Good day, and welcome to the CURO Group Holdings third quarter 2022 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on the telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I'd now like to turn the conference over to Tamara Schulz, CURO's Chief Accounting Officer. Please go ahead. Thank you and good afternoon, everyone. After the market closed today, CURO released its results for the third quarter 2022, which are available on the investors section of our website at ir.curo.com. With me on today's call are CURO's Chief Executive Officer, Don Gayhardt, and Chief Financial Officer, Roger Dean. Before I turn the call over to Don, I'd like to note that today's discussion will contain forward-looking statements based upon the business environment as we currently see it, including statements related to our future operational and financial performance. As such, it includes certain risks and uncertainties. Please refer to our press release issued this afternoon and on 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 forward-looking statements included in today's discussion. Any forward-looking statements in this call are based on assumptions as of today, and we undertake no obligation to update or revise these statements as a result of new information or future events. In addition to U.S. GAAP reporting, we report certain financial measures that do not conform to generally accepted accounting principles. We believe these non-GAAP measures enhance the understanding of our performance. Reconciliation between these GAAP and non-GAAP measures are included in the tables found in today's press release. Before we begin, I'd like to remind you that we have provided a supplemental investor presentation that we will reference in our remarks and that you can find it in the events and presentation section of our IR website. With that, I would like to turn the call over to Don. Thanks, Tamara. Good afternoon, everyone, and thank you for joining us today. Before I turn to our results for the quarter, you probably saw that earlier today we announced that Roger Dean is retiring as our Chief Financial Officer. Roger has agreed to stay with us in an advisory capacity through a transition period. Roger joined CURO in 2016, was instrumental in all of the transactions that have transformed our company over the past five years. He's worked tremendously hard and will leave behind a very talented team of finance and accounting professionals. I'll personally miss Roger's leadership and friendship and on behalf of everyone at CURO and those who know him both professionally and personally, we all wish Roger and his family the very best. We've commenced the search for Roger's successor, and Tamara Schulz, our Chief Accounting Officer, will serve as interim Chief Financial Officer. Tamara joined us last year from Capital One. She's done a terrific job for us and we're confident she'll be equally good in this interim role. Turning to our business review. I won't spend a ton of time on macro comments other than to say that we do see a lot of data that suggests some economic weakness in both the U.S. and Canada. In the U.S., our customers are still working in a very tight labor market with consistent wage gains, particularly among lower wage hourly workers, and these gains appear to be offsetting the inflationary impacts of gas, groceries, and housing. We should note, as we have in the past, that Canada is seeing some impact from the downside of pandemic-related stimulus, but that stimulus was much more targeted and limited than in the U.S., which result in inflation running about 150-200 basis points lower than in the U.S. The Canadian job market has shown some weakness over the past three months, and the Bank of Canada last week slowed their pace of rate increases. As we plan for 2023, our assumption is that we'll experience some form of a mild recession in both the U.S. and Canada, one that has higher levels of employment and wage growth than in the past, but with higher interest rates, at least for the near term. One final macro point relates to the Canadian dollar, which after holding steady at about $0.80 to the USD for much of the year, depreciated rapidly over the end of the summer and has recently been trading at about $0.73 to the USD. It does not have a cash impact on us, but it does hurt us in translation on our Canadian revenue and earnings. Obviously an almost 10% decline during the quarter will meaningfully impact those results. During the third quarter, we completed a series of transactions that dramatically reshaped and repositioned our company. We discussed these at some length in previous calls, so I won't spend a great deal of time to review other than to note that our results for the quarter are impacted by, one, the inclusion of results from our divested U.S. legacy business through July 7th. Two, a partial quarter of results from First Heritage, which we acquired on July 13th. Three, related non-recurring items. Roger will review these items later. Those transactions aside, I would characterize our results for the quarter as mixed. We saw continued growth in earning assets in our direct lending businesses, with Heights and our Canadian operations growing sequentially by 5% and 10% respectively, and in constant currency of 21% and 