funding capacity to over a billion dollars Canadian.
At flexing, we increased the capacity of our existing warehouse facility and added securitization capacity, bringing trucks. He total funding capacity to over $1 billion Canadian.
Speaker 3: We also monetize the portion of our investment in catapult when it became public in June 2021, receiving $147 million in cash from this highly successful investment. You'll recall that our total investment was $28 million.
We also monetize a portion of our investment in catapult when it became public in June 2021, receiving $147 million in cash from its highly successful investment you'll recall that our total investment was $28 million.
Speaker 3: We also currently retain a 25% ownership stake in catapult on a fully diluted.
We also currently retain a 25% ownership stake in catapult on a fully diluted basis.
Speaker 3: In 2022, we are focused on a number of key objectives, primarily
2022, we are focused on a number of key objectives, primarily.
Speaker 3: First, continuing to scale FlexD's originations and invest in its infrastructure to accommodate strong growth. We expect FlexD's revenue to grow more than threefold in 2022 and to double again in 2023.
First continuing to scale flex these originations and invest in infrastructure to accommodate strong growth, we expect <unk> revenue to grow more than three fold in 2022 and double again in 2023.
Speaker 3: Second, growing and executing on combined synergies of heights finance.
Second growing and executing on combined synergies of Heights finance.
Speaker 3: Third, sustaining the growth and margin expansion of our Canadian direct lending business with a focus on building on our 2021 success and growing Lend Direct, both online and through the opening of new Lend Direct.
Third sustaining the growth and margin expansion of our Canadian direct lending business with a focus on building on our 2021 success and growing one direct both online and through the opening of new lend direct branches.
Speaker 3: Fourth, continuing to evaluate the cost structure and opportunities for our legacy US direct lending business as this segment continues to recover from two years of pandemic related impacts.
Fourth continuing to evaluate the cost structure and opportunities for our legacy U S. Direct lending business. As this segment continues to recover from two years of pandemic related impacts more on this in a moment.
Speaker 3: fifth remaining very disciplined across all of our business units with our underwriting and customer acquisition and ad spend
With remaining very disciplined across all of our business units with our underwriting and customer acquisition and AD spend decisions.
Speaker 3: Finally, to remain conservative and careful managers of our capital.
Finally to remain conservative and careful managers of our capital.
Speaker 3: Markets for larger, longer term and lower yielding loans have better growth prospects and less regulatory.
Markets for larger longer term are lower yielding loans have better growth prospects and less regulatory risk, but these products and business lines are by definition more capital intensive and require us to stay ahead of the growth curve to continue to secure stable and cost effective funding.
Speaker 3: But these products and business lines are, by definition, more capital intensive and require us to stay ahead of the growth curve to continue to secure stable and cost-effective funding. Next, I'll provide some additional details.
Next I'll provide some additional details on a few of these objectives.
Let's start with flexing, where our 2022 plants are centered around supporting the company's strong origination growth.
Speaker 3: We're a 2022 plant centered on supporting the company's strong origination.
Speaker 3: When we announced the LFL partnership in June , we forecast that origination is increasing to $660 million Canadian in 2021 from $292 million Canadian in 2015.
When we announced the NFL partnership in June we forecast that originations increasing to $660 million Canadian in 2021 from $292 million Canadian in 2020.
Speaker 3: Our 2021 originations came in at $711 million Canadian, exceeding our projection and growing 143% year-over-year.
Our 2021 originations came in at $711 million Canadian exceeding our projection and growing 143% year over year.
Speaker 3: Flexi's originations in the fourth quarter alone total $322 million Canadian, positioning us very well for continued strong growth this year.
Flexi as originations in the fourth quarter alone totaled $322 million Canadian positioning us very well for continued strong growth this year.
Laxity exceeded by $3 million Canadian publicly disclosed 2021 revenue and by $9 million Canadian our pretax earnings outlook.
Speaker 3: Luxity exceeded by $3 million Canadian are publicly disclosed 2021 revenue and by $9 million Canadian are pre-tax earnings out.
Speaker 3: While Flexi remains focused on executing on its considerable LFL opportunity and capitalizing on the full exit of Desjardins, we have several other visible growth initiatives underway, including Remix effects Chaunceycello and Eev's
Well flexi remains focused on executing on its considerable Ellen Hello, FL opportunity and capitalizing on the full exit of days yard and we.
We have several other visible growth initiatives underway, including.
Speaker 3: rolling out the distinct Flexi-Wave branded car designed for non-prime customers.
Rolling out the distinct flexi wave branded card designed for non prime customers.
Speaker 3: developing a pay-in-four option to address its merchant partners' sizable small-ticket retail market in Canada, which is estimated to include close to 80% of total retail spend.
Developing a paying for option to address its merchant partners sizable small ticket retail market in Canada, which is estimated to include close to 80% of total retail spend.
Speaker 3: investing in the direct-to-consumer online channel to further accelerate new customer acquisition.
Investing in the direct to consumer online channel to further accelerate new customer acquisition.
Speaker 3: And finally, Flexi continues to have a very strong sales pipeline, and we're hopeful that new merchant relationships could drive even better growth than our current forecast implies. We'll include our standard reminder that new merchant wins are likely to be diluted in the near term while being accretive over the long term.
And finally flexi continues to have a very strong sales pipeline and we're hopeful that new merchant relationships to drive even better growth in our current forecast implies will.
We will include our standard reminder, that new merchant wins are likely to be dilutive in the near term while being accretive over the long run.
Speaker 3: Moving next to our plans to grow and execute on combined synergies for hyped.
Moving next to our plans to grow and execute on combined synergies for hoist finance.
Speaker 3: closed the Heights acquisition on December 27th, 2021. So it had an immaterial impact on our fourth quarter financial results.
We closed the heights acquisition on December 27th 2021.
So it had an immaterial impact on our fourth quarter financial results.
Speaker 3: Although the Heights team only joined us recently, we're very pleased with how quickly they've acclimated to our culture and the meaningful opportunities we see to grow our combined operations. They have outstanding leadership and collaborative, hard-working collaborations.
Although the heights team only joined US recently, we're very pleased with how quickly they've acclimated to our culture and the meaningful opportunities, we see to grow our combined operations they've outstanding leadership.
Collaborative hardworking culture.
Decelerates, our transition into longer term higher balance at lower rate loan products.
Speaker 3: Hike accelerates our transition into longer term, higher balance and lower rate loans.
Speaker 3: company provides us with an upmarket product that complements our legacy US direct lending business and positions us to serve a larger addressable market and potentially retain curo customers as their credit profiles improve.
<unk> provides us with an upmarket product complements our legacy U S direct lending business and positions us to serve a larger addressable market and potentially retain churro customers as their credit profiles improve.
Speaker 3: Approximately half of the height to loan balance are comprised of loans with APRs less than 36%, reflecting their customers' stronger credit profile.
Approximately half of the heights loan balances are comprised of loans with APR is less than 36%, reflecting their customers stronger credit profiles, the average heights customer.
Speaker 3: The average Heights customer makes around 10 to $12,000 a year more than an average Curl customer and has a FICO score that's about 40 or 50 points higher.
Makes around 10 to $12000 a year more than an average customer and has a FICO score that's about 40 or 50 points higher.
Speaker 3: The acquisition meaningfully diversifies our US product revenue, customer and geographic mix and opens the door for further geographic expansion.
The acquisition meaningfully Diversifies, our U S product revenue customer and geographic mix and opens the door for further geographic expansion.
Speaker 3: In fact, we already have plans to offer Heights products in four new states in 2022 and meaningfully expand the store count at Heights existing foot.
In fact, we already have plans to offer heights products in four new states in 2022 and meaningfully expand the store count at heights existing footprint.
Speaker 3: As I'm sure everyone understands, the speed of investment in market expansions determines how diluted the opportunity is in the near future.
As I'm sure everyone understands the speed of investment and market expansions determines how dilutive the opportunity is in the near term.
Our plans for a high performing Canadian direct lending business are not dissimilar to heightened in terms of market expansion too.
Speaker 3: Our plans for high performing Canadian direct lending business are not dissimilar to heights in terms of market expansion.
Speaker 3: 2021 was a great year for a Lend Direct brand, and we see opportunities to drive more growth to branch and online.
2021 was a great year for our lend direct brand and we see opportunity to drive more growth to branch and online expansion.
Speaker 3: We paused opening new one direct branches during COVID. We've signed leases for 12 new locations and are evaluating additional sites.
We paused the opening new one direct branches during Covid, we've signed leases for 12, new locations and are evaluating additional sites.
