CURO Group Holdings Corp. (CURO) CEO Don Gayhardt on Q1 2022 Results - Earnings Call Transcript

CURO Group Holdings Corp. (NYSE:CURO) Q1 2022 Earnings Conference Call May 2, 2022 5:00 PM ET

Company Participants

Tamara Schulz - Chief Accounting Officer

Don Gayhardt - Chief Executive Officer

Roger Dean - Executive Vice President and Chief Financial Officer

Conference Call Participants

John Hecht - Jefferies LLC

John Rowan - Janney Montgomery Scott LLC

Spencer James - William Blair & Company LLC

Moshe Orenbuch - Credit Suisse AG

Operator

Good day, and welcome to the CURO Holdings First Quarter 2022 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] 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.

Tamara Schulz

Thank you, and good afternoon, everyone. After the market closed today, CURO released its results for the first 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 on the business environment as we currently see it. As such, it does include certain risks and uncertainties. Please refer to our press release issued this afternoon and our Forms 10-K and 10-Q for more information on the specific risk factors that could cause our actual results to differ materially from the projections described in today's discussion. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no 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 Presentations section of our IR website.

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

Don Gayhardt

Thanks, Tamara. Good afternoon, everyone, and thank you for joining us today. I'll start with something we haven't been able to say since the fourth quarter of 2019. This quarter seemed more normal and poised to the tremendous long-term growth and value creation opportunities from our strategic repositioning of CURO.

Our loan book more than doubled versus the same quarter a year-ago, partly because we acquired Heights in the fourth quarter of last year, which added approximately $470 million of loans, but unpacking the year-over-year loan growth at the business level. Flexiti is up 169%, Canada Direct Lending was up 30%, legacy U.S. direct lending excluding the runoff portfolios was up 34%, and consolidated loan balances were up a very healthy 5.2% sequentially with Canada growing and the U.S. impacted by the Q1 tax refund season.

Tax season came in mostly in line with our internal forecast as we expected slightly smaller refund than years past due to the taxability of certain pandemic-related benefits. Smaller refunds reduced our collection rates modestly, but of course led to a smaller reduction in loan balances than in years past.

I should also note that Heights customers who have higher income and credit scores are much less likely to receive tax refunds in particular larger earned income tax credits. As a reminder, tax refund season is not a phenomenon that we and our customers see in Canada. Of course, with this growth comes upfront and normal loan loss provisioning, we point out in our release and at the top chart of page four of our investor presentation that normal loss provisioning in this quarter compared to government stimulus impacted provisioning in the first quarter of 2021, produced a $28.7 million pre-tax earnings swing year-over-year, and we have included additional charge-off and provisioning detail for each of our business units. Roger will cover the numbers in more detail later.

You will see on Slide 8 of our investor presentation that we have revised our 2022 and 2023 outlook for our Canadian businesses. It is important to note that the revised outlook reflects updated high-level thinking on the macro environment and recent trends, mostly a more cautious view of revenue growth and net charge-off levels. Expanding on this a bit, both U.S. and Canadian economies are performing fairly well right now with job and income growth. However, both central banks are increasing base rates at meaningful [indiscernible] in an effort to tamp down inflation and engineer soft lending.

We expect rising inflation and interest rates will impact our consumer spending and borrowing habits, but to what degree remains unknown as we are facing a set of converging factors. Typically, when we see rising inflation coupled with positive employment trends, this is a sweet spot for our business, but we see good demand along with good credit performance. The unknown factor facing this scenario is that the U.S. and Canadian economies dip into recessions, and we start to see job growth slowed.

Many forecasters have increased the probability of recession in late 2022 or 2023, so this has caused us to tamper some of our topline and credit performance expectations. Also, rates are rising and it's far too early to tell where the Fed and the Bank of Canada end up on their benchmark rates using the current forward rate curves, which is steep and meaningful in the past month.

We would see an impact of approximately $8 million in 2022 and $15 million in 2023, put it another way each 25 basis point increase in the benchmark rates result in about $2.5 million of additional annual interest expense using current debt balances. A reminder here that of our current debt balance, approximately 50% consists of fixed rate senior notes and the rest, invariable rate asset-backed facilities in the U.S. and Canada.