29% since the beginning of 2022. Flexiti's loan book has continued strong growth and ended the quarter at approximately CAD 950 million or just under $700 million. Which is 128% higher than a year ago and compares with approximately CAD 250 million when we closed the transaction in March of 2021. Terrific progress in just about 18 months. Growth rates in our direct lending book in both the U.S. and Canada did slow in the third quarter as credit tightening measures that we took beginning in April and May had the intended impact, particularly in the lower credit tiers in the U.S. and in our LendDirect brand in Canada. We'll talk about credit in more detail later, but we believe that we're well-positioned to continue to grow our portfolio in both the U.S. and Canada in a disciplined way while generating good credit outcomes even amid more macroeconomic uncertainty. We expect our consolidated loan book to grow in our fourth quarter, with more than 50% of that coming from seasonal holiday growth in Flexiti's merchant base of more than 8,000 retail partner stores and online shopping sites. With that loan growth in Canada, we saw strong revenue growth in constant currency, with our combined Canadian operations growing to CAD 139 million or 11% sequentially and 43% year-over-year. For Heights and First Heritage, their combined operations saw revenue growth of 10% and earning asset growth of 14% versus the third quarter of 2021, which includes periods prior to our purchase. While revenue growth was strong, it fell short of our expectations as our credit tightening had marginally more impact than anticipated, particularly in the lower credit tiers, which have higher relative yields and more of the revenue stream comes from upfront origination fees. This impact was most pronounced in the small loan segment of our U.S. direct lending, and we expect these impacts to continue for the next several quarters. As we stated when we purchased Heights and First Heritage, our focus is on driving growth in the larger loan segment with higher credit quality borrowers. At the quarter end of our $739 million U.S. loan portfolio, approximately 70% is in the larger loan category, and we expect to see that percentage continue to increase over time. Excluding the divested legacy business, our net charge-off rate for the quarter in the U.S. improved by 110 basis points over the second quarter as we benefited from higher recovery rates, some of which resulted from new centralized collection procedures and resources that we've added at Heights and have in the works at First Heritage. That said, net charge-off rates within the U.S. business are still trending higher than we anticipated, as we are experiencing higher defaults on loans that originated at Heights Finance in Q3 and Q4 2021, which is before we closed on the sale. We expect the charge-offs on these vintages to peak in Q4 and early first quarter 2023 before returning to a more normalized rate. In Canada direct lending, we saw year-over-year loan growth of 19% and reported balances were relatively flat on a sequential basis, but up 6% on a constant currency basis. Year-over-year sequentially, net charge-offs increased 260 basis points and 90 basis points respectively. We expected this increase in net charge-off rates as we return to pre-COVID performance levels. Overall, I'd say that credit in Canada has normalized a bit faster than anticipated, but we're comfortable with current trends. I would note that we now have more than 20% of our loan book originated at the internet channel, where we will see slightly higher charge-offs than in-store originations, so some mix shift there as well. Our Canadian point-of-sale lending business, Flexiti, a modest increase in net charge-offs of 20 basis points and 30 basis points year-over-year and sequentially respectively. As more of a Flexiti portfolio moves into revolving status from deferral periods where no payments are due, we will see charge-offs tick up, but yields will move up higher as well. We should spend a minute on this, as it is important to understand how this dynamic, coupled with continued loan growth, will drive sequential earnings improvements at Flexiti. In addition to the discount that Flexiti earns from its merchant partners, we also earn interest and fees from consumers, but only after the end of the promotional period. Given that this is largely a prime book, a significant portion of consumers will pay off the balance during the promotional period, and more consumers did that during the pandemic. Also, and importantly, as the book is growing, it will, by definition, have more new customers in the deferral period. While the Flexiti loan book is on track to meet its expected loan growth of 80%-90% for this year, we expect more modest growth of 30%-35% in 2023. In terms of the composition of the portfolio, we expect the portion of Flexiti customers carrying interest-bearing balances to increase from approximately 20% currently to approximately 30% by year-end 2023, and this should help gross yields on the Flexiti portfolio to conservatively increase by approximately 500 basis points by the end of 2023. Turning to some of the expense and earnings improvement steps that we announced in our earnings release. In addition to credit normalization