Speaker 3: Finally, for a US direct lending business, during COVID, our results have been impacted by elevated repayment rates and increased competition at the top of the non-prime funnel.
Finally for our U S direct lending business during Covid, our results have been impacted by elevated prepayment rates and increased competition at the top of the non-profit funnel.
Speaker 3: In addition, portfolio runoff related to regulatory change will create year-over-year headwinds and close to $30 million of pre-tax.
Portfolio runoff related to regulatory change will create your over your headwinds of close to $30 million of pre tax earnings.
Speaker 3: The balance of our US direct lending business is expected to grow at healthy levels, but we will see some higher allowance built.
Balance of our U S direct lending business is expected to grow at healthy levels, but we will see some higher allowance build.
Turning to our outlook for 2022 and beyond starting on slide nine of our earnings supplement deck.
Speaker 3: We are increasing our previous Canada Direct Lending 2022 Revenue Outlook and raising our 2022 pre-tax earnings guide.
We're increasing our previous candidate direct lending 2022 revenue outlook and raising our 2020 to pretax earnings guidance.
Speaker 3: We are also increasing our 2023 revenue and pre tax earnings guidance for this business.
We are also increasing our 2023 revenue and pretax earnings guidance for this business.
For Canada P. O S lending, we are maintaining our pretax earnings guidance, while modestly lowering our 2022 revenue guidance.
Speaker 3: We are maintaining our pre-tax earnings guidance while modestly lowering our 2022 revenue guidance. On that front, a couple of...
On that front and a couple of developments are worth noting.
Speaker 3: First, a portion of the reduction is related to an accounting change related to merchant rebates, which are now deducted from revenue instead of being classified as an operating cost. No change in the bottom line, but it does slightly lower revenue.
First a portion of the reduction is related to an accounting change related to merchant rebates, which are now deducted from revenue instead of being classified as an operating cost no change to the bottom line, but it does slightly lower revenue.
Speaker 3: Second Omicron impacts as most provinces started 2022 with modified retail restrictions that are just now in the process of being looked.
Second omicron.
<unk> impacts as most provinces started 2022 with modified retail restrictions that are just now in the process of being looked at.
Speaker 3: This led to some slow revenue growth in certain categories in December and January .
Some slow revenue growth in certain categories in December and January .
Speaker 3: And finally, a higher percentage of our customers in Flexity's business are continuing to pay off in full at the end of the promotional period, versus moving to revolving and interest bearing balances. This results in lower portfolio yield, but is partially offset by lower charges.
And finally, a higher percentage of our customers in flexing his business are continuing to pay off in full at the end of the promotional period versus moving to revolve in interest bearing balances. This results in lower portfolio yield was partially offset by lower charge offs, we're starting to see early trend towards moving to evolving.
Speaker 3: starting to see early trends towards moving to revolving balances and as that returns to pre pandemic levels, yields and revenue increase but with a corresponding uptick in loss.
Balances and as that returns to pre pandemic levels yields and revenue will increase but with a corresponding uptick in loss rates.
Speaker 3: And the Flexity business overall expenses are in line with better credit being offset by higher spending for merchant support and investment in our new buy now pay later pay in for price.
And if I see it as an overall expenses are in line with better credit being offset by higher spending for merchant support and investment in our new buy now pay later paying for product.
Speaker 3: To close on Canada, we're extraordinarily pleased with the financial performance, market position, and prospects for both of these...
To close on Canada, we're extraordinarily pleased with the financial performance market position and prospects for both of these segments.
Speaker 3: You can find the details on page 9 of our investor deck. But we are now forecasting combined 2022 revenue and pre-tax income respect.
Can find the details on page nine of our investor deck, but we are now forecasting combined 2022 revenue and pretax income respectively.
Speaker 3: of $571 million Canadian and $109 million Canadian. And for 2023, we see revenue of $774 million Canadian and pre-tax income of $200 million Canadian.
$571 million Canadian and $109 million Canadian and for 2023, we see revenue of $774 million Canadian and pretax income of $230 million Canadian.
Speaker 3: Next, you'll see in slide 10 of our earnings supplement deck that we were affirming our previous 2022 guidance for heights and introducing our 2023 outlook.
Next you'll see on slide 10 of our earnings supplement deck that we're affirming our previous 2022 guidance for heights, and introducing our 2023 outlook.
Speaker 3: With the visible opportunity to expand footprint and store count, we believe heights can achieve the loan growth necessary to support the 2023 revenue guidance and acquisition synergies and operating leverage, drive our expectations for the related growth and pre-tax income.
Well the visible opportunities to expand footprint in store count, we believe heights can achieve the loan growth necessary to support the 2023 revenue guidance and acquisition synergies and operating leverage drive our expectations for the related growth in pre tax income.
Speaker 3: For 2022, we affirm our guide of $275 million in revenue and $55 million in pre-tax.
For 2022, we affirm our guide of $275 million in revenue and $55 million in pre tax income for 2023, we see revenue increasing to $303 million and pre tax income to $76 million.
Speaker 3: For 2023, we see revenue increasing to $303 million and pre-tax income to $76 million.
Speaker 3: To close, we recognize that the full potential of large scale acquisitions is only achieved through careful execution and by ensuring a strong culture is maintained throughout the expanded organization.
To close we recognize that the full potential of large scale acquisition only achieved through careful execution and by ensuring a strong culture is maintained throughout the expanded organization.
Speaker 3: Accordingly, in 2022, our focus is on realizing the considerable value creation opportunities presented by these acquisitions.
Accordingly in 2022, our focus is on realizing the considerable value creation opportunities presented by these acquisitions.
Speaker 3: I know I'm making sure that urgency, passion, and teamwork, all hallmarks of the CURO culture, are shared by our new colleagues.
I know and making sure that urgency passion and teamwork all hallmarks of the Kearl culture are shared by our new colleagues.
Speaker 3: We're already off to a strong start and are excited to continue executing on our strategic plans to drive growth and deliver long term value for our shareholders.
We're already off to a strong start and are excited to continue executing on our strategic plans to drive growth and deliver long term value for our shareholders.
Speaker 3: As always, I'd like to close by thanking our team members who are so critical to delivering on our strategic priorities and to meeting the needs of our expanding customers.
As always I'd like to close by thanking our team members, who are so critical to delivering on our strategic priorities and to meeting the needs of our expanding customer base I'll now turn the call over to Roger to review the highlights from our fourth quarter and full year 2021 results.
Speaker 3: I'll now turn the call over to Roger to review the highlights from our fourth quarter and full year 2021 results.
Thanks, Don and good morning.
Speaker 2: Consolidated revenue for the fourth quarter of 2021 was $224 million, an increase of 11% in the same quarter last year.
Consolidated revenue for the fourth quarter of 2021 was $224 million, an increase of 11% from the same quarter last year.
Speaker 2: Adjusted EBITDA was $17 million, and we reported an adjusted loss of $0.29 per share.
Adjusted EBITDA was $17 million and we reported an adjusted loss of 29 cents per share.
Speaker 4: compared to last year's adjusted EBITDA of $34 million and adjusted earnings per share of $26 million.
Compared to last year's adjusted EBITDA of $34 million.
Adjusted earnings per share of 20 cents.
Speaker 4: Fourth quarter earnings were at a low point and it's pretty easy to summarize the drivers.
Fourth quarter earnings were at a low point and it's pretty easy to summarize the drivers.
Speaker 4: First, we had the impacts of upfront loan loss provisioning and high levels of sequential loan growth with expected upticks and net charge offs for credit normalization.
First we had the impacts of upfront loan loss provisioning on high levels of sequential loan growth with expected upticks and net charge offs for credit normalization.
Speaker 4: Second, sequential spending increases at Flexity to support LFL's onboarding in a really good holiday season for Flexity's merchant partners increased our sequential expense.
Second sequential spending increases at flexi.
To support telephone Onboarding and a really good holiday season for flex cities merchant partners increased our sequential <unk> expenses.
Speaker 4: Net revenue for the fourth quarter decreased $2 million, or 1%, year over year, and decreased $8 million, or 6% sequentially.
Net revenue for the fourth quarter decreased $2 million or 1% year over year and decreased $8 million or 6% sequentially with.
Speaker 4: The sequential decline in that revenue reflected upfront.
The sequential decline in net revenue reflected upfront loan loss provisioning on accelerated sequential loan growth.
Speaker 4: on accelerated sequential lung growth and higher net charge off rates from new...
And higher net charge off rates.
