FCFS 10-K & 10-Q changes, risk factors and insider trading

•The Company faces significant competition from other pawnshops, branch-based consumer lenders, online consumer lenders, banks, credit unions, online lenders, POS consumer finance companies, LTO companies, buy-now/pay later (“BNPL”) providers along with general, specialty and online retailers, governmental entities and other organizations offering similar financial services and retail products to those offered by the Company.

•The inability to successfully identify attractive acquisition targets, realize administrativeanticipated andbenefits operational synergiesfrom and integrate completed acquisitions could adversely affect results.

•Changes impacting international trade, such as proposed or enacted tariffs, including pursuant to policies of the incomingcurrent U.S. administration, and corporate taxation and other related regulatory provisions may have an adverse effect on the Company’s financial condition and results of operations.

•The Company’s products and services are subject to extensive regulation and supervision under various federal, state and local laws, ordinances and regulations in boththe U.S., Latin America and the U.S. and Latin America,U.K., and all consumer finance and lease-to-own companies that serve credit-constrained consumers, including the Company, face increasing regulatory scrutiny under the current regulatory environment.

•Current and future litigation or regulatory proceedings, both in the U.S.U.S., Latin America and Latinthe America,U.K., could have a material adverse effect on the Company’s business, prospects, results of operations and financial condition.

•The Company’s financial position and results of operations may change significantly due to fluctuations in currency exchange rates in Latin American markets.markets and in the U.K.

Increased competitionCompetition from other pawnshops, POS consumer finance and BNPL companies, other short-term consumer lenders, other LTO companies, governmental entities and other organizations offering similar financial services and retail products offered by the Company could adversely affect the Company’s results of operations.

The Company’s principal competitors are other pawnshops, branch-based consumer lenders, banks, credit unions, credit card issuers, online lenders, POS consumer finance and BNPL companies, LTO companies, general, specialty and online retailers, governmental entities and other organizations offering similar financial services and retail products to those offered by the Company. In addition, banks, credit card issuers, consumer finance companies and retailers continue to develop and enhance lending and retail POS payment products and services designed to compete for the credit-constrained customer, many of which have greater financial resources and brand recognition than the Company. Significant increases in the number and size of competitors for the Company’s business could result in a decrease in the number of the Company’s pawn transactions or in AFF’s transaction volumes, resulting in lower levels of revenue and earnings.

The success of the Company’s organic expansion strategy is subject to numerousmany external factors, including regulatory restrictions, general economic conditions and acceptance of the Company’s products. With respect to the Company’s pawn business, organic growth is largely driven by the ability to increase the productivity of its existing stores and successfully open new stores, which new store openings are impacted by the availability of sites with favorable customer demographics, limited competition from other pawn stores, community acceptance, suitable lease terms, its ability to attract, train and retain qualified associates and management personnel, the ability to obtain required government permits and licenses and the ability to complete construction and obtain utilities in a timely manner. With respect to the AFF business, organic growth is largely driven by the ability of AFF to expand its network of merchant partners, increase utilization of its products at its merchant partners and improve its technology to support increased growth, meet the needs of its merchants and consumers and make effective pricing and approval decisions with respect to its products. Some of these factors are beyond the Company’s control. The failure to execute the Company’s organic expansion strategy would adversely affect the Company’s ability to expand its business and could materially adversely affect its business, prospects, results of operations and financial condition.

The inability to successfully identify attractive acquisition targets, realize administrativeanticipated andbenefits operational synergiesfrom and integrate completed acquisitions could adversely affect results.

The Company has historically grown in large part through strategic acquisitions, and the Company’s strategy is to continue to pursue attractive acquisition opportunities if and when they become available. The success of an acquisition is subject to numerous internal and external factors, such as competition rules, the ability to consolidate information technology and accounting functions, the management of additional sales, administrative, operations and management personnel, overall management of a larger organization, competitive market forces, and general economic and regulatory factors. It is possible that the integration process could result in unrealized administrative and operational synergies, the loss of key employees, the disruption of ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect the Company’s ability to maintain relationships with customers, employees, or other third parties or the Company’s ability to achieve the anticipated benefits of such acquisitions and could harm its financial performance. Furthermore, future acquisitions may be in jurisdictions in which the Company does not currently operate or in lines of business that are new to the Company, which could make the successful consummation and integration of any such acquisitions more difficult. Acquisition targets may also become increasingly scarce in future periods or harder to acquire at attractive valuations. Failure to successfully integrate an acquisition could haveadversely an adverse effect onaffect the Company’s business, results of operations and financial condition, and failure to successfully identify attractive acquisition targets and complete such acquisitions on favorable terms could have an adverse effect on the Company’s growth. Additionally, any acquisition carries the risk that the Company may not realize a return on the acquisition or the Company’s investment.

