CURO Group Holdings Corp. Announces Fourth Quarter and Full Year 2019 Financial Results, Initiates Dividend Program, Authorizes new $25.0 million Share Repurchase Program and Initiates 2020 Guidance

CURO Group Holdings Corp. (NYSE: CURO) (“CURO” or the “Company”), a market leader in providing short-term credit to underbanked consumers, today announced financial results for its fourth quarter and full year ended December 31, 2019.

“We are pleased to report excellent quarterly and annual earnings growth,” said Don Gayhardt, President and Chief Executive Officer. “For the full year, our revenue and Adjusted Diluted Earnings per Share(1) grew 9.3% and 46.6%, respectively, versus 2018, and we generated substantial free cash that we invested in new growth opportunities and returned to shareholders in the form of $72.3 million of share repurchases. For our fourth quarter, outstanding growth in Canada, where revenue and Adjusted EBITDA(1) grew 18.3% and 131.2%, respectively, coupled with disciplined expense management, offset lower year-over-year growth in the U.S. caused by repositioning and optimization of our California Installment loan portfolios. We are introducing 2020 guidance which reflects our expectation that:

• Canada will continue to be a strong growth engine;
• U.S. regulatory changes will be manageable with earnings growth outside of California offsetting California declines;
• Significant excess cash flow will be generated; and
• We will continue to diversify our funding sources and be disciplined in our return of capital.”

Fourth quarter 2019 and subsequent developments include:

• Revenue increase of $14.7 million, or 5.1%, over the prior-year period, driven primarily by revenue growth from Open-End loans in the U.S. and Canada, which more than outpaced the year-over-year decline in Unsecured and Secured Installment loan revenues stemming from California portfolio repositioning.
• Growth in Company Owned gross loans receivable and Gross combined loans receivables of 16.5% and 13.9%, respectively, versus the prior-year period. Year-over-year comparisons benefited from the Q1 2019 Open-End Loss Recognition Change. See "Loan Volume and Portfolio Performance Analysis" for additional details on the Q1 2019 Open-End Loss Recognition Change. Excluding the impact of this change, Company Owned gross loans receivable and Gross combined loans receivables grew 7.7% and 6.2%, respectively. Further, excluding the negative impact of California portfolio repositioning, Company Owned gross loans receivable grew 21.6% year-over-year.
• Consolidated quarterly net charge-off ("NCO") rates improvement of 200 basis points ("bps") compared to the prior-year quarter, primarily because of improvement in Canada. U.S. NCO rate comparisons were affected primarily by modestly higher charge-offs in the California Unsecured Installment portfolio and elevated Open-End charge-offs after strong asset expansion in the third quarter of 2019.
• Net income from continuing operations and Adjusted Net Income increase of 91.8% and 52.0%, respectively.
• Diluted Earnings per Share from continuing operations increase to $0.68 from $0.32 and Adjusted Diluted Earnings per Share increase to $0.80 from $0.48, as compared to the prior-year quarter.
• Announcement of the acquisition of Ad Astra Recovery Services, Inc., our exclusive provider of third-party collection services for the U.S. business. The acquisition, which was completed on January 3, 2020, is expected to provide multiple synergies and be accretive to 2020 earnings as disclosed in our Current Report on Form 8-K filed with the Securities and Exchange Commission ("SEC") on December 16, 2019.
• Authorization by our Board of Directors of a new share repurchase program, up to $25.0 million, of CURO common stock.
• Initiation of a dividend program and declaration of our first quarterly cash dividend of $0.055 per share ($0.22 per share annualized) to be paid on March 2, 2020 to stockholders of record as of the close of business on February 18, 2020.
• Executed a non-binding letter of intent for an additional $200 million Non-Recourse Revolving Credit Facility to fund our growing U.S. portfolios. This facility has a 90% advance rate with a 5.75% LIBOR spread.