and other factors impacting operating results, our earnings outlook has been negatively affected by increases in forward benchmark rates for variable rate debt, as well as the currency impact that we discussed earlier. Since we announced our decision to sell our legacy U.S. business to purchase First Heritage in the spring, forward curves and currency have impacted our 2023 outlook by more than $45 million. To mitigate these expected headwinds, we are executing on a number of initiatives that will materially improve our 2023 earnings. Let's start with expenses, where we're taking immediate action to lower our operating costs across both the U.S. and in Canada. In Canada, we are closing 59 branches and consolidating those units into our remaining Canada direct lending stores, which will have 149 Cash Money stores remaining with still very strong networks in most Canadian metro areas. This consolidation capitalizes on the strength of our online channel, which I mentioned earlier, and demonstrates the more limited need for our line of credit customers to visit branch locations. We've also reduced store headcount in certain markets to better align with branch traffic. Collectively, we expect these actions to save us $13 million-$14 million on an annual basis. In our Canada point-of-sale business, we've identified additional opportunities to defer planned staffing additions and other expenditures which will result in savings of approximately $5 million. In the U.S., beginning this month and through the first quarter of 2023, we plan to close approximately 10% of our U.S. direct lending stores. We are targeting both lower performing stores as well as stores where we have overlapping footprints. This consolidation capitalizes on in-depth analysis of local market density and continuing improvements in centralized digital operations. We expect these store closures to result in annual savings of $10 million-$12 million. In addition, we've also made the difficult decision to suspend indefinitely the rollout of our First Phase non-prime credit card. This card was meant to appeal to customers of our U.S. legacy business. On the rapid change in the macroeconomic environment for funding costs, credit performance, and liquidity considerations significantly altered the return horizon for this initiative. We'll continue to work on a larger balanced card product that appeals to our current U.S. direct lending customer base, but do not expect to launch any new offerings in this area in 2024 at the earliest. We expect the suspension to result in potential operating savings of approximately $7 million. Across our geographic footprint, we are consolidating certain back-office functions as well as reducing our corporate office footprint, both to reflect the changes in our businesses through the acquisitions and sale and how our employees work post-pandemic. We expect to achieve approximately $5 million-$7 million of operating expense savings by consolidating corporate office functions and space. Summing it up, through the consolidation and rationalization across our Canadian and U.S. operations and our corporate functions and office space, we expect to see a net annualized improvement in adjusted pre-tax income of approximately $40 million-$45 million while reducing our overall headcount from approximately 4,000 employees to between 3,500 and 3,600 employees. We also expect to incur pre-tax non-recurring restructuring charges in the fourth quarter of 2022 in the range of $5 million-$7 million relating to these initiatives, of which $3 million represents cash costs. Looking at risk-adjusted revenue, to address the margin compression we've experienced due to rising interest rates, where permitted and appropriate based upon the competitive environment, we're working in three areas. First, adjusting pricing to consumers in all three business units. Second, adjusting discount rates for Flexiti to reflect higher base rates. Three, adding more resources and debt mitigation tools for consumers. While we expect that the ongoing shift in the portfolio to Flexiti U.S. direct lending larger loans will modestly reduce our overall yield, these measures taken together should improve our risk-adjusted yields in 2023 across our entire portfolio by 100-125 basis points. In conclusion, we believe we have identified revenue enhancements and operating expense reductions which should result in a meaningful improvement in pre-tax earnings in 2023, which will help offset the increase in interest expense due to rising rates, a weakened Canadian currency, and other economic headwinds. While the extent and duration of these headwinds makes it difficult for us to provide any forward outlook at this point, we do feel very confident that we are well-positioned to continue to grow our business in a very disciplined fashion and to deliver a solid and sustainably profitable business in 2023 and beyond. I'll now turn the call over to Roger to review the details for our third quarter of 2022 results. Thanks, Don. Adjusted net loss for the quarter was $12 million, or $0.29 adjusted loss per share, compared to $0.15 adjusted earnings per share in the second quarter of 2021. The primary drivers of the year-over-year decline in earnings were, 1, decreased revenue in our U.S. segment as product mix in the U.S. shifted with the acquisitions of Heights Finance and First Heritage and the sale of our legacy U.S. direct lending business. 