With respect to our Flexiti business, we are very pleased with the work being done by our whole team in Toronto to scale and support a business that is tripling its year-over-year rate of originations. But overall retail sales in Canada have seen some softening as well as a shift from larger tickets, hard and white goods, which are Flexiti's primary channels to apparel and cosmetics as well as a further shift to travel, dining and other service-based expenditures.

Finally, I should note that we share some of the optimism that's being expressed in some of the earnings reports about the overall health of consumer balance sheets and wage gains that is driving more loan demand. However, in our view, a bit more of a balanced approach is called for and we try to reflect that in a revised outlook and I continue to remain confident in our outlook, given the strength of our businesses and consistent focus on disciplined long-term execution and prudent credit management.

I'll now turn the call over to Roger to review the details for our first quarter 2022 results.

Roger Dean

Thanks, Don, and good afternoon. Adjusted net income for the quarter was $6.3 million or $0.15 adjusted diluted earnings per share, compared to $0.69 adjusted diluted earnings per share in the first quarter of 2021. The primary driver of the year-over-year decline in earnings was stimulus impacted compared to normalized loss provisioning that Don mentioned earlier. Interest cost was also higher by $18.8 million because of the senior notes tack-on that we did in the fourth quarter to finance in part the acquisition of Heights and higher utilization of non-recourse asset-backed facilities to support loan growth, including the related facility assumed in the Heights acquisition.

Total revenues in the first quarter increased $94 million or 48% year-over-year. Heights added $66 million of revenue and we also had a full-quarter of Canada point-of-sale lending, which contributed $20 million of revenue this first quarter compared to $1.6 million in a partial quarter of the first quarter of 2021. Canada Direct Lending revenue rose 22% year-over-year, and U.S. direct lending excluding the runoff portfolios and excluding Heights, grew 12% versus the first quarter of last year.

Our U.S. runoff portfolios and if you recall, those portfolios are comprised of California and Illinois installment loans, Virginia open in line of credit and Verge. Those contributed $6.4 million of net revenue in this first quarter compared to $14 million of net revenue in the first quarter of 2021. Consolidated operating expenses for the quarter increased $46.2 million or 43.1% compared to the prior year driven entirely by the expense space that we acquired with Heights, that was $33.8 million and a full quarter of Flexiti this year, adding $15.5 million.

Excluding the lack of year-over-year comparability for the Heights and Flexiti acquisitions, operating expenses were flat as cost savings from store closures in the middle of last year offset normal growth in variable cost and compensation, sequentially recurring operating expenses excluding Heights decreased by $4 million.

Don already covered loan growth by business. So I'll talk a little more about credit quality. Our credit metric trends in Q1 were consistent with what many of our peers have seen overall, continuing trends towards normalization but still favorable to pre-pandemic run rates. Our consolidated quarterly net charge-off rates for the first quarter improved year-over-year by 90 basis points from portfolio mix shift to lower loss rate products.

Looking at it by business, U.S. net charge-off rates improved 150 basis points year-over-year, while past due rates increased by 90 basis points to a year-ago. Sequentially, U.S. net charge-off and past due rates also improved meaningfully. Both comparisons are affected by our Heights acquisition at the end of December. So if we take Heights out of the numbers, U.S. net charge-off rates were 440 basis points higher year-over-year, while past due rates were 240 basis points higher, but sequentially U.S. net charge-off rates were down 380 basis points and the past due rate was down 30 basis points.

Canada Direct Lending net charge-off rates increased 170 basis points and the past due rate was up 160 basis points compared to Q1 of last year. We saw more normal post holiday seasonality in the Canadian Direct Lending portfolio in the middle of Q1, but as we move through Q2, so far we have seen delinquencies trend back down comfortably.

For Canada point-of-sale, we have had very stable and consistent net charge-offs and past due rate trends over the past three quarters. We had $60.2 million in unrestricted cash and $118 million of additional liquidity, including undrawn capacity on revolving credit facilities and borrowing base levels at March 31, 2022.

We are currently working on a very attractive refinancing and expansion of Heights non-recourse asset-backed warehouse facility and accessing asset-backed securitization for that business in the second half of 2022. We also announced earlier this quarter that we expanded the capacity under our Canadian SPV Facility by C$50 million. Finally, during the quarter, we repurchased just over 824,000 shares and the Board authorized our quarterly dividend at $0.11 per share.