Full-year 2019 developments include:

• Revenue increase of $96.7 million, or 9.3%, over the prior year. Year-over-year revenue comparisons include approximately $49 million benefit from the Q1 2019 Open-End Loss Recognition Change, offset by a similar increase in provision expense.
• Net Income from continuing operations of $103.9 million, an increase of $87.4 million compared to the prior year, and Diluted Earnings per Share of $2.26, up from $0.34 in the prior year.
• Adjusted Net Income and Adjusted Diluted Earnings per Share growth of 40.8% and 46.6%, respectively, over the prior year.
• Continued success with the Canada Open-End product transition, as the portfolio grew and matured and NCO rates improved. Canada Adjusted EBITDA increased $33.0 million over the prior year, from $25.9 million to $58.9 million.
• During the period from April through July 2019, investment of an additional $3.8 million in Cognical Holdings, Inc. ("Katapult," formerly known as Zibby), an on-line virtual lease-to-own platform. As a result of this investment, our diluted ownership of Katapult increased to 43.8%.
• Completion of the exit from the U.K. market during the first quarter of 2019, resulting in favorable U.S. tax consequences related to the loss on disposal.
• Addition of two independent directors to our Board of Directors, which brought both compliance and human resources experience and insight, as announced in our Current Report on Form 8-K filed with the SEC on July 22, 2019.
• Cumulative open market purchases of 4,069,796 shares through February 5, 2020 under the terms of our $50 million share repurchase program that was announced in April 2019. As of February 5, 2020, the authorized total under the repurchase program has been fully utilized.
• The purchase of 2,000,000 shares from Friedman Fleischer & Lowe Capital Partners II, L.P. and its affiliated investment funds ("FFL"), a related party to the Company, as disclosed in our Current Report on Form 8-K filed with the SEC on September 3, 2019.

2020 Outlook

The Company is initiating its full-year 2020 revenue and non-GAAP adjusted earnings guidance, as follows:

• Revenue in the range of $1.165 billion to $1.195 billion, an increase of $23.2 million, or 2.0%, to $53.2 million, or 4.7% over 2019
• Adjusted Net Income in the range of $135 million to $145 million, an increase of $4.6 million, or 3.5% to $13.6 million, or 10.4%, over 2019
• Adjusted EBITDA in the range of $265 million to $280 million, an increase of $3.9 million, or 1.5%, to $18.9 million, or 7.2%, over 2019
• Adjusted Diluted Earnings per Share in the range of $3.10 to $3.35, an increase of $0.27 per share, or 9.5%, to $0.52 per share, or 18.4%, over 2019
• Effective income tax rate in the range of 26% to 27%, consistent with 2019

For a reconciliation of each non-GAAP metric to the nearest GAAP metric, see the specific reconciliations contained under "Fiscal 2020 Outlook - Reconciliations" at the end of this release. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures."

Consolidated Revenue by Product and Segment

Year-over-year comparisons for Open-End loan portfolio metrics are affected by the Q1 2019 Open-End Loss Recognition Change. Additionally, throughout this release, we exclude financial results of our former U.K. operations for all periods presented, as they were discontinued for accounting and reporting purposes in February 2019. See “Results of Discontinued Operations” for additional information.

The following tables summarize revenue by product, including credit services organization ("CSO") fees, for the periods indicated:

During the three months ended December 31, 2019, total revenue grew $14.7 million, or 5.1%, to $302.3 million, compared to the prior-year period, predominantly driven by growth in Open-End loans in both countries. Geographically, total revenue in the U.S. and Canada grew 2.2% and 18.3%, respectively. From a product perspective, Unsecured Installment and Secured Installment revenues decreased 6.7% and 2.7%, respectively, due to portfolio repositioning and optimization in California ahead of regulatory changes effective January 1, 2020. Single-Pay loan balances grew 4.4% sequentially (defined within this release as the change from the third quarter of 2019 to the fourth quarter of 2019, or comparable periods for 2018 sequential metrics) and were flat year-over-year (3.2% loan growth in the U.S. was offset by declines in Canada from migration to Open-End loans). Open-End loans in Canada grew $94.1 million, or 59.5% ($72.0 million, or 45.5%, excluding past-due receivables), from December 31, 2018, which fueled related revenue growth of $10.4 million, or 58.8%. U.S. Open-End revenue rose 46.3% on related loan growth of $34.1 million, or 69.3% ($6.1 million, or 12.4%, excluding past-due receivables). Ancillary revenues increased 6.2% versus the comparable quarter a year ago, primarily due to the sale of insurance products to Open-End and Installment loan customers in Canada.