The Company depends on its senior management to execute its business strategy and oversee its operations. The Company’s senior management team has significant pawn industry experience in both Latin America and the United States as well as public company experience, which the Company believes is unique in the pawn industry. Furthermore, H&T’s and AFF’s senior management teamteams providesprovide the Company with significant experience with the U.K. pawn market and retail POS payment solutions forindustry, credit-constrained customers.respectively. The loss of services of any member of the Company’s senior management, including AFF’s management,management could adversely affect the Company’s business until a suitable replacement can be found, if at all. There may be a limited number of persons with the requisite skills to serve in these positions, and the Company cannot ensure that it would be able to identify or employ such qualified personnel on acceptable terms. Furthermore, a significant increase in the costs to retain any members of the Company’s senior management could adversely affect the Company’s business and operations.

The Company’s pawn businessbusinesses reliesrely heavily on hourly retail employees along with supervisory employees, while AFF relies heavily on sales, information technology, data science and customer service employees. The Company must attract, train, and retain a large number of employees, while at the same time controlling labor costs. In particular, the Company’s in-store positions have historically had high turnover rates, which can lead to increased training, retention and other costs and impair the overall customer service and efficiencies at the Company’s pawn stores. There has also been an increase in labor shortages and competition for employees, especially with respect to the Company’s hourly in-store employees, including from retailers and the restaurant industries. The Company also faces meaningful competition for AFF’s salesforce, information technology, call center and data science teams. The lack of availability of adequate employees or the Company’s inability to attract and retain qualified employees, or an increase in wages and benefits to current employees, could adversely affect its business, results of operations, cash flows and financial condition.

The Company’s business depends highly upon its ability to perform, in an efficient and uninterrupted fashion, necessary business functions such as operating, managing and securing its retail locations, technical support centers, security monitoring, treasury and accounting functions and other administrative support functions. Additionally, the Company’s storefront operations depend on the efficiency and reliability of the Company’s proprietary pawn POS and loan management systemsystems and AFF depends on its systems to process its transaction volume and effectively take applications, decision and service its customers. Furthermore, third parties provide a number of key components necessary to the Company’s business functions and systems. Any problems caused by these third parties could adversely affect the Company’s ability to deliver products and services to its customers and otherwise conduct its business. A shut-down of or inability to access these systems due to a power outage, a cyber-securitycybersecurity breach or attack, a breakdown or failure of one or more of its information technology, telecommunications or other systems, or sustained or repeated disruptions of such systems could significantly impair its ability to perform such functions on a timely basis and could result in a deterioration of the Company’s ability to perform its day-to-day operations, provide customer service or perform other necessary business functions.

An important component of the Company’s business involves collection, storage, use, disclosure, processing, transfer and other handling of a wide variety of sensitive, regulated and/or confidential information, including personally identifiable information, for various purposes in its business with customers.customers and employees. While the Company’s pawn business has historically acquired and maintained minimal personal information (primarily name, address, government identification numbers and date of birth)., AFF obtains additional personal information, including social security numbers, dates of birth, bank account and payment card information and data from consumer reporting agencies (including credit report information) from its customers, increasing the potential risk of unauthorized access to such confidential information. The Company is under constant threat of loss due to the velocity and sophistication of security breaches and cyber attacks. These security incidents and cyber attacks may be in the form of computer hacking, acts of vandalism or theft, malware, computer viruses or other malicious codes, phishing, employee error or malfeasance, catastrophes or unforeseen events or other cyber attacks. A security breach of the Company’s computer systems, or those of the Company’s third-party service providers, including as a result of cyber attacks, could cause loss of Company assets, sensitive customer informationor andemployee information, transaction data, interrupt or damage its operations or harm its reputation. In addition, the Company could be subject to liability if confidential customer or employee information is misappropriated from its computer systems. Any compromise of security, including security breaches perpetrated on persons with whom the Company has commercial relationships, that results in the unauthorized access to or use of personal information or the unauthorized access to or use of confidential employee, customer, supplier or Company information, could result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to the Company’s reputation, and a loss of confidence of the Company’s customers, vendors and others, which could harm its business and operations. Any compromise of security could deter people from entering into transactions that involve transmitting confidential information to the Company’s systems and could harm relationships with the Company’s suppliers, which could have a material adverse effect on the Company’s business. Actual or anticipated cyber attacks may cause the Company to incur substantial costs, including costs to prevent future attacks and investigate actual attacks, deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants. Despite the Company’s implementation of significant security measures, including the use of encryption and authentication technology to provide security and authentication to effectively secure transmission of confidential information, these systems may still be vulnerable to physical break-ins, computer viruses, programming errors, attacks by third-parties or similar disruptive problems. The Company may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber attacks. Moreover, the Company may be unable to anticipate cyber attacks, react in a timely manner, or implement adequate preventative or remedial measures. Although the Company monitors its systems in order to detect security breaches or instances of unauthorized access to confidential information, there is no guarantee that its monitoring efforts will be effective. While the Company has not experienced any material losses relating to cyber attacks or other information security breaches to date, the Company and AFF have been the subject of attempted hacking and cyber attacks and there can be no assurance that the Company will not suffer significant losses or reputational harm in the future.