From from new customer mix, and originations seasonality and channel origination mix shifts.
Speaker 4: seasonality and channel origination mix show.
Our consolidated provision for loan losses exceeded net charge offs by $15 million in the fourth quarter of 2021.
Speaker 4: Our consolidated provision for loan losses exceeded net charge-offs by $15 million in the fourth quarter of 2020.
Speaker 4: The chart at the top of slide 5 of our supplemental earnings presentation illustrates the loan loss provision tailwinds and headwinds by quarter and is useful for thinking about 2022.
The chart at the top of slide five of our supplemental earnings presentation illustrates the loan loss provision tailwind and headwinds by quarter and it's useful for thinking about 2022.
Consolidated operating expenses for the quarter increased $34 $7 million or 32% compared to the prior year.
Speaker 4: Consolidated operating expenses for the quarter increased $34.7 million, or 32%, compared to the prior year.
Speaker 4: excluding the increase in operating costs related to the flexi acquisition.
Excluding the increase in operating costs related to the flexi acquisition transaction costs associated with our acquisition of Heights, and onetime store closure costs related to our second and third quarter U S store rationalization.
Speaker 4: transaction costs associated with our acquisition of Heights and one-time store closure costs related to our second and third quarter US store rationalization.
Speaker 4: adjusted operating expenses increased just 4.7 million or 4.4% aided by cost savings from the store.
Adjusted operating expenses increased just $4 7 million or four 4%.
Aided by cost savings from the store closures.
Speaker 4: $4.7 million increase was due to the timing and level of performance-based variable compensation.
The $4 $7 million increase was due to the timing and level of performance based <unk>.
Variable compensation.
Speaker 4: and higher variable costs primarily due to collection and financial services fees on higher volume year over year particularly in Canadian direct...
And higher variable costs, primarily due to collection of financial services fees on higher volume year over year, particularly in Canadian direct lending.
2021 loan growth was significantly influenced by our acquisitions look flexibly and heights to illustrate our gross combined loans receivable increased by $985 million or 165% year over year.
Speaker 4: 2021 loan growth was significantly influenced by our acquisitions of Flexity and Height.
Speaker 4: To illustrate, our gross combined loans receivable increased by $985 million, or 165% year-over-year. Don mentioned earlier that...
Don mentioned earlier, excluding flexi and heights.
Speaker 4: Gross combined loans receivable increased by $66 million or 11 percent in 2020.
Gross combined loans receivable increased by $66 million or 11% in 2020 one.
Excluding the U S run off portfolios gross combined loans receivable increased $121 million or 23% in 2021.
Speaker 4: excluding the US runoff portfolios, gross combined loans receivable increased $121 million, or 23% in 2020.
Turning to our business segments, Canada direct lending loan balances increased by $97 million or 29%.
Speaker 4: Turning to our business segments, Canada Direct Lending loan balances increased by $97 million or 29% during 2021 and 9% sequential.
During 2021 and 9% sequentially.
Speaker 4: Flexity continued to grow rapidly throughout 2021, particularly beginning in July 2021, when its exclusive POS financing partnership with the LFL group began.
Well actually continued to grow rapidly throughout 2021, particularly beginning in July 2021, when its exclusive P. O S financial partnership with you all FL group began.
Speaker 4: In addition, the holiday season resulted in $114 million of Canadian POS lending growth in November and December 11.
In addition, the holiday season resulted in $114 million.
Canadian P O S Linden growth in November and December alone.
Speaker 4: excluding the impact of the HIKA acquisition, are U.S. gross combined loans receivables.
Excluding the impact of the hikes acquisition, our U S. Gross combined loans receivable decreased $31 million or 12%.
Speaker 4: decreased 31 million or 12 percent in 2021, primarily due to COVID-19 impacts and runoff portfolio.
In 2021, primarily due to COVID-19 impacts and runoff portfolios.
Speaker 4: However, excluding runoff portfolios and loans acquired with heights, our U.S. gross combined loans receivable increased 24 million, or 13%, versus a year ago and 7% sequentially.
However, excluding runoff portfolios.
Loans acquired with Hearts.
Our U S gross combined loans receivable increased $24 million or 13% versus a year ago and 7% sequentially.
Speaker 4: Interest expense for the fourth quarter increased $10 million, or 53% year over year, primarily related to interest on non-recourse debt to support the loan growth at flex cities.
Interest expense for the fourth quarter increased $10 million or 53% year over year, primarily related to interest on nonrecourse debt to support the loan growth that flexibility.
Speaker 4: and the additional $250 million tack on issuance of 7.5% senior secured notes because it adds in part a high-tech.
And the additional $250 million tack on issuance up seven 5% senior secured notes to finance in part the Hi Tech acquisition.
Speaker 4: Turning next to credit, our credit metric trends in Q4 were consistent with what many of our peers have seen overall, what is being termed as a trend towards normalization, but still.
Turning next to credit our credit metric trends in Q4 were consistent with what many of our peers have seen overall.
What has been termed as a trend towards normalization.
But still favorable to pre pandemic run rates.
Speaker 4: Our consolidated quarterly net charge off rates for the fourth quarter improved year over year by 220 basis points, primarily from the relative growth of Canadian POS lending, which shifts our portfolio.
Our consolidated quarterly net charge off rates for the fourth quarter improved year over year by 220 basis points.
Primarily from the relative growth of Canadian P O S funding, which shifts our portfolio mix to lower loss rate products.
Speaker 4: Sequentially consolidated quarterly net charge-off rates increased 100 basis points due to the relative loan growth, new customer mix and originations, seasonality, and the growth of more customers and bartenders on the high side of the development of the technology.
Sequentially consolidated quarterly net charge off rate increased 100 basis points due to the relative loan growth, new customer mix and originations seasonality and channel origination mix shifts.
U S quarterly net charge off rates increased 340 basis points year over year, and 275 basis points sequentially Pri.
Speaker 4: US quarterly net charge-off rates increased 340 basis points year over year and 275 basis points sequentially.
Speaker 4: primarily driven by new customer mix, growth, origination channel mix, and diminishing COVID-19 impact.
Primarily driven by new customer mix growth origination channel mix and diminishing COVID-19 impacts.
Speaker 4: Notwithstanding, US net charge-off rates remained 80 basis points below the fourth quarter of 2019.
Notwithstanding.
Net charge off rates remained 80 basis points below the fourth quarter of 2019.
Speaker 4: US past due rate, including loans guaranteed by the company, improved sequentially by 75 basis points, or 3%, which was
U S pass through rate, including loans guaranteed by the company improved sequentially by 75 basis points, or 3%, which was better than we expected.
Speaker 4: Canada Direct Lending net charge off rates increased 85 basis points year over year and 110 basis points sequentially.
Canada direct lending net charge off rates increased 85 basis points year over year at 110 basis points sequentially.
Speaker 4: as provisioning fully normalized with no noise from a violence releases or adjustments.
Provisioning fully normalized with no noise from allowance releases or adjustments.
Speaker 4: Canada direct lending net charge off rates remain 240 basis points below the fourth quarter of 2019.
Canada Rec lending net charge off rates remain.
240 basis points below the fourth quarter of 2019.
Speaker 4: the Canada direct lending past due rate increased sequentially 200 basis points due to growth in season.
The Canada direct lending pass through rate increased sequentially 200 basis points due to growth and seasonality.
Speaker 4: Don already covered the 2022-2023 outlook for several of our businesses. I'll close with some color on Q1 expectations.
Don already covered with 2022 'twenty 'twenty three outlook for several of our businesses.
I'll close with some color on Q1 expectations.
We were encouraged by january's loan growth.
Speaker 4: Consolidated balances grew approximately $34 million with both Canadian businesses leading the growth.
Holiday balances grew approximately $34 million.
With both Canadian businesses, leading the growth.
Speaker 4: complexity continued to grow in January , bucking what is normally a seasonal decline for post-holiday merchant seasonality.
What could he continued to grow in January .
What is normally a seasonal decline for post holiday merchant seasonality.
Speaker 4: customer behavior through U.S. federal income tax season.
Customer behavior through the U S federal income tax season.
Speaker 4: is a big uncertainty for the next six weeks, and it affects the way we think about Q1 expectations.
It's a big uncertainty for the next six weeks and it affects the way we think about Q1 expectations.
Speaker 4: In thinking about Q1 earnings, I'd also point everyone to slide 5 of our earnings supplement doc.
And thinking about Q1 earnings I'd also point, everyone to slide five of our earnings supplement deck.
Especially the upper right chart.