For the year ended December 31, 2019, total revenue grew $96.7 million, or 9.3%, to $1,141.8 million, compared to the prior year, predominantly driven by growth in Open-End loans in both countries. Geographically, total revenue in the U.S. and Canada grew 7.1% and 18.9%, respectively. From a product perspective, Unsecured Installment revenues rose $14.1 million, or 2.8%, in the U.S., with full-year comparisons affected by the aforementioned fourth quarter 2019 portfolio repositioning and optimization in California and a decrease in Canada of $6.6 million due to the continued transition to Open-End loans. Secured Installment revenues and related receivables were flat year-over-year as growth in other states offset California declines from portfolio repositioning. U.S. Single-Pay revenue increased $5.4 million, or 5.0%, compared to the prior year. Canadian Single-Pay usage and product profitability were impacted negatively year-over-year by regulatory changes in Ontario effective July 1, 2018, and the strategic transition of qualifying customers to Open-End loans. Open-End revenues rose $103.3 million, or 72.8%, on related loan growth in Canada and U.S., primarily in Tennessee, Virginia and Kansas. Ancillary revenues increased $13.7 million, or 27.3%, versus the prior year, primarily due to the sale of insurance to Installment and Open-End loan customers in Canada.

The following table presents revenue composition, including CSO fees, of the products and services that we currently offer:

For the three months ended December 31, 2019 and 2018, revenue generated through the online channel as a percentage of consolidated revenue was 47% and 44%, respectively. For the year ended December 31, 2019 and 2018, revenue generated through the online channel as a percentage of consolidated revenue was 46% and 42%, respectively.

Loan Volume and Portfolio Performance Analysis

The following table summarizes Company Owned gross loans receivable, a GAAP-basis balance sheet measure, with reconciliation to Gross combined loans receivable, a non-GAAP measure(1). Gross combined loans receivable include loans originated by third-party lenders through CSO programs, which are not included in the Consolidated Financial Statements but from which we earn revenue by providing a guarantee to the unaffiliated lender.

Gross combined loans receivable by product is presented below. Year-over-year comparisons for Open-End are affected by the Q1 2019 Open-End Loss Recognition Change. Excluding the impact of the Q1 2019 Open-End Loss Recognition Change, Open-End receivables increased $78.1 million, or 37.7%, year-over-year.

Gross combined loans receivable increased $90.5 million, or 13.9%, to $742.5 million as of December 31, 2019, from $651.9 million as of December 31, 2018, primarily due to an increase in Open-End loans of 69.3% and 59.5% in the U.S. and Canada, respectively. Gross combined loans receivable performance by product is explained further in the following sections.

Unsecured Installment Loans

Unsecured Installment revenue and related gross combined loans receivable decreased 6.7% and 12.2%, respectively, from the prior-year quarter, due to portfolio repositioning and optimization in California to manage January 1, 2020 regulatory changes. Unsecured Installment gross combined loans receivable decreased $32.8 million compared to December 31, 2018.

Unsecured Installment loans in California were $71.4 million, or 44.4%, as of December 31, 2019, a decrease of $30.1 million from $101.5 million as of December 31, 2018, and of $15.0 million from $86.4 million as of September 30, 2019.

Unsecured Installment loans Guaranteed by the Company declined $3.1 million year-over-year due to regulatory change in Ohio, effective April 2019, and the subsequent conversion of some Ohio CSO volume to Company Owned loans, partially offset by growth in Texas.