Additionally, the regulatory environment related to information security and data collection, retention, use and privacy is increasingly rigorous, with new and constantly changing requirements applicable to the Company’s business, and compliance with those requirements could result in additional costs, such as increased investment in technology or investigative expenses, the costs of compliance with privacy laws, and fines, penalties and costs incurred to prevent or remediate information security or cyber breaches. Furthermore,For federalexample, the GDPR imposes strict data protection requirements and statesignificant penalties for noncompliance. Furthermore, various regulators and many federal and state laws and regulations require notice of any data security breaches that involve personal information. These mandatory disclosures are costly to implement and often lead to widespread negative publicity, which may cause consumers to lose confidence in the effectiveness of the Company’s data security measures. Any security breach suffered by the Company or its vendors, any unauthorized, accidental, or unlawful access or loss of data, or the perception that any such event has occurred, could result in a disruption to the Company’s operations, litigation, an obligation to notify regulators and affected individuals, the triggering of indemnification and other contractual obligations, regulatory investigations, government fines and penalties, reputational damage, and loss of customers and ecosystem partners, and its business could be materially and adversely affected. For additional information on cybersecurity, see “Item 1C. Cybersecurity.”

Because the Company maintains a significant supply of cash, pawn loan collateral and retail inventories in its pawn stores and certain processing centers, the Company may be subject to employee and third-party robberies, riots, looting, burglaries and thefts. The Company may also be subject to liability as a result of crimes at its pawn stores.

The success of the Company’s business depends to a certain extent upon the value associated with its intellectual property rights, including its proprietary, internally developed POS and loan management system that is in use in its pawn stores and its proprietary application and decisioning technology that is used by the AFF business. The Company relies on a combination of trademarks, trade dress, trade secrets, proprietary software, mobile applications, website domain names and other rights, including confidentiality procedures and contractual provisions, to protect its proprietary technology, processes and other intellectual property. While the Company intends to vigorously protect its trademarks and proprietary systems against infringement, it may not be successful. In addition, the laws of certain foreign countries may not protect intellectual property rights to the same extent as the laws of the U.S. The costs required to protect the Company’s intellectual property rights and trademarks could be substantial.

The Company’s operations and cash management are dependent upon the Company’s ability to maintain retail banking services, treasury management services and borrowing relationships with commercial banks. ActionsCertain banks have made strategic decisions to limit or restrict branch-based cash handling services. Additionally, actions by federal regulators in the U.S. andU.S., Latin American countries where the Company operates and the U.K. have caused manysome commercial banks, including certain banks used by the Company, to cease offering such services to the Company and other businesses in the pawn, LTO and consumer finance industries. The Company also relies significantly on outside vendors to provide services related to financial transaction processing (including credit and debit card processors), utilities, store security, armored transport, precious metal smelting,smelting and sales, data and voice networks and other information technology products and services. The failure or inability of any of these third-party financial institutions or vendors to provide such services could limit the Company’s ability to grow its business and could increase the Company’s costs of doing business, which could adversely affect the Company’s operations if the Company is unable to timely replace them with comparable service providers at a comparable cost.

The Company could incur substantial losses and its business operations could be disrupted if the Company isdoes unable tonot effectively identify, manage, monitor and mitigate financial risks, such as credit risk, interest rate risk, commodity pricing risk, prepayment risk, liquidity risk and other market-related risks, as well as regulatory and operational risks related to its business, assets and liabilities. The Company’s risk management policies, procedures and techniques may not be sufficient to identify all of the risks it is exposed to, mitigate the risks the Company has identified or identify concentrations of risk or additional risks to which the Company may become subject in the future.

