John Rowan • Janney Montgomery Scott

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CEO & CFO Fahmi Karam stated that a 'meaningful percentage' of their customers would benefit from tax changes on tips and overtime. He noted no official changes have impacted Bridget's model from the CFPB's actions yet, but it's being monitored. The legal accrual covers several disclosed cases, with the majority related to the multi-state AG matter, and he framed the progress as a positive development.

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CFO Fahmi Karam clarified that the 'legal matters' adjustment line will persist as it covers other cases beyond the CFPB. He also noted that while Acima acquisition adjustments are winding down, new adjustments for the Brigit deal are ramping up. CEO Mitchell E. Fadel agreed with the tariff thesis, stating that price inflation could indeed act as a tailwind by making leasing a more attractive option, reinforcing the business's recession-resilient nature.

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CEO Mitchell E. Fadel stated that regarding the CFPB, they are waiting for the situation to stabilize but remain confident in their legal position, especially since a competitor won a dismissal in a nearly identical case. He believes the trade-down trend is driven more by broad inflation and delinquency pressures at prime lenders rather than the specific late fee rule, and expects that tightening from other lenders will continue regardless. CFO Fahmi Karam confirmed their guidance assumes a stable trade-down environment.

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CEO Mitchell E. Fadel and CFO Fahmi Karam clarified that the accrual is not for a single issue. They confirmed the estimate is a collective amount for all three outstanding legal matters with the CFPB, the New York AG, and the Multistate AG, and represents an estimate for a potential settlement, not a finalized agreement.

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Chief Financial Officer Jay Martin asserted that even the most underperforming vintage (2022) is still generating a return above the cost of capital and remains profitable based on current estimates. SVP & Treasurer Jay Brinkley confirmed significant repurchase activity, with 530,000 shares bought back, and explained that buybacks are typically more active when origination growth slows. He noted 391,000 shares remain on the authorization and the board will be consulted for more capacity.

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Chief Treasury Officer Douglas Busk explained that accelerating dealer holdback is a long-standing practice designed to create a stronger incentive for dealers by linking their origination behavior more closely to their eventual profitability. Executive Jay Martin noted that Q1 operating expenses are seasonally higher due to payroll taxes and sales commissions but that the company still gained operating leverage year-over-year. CEO Kenneth Booth clarified that market share was 5.2% for the first two months of 2025, down from 6.0% in the prior year, attributing the change to a Q3 2024 scorecard update and increased competition.

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CEO Kenneth Booth confirmed the scorecard change occurred during Q3, with its full effect likely felt in September, and stated it was an adjustment to reflect recent performance trends. He also noted that a more difficult competitive environment and challenging year-over-year comparisons could be contributing factors. Regarding expenses, Mr. Booth attributed the G&A decline primarily to volatility in legal expenses, which can fluctuate significantly quarter-to-quarter.

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CEO Kenneth Booth explained that lower prepayments primarily mean fewer consumers are refinancing loans, a trend currently at near-historic lows. Chief Treasury Officer Douglas Busk added that forecasting this is difficult and confirmed that negative equity and tight credit availability are contributing factors. Regarding vintage profitability, Mr. Busk noted that the impact of collection shortfalls varies by program, with the purchase program being more sensitive than the portfolio program, which shares losses with dealers.

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CFO Steven Cunningham stated that the fair value marks have remained very stable, as they reflect lifetime unit economics rather than short-term fluctuations in metrics like NCOs. He provided expected NCO ranges, noting performance within these ranges still drives strong results. Cunningham also confirmed that about 50% of the company's debt is floating rate and is most sensitive to SOFR.

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CEO David Fisher affirmed the stock is still seen as undervalued, justifying continued opportunistic buybacks. CFO Steve Cunningham specified about $200 million remains on the authorization. Regarding regulations, David Fisher mentioned the 1071 small business rule and the small dollar rule's payment provisions, stating neither would have a significant impact, but their delay would be a minor positive by freeing up resources.

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CFO Steven Cunningham explained that CSO loan balances can fluctuate based on specific geographic demand opportunities that align with their economic framework and are not typically a persistent trend. He clarified that consumer charge-offs were down year-over-year and the rise in 30+ day delinquency was due to a product mix shift toward CashNet. He emphasized that underlying credit is stable, supported by flat fair value premiums and a lower 1+ day delinquency rate year-over-year.

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President and CEO R. Chad Prashad and EVP, Treasurer, Chief Financial & Strategy Officer John Calmes detailed the repurchase capacity, which includes a $100 million upfront allowance plus 100% of net income from January 1, 2025, fully accessible after retiring the outstanding bonds. Calmes also confirmed the new credit agreement contains no new performance-based governors and that the company has ample cushion under existing covenants.

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Chief Financial and Strategy Officer John Calmes confirmed the income increase was driven entirely by the tax preparation business. He attributed the lower allowance for loan losses to the runoff of the portfolio. Regarding buybacks, Calmes stated they expect to repurchase more shares, with increased flexibility anticipated after refinancing outstanding bonds that currently limit repurchases.

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Executive Chad Prashad explained that while the company is returning its focus to smaller loans and marketing to former customers, the product has evolved. Today's average new loan is larger (~$800-$850) than pre-2020 levels (~$650), and longer average terms (around 12 months for new loans) mean the company will not return to the very high refinancing rates seen historically. Chief Financial and Strategy Officer John Calmes added that the expected life of a loan is around 7-8 months, whereas the contractual life for the portfolio is about 12-13 months.

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John Calmes, Chief Financial and Strategy Officer, confirmed the reported $3.99 Q2 EPS is the GAAP figure including a reversal. Executive Chad Prashad clarified the company's strategy, stating that the primary focus for customer growth remains on small loans, with large loans now serving mainly as a customer retention tool rather than a primary growth channel. Calmes also noted that the revolving credit facility has about two years remaining on its term with approximately $300 million available.

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President and CEO Ashish Masih clarified that these two metrics are not always directly correlated as they can relate to different portfolio vintages. He explained that strong current collections can sometimes represent a pull-forward of cash, which would necessitate a negative adjustment to future expectations for that specific vintage. Masih emphasized that these are vintage-by-vintage judgments and that the company is very pleased with the strong overall collections performance.

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President and CEO Ashish Masih suggested the historical mix of around 80% MCM purchasing is a better guide for 2025 than the anomalous Q4. CFO Jonathan Clark provided the Q4 cash-over-collections figure of $26 million, but Masih declined to provide a forward-looking outlook. Masih affirmed that the adjusted Q4 earnings figure is a solid baseline for modeling, as it reflects current business momentum and interest expense levels.

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Rakesh Sehgal, EVP and CFO, explained that the increase in other revenue was driven by a normal-course transaction within their securities and antitrust claims business (CCB). Both Sehgal and CEO Vik Atal reiterated that the 2025 cash efficiency target of over 60% already accounts for the expected level of legal spending, which is a strategic investment that will fluctuate with the volume and type of portfolio purchases.

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CFO Jenny Osterhout acknowledged that expenses can be lumpy quarter-to-quarter and suggested looking at year-over-year trends, reaffirming the 'around 6.7%' guidance. CEO Douglas Shulman added that while they are aggressive on expense control, they also make necessary long-term investments for future growth, and they manage the business for years, not single quarters.

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