The NCO rate for Company Owned Unsecured Installment gross loans receivables in the fourth quarter of 2019 increased approximately 40 bps year-over-year, primarily due to mix shift associated with California portfolio repositioning and optimization. California NCO rates for Unsecured Installment loans historically are lower than our other major states. California comprised 48.8% of total U.S. Company Owned Unsecured Installment loans as of December 31, 2019 compared to 58.0% in the prior year. Also, due to the repositioning, California NCO rates have increased slightly year-over-year. Company Owned Unsecured Installment NCO rates for the U.S. excluding California were flat year-over-year.

The Unsecured Installment Allowance for loan losses as a percentage of Company Owned Unsecured Installment gross loans receivable ("allowance coverage") increased year-over-year from 19.8% as of December 31, 2018 to 22.1% as of December 31, 2019, primarily as a result of the aforementioned increase in U.S. NCO rates and higher past-due balances. Past-due receivables as a percentage of total gross receivables increased 100 bps from the same quarter a year ago, consistent with the change in NCO rates. Sequentially, allowance coverage increased from 21.9% to 22.1% as of December 31, 2019.

NCO rates for Unsecured Installment loans Guaranteed by the Company improved 270 bps compared to the same quarter a year ago. The CSO liability for losses decreased sequentially from 14.4% to 14.2% for the fourth quarter of 2019.

Secured Installment Loans

Secured Installment revenue and the related gross combined loans receivable for the three months ended December 31, 2019 decreased 2.7% and 5.7%, respectively, compared to the prior-year period, primarily as a result of portfolio repositioning and optimization to manage California regulatory changes effective January 1, 2020. Secured Installment gross combined loans receivable decreased $5.5 million, compared to December 31, 2018. California accounted for $36.5 million, or 40.4%, of total Secured Installment gross combined loans receivable as of December 31, 2019, a decrease of $12.3 million from $48.8 million as of December 31, 2018, and of $4.9 million from $41.4 million as of September 30, 2019. Secured Installment Allowance for loan losses and CSO liability for losses as a percentage of Secured Installment gross combined loans receivable decreased year-over-year from 13.2% to 11.5% for the fourth quarter of 2019, and modestly increased on a sequential basis from 11.3% to 11.5% during the fourth quarter of 2019, reflecting the increase in past-due receivables.

Open-End Loans

Open-End loan balances as of December 31, 2019 increased by $128.2 million, or 61.8%, compared to December 31, 2018, on 45.5% growth in Canada and 12.4% growth in the U.S (excluding the impact of the Q1 2019 Open-End Loss Recognition Change). The Q1 2019 Open-End Loss Recognition Change, discussed further below, impacted comparability as $50.1 million of past-due Open-End loans as of December 31, 2019 would have been charged off under the former policy.

The consolidated Open-End NCO rate during the fourth quarter of 2019 improved 165 bps versus the same quarter in the prior year, primarily as a result of seasoning of the Canada portfolio. Canada NCO rates improved 290 bps year-over-year. U.S. NCO rates increased 180 bps for the same periods from a combination of loan growth, mix shift to more online volume and advertising channel shifts.

Q1 2019 Open-End Loss Recognition Change

Effective January 1, 2019, we modified the timeframe in which we charge-off Open-End loans and made related refinements to our loss provisioning methodology. Prior to January 1, 2019, we deemed Open-End loans uncollectible and charged-off when a customer missed a scheduled payment and the loan was considered past-due. Because of our continuing shift to Open-End loans in Canada and our analysis of payment patterns on early-stage versus late-stage delinquencies, we revised our estimates and now consider Open-End loans uncollectible when the loan has been contractually past-due for 90 consecutive days. Consequently, past-due Open-End loans and related accrued interest now remain in loans receivable for 90 days before being charged off against the allowance for loan losses. All recoveries on charged-off loans are credited to the allowance for loan losses. We evaluate the adequacy of the allowance for loan losses compared to the related gross loans receivable balances that include accrued interest.

The aforementioned change was treated as a change in accounting estimate for accounting purposes and applied prospectively beginning January 1, 2019.