Speaker 4: You'll see that in the first quarter of 2021, allowance release driven primarily by the second round of major US COVID-19 government stimulus resulted in the loan loss provision being $17 million less than that charge.
You'll see that in the first quarter of 2021.
Allowance release, driven primarily by the second round of major.
COVID-19 government stimulus.
And the loan loss provision being $17 million less than net charge offs.
Speaker 4: In other words, $17 million of pre-tax earnings benefit with historically low net charge-off rates. As we saw in the back half of 2021,
In other words $17 million of pre tax earnings benefit with historically low charge off rates.
As we saw in the back half of 2021.
Loan loss provisioning normalized.
With loan growth.
Speaker 4: and net charge-offs are bouncing off of unsustainable levels.
And net charge offs are bouncing off of unsustainable levels.
Speaker 4: and also remember that we acquired flexivity at the end of Q1 2021.
And also remember that we acquired flexibility at the end of Q1 2021.
Speaker 4: So we are comping against no operating expense base for complexity in Q1.
So we were comping against no operating expense base for flexing in Q1.
This should result in Q1 earnings significantly below Q1 of 2021, but meaningfully improved versus Q4 of 2021.
Speaker 4: significantly below Q1 of 2021, but meaningfully improved versus Q4 of 2021.
Speaker 4: we will continue our practice of updating you on our outlook for the next few days.
We will continue our practice of updating you on our outlook for the quarter next month.
Speaker 4: We ended the year with $63 million and unrestricted cash and $214 million of additional liquidity, including undrawn capacity on revolving credit facilities and borrowing base levels.
We ended the year with $63 million in unrestricted cash and $214 million of additional liquidity, including undrawn capacity on revolving credit facilities and borrowing base levels.
Speaker 4: We continue to work on several opportunities to expand capacity to support growth and capital.
We continue to work on several opportunities to expand capacity to support growth and capital return.
Speaker 4: And finally, our board authorized our quarterly dividend at 11 cents per share and authorized a new $25 million share repurchase.
And finally, our board authorized a quarterly dividend of 11 cents per share and authorized a new $25 million share repurchase program.
This concludes our prepared remarks, and well now ask the operator to begin Q&A.
Speaker 4: This concludes our prepared remarks and we'll now ask the operator to begin Q&A.
Speaker 1: Thank you. We will now begin the question and answer session. To ask a question, you may press star 1 1 on your touch tone phone. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys. To answer your question, you may press star 1 1 on your touch tone.
Thank you well now begin the question and answer session to ask a question you remember our Star then one on your Touchtone phone.
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Speaker 3: Today's first question comes from Bob Napoli at William Blair. Please go ahead. Thank you and good morning. So, good morning Bob. Good morning Don, how are you? Hey Roger. Cool.
Today's first question comes from Bob Napoli of William Blair. Please go ahead.
Thank you and good morning, so good morning, Bob.
Don how are you.
Hey, Roger Good got.
Speaker 5: So just a question on the 2023 outlook and kind of as you've owned Succity now for a while, your confidence level in the revenue and pre-tax earnings now for the Canadian businesses in particular. Canada direct lending I would imagine you have
So I guess the question on the two.
2023 outlook and are they kind of bounce that subsidy now for a while.
Now your confidence level.
In our the revenue and pretax earnings.
For the Canadian businesses in particular, Canada.
The direct lending I would imagine you have.
Speaker 5: you know, much higher visibility and confidence giving the longer history there, the Canada POS lending and complexity. So I'm just
Much higher visibility and confidence giving the longer.
History, there of the candidate Pof's lending influx city, so I'm just yeah.
Speaker 5: I'm curious, I guess, on your confidence level, what you've learned in owning Flexity for a year and the profit model, the long-term profit model, the confidence in that.
You know I I'm curious I guess on your confidence level, what you've learned in owning like city for a year now.
And yes.
The profit model long term profit model the confidence in that.
Speaker 3: I'll talk a little bit about Flexity and a couple of broader comments and maybe let Bill comment on the Canadian direct lending business. We've owned Flexity since March of last year. It seems like it feels like a lot longer than that. We spent pretty much nine months.
Talk a little bit about Flexitarian and I had a couple of kind of broader comments and maybe let bill comment on sort of a Canadian direct lending business.
But obviously, we're going Flexitime since March of last year. It seems like it's it feels like a lot longer than that.
But I think we and we spent pretty much nine months in and you know somewhat intensive diligence on that so you know I think we got to know the team there very well and we really got to understand the business and obviously the merchant side of the business. The <unk> side of the business now I think we had some really good exposure with that with our.
Speaker 3: in somewhat intensive diligence on that. So I think we got to know the team there very well and really got to understand the business. And obviously the merchant side of the business, the B2B side of the business, I think we had some really good exposure with that with our ownership and activity and board.
Our ownership in active.
Activity in our board.
Speaker 3: board service with catapults here in the US. So it wasn't a, you know, it's obviously different than a B2C company, but I think it wasn't a completely new animal from that perspective. I would say, you know, I think what ultimately was compelling for us was that, you know, there were not only, you know, Desjardins was just kind of an Uber credit union.
Service with with catapult here in the U S. So it wasn't a yeah.
It's obviously different than that of.
We got our BDC company, but I think it wasn't.
Totally new animal from that perspective, I would say you know I think we what we what ultimately was compelling for US was that they were not only does go down which is kind of like Uber credit Union.
Speaker 3: you know, a 600, 700 billion dollar asset credit union, but also TD Bank and some of the larger banks up there had really been getting out of the point of sales space. They didn't think the market was big enough, they were chirping out et cetera, et cetera. So, you know, we saw an opportunity for small.
600, 700 billion dollar asset credit Union, but also TD bank and some of the larger banks up there had had really been getting out of the point of sales, but you didn't make the market was big enough and the trucking out et cetera et cetera. So.
We saw an opportunity for for smaller players like flex and you just sort of take share as the larger players exited not that thesis has proven I think very very true.
Speaker 3: players like Flexity to sort of take share as the larger players exited, and that thesis is proven, I think, very, very true. And then the big win for us was getting LFL, and we basically kind of tripled the origination base. We felt.
And then you know the big win for US was getting L. F. L with basically the kind of tripled the origination pace, we felt during diligence they had a decent chance to get it.
Speaker 3: During Gilt's we had a decent chance to get it. It wasn't until after that we had decent chance to get some of it. And I think we were able to sort of get all of it. So I guess in terms of like where the numbers kind of roll out from here, there aren't any, you know, there's some new business in there, but there aren't any sort of major, you know, new wins that are in sort of the numbers. It's basically kind of, you know, some growth in the existing merchants.
Wasn't until after that.
We have just said you've got some of it.
And I think we were able to sort of get all of it. So I guess, Mike in terms of like where the the numbers kind of rollout from Hugh there arent.
And you know they're there.
Some new business in there, but there arent any sort of major.
You know new wins that are in sort of the in the numbers is basically kind of some growth in the existing merchants, some oh, what kind of a category and smaller wins, but there aren't any.
Speaker 3: some kind of a category of smaller wins, but there aren't any.
Speaker 3: you know, kind of, you know, we like to call them earth moving kind of merchant winds.
Kind of you know as we like to call them Earthmoving Earth, moving kind of merchant wins that are baked into the 'twenty two and 'twenty three.
Speaker 3: that are baked into the 22 and 23.
Speaker 3: forecast. So, I think from a confidence level, I mean the drivers of that business are going to be making some good improvements to, to keep guysIVES.
Forecast so.
I think from a from a confidence level I mean, the drivers of that business are going to be.
Speaker 3: And we talked about, you know, yield. Yield's been a little bit lower, it was a little bit lower in 22. Volume was a little better. Yield was a little lower just because, you know, these are promotional periods. You know, pay no interest for 90 days, 180 days, whatever. And then if you pay the obligation off in that period, we get our merchant discount, but that's, you know, and maybe a little bit of fee income, but it doesn't flip into an interest bearing.
And we're talking about you know yield you've been a little bit lower than it was a little bit lower in 'twenty. Two volume was a little better yield was a little lower just because.
So these are promotional periods, you'll pay no interest for 90 days 180 days whatever and then if you if you pay the obligation off in that period, we get our merchant discount, but that's you know and maybe a little bit of fee income, but it doesn't flip into an interest bearing account.
Speaker 3: account. Like in the US, a lot of the card businesses, you probably know about, a lot of people paying off their cards, certainly during during 21, buying like people paying off their balances more, because they had more more sort of disposable cash. And that's starting to, I think card balances in in December , November , December started to come back. So we're starting to see more of a normalization in terms of the rate at which
Like in the U S. A lot of the card business as you probably know that there.