2, increased interest expense attributable to rising benchmark rates and increased borrowing to support, in part, the acquisition of Heights and loan portfolio growth. 3, increased loan loss provisioning on sequential loan growth and loss rates returning to pre-pandemic levels. Total revenues in the third quarter increased $5 million or 2% year-over-year. Canada direct lending revenue was $13 million or 19% year-over-year, and Canada POS increased by $16 million or 143% as compared to the third quarter of 2021. In the U.S., revenue decreased by $24 million or 18% because of the sale of the legacy U.S. direct lending business. For perspective, the sold business had revenue of $127 million in the third quarter of last year. For this third quarter, the combination of Heights and a partial quarter of First Heritage added $97 million in revenue. Consolidated operating expense for the quarter decreased $6 million or 5% compared to the prior year, primarily driven by the divestiture of the U.S. direct lending legacy business in July 2022, partially offset by the acquisitions of Heights Finance and First Heritage. Interest expense increased $24 million year-over-year. Of the increase, approximately $20 million was attributable to higher average borrowing levels. That is growth at Flexiti and Canadian direct lending increased for the senior notes tack on and new facilities for Heights and First Heritage. The remainder of the increase was due to increases in the benchmark rates for Flexiti and Canadian direct lending facilities. Gross loans receivable grew year-over-year by over $1 billion or 115%, primarily driven by the acquisition of Heights in December 2021 and First Heritage in July 2022, which contributed $509 million and $225 million to the balances respectively. For Canada, it's worth mentioning that the Canadian dollar weakened by 7% during this third quarter, with 4% of the decline occurring in the last two weeks of September. This negatively affects year-over-year and sequential loan comps. Flexiti loans grew 143%, adding $388 million in loan balances year-over-year. Canada direct lending grew 19%, adding $74 million in loan balances year-over-year. Since the end of last quarter, gross loans receivable grew by $114 million or 6%, primarily driven by the acquisition of First Heritage and Canadian POS lending growth of $63 million or 10%. The increase is offset by the sale of the legacy U.S. direct lending business. Excluding the loans sold with the divestiture of the legacy U.S. direct lending business, gross loans receivable grew $302 million sequentially, of which $225 million came from the First Heritage acquisition during the quarter. Canada direct lending was relatively flat sequentially, but on a constant currency basis, increased by 6%. On the First Heritage acquisition, for accounting purposes, we are required to account for the loans and other balance sheet amounts acquired at fair value as of the date acquired. We have included a brief summary of the purchase accounting on page 13 of our investor presentation. The fair value of the loan portfolio incorporates the credit losses expected to be realized on that portfolio. At day one, there is no allowance for loan losses for the acquired portfolio. The roughly $18 million discount is then accreted into revenue over the life of the loan portfolio. Charges related to this portfolio will be recognized in provision. While these entries should be neutral to risk-adjusted revenue, the geography on the P&L will be different than our originated loans. Over time, we will be building allowance on loans originated post-acquisition, as well as any further credit deterioration that was not included in the initial valuation of the acquired portfolio. We are also on track to adopt the CECL accounting standard on January 1st. We are still finalizing all of our processes and procedures, including review with our external auditors. We expect that adoption on January 1, 2023, will have a material impact by increasing the allowance for loan losses with a corresponding reduction in shareholders' equity. We expect the day one impact to be similar to what our peers experienced upon their adoption as of January 1, 2020. On the liquidity and funding side, we announced during the quarter we put in place new non-recourse revolving warehouses to support our U.S. business, and we also expanded the capacity and extended the maturity on our Flexiti facility. The maturity date for these facilities now extend through 2025. In August, we renewed our U.S. revolver for 12 months. At the end of the third quarter, we had $118 million of available liquidity, including unrestricted cash and undrawn borrowing-based capacity on our various warehouse facilities. As Tom mentioned earlier, we expect to fund, among other cash inflows and outflows, approximately $3 million of cash restructuring charges in the fourth quarter of 2022. Given the payback, we believe this is an attractive investment, and we have incorporated the use of cash in all of our liquidity projections. With respect to our dividend, while we feel comfortable that our current liquidity position would