The change affects comparability to prior periods as follows:

• Gross combined loans receivable: balances as of December 31, 2019 include $50.1 million of Open-End loans that are up to 90 days past-due with related accrued interest, while such balances for periods prior to March 31, 2019 do not include any past-due loans.

• Revenues: for the three months and year ended December 31, 2019, gross revenues include interest earned on past-due loan balances of approximately $14 million and $49 million, respectively, while revenues in prior-year periods do not include comparable amounts.

• Provision for Losses: prospectively from January 1, 2019, past-due, unpaid balances plus related accrued interest charge-off on day 91. Provision expense is affected by NCOs (total charge-offs less total recoveries) plus changes to the Allowance for loan losses. Because NCOs prospectively include unpaid principal and up to 90 days of related accrued interest, NCO amounts and rates are higher and the Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable is higher. The Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable increased to 16.4% at December 31, 2019, compared to 9.6% in the comparable prior-year period.

The following table reports 2019 Open-End loan performance, including the effect of the Q1 2019 Open-End Loss Recognition Change:

In addition, the following table illustrates, on a non-GAAP pro forma basis, the 2019 quarterly results as if the Q1 2019 Open-End Loss Recognition Change had been applied to our outstanding Open-End loan portfolio as of December 31, 2018. This table is illustrative of retrospective application to determine the NCOs that would have been incurred in each quarter of 2019 from the December 31, 2018 loan book. The primary purpose of this pro forma illustration is to provide a representative level of NCO rates from applying the Q1 2019 Open-End Loss Recognition Change.

Single-Pay

Single-Pay revenue during the three months ended December 31, 2019 remained flat compared to the three months ended December 31, 2018. U.S. Single-Pay receivables increased $1.4 million, or 3.2%, year-over-year, offset by a decrease in Canada receivables of $0.8 million, or 2.1%, from mix shift to Open-End loans. Year-over-year, NCO rates increased 30 bps, driven entirely by Canada. The Single-Pay Allowance for loan losses as a percentage of Single-Pay gross loans receivable decreased sequentially from 7.3% to 7.2%.

Results of Operations - CURO Group Consolidated Operations

For the three months ended December 31, 2019 and 2018

Revenue and Net Revenue

Revenue increased $14.7 million, or 5.1%, to $302.3 million for the three months ended December 31, 2019, from $287.6 million for the three months ended December 31, 2018. Revenue for the three months ended December 31, 2019 included interest earned on past-due Open-End loan balances of approximately $14 million as a result of the Q1 2019 Open-End Loss Recognition Change. U.S. revenue increased 2.2%, driven by Open-End growth, partially offset by a decrease in Installment loans as a result of California portfolio repositioning and optimization to manage January 1, 2020 regulatory changes. Canadian revenue increased 18.3% primarily due to growth in Open-End loans and Ancillary revenues.

Provision for losses remained consistent for the three months ended December 31, 2019 compared to the prior-year period. Geographically, U.S. provision for losses increased $2.5 million, or 2.3%, due to the Q1 2019 Open-End Loss Recognition Change, offset by less provisioning as the California Installment loan portfolios declined. Canada provision for losses decreased $2.9 million, or 13.5%, on loan growth and the impact of the Q1 2019 Open-End Loss Recognition Change, offset by 290 bps improvement in Open-End NCO rates.

Cost of Providing Services

The total cost of providing services increased $1.5 million, or 2.0%, to $76.7 million in the three months ended December 31, 2019, compared to $75.2 million in the three months ended December 31, 2018, primarily because of higher advertising costs.

Operating Expenses

Corporate, district and other expenses were $37.1 million for the three months ended December 31, 2019, an increase of $0.6 million, or 1.5%, compared to the three months ended December 31, 2018.

We account for our investment in Katapult under the equity method. We record our pro rata share of Katapult's income or losses in the income statement with a corresponding adjustment to the carrying value of our investment in "Other" on the Consolidated Balance Sheet. Our share of estimated losses for the three months ended December 31, 2019 was $1.2 million.