This concludes our prepared remarks and will now ask the operator to begin Q&A.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question will come from John Hecht with Jefferies. Please go ahead.

John Hecht

Good afternoon, guys, and thanks for taking my questions. First one is just, Roger you did mention that from an expense perspective, not a lot of comps just given some of the new kind of divisions you guys have bought are growing. Is this a good kind of base case for expenses? And then any comments, some kind of inflation or just sort of growth expectations with respect to expenses this year?

Don Gayhardt

Roger, you on mute maybe.

Roger Dean

Sorry. Forgive me. I was on mute. Sorry about that. No, I think John, I think Q1 – Q1 has a pretty good – pretty good run rate from a quarterly perspective, [there wasn't anything] if you take the recurring expenses, which are reconciled back in the appendix of the deck. Flexiti's expenses were a little lower than they were. Total expenses were down sequentially. If you take Heights out, I'll come back to Heights in a minute. But if you take Heights out, total expenses were down sequentially from Q4 that is largely variable compensation if we did have – we did overachieve our plan that's all in the proxy. And so we had some back loaded, a little bit more variable compensation expense in the fourth quarter than a normal run rate.

And couple of other things. And by the way, Flexiti is seasonally – Flexiti's expenses in the fourth quarter to support the holiday season are higher than they would be in the first quarter. So if you look at our numbers, I think, I said, excluding Heights, the expenses were down $4 million sequentially, but if you kind of establish that as the run rate ex-Heights, and then Heights was about $33 million, $34 million. And I think there's going to be some – that the Heights number is not – it certainly not going to go up materially. There are some – there continued to be – we'll be working through some combined cost synergies there that like I said, as you know, we've only owned them since the end of the December. So we're on our way, but not all the way there. So overall, again, I think that – I think the Q4s, Q1s are good, a good run rate proxy for the quarterlies for the rest of this year.

John Hecht

Okay. That's helpful. And then, I mean, with Heights and some of the new stuff you guys have bought in Canada, you've got a number of different channels to grow and customer acquisition channels. I'm wondering, can you comment on customer acquisition, specifically, customer acquisition cost, the methods of customer acquisitions and so forth and any channels that are growing at different paces or more attractive paces than you would've expected?

Don Gayhardt

Yes. It sounds fun. I think, well obviously in some of the new stuff, Flexiti is a merchant-based relationship business, but we do get some traffic to flexiti.com. And as we – typically as we've rolled out and ramped up the LFL relationship, which I feel like it would be the reminder for [Venue] since it is the largest home furnaces retailer in Canada. So we've been featured in a lot of their advertising both, but printing online we've been able to get some traffic with flexiti.com directly. And we have some – we're testing ways to grow that. We've got a good team up there, good marketing team with some good digital experience. So – but I think the main focus in that business continue to be just ramping up and rolling out the digital relations as we've added and so we're probably up about – we tripled their origination volume year-over-year in the first quarter there. So that certainly is the main focus, although we are starting to put some more money, and some more energy and effort into the – call to direct-to-consumer and to flexiti.com online brand.

Heights is a retail business. I think most people will – they'll be either sort of shopping some of the applications online, calling the branches. So it's really not a walk-in business per se. But most of the – unless it's a certain kind of repeat transaction, most of the loan transactions [that are our branch visit loans]. We have some work to do before we can sort of fully, I think take advantage of some of the digital capabilities that we have, and sort of, I guess, sharing those with Heights. And certainly is – and we're looking – we're working on adding some centralized collections, adding some more centralized underwriting and then adding to their digital capabilities.

[Indiscernible] be able to close certain kinds of loan transactions completely online, like we do in the legacy U.S. direct lending business. But I would say in terms of money being spent in either Flexiti or Heights, it's a little early, I think it's much more sort of planning and development to make sure that we kind of get it right when we do roll that.

And one thing I would just mention as well is, one of the exciting parts about both of those is there are certain, and some of the high cost lending channels are limited, if it's Google or [indiscernible] where you can put your apps, et cetera. And Flexiti and a large measure of the loan portfolio and the products at Heights are not burned by those same kind of restrictions. So we are more kind of excited to be out and with those businesses, we grow those to be able to use it on a wider variety of channels and we've been able to use the legacy direct lending business.