allow us to make this quarter's payment, we are prioritizing cash and liquidity needed to fund our growing loan book and to make investments, including the cash restructuring costs in the fourth quarter to deliver sustainable profitability with our new business model in 2023 and beyond. As such, we are suspending our quarterly dividend and will continue to review with our board going forward. I'll wrap up by saying what a privilege it has been to be part of CURO's journey since 2016. I've worked with some of the best and most talented people, a very knowledgeable and engaged board of directors and great advisors. I've known many of the investors and analysts on this call for over a decade, and I've thoroughly enjoyed the engagement and support. I'll likely miss it all on some level, but after 38 years in accounting and finance, I'm ready to slow down a bit and involve the next chapter. Operator. This concludes our prepared remarks, and I'll ask the operator. We will now begin the question and answer session. To ask a question, you may press Star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press Star then two. At this time, we will pause momentarily to assemble our roster. Still just John. The first question is from John Hecht of Jefferies. Please go ahead. Hey, guys. Roger, best of luck. It's sad to see you go, but I'm sure we'll keep in touch. Congratulations on a big move. Let's see. I guess trying to, you know, take out some of the noise from the acquisitions and all the moving pieces there. Acquisitions and then sales of loans portfolio. Can you know, maybe tell me what organic growth was? You know, I know there's no perfect science to this, so you're gonna have to maybe take a gauge at it. Organic growth was quarter to quarter, so from Q2 to Q3 in Flexiti and then the direct business in Canada and then the U.S. business. Just trying to get a sense for what is organic momentum for those three categories. Sure. Hey, John. Thanks for the comments, by the way. John, I think at the beginning of our earnings release, we added some tables that kind of unpack the moving parts at a very summary level. If you look at the loans and you ignore what we sold, the U.S. direct lending business, you know, was up, obviously up 40% sequentially, but $225 million of the growth, of the $300 million in growth came from the acquisition of First Heritage. Heights grew 8% sequentially, organically. Yep. Canadian direct lending was flat sequentially, but that was currency-driven. In Canadian dollars, it was 6%. Yep. -sequentially. Okay. The reported numbers were flat because, you know, we took the hit of the weakening of the Canadian dollar on September thirtieth. POS grew 10% sequentially. In U.S. dollars, though? Yeah, in U.S. dollars. It's a bigger number than that. 14%. It would've been like 14%. Yeah, okay. in Canadian. Given what you're, Don, you mentioned just being a little bit more cautious, surgical from a credit perspective. How do we think, you know, I guess seasonally, thinking about seasonality and you guys getting a little bit more selective, what do you think happens to that type of growth for the next few quarters? Yeah. John, I think obviously you've got, and particularly in the Flexiti business, right? You've got that merchant base, which is, you know, geared. There's a lot of big-ticket stuff that's geared to holiday shopping. I think that our expectation is that that business, that portfolio in U.S. dollars is probably gonna grow, you know, mid-teens, maybe mid to high-teens through the end of the year. The balance of the portfolio, I think the U.S. business, you know, starting at a base of $730 million or $740 million, you know, we could see, you know, maybe $20 million-$30 million of portfolio growth there, given kind of where we are from a credit perspective. I think Canada direct lending will go up, you know, probably 3% in U.S. dollars for the fourth quarter. Again, you know, kind of adjusting for where the trend was versus some, you know, some of the credit tightening measures. If you go forward to the end of Q1, you will still see Flexiti's still gonna grow, although it obviously will be, you know, coming off on the holiday period. The rest of the portfolio, Flexiti grow a little bit, the rest of the portfolio will shrink a little bit. From Q4, from December 31 to March 31, you know, it's very little growth in there because of the, you know, we still. The small loan portfolio at Heights has some real income tax impact. We'll see the biggest amount of shrink in that portfolio, but that's $200 million of the total earning asset base right now. The large loans will kind of run in place, maybe grow a touch. As I said, LendDirect will grow a touch, and Flexiti will grow some more. The whole portfolio will be relatively flat December to March. You know, it's really hard to, you know, with the kind of the macro situation, you know, we're anticipating some continued growth in the portfolio sequentially across the balance of 2023. We feel like as I think I said, the kind of Flexiti is gonna grow from year end, it'll grow 30%-35% by the end of Q4 of 2023. Most by the end of Q4 of 2023. Most of that, though, is just within the existing full year of the existing merchant base that they have now. It does not assume that