Guy Riegel

Guy Riegel inquired about the company's strategy regarding branch-level headcount, specifically the decision to first increase staff and then plan for a 3-5% reduction. He also asked if underperformance was related to collection ability and about the potential impact of a 10% cap on credit card rates on the company's installment loan business.

Answer

President and CEO Chad Prashad explained that the initial headcount increase was a proactive measure to build a quality team in anticipation of turnover from underperforming team members and segments of the company, with reductions expected quickly within the current quarter. He confirmed that underperformance is multifaceted, including collection ability, overall performance, and engagement. Regarding the credit card cap, Mr. Prashad noted no current discussions impacting installment loans but projected that a 10% cap would severely limit credit card access for lower credit score individuals, potentially increasing demand for installment loans. He added that the company's credit card portfolio is currently very small, allowing for quick pivots if needed.

Guy Riegel questioned the company's strategy regarding branch-level headcount, specifically the recent increase followed by a planned 3%-5% reduction, and sought clarification on the reasons for this approach and the nature of underperforming team members. He also asked about the potential implications of recent headlines concerning a 10% cap on credit card rates for the company's installment loan business.

Answer

President and CEO Chad Prashad explained that the headcount increase was a proactive measure to build a quality team in anticipation of turnover from underperforming team members, with the planned reduction expected quickly as the base is established. He clarified that underperformance relates to collection ability, overall performance, and engagement. Regarding the credit card cap, Mr. Prashad stated there have been no discussions linking it to installment loans but estimated it would severely reduce credit card access for many consumers, potentially increasing demand for their installment loan product. He noted the company's credit card portfolio is small and adaptable.

Guy Riegel of Ingalls & Snyder inquired about the timeline for becoming a full cash taxpayer and the expected rate, and also asked for details on potential new products to be launched over the next few years.

Answer

Executive John Merrill explained that with $8-9 million in remaining NOLs, the company is close to becoming a full taxpayer but could not yet provide a specific future rate, noting they are exploring R&D tax credits. Executive Randall Fields described the new product strategy as focusing on 'adjacencies' to their current offerings, such as recall management for traceability or enhanced ordering and forecasting tools. He emphasized these would be high-margin additions leveraging their single, efficient technology platform.