The Company’s products and services are subject to extensive regulation and supervision under various federal, state and local laws, ordinances and regulations in boththe U.S., Latin America and the U.S. and Latin America.U.K. If changes in regulations affecting the Company’s pawn business or the AFF business create increased restrictions, or have the effect of prohibiting pawn loans or POS payment products in the jurisdictions where the Company currently operates, such regulations could materially impair or reduce the Company’s business and limit its expansion into new markets.

The Company’s products and services are subject to extensive regulation and supervision under various federal, state and local laws, ordinances and regulations in boththe U.S., Latin America and the U.S. and Latin America.U.K. Federal and state regulatory authorities are increasingly focused on consumer finance and retail POS payment products, such as those offered by the Company, for credit-constrained consumers. The Company faces the risk that restrictions or limitations on pawn loans and retail POS payment products resulting from the enactment, change, interpretation or enforcement of laws and regulations in the U.S. orU.S., Latin America or the U.K. could have a negative effect on the Company’s business activities. For example, certain states have capped interest rates on consumer loans at 36% and there has been legislation proposed at the Federalfederal level and in other states to implement a comparable cap on interest rates on consumer loans. If such caps were implemented more broadly, they could have a material impact on the Company’s revenues and profitability. In addition, certain consumer advocacy groups, federal, state and local legislators and governmental agencies have also asserted that rules, laws and regulations should be tightened so as to severely limit, if not eliminate, the availability of pawn transactions, POS payment products and buy/sell agreements to consumers.

In particular, with respect to the Company’s pawn business, restrictions and regulations such as licensing requirements for pawn stores and their employees, customer identification requirements, suspicious activity reporting, disclosure requirements and limits on interest rates, loan service fees, or other fees have been and continue to be proposed. Adoption of such federal, state or local regulation or legislation in the U.S. andU.S., Latin America and the U.K. could restrict, or even eliminate, the availability of pawn transactions and buy/sell agreements at some or all of the Company’s locations, which would adversely affect the Company’s operations and financial condition.

Media reports, statements made by regulators and elected officials and the general public perception that pawnshops, LTO and retail finance products for credit-constrained consumers are predatory or abusive could materially adversely affect the Company’s businesses. In recent years, consumer advocacy groups and some media reports, in boththe U.S., Latin America and the U.S. and Latin America,U.K., have advocated governmental action to prohibit or place severe restrictions on the Company’s products and services.

Current and future litigation or regulatory proceedings, bothproceedings in the U.S.U.S., Latin America and Latinthe America,U.K. could have a material adverse effect on the Company’s business, prospects, results of operations and financial condition.

The Company or its subsidiaries has been, is, or may become involved in lawsuits, arbitration claims (including mass arbitrations);, regulatory or administrative proceedings;proceedings, examinations;examinations, investigations;investigations, consent orders;orders, memorandums of understanding;understanding, audits;audits, other actions arising in the ordinary course of business, including those related to consumer financial protection, federal or state wage and hour laws, product liability, unclaimed property, employment, personal injury;injury, and other matters that could cause it to incur substantial expenditures and generate adverse publicity. In particular, the Company may be involved in lawsuits, arbitration claims or regulatory actions related to consumer finance and protection, employment, marketing, unclaimed property, competition matters, and other matters, including class action lawsuits brought against it for alleged violations of the Fair Labor Standards Act, state wage and hour laws, state or federal advertising laws, consumer protection, lending and other laws. The consequences of defending proceedings or an adverse ruling in any current or future litigation, arbitration claims (including mass arbitrations), judicial or administrative proceeding, including consent orders or memorandums of understanding, could cause the Company to incur substantial legal fees, have to refund fees and/or interest collected, refund the principal amount of advances, pay treble or other multiples of damages, pay monetary penalties, fines, and/or modify or terminate the Company’s operations in particular states or countries. Defense or filing of any lawsuit, arbitration claims or administrative proceeding, even if successful, could require substantial time, resources, and attention of the Company’s management and could require the expenditure of significant amounts for legal fees and other related costs. Settlement of lawsuits or administrative proceedings may also result in significant payments and modifications to the Company’s operations. Due to the inherent uncertainties of litigation, administrative proceedings and other claims, the Company cannot accurately predict the ultimate outcome of any such matters.

Because the Company accepts firearms as pawn collateral and buys and sells firearms, ammunition and certain related accessories in many of its U.S. pawn locations, the Company is required to comply with U.S. federal, state and local laws and regulations pertaining to the pawning, purchase, storage, transfer and sale of such products, and the Company is subject to reputational harm if a customer purchases or redeems a pawned firearm that is later involved in a shooting or other crime.