they sign any more, you know, meaningful, you know, kind of enterprise merchant partners. Okay. Then I guess sort of a similar question, but turning to credit, you know, because you guys do like give the NCO rates by channel, I guess the U.S. direct lending, Canadian direct lending, and POS. You know, where those are, again, understanding the seasonal considerations, but you know, you're still talking about seeing some you know, weakness or normalization. What's the kind of normalized level for those three categories of loss rates? Or are we kind of in the zone at this point when thinking about seasonality? I think, as Don mentioned on the call, the prepared remarks, you know, Heights is still, you know, it's still above what we expect because of those 21 vintages are still working their way through. Yes. I think it's about maybe the trailing twelve annualized rate is maybe 200 basis points above where we'd like it to settle. Okay. You know, in the Heights business, the delinquencies, and again, it's not, you know. I don't think you get a clean cut in the because we still have the legacy stuff. In the Heights business, the delinquencies came down, the early-stage stuff came down from June to September. We feel like, you know, if you track the subsequent vintages, you know, you get into the end of last year, the first part of this year, the subsequent vintages are, you know, the curves are performing better than the stuff that was being written in sort of the, call it June to October period of last year. We feel good about our ability to, you know, again, to get that, you know, get the trailing twelve rate down another a couple hundred basis points. Okay. Some of the measures you're taking for expenses in this quarter, how much of the kind of run rate expenses do you think go away once all the dust settles there? Yeah. I think if you go, John, to page. I know it was a lot of words in the script because there were a lot of initiatives. If you go to, in our earnings deck, page 14, I think it is. Hold on a second. Page 12, I'm sorry. Page 12 in our earn- Okay. So- Yeah, I apologize that when you started the call. I know. This wasn't up, but now it is. A lot of the questions I have are answered in this. I know. We had some technical difficulties with Business Wire this afternoon, but Okay. If you look at that page, John, the Canadian store closures have happened. They happened, you know, that'll start. We'll start realizing that in November. You know, the Canadian POS deferred spend occurs over the course of 2023. U.S. store closures, you know, we said those are starting. Those are starting. Three-quarters of those, we're talking, you know, circa 50 stores. 30 of those will happen in this quarter. The balance will happen in the first, probably, you know, by the end of the first quarter of 2023. Kind of two-thirds maybe this quarter, the balance in the first quarter next year. Yeah. The first-day suspension, that's the, you know, tough decision, but those, the related costs, the people have been laid off and Yep. You know, that happened. The corporate office function consolidation and closures, the closures have occurred. We closed, we consolidated corporate offices. Those have all occurred. The corporate office function, some of that's tech dependent, and that's probably gonna get achieved by the first half, in the first quarter into- Yeah. I would say most of that happened this quarter, though, John. It's. Yep. There's a little bit of it that'll bleed into the first quarter of next year, but most of that $5 million-$7 million number will happen this year. Okay. Well, that's all very helpful. I'll get back in the queue because I've asked a few questions, but thanks very much. Sure. The next question is from Vincent Caintic of Stephens. Please go ahead. Thank you. My questions. Roger, you know, well deserved and well earned. We're gonna miss you. After 38 years, it's well deserved, so congratulations. A couple of follow-ups. In terms of the pricing powers, I know you were talking about you know, passing on to the consumer. On the Flexiti side, and you're talking a bit about the merchants and maybe getting some discount rates, sort of wondering what you're seeing there and what you're seeing with merchant engagement, especially ahead of the holidays that you know, what the maybe opportunities are for getting some merchants. If you can talk maybe about the differences, since I don't cover many Canadian companies, just how the differences are between that Canadian consumer versus a U.S. consumer. Thank you. Hey, Vincent, it's Don. Thank you. Just to make sure I understand the first part of the question, you're talking about new merchants? No, I- Yeah, just in terms of, 'cause so just hearing from the U.S. based guys like, you know, like, Synchrony and Bread talking about, well, you know, maybe the consumers, we're facing macro headwinds, but actually maybe the merchants are engaging more, or maybe there's pricing opportunities there in terms of the discount rate. Just- Yep. Maybe making it a broad question, though, in terms of, you know, what you can do with Flexiti. Yeah, I think just. I think we said it before, but you know, overwhelmingly the merchant base that contractually we have, and again, it works a little bit differently with