A lot of people paying off there certainly during during 'twenty, one by and large people are paying off their balances more because they had more more.
Sort of disposable cash next.
Starting to see I think card balances and and in December November December started to come back and we're starting to see more of a normalization in terms of the rate at which consumers. Remember. These are prime customers was 740 FICO is the rate at which they are.
Speaker 3: consumers. Remember, these are prime customers, just 740 FICO's, the rate at which they let the promotional period kind of roll into an interest-bearing obligation. So, and then from there we've got credit.
Let the promotional period kind of a roll into interest bearing obligations. So and then from there we've got credit and credit has been very very good and again. These are you know.
Speaker 3: credit's been very, very good and again, these are, you know, very high quality customers. We're trying to add some non-crime to it.
Very high quality.
Customers were trying to add some non prime to it.
Speaker 3: but by and large it's a prime customer base. And then it's op-ex. And there I think the issue just we're trying to make sure we invest the right in the right areas to continue kind of building. You know, we mentioned we, we, they have a bunch of different formulations they can work on with merchants, but a sort of we call a more robust paying full product.
But by and large it's still a prime customer base.
And then it's Opex and there I think the issue just where we're trying to make sure we invest the right in the right areas to continue kind of building. We mentioned, we they have a bunch of different formulations that they can work on with merchants.
A a sort of we call them more robust paying for product Umbriel buy now pay later product, we think something that that our merchant base is really going to.
Speaker 3: a real buy now pay later product. We think something that that that our merchant base is really going to
Speaker 3: Like and in some case, I think it's gonna look competitive standpoints going to give us a nice leg up. And one that's more sort of easily integrated for online merchants, so we're putting some real investment dollars into that. We started that in the back half of this year, 21, continue into...
Like in some cases, it gets kind of.
From a competitive standpoint is going to give us a nice leg up and one that's more sort of easily integrated for online merchants. So we're putting some real investment dollars into that we started out in the back half of this year of 'twenty, one that will continue into <unk> into 'twenty two.
Speaker 3: into 22. And then funding costs. And I think we, obviously we spent, Roger and Hiechi spent a ton of time adding a securitization on that deal got priced in.
And then you know funding costs and I think we we are you know obviously, we spent Roger and his team spent a ton of time.
Adding a K a.
Securitization that deal got priced and.
Speaker 3: And I think Roger, like we probably November , December , and close so we started borrowing, and that's putting stuff in the warehouse in the curation in December , and that's gonna lower our overall funding cost. So I think, you know, by and large, those are kind of the big drivers. I think we feel good about our ability.
And I think that Roger previewed probably November December and it closed. So we started we started borrowing under that's putting stuff on the warehouse and the securitization in December and that's going to lower our overall funding costs. So I think by and large those are kind of the you know the big drivers I think we feel good about our ability to.
Speaker 3: to manage those. Some of them, again, the externalities for the rate at which people pay off obligations, we're waiting for that. And I think we say that will normalize, but also probably credit quality ticks up a little bit. Credit losses tick up a little bit as more balance. Because obviously somebody just pays it off in the promotional period, you have no charge.
To manage those some of them again, the externalities for you know.
The rate at which people pay off obligations you know not you know that's you know we're waiting for that that's it and I think we say that that will normalize, but also private credit quality ticks up a little bit of credit losses pick up a little bit more balanced because obviously somebody paid probably just paid it off in the promotional periods. You have no you have no charge offs.
Speaker 3: So there will be a little bit of a, but we want a reasonably high percentage of those to roll into a balance. But I'll just say from a market position, we think they're a market leader in point of sale in Canada. We think in direct lending, we're a top three provider in the direct-to-consumer space. And maybe I'll let Bill talk a little bit about sort of our confidence levels in direct lending. Bill?
So there'll be a little bit, but we do we want us we wanted we want a reasonably high percentage of those to roll into our into our balance so, but I'll just say from a market position.
They are a market leader in point of sale in Canada, We think of direct lending where were we are a top three.
Provider in that kind of direct to consumer space and maybe I'll, let bill talk a little bit about sort of all our confidence levels in direct lending.
Yeah.
Sure Good morning, Bob.
Speaker 2: It's really, for us, it's a few things and I'll be brief, but I think the first is the experience and tenure of our operating team. We've got a really good team who understands what's the second driver, I think, is the product.
Really for us, it's a few things and I'll be brief but I think the first is the experience in tenure of our operating team. We've got a really good team who understands what's the second driver I think is the product and I think it's our confidence and the stickiness and predictability of that open on product.
Speaker 6: And I think it's our confidence in the stickiness and predictability of that open-end product.
Speaker 6: I think we've got the models really well refined. I think our team is.
I think we've got the models really well refined I think our team is very experienced in explaining it and helping customers use it properly and you can see that in the numbers as far as just how long the customers keep that product opened and draw on it.
Speaker 6: very experienced in explaining it and helping customers use it properly.
Speaker 6: And you can see that in the numbers as far as just how long the customers keep that product open and draw on it. And then the third is the growth in the market.
And then the third is the growth in lung direct lender.
Speaker 6: You let Blender act out a terrific year last year on growth. Now to the point where it was generating is many online customers as the cash money brand. And obviously with a much smaller.
Glenn direct had a terrific year last year on growth not to the point, where it was generating isn't any online customers as the cash money brand and obviously with a much smaller footprint.
Speaker 6: which led us to the decision to expand that footprint, to the point done made by at least 12 locations, perhaps more, and those would all be in the Ontario Province, which gives us even more operating leverage and helps our marketing dollars go further.
Which allowed us to the decision to expand that footprint.
Point, Don made by at least 12 locations, perhaps more those would all be in the Ontario Province, which gives us even more operating leverage and helps our marketing dollars go further.
Speaker 5: Thank you. I guess the first phase credit card, what is the, how aggressive is the rollout? What is, how much testing have you done? What do we think about as far, what is the near term and long term opportunity for that business, near term cost, long term opportunity?
Thank you and I guess the follow up question the first phase credit card.
What is the I mean, how aggressive is the rollout what is.
How much testing have you done.
So what can we think about as Bart what is what is the near term and long term opportunity for that business near term costs long term opportunity.
Speaker 6: Yeah, I'm happy to take that one as well. So we really are in a pilot phase right now testing all the workflows, making sure credit works, and we'll continue to do that for the next couple of months, but at that point, just based on the structure of the product, we have the ability to ramp pretty quickly. So I think we want to make sure that everything works, right? The customer experience is right, that our bank partner is comfortable with everything.
Yeah, I'm happy to take that one as well Tobey, we really are in a pilot phase right now testing all the workflows, making sure our credit works and we'll continue to do that you know for the next couple of months, but.
At that point, just based on the structure of the product we have the ability to ramp pretty quickly.
So I think we want to make sure that everything works right. The customer experience is right that our bank partners comfortable with everything.
Speaker 6: Everything's buttoned up that has gone reasonably well thus far we've got a lot of
Everything is buttoned up that has gone reasonably well thus far we've got a lot of good experience on the team at this point with them from a credit card experience perspective, So I think you'll see the first quarter would be continued to be a rollout opening new marketing channels evaluating those and then really in the middle to back half of the year.
Speaker 6: good experience on the team at this point with from a credit card experience perspective.
Speaker 6: I think you'll see the first quarter be continued to be a rollout, opening new marketing channels, evaluating those, and then really in the middle to back half of the year, you'll see us get more aggressive with volume as we have the confidence to do so. The costs are really internal from a team perspective, and of course you've got your bank costs and profit-lifting costs. But I think those are all, you've got those all baked into the model and understand the targets that we need to hit for, for that pride to be successful.
You see us get more aggressive with volume as we had the confidence to do so.
Cost of really.
Internal from a team perspective and of course, you've got your bank cost and processing cost, but I think those are all and we've got those all baked into the model and understand the targets that we need to hit for you know for that product to be successful.
Thank you.
Speaker 1: And it's Washington, and it comes from Moshe, Ornbuck, with Credit Suisse. Please go ahead.
And our next question comes from Moshe Orenbuch with Credit Suisse. Please go ahead.
Speaker 7: Great thanks and a lot of detail in the call on the Canadian business. Maybe, and you did kind of talk a little bit about the US side and maybe just expand a little on what you think it's going to take to get that back to where you're, you know, I mean, or maybe just tell us what your plans are and what you think it can get to within a kind of a two year time.