Interest Expense

Interest expense for the fourth quarter of 2019 decreased $0.5 million, or 2.6%, compared to the prior-year period, primarily due to long-term debt refinancing activities in the second half of 2018.

Provision for Income Taxes

The effective income tax rate for the three months ended December 31, 2019 was 24.9%, compared to a tax rate of 11.1% for the three months ended December 31, 2018. The fourth quarter 2019 increase in effective income tax rate was due to unfavorable impacts from the non-tax deductible loss on our equity method investment, changes in state income apportionment and a mix shift in taxable income between the U.S. and Canada. Excluding non-GAAP adjustments to Adjusted Net Income as presented in the reconciliation of Net income to Adjusted Net Income, the Adjusted effective income tax rate from continuing operations for the three months ended December 31, 2019 was 24.4%, compared to a tax rate of 26.3% for the three months ended December 31, 2018.

For the year ended December 31, 2019 and 2018

Revenue and Net Revenue

Revenue increased $96.7 million, or 9.3%, to $1,141.8 million for the year ended December 31, 2019 from $1,045.1 million for the year ended December 31, 2018. Revenue for the year ended December 31, 2019 included interest earned on past-due Open-End loan balances of approximately $49 million from the Q1 2019 Open-End Loss Recognition Change, offset by a higher provision rate and the higher allowance discussed further below. U.S. revenue increased 7.1%, driven by growth in Open-End loans. Canadian revenue increased 18.9% (21.8% on a constant currency basis), as loan growth offset yield compression from negative regulatory impacts on Single-Pay loan yields and the significant product mix-shift to lower-yielding Open-End loans.

Provision for losses increased $47.0 million, or 11.1%, to $468.6 million for the year ended December 31, 2019, from $421.6 million for the year ended December 31, 2018, primarily due to the Q1 2019 Open-End Loss Recognition Change and loan growth year-over-year as further described in "Segment Analysis" below.

Cost of Providing Services

The total cost of providing services decreased $3.4 million, or 1.1%, to $294.6 million in the year ended December 31, 2019, compared to $298.0 million in the year ended December 31, 2018, on lower advertising costs, offset by an increase of 1.1% in all other costs of providing services. The decline in advertising costs was primarily the result of reduced spending in California, and normalized levels in Canada compared to the elevated spending in the prior year due to the transition to Open-End loans in Ontario in the third quarter of 2018.

Operating Expenses

Corporate, district and other expenses increased $27.7 million, or 20.9%, primarily as a result of $8.8 million for obtaining the consent of our holders of the 8.25% Senior Secured Notes and our bondholders associated with discontinuing our U.K. operations and other related U.K. separation costs, $3.0 million of legal and related costs as described in footnote 3 to the preceding tables, $1.8 million of restructuring costs from our reduction-in-force implemented in January 2019 and $2.1 million of additional share-based compensation. Excluding these costs, corporate, district and other expenses increased by $11.7 million, or 9.4%, primarily due to higher professional fees and higher variable compensation based on financial performance.

Our share of estimated losses for Katapult for the year ended December 31, 2019 was $6.3 million, which includes a market adjustment of $3.7 million for loss recognized in the second quarter of 2019 and $2.5 million of our share of estimated losses in 2019.

Interest Expense

Interest expense decreased by $14.6 million, or 17.3%, compared to the prior-year period, primarily due to long-term debt refinancings in 2018. During the third quarter of 2018, we issued $690.0 million of 8.25% Senior Secured Notes and used the proceeds from the issuance to extinguish our $527.5 million 12.00% Senior Secured Notes and our Non-Recourse U.S. SPV Facility. In addition, we entered into a Non-Recourse Canada SPV Facility in the third quarter of 2018 with a lower interest rate than our previous Non-Recourse U.S. SPV Facility.