each contract, so I wish I could give you a somewhat different question, so make sure, just as a reminder on that point. There are, within each merchant, you know, there's, if you're from Synchrony Financial or Bread Financial, you know, you have a variety of different sort of promotional programs that are being run with merchants, and some may be 90-day same as cash, 12-month equal monthly payments. All of those are gonna have kind of different economics, different discount rates, et cetera, with the merchants. A lot of the, you know, the hard work in that business is working with merchants to help align these promotional programs with, you know, advertising spend they have, as well as sort of product introductions and initiatives. In some cases, we have multi-line retailers that have different brands. They may have an appliance store, but also, you know, opening some, you know, mattress stores, and trying to work with them on rollouts and new promotions. There's a whole That's, you know, I think the team up there, that's what they're really good at, is working across those lines and making sure that we're both maximizing the opportunity for the retailers to sell through so they get higher, you know, more financing, higher conversions, but also doing it in a way that doesn't in an environment where gross margins have been strained at the retail level, you know, shipping costs and, you know, and again, for furniture retailers, your lumber, et cetera, it's just been a tougher, you know, the inflation environment, the supply chain environment has caught them as well. I guess what I would say, it feels like the supply chain pressures and the gross margin pressures are abating to an extent, and that, given the, I think the economic climate, and certainly there's a lot of demand for, you know, demand for consumer credit remains pretty good in the U.S., likewise in Canada. We feel like it sets us up for a pretty good holiday season, with the merchants, and we've done. You know, I think most of the work to set up new programs has kind of been, you know, to the extent they involve new discount rates, et cetera, that's already been worked out with the retailers. I think we're just doing everything we can to make sure we're supporting the merchants so they can sort of finish the year strong. I'll sort of get into the next question, which is, you know, Canada did not see the, you know, the run-up in retail, fed by stimulus that we did in the U.S., but they did see some of it. You can track the bigger, you know, Leon's is our biggest partner up there. They're a publicly traded company. They've seen, you know, sales kind of bounce around a little, but generally kind of keep moving in the right direction and not sort of see the big, you know, a big sort of whiplash effect from the certainly some of the online, you know, bigger ticket retailers, the furniture retailers that have seen in the U.S. I think the environment in Canada, the economy is generally pretty good. I mentioned that, you know, the labor market isn't quite as tight as it is in the U.S. You're not seeing, you know, the 1.7 job openings for every applicant kind of thing. The flip side of that is inflation is lower, and the Bank of Canada last week sort of surprised everybody, at least most people, by only raising 50 basis points and signaling that, hey, we wanna make sure we're balancing, you know, strength and ongoing strength in the economy with the need to contain inflation. Again, I haven't had a ton of time to read, you know, today's goings on in the Fed world, but it does seem like the Fed. What I read just a bit quickly is that, you know, the Fed's gonna continue to raise. There's a little bit of a divergence there, I think in almost, in my view, entirely owing to the amount of stimulus that was spent in the U.S. and the effect that that had on inflation. We feel good about the Canadian consumer. I've said it a million times. Like, you know, the average Canadian consumer, you know, similarly situated, same, you know, similar FICO, similar income, you know, all the same kind of, you know, ability to repay metrics that you'd run in the U.S., that customer's gonna pay, you know, payment rates over time are gonna be, you know, 15%-20% higher than what you see in the U.S. The flip side obviously is, you know, delinquencies and charge-offs for similarly situated customers are gonna run lower. There's a million reasons and theories about why that happens, but it's certainly just been my, you know, 25 years of experience doing, you know, business up there. Okay, great. Very helpful. Thank you. Separate question. Last question. Just on the capital structure, your funding structure, how should we think about that in terms of a rising rate environment? Perhaps if you can give us some sensitivity. Are you comfortable with your current capital structure or should we maybe see it evolve? Thank you. Yeah, I think it will evolve. You know, what's most immediate is. You might have saw that we posted a deck because we were at the ABS conference launching you know launching a U.S. securitization transaction that we expect to close you know just after the first of the year. You know, deals are still getting done. Regional just priced I think last week. The ABS markets you know are still