Great. Thanks, and a lot of detail on the call on the Canadian business, maybe you could and you did kind of talk a little bit about the U S side, and maybe just expand a little on what you know what you think it's going to take to get that back to where you know you're you know I mean or maybe just tell us what what your plan.
Saar and what you think it can get to within a kind of a two year timeframe.
Yes.
Speaker 3: uh... and most of the all morning all uh... uh... give a little call or maybe that's determined but no it's just that we saw if you if you exit for the runoff portfolios from regulatory change at the count you know biggest ones of the california virginia
Oh, Hey, Moshe talked all morning.
But I'll give you a little color, maybe those guys can chime in but.
We saw if you if you ex out the for the runoff portfolios from regulatory change I think you know the biggest ones that would be California, Virginia, and then the the verge.
Speaker 3: and then the verge credit bank product. We saw 9% sequential growth in balances. I think last year we said we'd like to see 8% to 10% sequential growth. You know, absent the runoffs.
Bank product, we saw 9% sequential growth.
And balances I think last year, we said, we'd like to see you know, 8% to 10% sequential growth absent the runoffs and sort of the core portfolios.
Speaker 3: It's sort of the core portfolio's, for some extended period of time. So I think we're with the first quarter so far. It's tracking well. I think a lot of people in our space have talked about, this is going to be a very different taxi. And so that's part of our caution on guidance on the US business. It's just with the child tax credit pay off last year, how does it impact?
Now for some extended period of time, so I think.
No I think we're with the the first quarter. So far it's tracking well I think there's a lot of people in our space have talked about this is gonna be a very different tax season. So.
That's part of the caution on guidance on the U S business is just with.
With the child tax credit pay off last year, how that's going to impact them.
Speaker 3: you know tax refund fees and what that does to pay down and credit etc. So they will really get a little bit of a you know we have some thoughts about them we're kind of prepared for a bunch of different outcomes but it's it's really going to be a different year than what anything we've seen in a long time. So but you know that you know the tax fees in the side I think that
As you know tax refund season, and what that does to pay downs and credit et cetera. So now, we're really going a little bit about it.
We have some thoughts about them are kind of prepared for a bunch of different outcomes, but it certainly can be a different year than anything we've seen in a long time, so but.
You know that the tax season, aside I think that if.
Speaker 3: if we can continue to see good sequential growth, and tax season is going to obviously have an impact, so maybe for the year you're still looking at balance growth that's going to be...
You can we can.
Continue to see good sequential growth.
And if you. It's you know taxes you can obviously have an impact so maybe for the year, you're still looking at balanced growth that's going to be you know.
Speaker 3: you know, well past 20% for the year in the US. And I think a lot depends on the macro.
Well past, 20% for.
For the year in the U S and I think you.
You know a lot a lot depends on the macro.
Speaker 3: you know, the factors in the US, but, but, you know, we're still, you know, two and a half million, two and a half million jobs, I mean, I think the number you believe short of, the number of people that were working before COVID in the US, actually, that says the Canada, we, Canada's actually the more people working in Canada now than we're working pre-COVID. The US, we're still short. A lot of those jobs in the US are in
The factories in the U S, but but you know we're still two and a half million two two and a half million job depending on whose number you believe short of of the number of people that were working before COVID-19 in.
In the U S actually not just a Canada, Canada is actually the more people working in Canada now and we're working pre Covid you are still showing a lot of those jobs in the U S are in.
Speaker 3: you know, retail restaurants, hospitality jobs. And there's a lot of that's a key kind of customer base for us. So provided that gap continues to close. You know, if you're instead of 10 of a two year horizon, I think we see it two year horizon. But remember, we still have, you know,
But retail restaurant hospitality jobs, and there's a lot of it that's a key key kind of customer base for us So provided that that gap continues to close.
Right up here, you said 10 of a two year horizon I think we see a two year horizon, but remember we still have.
Speaker 3: California, Virginia, that those from a regulatory standpoint, that business, which is we're gonna have to kind of build back and that, with out sort of the benefit of some pretty nice pieces of business there. So I think it is, I think your good question, though, is it is kind of a two year.
Portfolio as you know, California, Virginia.
Those those from a regulatory standpoint that business. You know, we're just we're going to have to kind of build back and and you know without towards the benefit of some pretty nice pieces of our business. There. So I think it is I think it's a good question, though is it is kind of a two year build the kind of work.
Speaker 3: you know, build the kind of, you know, to kind of build back from the sort of, you know, the COVID impacts to...
To.
Kind of build back from both the sort of the Covid impacts.
Speaker 3: You know, these balances pay off the smaller, higher yielding products, where the products have paid off and stayed kind of depressed from a demand level, you know, more so than the larger ticket, the larger balance, lower yielding products. So, I'll go right to have any comments on that.
You know these these balances pay off the smaller higher you know higher yielding products, where the where the products have paid off and stayed kind of depressed from a demand level.
No more so than the larger ticket the larger balance is lower yielding products. So oh go Roger have any comments on that.
No I think I think you covered.
Yeah.
Speaker 4: I think everything that's obviously worth noting is we have to continue to be diligent on evaluating the cost structure of that business.
Yeah, and I think the other thing that's.
Obviously worth noting is we have to continue to be.
Diligent on it.
Evaluating the cost structure.
That business.
Because of those trends and because you know.
Speaker 4: because of those trends and because, you know, with
With it with more with obviously with more volume going online and also you know we're not going to we're not going to have an installment product in California.
Speaker 4: with more obviously with more volume going online and also, you know, we're not going to have an installment product in California, you know, in the future. So, you know, that runoff portfolio influences a lot of decisions around evaluating cost structure as well.
In the future. So so you know that.
That runoff portfolio.
Fluids was a lot of decisions around evaluating cost structure as well.
Got it thanks, and maybe just as a follow up I mean, your delinquencies overall were relatively stable in the fourth quarter and you know you've talked about credit normalization.
Speaker 7: kind of thanks and maybe just as a follow up, I mean, you know, the linkancies overall were relatively stable in the fourth quarter. And you've talked about credit normalization. Like, I understand the trends that you talked about, you know, kind of year over year differences in provisioning. But maybe just in terms of just the linkancy performance, are they at roughly normal levels? Is there more of that to come? Like how do we think about that in 2020?
I understand that you know the trends that you talked about you know kind of year over year differences and provisioning, but maybe just in terms of just the delinquency performance are they at roughly normal levels is there more of that to come like how do we think about that into 2022.
Speaker 6: This is though maybe I'll just say a few things and not what others shine in but I think if you look
This is bill maybe I'll, just say a few a few things and then let others chime in but I think if you look at it.
Speaker 6: You know, in the prepared remarks, we talked about the things that drive a lot of that, which is the channel mix, the new customer mix. But if you just look at it on a per unit basis, and then those that do go into delinquency and the liquidation levels, we continue to be, to perform well above where we were pre-pandemic.
The prepared remarks, we talked about the things that drive a lot of that which is the channel mix of new customer mix, but if you just look at it on a per unit basis, and then those that do go into delinquency in the liquidation levels. We continue to be performed well above where we were pre pandemic and I think a lot of that is you know a lot of it will be learned through the pandemic.
Speaker 6: And I think a lot of that is, you know, a lot of will be learned through the pandemic, both from a credit risk model perspective and just our recovery tactics. And we would expect to, you know, maintain, you know, significant portion of those efficiencies as we move into, you know, more quote unquote, normal period.
From a credit risk model perspective, and just our recovery tactics and we would expect to maintain.
A significant portion of those efficiencies as we move into a more quote unquote normal period.
Great.
Thanks.
Speaker 1: Thank you, and our next question today comes from John Hack, at Jump Freeze. Please go ahead.
Thank you and our next question today comes from John Hecht Jefferies. Please go ahead.
Speaker 8: Morning guys, thanks very much. It's done. I think even in here, I was the last call or the call before you talked about.
Morning, guys. Thanks, very much Don I think even in.
I can't remember the last call or the call before you talked about.
Speaker 8: You made it kind of on impacts of inflation and how that might affect things. I'm just kind of interested in update because I think we're now seeing it in real time action. And how does inflation impact the different segments? I mean, I would assume those ending segments has a different impact than point of sale. Are you seeing any changes that are worth noting at this point time? Is that developed?
You intimated kind of on it.
Impacts of inflation and how that might look like.
To affect things.
I'm just kind of interested in an update because I think we're now seeing it in real time action and how it how does inflation impact either the different segments. I mean, I would assume that lending segment has a different impact in point of sale are you seeing any changes that are worth noting at this point in time is that as that develops.