John Hecht

Great. Appreciate all the details. Thanks.

Operator

Our next question will come from John Rowan with Janney. Please go ahead.

John Rowan

Good afternoon, guys. Don, I just want kind of go over some of the guidance that you had previously provided, specifically the $3 plus whatever number was for guidance – or for Heights previously. I mean, are you backing away from that or is that still a target for 2023? I just want to understand how you're looking at the 2023 number with everything in it?

Don Gayhardt

Yes. So we're certainly, but we're – I guess, we didn't address a revised outlook for Heights, so we're certainly affirming the outlook that we gave for Heights when we announced that deal and close that deal in December, so – which Roger and I think was in the $55 million to $56 million pretax, I think going to $75 million to $76 million in 2023. So we feel good about where Heights is. And then – and so we still – as a reminder, [indiscernible] just because of the difficulties in forecasting, the legacy U.S. direct lending business coming out of the pandemic. As you said, the top of it – top of the concept that we're getting more normal numbers now and more normal kind of quarter. But exactly how that business bounce back, I think in light of what it is, some more uncertain economic times, we're still not prepared for do an outlook on that business.

We did reduced our Canadian Direct Lending businesses a little bit for – the direct lending business a bit for a little bit higher credit costs as well as just interest expense increases with the full recurrence going up so much in Canada and the U.S. by about the same looking out as kind of 2.25 per 50 basis points. So – and then on the Flexiti side, we just looked at – I think we talked about that in the last call, the sales volumes have been running a little bit behind what we'd like, and that's just retail, general and Canada people spend more money on dining out and travel, et cetera, and on [indiscernible] and furniture, et cetera.

And then while the credit quality is excellent that you can see in our earnings release, that are still running around 50 basis points a quarter and charge-offs there. But that means fewer accounts are rolling to interest-bearing. So it's typically going to be 90 days same as cash and that rolls to interest-bearing account. We're seeing a few of those roll sort of being paid off earlier, which benefits credit a lot, but we purchased a bit on the topline yield.

So I think that even if you look at the – if you roll those numbers out for 2023, I think a $3 number and again, depends on where the U.S. legacy business and how that business ends up performing with that number certainly. We think absolutely a view for us in 2023. Again, assuming we get a somewhat normal kind of return to loan items and credit in the U.S., which I think the first quarter was a pretty good down payment on that.

John Rowan

So obviously, we have guidance for Canada, right. We have – you're standing by your guidance for Heights. The wildfire has always been, and this is nothing new what happens in the U.S. How do you feel about the U.S., right? There was a relatively modest segment operating loss for the quarter, if I'm reading the supplemental correct. If I'm not mistaken, I believe in the last few quarters, it was a bigger number. So maybe just give us an idea of the trajectory in the U.S. and whether or not, what it's going to take to turn that business profitable?

Don Gayhardt

Yes. And I think you can see the provision impact in that business on Page 4 of the – actually for all the businesses is on Page 4 of the deck. But again, Roger, we have the operating numbers, but does that include the bond interest – is fully burdened by that?

Roger Dean

Yes. In all periods, so obviously the interest expense for that is on that business, but – and it went up, so we had a meaningful improvement, obviously sequentially from Q4 in the pre-tax and the EBITDA for the U.S. legacy business. But I think it's pretty much what we've talked about, which is, I think we've said because of the year-over-year provisioning, and you saw a big chunk of that this quarter with allowance release and provision being a credit or a tailwind in Q1 of last year and headwind this year. That's going to – that delta year-over-year and the second half of the year kind of normalizes, but that the business will continue to make a little more money, I think each quarter, but it's never – like-for-like that 2022, we said a number of times 2022 will never approach 2021. But assuming that we can grow the loans and get the provision normalize and get a lot of the upfront provisioning behind us then 2023 should start to look normal again.

Don Gayhardt

John, again, just to make – I think one of the ways we look at the business now is, we take sort of direct lending like we take the Heights business, Canada Direct Lending, the Flexiti business, and then the U.S. direct lending business, but without the burden of the interest expense, that kind of sets up a [indiscernible] because we look at those businesses, they all have financing facilities, non-recourse financing facilities, and we deduct the interest expense of those from their pre-tax earnings from an internal work. So if you add the $75 million of interest expense on the bonds back to the U.S. segment, you can sort of see the level – that the business unit, the operations aren't profitable, they're quite profitable. It's just that the way it's presented the burden, that business burden with all that interest expense.