Provision for Income Taxes

The effective income tax rate for the year ended December 31, 2019 was 27.1%, compared to a tax rate of 9.2% for the year ended December 31, 2018. The effective income tax rate for the year ended December 31, 2019 included unfavorable impacts from the non-tax deductible loss on our equity method investment, changes in state income apportionment and a mix shift in taxable income between the U.S. and Canada. Excluding non-GAAP adjustments to Adjusted Net Income as presented in the reconciliation of Net income to Adjusted Net Income, the Adjusted effective income tax rate from continuing operations for the year ended December 31, 2019 was 25.9% compared to a tax rate of 24.7% for the year ended December 31, 2018.

Segment Analysis

We report financial results for two reportable segments: the U.S. and Canada. Following is a summary of results of operations for the segment and period indicated:

U.S. Segment Results - For the three months ended December 31, 2019 and 2018

Fourth quarter 2019 U.S. revenues increased by $5.1 million, or 2.2%, to $240.3 million, compared to the prior-year period. U.S. revenue growth was primarily driven by growth in Open-End loans, which increased $34.1 million, or 69.3%, offset by portfolio optimization ahead of regulatory changes in California impacting Installment loans as discussed above. U.S. revenue for the three months ended December 31, 2019 included interest earned on past-due Open-End loan balances of approximately $12 million from the Q1 2019 Open-End Loss Recognition Change.

The provision for losses increased $2.5 million, or 2.3%, despite the decline in total gross combined loans receivable primarily due to the Q1 2019 Open-End Loss Recognition Change. NCO rates were consistent year-over-year, with an increase of approximately 50 bps for the three months ended December 31, 2019 compared to the prior-year period.

U.S. cost of providing services for the three months ended December 31, 2019 was $57.9 million, an increase of $1.1 million, or 1.9%, compared to $56.8 million for the three months ended December 31, 2018, because of modestly higher advertising costs.

Corporate, district and other operating expenses were consistent compared to the same period in the prior year.

U.S. interest expense for the fourth quarter of 2019 decreased by $0.4 million compared to the prior-year period, primarily due to our refinancing activities in 2018. During the third quarter of 2018, we issued $690.0 million of 8.25% Senior Secured Notes and used the proceeds from the issuance to extinguish our $527.5 million 12.00% Senior Secured Notes and U.S. SPV facility.

U.S. Segment Results - For the year ended December 31, 2019 and 2018

For the year ended December 31, 2019, U.S. revenues increased by $60.4 million, or 7.1%, to $913.5 million. U.S. revenue growth was primarily driven by growth in Open-End loans, which increased $34.1 million, or 69.3%, compared to the prior year, offset by regulatory changes in California impacting Installment loans as discussed above. Additionally, U.S. revenue for the year ended December 31, 2019 included interest earned on past-due Open-End loan balances of approximately $42 million from the Q1 2019 Open-End Loss Recognition Change, offset by related higher provision rate and higher provision for losses.

The provision for losses' increase of $43.5 million, or 12.5%, was primarily due to the Q1 2019 Open-End Loss Recognition Change. In addition, the year ended December 31, 2018 included $13.6 million of provision benefit from changes in allowance coverage rates, whereas the year ended December 31, 2019 included $1.2 million of incremental expense.

U.S. cost of providing services for the year ended December 31, 2019 was $218.4 million, a decrease of $1.3 million, or 0.6%, compared to $219.7 million for the year ended December 31, 2018, primarily due to lower advertising costs associated with repositioning our California Installment loan portfolio in advance of regulatory changes.

Corporate, district and other operating expenses increased $25.4 million, or 22.5%, compared to the prior year, primarily due to $8.8 million of U.K. disposition-related costs, $9.1 million higher performance-based variable compensation costs, $2.1 million of higher share-based compensation expense, $3.5 million higher legal and related costs, and $1.6 million of restructuring costs.

U.S. interest expense for the year ended December 31, 2019 decreased by $21.1 million compared to the prior year, primarily due to our refinancing activities in 2018. During the third quarter of 2018, we issued $690.0 million of 8.25% Senior Secured Notes and used the proceeds from the issuance to extinguish our $527.5 million 12.00% Senior Secured Notes and our U.S. SPV facility.