you know they're not certainly not as attractive as they were six months ago, but deals are still getting done. We expect for the U.S. business to do a securitization just sometime in the first quarter. Flexiti will tap securitization markets again middle of next year. We are evaluating some potential opportunities even for the Canadian direct lending business, for you know, similar securitization, as we start to put the Flexiti non-prime assets collateral into combining that Flexiti non-prime collateral with our Canadian direct lending collateral. That's really the biggest thing we have on the plate. You know, we'll continue to work to expand our senior revolver and more bank participants in that. The big thing you know, is securitization of the U.S. Heights large loan portfolio. The first up in the queue. Yep. Great. Perfect. Thanks very much. Again, if you have a question, please press star then one. The next question is from John Rowan of Janney. Please go ahead. Good afternoon, guys. Hey. Hey, John. Roger, I echo everyone's sentiment. It's certainly been nice to work with you over the last few years. Certainly, keep in touch. Thanks, John. As far as closing stores. You're basically closing stores, I mean, that you bought from Heights and First Heritage, right? There's no other stores that you have in the U.S. Am I correct? Sure. In the US. Yeah. Yep. Yep. Okay. Just to be clear, you're pulling the $2-$2.40 guidance for 2023? Well, we didn't. We gave it as an outlook, John. We just said, you know, we don't, we feel like given where we are in the macro, it doesn't, you know, giving forward outlook doesn't. It doesn't make sense to us right now. A lot of that goes back to interest expense. The ramp up in interest expense has been pretty steep, and it seems to be almost one-for-one with changes in the Fed funds rate. How sensitive are you? I mean, what's the percentage of your funding that's fixed versus floating in nature? John, Roger can answer. Yeah. No, we've, as we said, it's about $40 million of increase from March. You know, once the curve started moving up kind of in March of last year, that hurt our 2023 outlook by about that $40 million pre-tax. And then currency, which is, you know, we don't move money back and forth, so it's not a cash issue for us, but it is certainly it'll translate into that EPS number that we gave. Roger will give you the breakdown. Obviously part of, as we just, you know, talked about with Vincent move, you know, having portfolios that we can move in, out of the warehouse into the securitization transaction helps, you know, both from a duration standpoint and a fixed versus floating standpoint as well. Okay. What's the breakdown now? It's about half and half. We got $2 billion of debt, and half of it's fixed rate, and half of it's floating. Right. That's what I was gonna say, the base rates have gone up, you know, 350-400 basis points. That's kind of that $40 million number right there. You said 30%-35%, I think it was 30%-35% growth in the point of sale business for next year. Is that correct? You said you would end this year about where you expected. Can you remind me where you expected to end this year and refresh my memory if I'm correct on the 35% growth for 2023. The question is where are we on just the point of sale portfolio? Correct. Did I hear you correctly, you gave guidance for 35% growth in 2023? Yep. That's yep, just get you the number here, so. We also said it's gonna grow, you know, they're gonna have the next six weeks, it'll be, you know, the holiday season. Yeah. Yeah, go ahead, sorry. We expect that portfolio, which is about $690 million now, will end in the you know $800 million range, U.S. dollars, at the end of the year. 35% growth on top of that? That's how I think about that growth. 35% growth next year. Yep. Yep. Okay. I make the point that's part of why we're talking about sort of the yield stuff, which is, you know, there's that maturation in a business, and if you start to look at, you know, what you get in 2023, where we think the business will move from being a cash P&L profitable business. Now, if you add back depreciation, amortization, and provision impact and the MVR, which isn't, we don't disclose that separately. We do it in that there's an addendum in the earnings deck. We think it'll move. It should be a GAAP profitable business at the pre-tax line, you know, early in 2023. Even with, because of that growth of an ongoing healthy dose of provisioning, you know, of ALL growth. Does the revenue yield in that business still go to about 5% as, you know, you get past kind of that cohort of consumers that are in the promotional period? I think it should grow pretty ratably over the year and exit by the time you get to Q4. You should have that whole 500 basis point increase. Okay. All right. Thank you very much. Okay. This concludes our question and answer session. I would like to turn the conference back over to Don Gayhardt for closing remarks. Great. Thank you everybody for joining us. Again, we'll talk to you. Look forward to speaking to you again, for our year-end call, and I will add my thanks and goodbyes and good wishes to Roger and his family as well. Thanks everybody. Have a good evening. Thanks. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.