John Rowan

Okay. And is there any essentially explanation, are you guys providing any guidance for 2Q at this time?

Roger Dean

Not yet. No.

John Rowan

Okay. All right. Thank you.

Don Gayhardt

Thanks, John.

Operator

Our next question will come from Bob Napoli with William Blair. Please go ahead.

Spencer James

Hi. This is Spencer James. I'm for Bob Napoli. Thank you for taking the question. Could you just remind us how Heights is positioned relative to how that business was positioned pre-pandemic? Does your guidance for this year for Heights imply it being ahead of where it was in 2019? And then in that context, what are the drivers you're seeing for the revenue growth for Heights into 2023?

Don Gayhardt

Yes. Thanks. It's a good question. So, no, we absolutely see it being – and again, it was a private company, but now we see it well ahead 2021 for them was ahead of – they showed relatively consistent earnings growth even with a little bit of a pandemic-related slowdown. But remember this is a higher credit quality customer, the small loan customer there, and that book is going to be kind of low-600s and the large loan customers going to be 20 to 30 points higher there from the FICO perspective.

So as I mentioned, not as – so there's not much seasonal payout with tax refunds, et cetera. So it's a very different product, a very different customer than our legacy U.S. business. So they continue to see good growth. Their earning assets for March of 2022 – March of 2022 versus March of 2021, when they were private, were up 23.2% year-over-year. Revenue is not quite the same, but some it's mixed shift to some of the larger, lower yielding loans, but a very good performance in that business. And I think that we are in the process of opening a number of branches, we're probably going to be in four new states by the end of the year. We're trying to be – again, all of this is – I think everybody is kind of look at the macro and making sure that you're not in terms of volume and new customers, we're being a little bit more measured than maybe we have been in the fall just because we're looking at the macro. But I think you're still going to see us opening branches, expanding in new states.

And again, more emphasis on some closed deal, more emphasis on that larger loan product as opposed to the smaller loan product. So larger loans, lower yields, longer terms and those products also, again, just because of the pandemic, they didn't seem nearly as like the – and the stuff – the stuff for us that paid down the fastest or the smaller balance, higher yielding products that we offer in our legacy business. Those paid down, it's almost a linear relationship, the lower price, the product, the larger, the lower and the longer term, those experience lower paydown rates and the Heights smaller, the larger, and just kind of – if you want to sort of plot them on that same curve, they would show that same kind of behavior. So we haven't had to deal with – they haven't had deal with the same kind of paydowns we did in the U.S.

Spencer James

Okay. That makes a lot of sense. Thank you. And so, if I'm hearing you correctly, there's no changes to the plans to open new stores in Ontario and also new branches for Heights in the United States. Is it the outlook there the same as it was last quarter?

Don Gayhardt

Yes. It's still the same. Yes, that's our – primarily our LendDirect brand in Ontario and then the Heights brand in…

Spencer James

Okay. Thank you. And then I'll just sneak in one more quickly. Any comments on, for the Flexiti business customers’ propensity to run a revolving balance. I know that some of those customers take longer to ramp up, any change to how you're seeing customers running a balance versus paying it down more quickly?

Don Gayhardt

Yes. We're seeing gradual improvement. But again, and you can – if you look at the – we just plot, we give you on Page 4, the very bottom right corner page of Page 4, we give you the charge-off rate by segment, and you can see that Flexiti gone, it's actually – it's gone down even from 2Q of last year, which was a pretty good quarter from a credit quality standpoint. So the credit quality continues to get better there, but that's a function – that's almost the inverse you'll be able to talk about. So we'd rather see balance, obviously you're annualizing 50 basis point charge-offs, but we think charge-offs, and Roger could run over time in that business, we'd like to see them run kind of 4% to 5%. And some of that's going to be – we're adding some near prime and sub-prime to the product mix there. But we think that right sort of – and that's kind of start, if you look at that business overtime, that's a more normalized charge-off pattern. And we think that the business model works because you then add, if you add more – in charge-offs, you're going to add a lot – you're going to add a proportionately larger amount of yield. So you're kind of net – your net margin after credit provisioning is going to go up.