Over the past several years, the purchase, sale and ownership of firearms, ammunition and certain related accessories hashave been the subject of increased media scrutiny and federal, state and local regulation. If enacted, new laws and regulations could limit the types of licenses, firearms, ammunition and certain related accessories that the Company is permitted to purchase and sell and could impose new restrictions and requirements on the manner in which the Company pawns, offers, purchases and sells these products, which could have a material adverse effect on the Company’s business, prospects, results of operations and financial condition.

The Company is subject to the FCPA, which generally prohibits companies and their agents or intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business and/or other benefits. The Company is also subject to anti-money laundering laws in both the United States andU.S., Latin America and the U.K. and anti-terrorism financing laws and regulations, including the Bank Secrecy Act and the Patriot Act. Furthermore, AFF is required under its agreements with its originating bank partner to maintain an enterprise-wide program designed to enable it to comply with all applicable anti-money laundering and anti-terrorism financing laws and regulations, including the Bank Secrecy Act and the Patriot Act. Although the Company has policies and procedures designed to ensure that it, its employees, agents, and intermediaries comply with the FCPA, anti-money laundering laws and other similar laws and regulations, there can be no assurance that such policies or procedures will work effectively all of the time or protect the Company against liability for actions taken by its employees, agents, and intermediaries with respect to its business or any businesses that it may acquire. In the event the Company believes, or has reason to believe, its employees, agents, or intermediaries have or may have violated applicable anti-corruption laws in the jurisdiction in which it operates, including the FCPA, the Company may be required to investigate or have a third party investigate the relevant facts and circumstances, which can be expensive and require significant time and attention from senior management. The Company’s continued operation and expansion outside the U.S., especially in Latin America, could increase the risk, perceived or otherwise, of such violations in the future.

Failure to maintain certain criteria required by various federal, state and local regulatory bodies could result in fines or the loss of the Company’s licenses to conduct business.

MostThe statesCompany’s pawn businesses are subject to significant registration and manylicensing localrequirements jurisdictions,from bothvarious federal, state and municipal governmental entities in the U.S.U.S., Latin America and in Latin America, in which the CompanyU.K. operatesMany of these regulatory bodies require registration and licenses of stores and employees to conduct the Company’s business.business These states or their respective regulatory bodiesand have established criteria the Company must meet in order to obtain, maintain, and renew those licenses. In addition, the AFF business is also subject to certain states’ laws which regulate and require licensing, registration, notice filing or other approval by parties that engage in certain activity regarding consumer finance transactions, including facilitating and assisting such transactions in certain circumstances. Furthermore, certain states and localities have also adopted laws requiring licensing, registration, notice filing, or other approval for consumer debt collection or servicing, and/or purchasing or selling consumer loans. From time to time, the Company is subject to audits in various statesjurisdictions to ensure it is meeting the applicable requirements to maintain the applicable licenses and registrations.

The Company’s financial position and results of operations may change significantly due to fluctuations in currency exchange rates in Latin American and U.K. markets.

The Company derives significant revenue, earnings and cash flow from operations in Latin America,America and the U.K., where business operations are transacted primarily in Mexican pesos,pesos and British pounds sterling, and to a lesser extent in Guatemalan quetzales and Colombian pesos to a lesser extent.pesos. The Company’s exposure to currency exchange rate fluctuations results primarily from the translation exposure associated with the preparation of the Company’s consolidated financial statements, as well as from transaction exposure associated with transactions and assets and liabilities denominated in currencies other than the respective subsidiaries’ functional currencies. While the Company’s consolidated financial statements are reported in U.S. dollars, the financial statements of the Company’s Latin Americanforeign subsidiaries are prepared using their respective functional currency and translated into U.S. dollars by applying appropriate exchange rates. As a result, fluctuations in the exchange rate of the U.S. dollar relative to the Latin Americanforeign currencies could cause significant fluctuations in the value of the Company’s assets, liabilities, stockholders’ equity and operating results. In addition, while expenses with respect to foreign operations are generally denominated in the same currency as corresponding sales, the Company has transaction exposure to the extent expenditures are incurred in currencies other than the respective subsidiaries’ functional currencies. The costs of doing business in foreign jurisdictions also may increase as a result of adverse currency rate fluctuations. In addition, changes in currency rates could negatively affect customer demand, especially in Latin America and in U.S. stores located near the Mexican border. For a detailed discussion of the impact of fluctuations in currency exchange rates, see “Item 7A. Quantitative and Qualitative Disclosures About Market Risk.”