Speaker 3: Yeah, I mean, I'll try to do this in a way that's not because I think it's you just hit on some of the complications right that it's different
Yeah.
I mean, it's I'll try to do this in a way that's not because I think that's it you just hit on some of the complications right that it's different it has different impacts in different segments. So obviously in the point of sale side.
Speaker 3: um... it has different impacts and different segments obviously in the point the cell side you know your a.o.v. and your average ticket is gonna
Oh, Hey, your average ticket is going to go up.
Speaker 3: because you're talking about furniture and appliances, stuff with either lumber or, you know, but chips in certain appliances, et cetera. So you're seeing some inflation in the AOV. And I think that it's something that's from a credit quality standpoint.
Because youre talking about furniture, and appliances stuff with either lumber or.
Chips in certain appliances et cetera, so you're seeing some inflation in an NDA.
And the a O V.
And I think that that's something that from a from a credit quality standpoint that we've got to be pretty mindful about how we adjust the.
Speaker 3: We've got to be pretty mindful about how we adjust the
Speaker 3: You know, the underwriting side. I would say again, remember, that's a prime customer. So a 740. Now we are adding some on prime to that. And we're working closely with our partners at Flex City on the non-prime stuff, including the underwriting. But for now, overwhelmingly, that's a prime customer. So it would look more sort of flex on the ability to absorb pricing.
You know the underwriting side I would say again as I said that remember that's a that's a prime customer.
So 740 and now we are adding some non prime to that and we're working closely with our partners at <unk>.
At Flex city on the non prime stuff, including the underwriting but for now overwhelmingly that subprime customers. So it was more sort of flex and ability to absorb.
Rice increases.
Speaker 3: And when I'm talking about price degrees, meaning they are just how much net disposable income do they have so Canada is seeing
When I talk about price increases, meaning they're just how much net disposable income do they have so Canada is seen now in flight wage inflation in Canada was about two 7% for 'twenty, one, but it's expected to kind of keep going up from there this year.
Speaker 3: Now, it's like wage inflation in Canada is about 2.7%.
Speaker 3: for 21, but it's expected to kind of keep going up from there this year. And in the US, I think it was 4.7%, but the sequential rate fell in the fourth quarter. And I think a lot of the forecasts are maybe that we're sort of gonna see some moderation there. So I think in the direct consumer side, the thing for us is always,
And in the U S. I think it was four 7%, but the the rate the sequential rate fell in the fourth quarter.
And I think a lot of the forecast or maybe that we're sort of going to see some moderation. There. So I think in the direct to consumer side. The thing for US is always yes.
Speaker 3: if the inflation is sort of, prices are going up at a kind of, you know, something of a normal gem we haven't seen.
If the if the inflation is sort of if prices are going up at a on a kind of you know.
Something of a normal again, we haven't seen inflation like this since I.
Speaker 3: you know, I was in high school. I think so. I don't have a lot of experience with this in my business life. But I think in my experience, so as long as there aren't sort of shocks and the one I use, the example I use is gas prices during Katrina. You know, Katrina hit, I would see the scrub at all the refinery capacity, et cetera. And gas prices went in the period of nine. I went back and looked at them. In fact, from 90 days of gas prices, I went to 11 to $3.
I was in high school I think so I don't have a lot of experience with this and Mike I know in my business life, but I think in my experience I was just as long as there aren't sort of shocks in the one to one I use. The example, I use is as gas prices during Katrina.
[noise] ahead into chipset, you know, obviously disrupted all the refinery capacity et cetera, and gas prices went from a period of night I went back and looked at them back from 90 days of gas price went from 211 to $3.
Speaker 3: And that's the kind of spike that, and that, and you know, my, I remember in my, you know, prior job, you know, that that did have a credit impact because that was that, there was that biggest spike. So, and again, gas prices are up again. But I think if prices are moving up in a normal fashion, it gives our customers more ability to sort of adapt. Because again, they, you know, they live on tight budget generally. And I think they have, have, you know, kind of an and ingrained ability to sort of manage it more tightly.
And that's the kind of spike in that and you know my I remember in my prior job, but that did have a credit impact because that was that there was that big of a spike so and again gas prices are up again.
I think if prices are moving up in a normal fashion. It gives our customers more ability to sort of adapt them because again. They you know they live on tight budgets generally and I think they have had.
L. A kind of a an ingrained ability to sort of manage it more tightly than than you know.
Speaker 3: and customers that have more sort of flex in their disposable.
Customers that have more you know more sort of a flex in their disposable income.
Speaker 3: So we're not seeing any, I don't think we're seeing any that bleed over into the NCO and delinquency performance. I think more what's happening there is like that, it's just kind of returned to normal post-COVID as bank balances and excess cash starts to burn.
So we're not seeing I wouldn't say, we're not seeing any I don't think we're seeing any of that bleed over into in the N T O and delinquency performance I think more what's happening there.
Just kind of you know.
It's kind of returned to.
To normal post Covid edge bank balance citizen and excess cash starts to burn off.
Speaker 8: Okay, that's very helpful commentary. And then two quick questions kind of related to modeling.
Yes.
That's very helpful commentary and then.
Two quick questions kind of related to modeling.
Hum.
Speaker 8: is the runoff of like California and Verge, or where are we in that whole spectrum, and then where are you guys putting up new branches? I think you talked to, it does our new branches. did you think you guys were there?
Is the run off of like California, and verge are we where are we in that hole.
That whole spectrum, and then where are you guys, putting up new branches I think you talked to a dozen or so new branches.
But Roger you were talking about the the portfolio run off.
Speaker 4: Yes, sorry, I was muted, forgive me. Yeah, for those runoff balances, just for perspective, those balances ended 2021 in total at about 55 million. So it started, it would have started 21 at about 85 million.
Yeah, sorry, I was muted forgive me.
Yeah, John for those run off balances.
Just for perspective.
Those balances ended 2021 in total at about 55 million. So it started it was would've started a 'twenty one we'll get about.
80 about $85 million.
Speaker 4: And so they obviously one thing that sticks out because of how long we, you know, and that includes California, Virginia, Illinois was tiny and then the Burge product, the bank product.
And so they've obviously, one thing that sticks out because of how long.
And that includes California.
Virginia, Illinois was tiny and then the verge product bank product.
Speaker 4: So, you know, 55 million of receivables running down, we still think that, you know, by the end of the year, by the end of 2022, we still probably have a quarter of that left.
So $55 million of receivables.
Running down.
Still think that you know by the end of the year by the end of 'twenty to 'twenty, two we still probably have a quarter of that left.
Okay.
Speaker 6: And then John to get the question on the branches. A couple of moving parts. One is Lenderec and those will all be in the Ontario province, mostly outside the greater Toronto area, filling out some of the surrounding markets.
And then John to get the question on the branches a couple of moving parts. One is lender act and those will all be in the Ontario Province.
Outside of the greater Toronto area filling out some of the surrounding markets.
Speaker 6: We're gonna open a couple of cash monies again, and sort of outside markets this year. And then the Heights expansion will be primarily for new states for us. We're gonna open a couple of cash monies again, and sort of outside markets.
We're going to open a couple of cash monies again, again and sort of outside markets. This year and then the heights expansion will be primarily for four new states for us.
Okay.
Great I appreciate that guys. Thanks.
And our next question today comes from John Rowan of Janney. Please go ahead.
Speaker 1: And the next question today comes from John Rilland and Janie. Please go ahead. Good morning guys.
Good morning, guys.
Speaker 9: I missed the very beginning of the call. Two questions. So, Don, did you kind of address the longer term guidance? We haven't had an update of that $3 share number for 2023 since pre-hites and wondering, you know, if there's an update to that number, where you think it is, inclusive of heights, it's one to get an update on that.
Hey, Jon I missed the very beginning of the called.
Two questions. So Don did you kind of address the longer term guidance. We haven't had an update of that $3 a share number for 2023 since pre hydro I'm wondering you know if there's an update to that number where do you think it is inclusive of heights.
Just trying to get an update on that.
Speaker 3: Yeah, I mean, John , we didn't really address it specifically. And I think the, you know, we addressed sort of the component pieces other than the US.
Yeah, I mean, so we didnt, we didnt really address it specifically and I think the.
We addressed sort of the component pieces other than the U S. A.
Speaker 3: the US direct lending business. So we talked about height and intertuesday guide for height.