So right now our margin – while again, it's great to have 50 basis point charge-offs in a quarter – consecutive quarter over time, we'd like to see that float up, so more of those balances flowed into in the revolving and we earn interest income in addition to the…

And just a quick reminder, good question. This is a private label card business, and it has, I guess some product similarities that might line up with buy-now-pay-later companies. This is fundamentally not a buy-now-pay-later businesses, this is promotional interest rate financing, very typical, 90 days same as cash kind of maybe same as cash on larger ticket purchases. So this is furniture, appliances, and electronics. This is not $200 – break $200 of spend into four payments – four kind of bi-weekly payments. It's a very different business than the buy-now-pay-later models that are quite prevalent right now. And we think very much lines more up with sort of a what kind of [indiscernible] monogram card business and ADS, and those private label card businesses in that kind of business model.

Spencer James

Thank you.

Operator

[Operator Instructions] Our next question will come from Moshe Orenbuch with Credit Suisse. Please go ahead.

Moshe Orenbuch

Great. Thanks. Most of my questions have been asked and answered. But maybe could you talk a little bit, maybe in more detail about the plans for growth in Flexiti, given the various things you've already talked about? I think you made a small acquisition that kind of is – kind of goes on that platform of a portfolio. And obviously there will be – you'll be operating in a higher rate environment. So does that have any implications from a competitive standpoint? Just can you talk about that a little bit? Thanks.

Don Gayhardt

Yes. So we are going to give most – we did buy a portfolio, it's part of sort of onboarding Michael Hill, which is an Australian-based jewelry chain operations in Canada, we bought their existing, point of sale portfolio. I think it was C$11 million or C$12 million. And that's the strategy, we'll certainly – that's what a merchant would, is part of them and something. So most cases, we tend to sort of transition, they'll stop offering the financing relationship with the incumbent lender and we'll start using Flexiti card, but this is just a different option to kind of provide a little more liquidity upfront, we're happy to entertain that. So I think in Canadian dollars, Roger covered it. I think we just sort of passed about $700 million in Canadian outstandings just recently.

And I think by the end of the year that business will probably – certainly be a north of $1 billion in receivables. And that's – the biggest chunk of that's going to be the LFL business that we added. But some other good side merchants, we continue to say, we don't forecast which forecast growth – organic growth from existing merchant relationships, but we don't – we haven't built into any of the numbers, we’ve talked about Flexciti any new merchants. And we continue to feel like we're in position down – at some point down the road to add some additional like that. Now, whether it's going to be something of a scale of LFL, it's probably more unlikely side just because of the size of that business.

But if we look to sort of annualize or get a full – I guess, get a full-year of contribution from the business we have now, that's how we kind of get to that business from a rev standpoint, getting into the high-300s in 2023. So I think it's – hopefully there'll be some other stuff, again, the caution, which is if we add new relationship, they are generally going to be diluted in the near-term mostly just to some extent, mostly just a provisioning exercise early on. But that's a business that is – at the end, we think if we get to a 1 billion receivables, we would be the fourth largest retail credit card originator in Canada, I know one was Canada [indiscernible], I can't remember any others.

But because all of those cards are general purpose cards, so it's a Mastercard, Visa where you can go – you get – people can use the cards for gas and groceries, and they have rewards features, et cetera. We would be the number one private label issuers. So our card just only works in the network. One of the existing things we continue to sort of analyze and think about is, does it make sense for us to have our – to turn our card into a general purpose card? So you can use your Flexiti card with Mastercard and use it for purchases outside of the network. So there are a lot of cost considerations, but obviously it would be more volume. And it is done properly in a cheap way to originate a general purpose card, which is what I say, just point out there's a lot of larger companies that have very big general purpose cards that originate our retail platform. So that's something we're keeping out a hard look at right now.

Moshe Orenbuch

Great. Thanks very much.

Operator

This concludes our question-and-answer session. I would like to turn the conference back to Don Gayhardt for any closing remarks.

Don Gayhardt

Great. Thanks, everybody. We appreciate you joining us. Look forward to talking to you again after our second quarter results. Thanks a lot. Bye.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.