As of December 31, 2024,2025, the Company had 1,8261,837 pawn store locations in Latin America, including 1,7251,732 in Mexico, 7275 in Guatemala, 1718 in El Salvador and 12 in Colombia, and 286 stores in the U.K. The Company plans to open or acquire additional pawn stores in Latin America and the U.K. in the future. In addition, AFF owns customer service call centers operating in Jamaica and Mexico and utilizes third-party call center services located in the Dominican Republic and Mexico.Republic. Doing business in eachforeign ofcountries, theseespecially countriesin Latin America, involves increased risks related to geo-political events, political instability, corruption, economic volatility, property crime, drug cartel and gang-related violence, social and ethnic unrest including riots and looting, enforcement of property rights, governmental regulations, tax policies, banking policies or restrictions, foreign investment policies, public safety, health and security, anti-money laundering regulations, interest rate regulation and import/export regulations, among others. As in many developing markets, there are also uncertainties in the Latin American countries the Company operates in as to how both local law and U.S. federal law is applied, including laws related to commercial transactions and foreign investment. As a result, actions or events could occur in these foreign countries that are beyond the Company’s control, which could restrict or eliminate the Company’s ability to operate some or all of its locations in these countries or significantly reduce customer traffic, product demand and the expected profitability of such operations.

As of December 31, 2024, including the Company's senior unsecured notes and the Company’s unsecured credit facilities,2025, the Company had outstanding principal indebtedness of $1,748.0$2,224.0 million and availability of $528.9$178.0 million under its unsecured credit facilities, subject to certain financial covenants. The Company's level of indebtedness could:

Determining the AFF business’ allowance for lease and loan losses and liability for off-balance sheet credit exposure requires many assumptions and complex analyses. If the estimates prove incorrect, the AFF business may incur net charge-offs in excess of its reserves,reserves or liabilities, or may be required to increase its provision for lease and loan losses, either of which would adversely affect the Company’s results of operations.

The Company maintains an allowance for lease and loan losses and a liability for off-balance sheet credit exposure related to the OBS Loans at a level believed to be sufficient to cover estimated lifetime losses expected to be incurredincurred. inThese theestimates lease and loan portfolio. This estimate isare highly dependent upon the reasonableness of its assumptions and the predictability of the relationships that drive the results of its valuation methodologies. The Company performs a quantitative analysis to compute historical losses to estimate the allowance for future lease and loan losses. Leaselosses and loanthe lossliability for off-balance sheet credit exposure. Loss experience, first payment default histories, contractual delinquency of lease and loan receivables and OBS Loans and management’s judgementjudgment are factors used in assessing the overall adequacy of the allowance and liability and the resulting provision for lease and loan losses. Changes in estimates and assumptions can significantly affect the allowanceallowance, liability and provision for lease and loan losses. It is possible that the Company will experience lease and loan losses that are different from its current estimates. If the Company’s estimates and assumptions prove incorrect and its allowance for lease and loan losses and liability for off-balance sheet credit exposure are insufficient, it may incur net charge-offs in excess of its reserves,reserves or liability, or it could be required to increase its provision for lease and loan losses, either of which would adversely affect its results of operations.

The application of indirect taxes, such as sales tax,and value-added taxes, is a complex and evolving issue, particularly with respect to the LTO industry generally and AFF’s virtual and e-commerce LTO businesses more specifically.issue. Failure to comply with such tax provisions or a successful assertion by a jurisdiction requiring AFFthe Company to collect taxes in a location or for transactions where or for which AFFthe Company presently does not, could result in substantial tax liabilities, including those for past sales and leases,liabilities as well as penalties and interest. In addition, if the tax authorities in jurisdictions where AFFthe Company is already subject to sales tax or other indirect tax obligations were to successfully challenge AFF’sthe Company’s positions, AFF’sthe Company’s tax liability could increase substantially.

The current economic environment, characterized by risingelevated inflation, higherelevated interest rates, declines in consumer confidence and uncertainlyuncertainty about economic stability and a potential recession,stability, has increased demand for pawn loans in the U.S. Conversely these conditions, coupled with tighter decisioning, adversely affected merchant sales volumes in certain categories and demand in general for AFF’s products in 2024.2025. While retail sales at the Company’s pawnshops, due in part to the “deep value” nature of the products sold at its pawnshops, and demand for pawn loans have not been adversely affected by such economic trends in 2024,2025, there is no guarantee that they will not be adversely affected should economic conditions deteriorate further. A sustained deterioration in the economy could reduce the demand and resale value of pre-owned merchandise and reduce the amount that the Company could effectively lend on an item of collateral. Such reductions could adversely affect pawn loan balances, pawn redemption rates, inventory balances, inventory mixes, sales volumes and gross profit margins. Furthermore, labor shortages and inflation have also increased operating costs, having a negative effect on the Company’s margins. In addition, government stimulus programs, (such as the response to the COVID-19 pandemic) and increased minimum wage laws (such as the increases that have occurred in Mexico) had an adverse impact on pawn loan demand and any future stimulus programs or minimum wage increases could have a similar adverse impact.