The U S direct lending business and so we talked about height and introduced a guide for heights for 'twenty three and then we talked about the guide for them you know modestly higher guide for.
Speaker 3: for 23 and then we talked about the guide for, you know, modestly higher guide for the combined Canadian businesses and in 23. So I would say that, you know, if you heard the answer about sort of the recovery of the US business.
The combined Canadian businesses in.
And 23, so I would say that that.
If you already answer about sort of the recovery of the U S business now.
Speaker 3: If we can see, and again, this is not an official, it's the thing, if we can see a real recovery in that business.
Now if we can see and again this is not an official you're just saying if we can see a real recovery in that business.
Speaker 3: over the next cup, you know, that they get a two-year kind of, you know, where we see sort of pretty consistent.
Over the next couple of you know that they've got a two year kind of where we see sort of pretty consistent sort of sequential growth and an earning asset balances and and and pretty decent credit performance.
Speaker 3: sort of sequential growth in earning asset balances and pretty decent credit performance. Our feeling is that you can kind of add up the numbers.
Our feeling is that you know you can kind of add up the numbers from the subsidiary pieces and you know we think we can plug in a number for if we get some growth and the kind of growth we're talking about over a two year period I think we're certainly of a bolt of the belief that you know.
Speaker 3: from the subsidiary pieces. And we think we can plug in a number. If we get some growth, it kind of grows and talking about over a two year period, I think we're certainly of the belief that it's $3 plus height.
Right the $3 plus heights.
Speaker 3: in 20.3 is absolutely achievable. But again, the piece of that that was so little cautious on for a bunch of factors we talked about is gonna be the recovery of the US business.
In 'twenty three is absolutely.
Achievable, but again that the piece of that that that we're still a little cautious on for a bunch of factors that we talked about is gonna be the recovery of the U S business.
Speaker 9: i don't want to talk about that obviously yeah me obviously us businesses still losing money on a not an adjusted even thought but on a you know an operating basis uh... you know there's a lot of noise in the quarter in in the u.s. business because of the high-tech position realistically exclusive of that how unprofitable is the u.s. business and kind of where do you see that keeping point of it turning profitable again
I just wanted to talk about that obviously.
Yeah, I mean, obviously the U S business is still losing money on a not on adjusted EBITDA, but on a.
On an operating basis.
You know there was a lot of noise in the quarter and in the U S business because of the hydro acquisition.
Realistically exclusive of that I mean, how unprofitable as the U S business and kind of where do you see that tipping point of it turning profitable again.
Speaker 3: So, Tony, the other thing Roger said, I'm a little, I think in terms of sort of specific numbers, I think we're gonna, you know, we'd like to see things kind of spool out and get through this the first quarter, which I just said, it's like about the tax season impact. But I just, I'll just say that the,
So the other thing Roger said I'm not I'm I'm, a little I think in terms of sort of specific numbers I, just I think we're gonna Hum.
We'd like to see things kind of.
Full out and get through this the first quarter, which I just talked about the tax season impact, but I'd just I'd just say that.
The the the other thing we are continue to Roger mentioned continue to evaluate the cost structure in that business you know we closed.
Speaker 3: The other thing we are continuing to, Roger mentioned continuing to evaluate is the cost structure in that business. You know, we closed.
Speaker 3: I'm gonna get the exact number wrong probably someone who I'm able to 40 branches there last year, some of the dynamics in terms of consumers, willingness, ability to do transactions online.
And I've got to get the exact number wrong, probably somewhere in neighborhood of 40 branches, there last year and some of the dynamics in terms of.
Of of consumers' willingness and ability to do transactions online, which you know obviously how about that.
Speaker 3: which obviously have a, you know, ended that kind of variable cost in a lending model or still bear to give you like a more precise answer. I think we need to sort of be a little bit more precise and come to some conclusion about additional moves we're gonna make on the cost structure of that US direct lending business, the non-hipes US direct lending business. So, and obviously Rogerville, I'm coming.
And does that kind of variable costs are like no lending model are still there.
Give you a more precise answer I, just think we need to we need to sort of be a little bit more precise and come to some conclusions about.
The additional moves we're going to make on the you know on the cost structure of that that U S. Direct lending business. The non heights, you asked directly the nickel, so and obviously Brexit Bill I'm comments.
Speaker 4: by all means. Yeah, John , I would, it might be helpful. And we can talk about it offline, but just just pay 16 of our earnings release.
By all means.
Yes, John I would.
It might be helpful.
We could talk about it offline, but just a page 16 of our earnings release has the segment P&L for the U S and <unk> and the segment operating loss for Q4, I'm, including both obviously, we would capture the interest on the senior notes and that segment down, but it but we have.
Speaker 4: has the segment P&L for the US and the segment operating loss for Q4, including, look, obviously, we capture the interest on the senior notes in that segment down, but we have the operating loss for Q4 for that business on page 16 of our earnings releases is a little over $28 million.
The operating loss for Q Q4 for that business on page 16 of our earnings release is a little over $28 million.
Speaker 9: Okay. And then just last one, let me show you, I understood one Q guidance. It's weaker than one Q2 0, but better than four Q2 1, correct? Correct. Okay.
Okay.
And then just last one make sure I understood <unk> guidance, it's weaker than one Q 'twenty, but better than for Q2 'twenty one correct.
Correct Okay.
Thank you very much.
Speaker 1: And ladies and gentlemen as a reminder, if you'd like to ask a question, please press star then one. Today's next question comes from Vincent Caintec with Stevens. Please go ahead.
Okay.
And ladies and gentlemen, as a reminder, if you'd like to ask a question. Please press Star then one today's next question comes from Vincent <unk> with Stephens. Please go ahead.
Speaker 7: Hey, thanks. Good morning. Thanks for taking my questions. Most of my questions have been answered. But one question about marketing and customer acquisition cost trends that you're seeing.
Thanks. Good morning, Thanks for taking my questions most of my questions have been.
Answered, but one question about marketing and customer acquisition cost trends that youre seeing.
Your growth has been great I think some of the other fintech have pointed to higher acquisition costs and some concerns about low end consumers starting to maybe slow down their spending just wondering what your what youre seeing and.
Speaker 7: You know, your growth has been great. I think some of the other thin techs have pointed to higher acquisition costs and some concerns about low end consumers starting to maybe slow down their spending. Just wondering what you're seeing and.
Speaker 6: You know, how your particular growth have you been able to generate that while keeping marketing efficient? Thank you.
How your particular grow with have you been able to generate that.
While keeping marketing efficient thank you.
Speaker 6: Good morning, Vincent. This is Bill. And so I think it's for us, as we've long said, the fact that we have a very diversified marketing final gives us the ability to very quickly, you know, throttle up or throttle down based on what we're seeing in almost real time. And I think that was the case in the fourth quarter.
Hey, Good morning, Vincent this is bill so.
So I think it's for US as we've long said the fact that we have a very diversified marketing funnel. It gives us the ability to very quickly you know throttle up or throttle down based on what we're seeing in almost real time and I think that was the case in the fourth quarter.
Speaker 6: In addition, we actually tested some higher cost per funded channel.
We actually tested some higher cost per funded channels.
Speaker 6: to see what that did for demand and of course now we'll evaluate what the credit looks like and just how it performs as a vintage but you know not to say that there aren't pockets for you see increase.
What that did for demand and and of course now we'll evaluate what the credit looks like and just how the performance of the vintage but.
Not to say that there arent pockets, where you see increased marketing costs and our ability to move that to.
Speaker 6: marketing costs that our ability to move that to, you know, to more reasonable cost channels and based on performance, I think it has been and continues to be a real differentiator for us.
More reasonable cost.
Panels and based on performance I think it is.
Has been and continues to be a real differentiator for us.
Okay, Great. That's all I had thank you.
Yeah.
Speaker 1: Ladies and gentlemen, this concludes a question and answer session. I'd like to turn the conference back over to the men's routine for any final remarks.
And ladies and gentlemen, this concludes our question and answer session I'd like to turn the conference back over to the management team for any final remarks.
Speaker 3: Yeah, hey, it's Tom. Thanks everybody for joining us. We will talk to you again after we report our first quarter. Thanks very much and have a great day.
Yeah, Hey, thanks, everybody for joining us we will talk to you again after we report our first quarter. Thanks, very much and have a great day. Thank.
Speaker 1: Thank you, sir. This includes today's presentation. We thank you all for your participation. You may not have a selection of lines and have a wonderful day.
Thank you Sir this concludes today's presentation. We thank you all for your participation you may now disconnect your lines and have a wonderful day.
Yeah.