Furthermore, economic conditions and demand may also fluctuate by geographic region. The current geographic concentration of the Company’s pawn stores and AFF’s merchant partners creates exposure to local economies and politics, and regional downturns, including with respect to Latin American economies and politics, which tend to be more volatile than the U.S. economy.and U.K. economies. Any unforeseen events or circumstances that negatively affect these areas could materially adversely affect the Company’s revenues and profitability.

AFF depends on sales at its merchant partners to drive its transaction volume. If AFF’s merchant partners experience a general decline in sales or close their locations, it could negatively impact AFF’s transaction volume. The loss of business, transaction volumes or platform support from one or more of its top merchant partners could have a material adverse effect on the AFF business. Furthermore, a number of AFF’s legacy merchant partners operate brick-and-mortar retail locations, many of which are furniture stores which have been impacted industry-wide by sales declines inover 2024.the past several years. Certain of AFF’s larger furniture-focused merchant partners have experienced lagging sales, store closures and, in some instances, including Conn’s Appliances, Inc. (“Conn’s”) and American Freight, Inc.,Inc. (“A-Freight”), bankruptcies, which has and is expected to continue to negatively impact AFF’s originations. In the event that AFF is not able to replace origination volume from these brick-and-mortar retailers, its transaction volume and results of operations could be materially impacted.

AFF serves as a marketer, service provider and sub-servicer of loans originated by a Utah-chartered state bank. Under this arrangement, AFF purchases a portion of the cash flows originated by the Bank and sub-services the loans thereafter while the Bank retains ownership of the loans at all times. AFF does not originate or ultimately control the pricing or functionality of the loans. The Bank makes all key decisions regarding the marketing, underwriting, product features and pricing. AFF generates revenues through the loans and through marketing and sub-servicing fees paid by the Bank. If the Bank were to change its pricing, underwriting or marketing of the loans in a way that decreases revenues or increases losses, then the profitability of each loan could be reduced. Loans originated through the Bank’s program represent a material amount of AFF’s total origination volume. AFF’s bank loan product relies on the Bank originating the loans that are facilitated through AFF’s platform and complying with various federal, state and other laws. The current loan program agreement expires in August 2025.2028. In addition, upon the occurrence of certain early termination events, either AFF or the Bank may terminate the loan program agreement immediately upon written notice to the other party. The Bank could decide not to work with AFF for any reason, could make working with AFF cost-prohibitive or could decide to enter into an exclusive or more favorable relationship with one or more of AFF’s competitors. If the Bank were to suspend, limit or cease its operations, or if AFF’s relationship with the Bank were to otherwise terminate for any reason (including, but not limited to, its failure to comply with regulatory actions), AFF would need to implement a substantially similar arrangement with another bank, obtain additional state licenses or curtail its offering of a direct to consumerdirect-to-consumer loan product through its platform. If AFF needs to enter into alternative arrangements with a different bank to replace its existing arrangements, it may not be able to negotiate a comparable alternative arrangement in a timely manner or at all. If AFF is unable to enter into an alternative arrangement with different banks to fully replace or supplement its relationship with the Bank, AFF would potentially need to cease offering its bank loan product or other direct to consumerdirect-to-consumer installment loans. In the event that AFF’s relationship with the Bank were terminated and it is unable to substitute another one of its products at the merchants that utilize such bank loan products, its business, results of operations, financial condition and future prospects may be materially affected.

The Company’s primary business line is the operation of retail pawn stores, also known as “pawnshops,” which focus on serving cash- and credit-constrained consumers. The Company is the leading operator of pawn stores in the U.S.U.S., Latin America and Latinthe America.U.K. Pawn stores help customers meet small short-term cash needs by providing non-recourse pawn loans and buying merchandise directly from customers. Personal property, such as jewelry, electronics, tools, appliances, sporting goods and musical instruments, is pledged and held as collateral for the pawn loans over the typical 30-day term of the loan. Pawn stores also generate retail sales primarily from the merchandise acquired through collateral forfeitures and over-the-counter purchases from customers.

The Company is also a leading provider of technology-driven, retail POScustomer payment solutions focusedat onthe servingPOS credit-constrainedfor consumers.retailers of consumer goods and services, which it conducts solely through AFF. The Company’s retail POScustomer payment solutions business line consists solely of the operations of AFF, which focuses on LTO products and facilitating other retail financing payment options across a large network of traditional and e-commerce merchant partners in the U.S. and Puerto Rico. AFF’s retail partners provide consumer goods and services to their customers and use AFF’s LTO and retail finance solutions to facilitate payments on such transactions.

The Company’s two business lines are organized into threefour reportable segments. The U.S. pawn segment consists of pawn operations in the29 U.S. whilestates and the District of Columbia; the Latin America pawn segment consists of pawn operations in Mexico, Guatemala, El Salvador and Colombia.Colombia; and the U.K. pawn segment consists of pawn operations in England, Scotland and Wales. The retail POS payment solutions segment consists of the operations of AFF in the U.S. and Puerto Rico. Financial information regarding the Company’s revenue and long-lived assets by geographic area is provided in Note 17 of Notes to Consolidated Financial Statements.

Finance receivables and revenue recognition — The Company purchases and services retail finance receivables, the term of which typically range from six to 24 months, directly from its merchant partners or from its bank partner. The Company has a partnership with a Utah state-chartered bank that requires the Company to purchase the rights to the cash flows associated with certain finance receivables marketed to retail consumers on the bank’s behalf. The bank establishes the underwriting criteria for the finance receivables originated by the bank.

Goodwill and other indefinite-lived intangible assets — Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in each business combination. The Company performs its goodwill impairment assessment annually as of October 1, and between annual assessments if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company’s reporting units, which are tested for impairment, are U.S. pawn, Latin America pawn, U.K. pawn and retail POS payment solutions. The Company may assess goodwill for impairment at a reporting unit level by first assessing a range of qualitative factors, including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company’s products and services, regulatory and political developments, entity specific factors, such as strategy and changes in key personnel, and overall financial performance. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company proceeds to the quantitative impairment testing methodology, or at the Company’s option, it may proceed directly to the quantitative impairment testing methodology for a reporting unit. See Note 14 of Notes to Consolidated Financial Statements.

The following charts present net income, adjusted net income, diluted earnings per share, adjusted diluted earnings per share, EBITDA, adjusted EBITDA, revenueEBITDA and adjusted revenue for the years ended December 31, 2024,2025, 20232024 and 20222023 (in millions, except per share amounts):

U.S. retail merchandise sales increased 13%8% to $1,046.3 million during 2025 compared to $969.4 million during 2024 compared to $854.2 million for 2023.2024. Same-store retail sales increased 6% during 20242025 compared to 2023.2024. The increase in total and same-store retail sales was primarily due to incrementalcontinued salesstrong contributionsdemand fromfor acquiredvalue storespriced merchandise and anincreased increaseinventory inlevels same-storeduring sales.2025 Duringcompared 2024,to the2024. The gross profit margin on retail merchandise sales in the U.S. was 42% compared to a margin of 43% during 2023,both reflecting continued demand for value-priced, pre-owned merchandise2025 and low levels of aged inventory.2024.

U.S. inventories increased 11%17% to $286.1 million at December 31, 2025 compared to $245.5 million at December 31, 2024 compared to $221.8 million at December 31, 2023.2024. The increase was primarily due to incremental inventories from acquired stores and an increaseincreases in same-store inventories as a result of the higher pawn loan receivable balances notedcreating below.more forfeited inventory. Inventories aged greater than one year in the U.S. were 1%1.8% at both December 31, 20242025 andcompared 2023.to 1.5% at December 31, 2024.

U.S. pawn loan receivables as of December 31, 20242025 increased 15%14% in total and 12% on a same-store basis compared to December 31, 2023.2024. The Company believes the increase in same-store pawn receivables was primarily due to continued inflationarystrong pressures driving additionalcustomer demand forfrom pawna loanscombination of more customer transactions and higherlarger goldloan prices,amounts whichrequested increasedby customers’the jewelryCompany’s collateral value.customers.

U.S. pawn loan fees increased 16%10% to $555.0 million during 2025 compared to $505.3 million during 2024 compared to $435.8 million for 2023.2024. Same-store pawn loan fees increased 11%9% during 20242025 compared to 2023.2024. The increase in total and same-store pawn loan fees was primarily due to store growth and increased same-storehigher pawn receivables.loan balances.

U.S. store operating expenses increased 12%7% to $536.6 million during 2025 compared to $503.6 million during 2024 compared to $451.5 million during 2023 while same-store operating expenses increased 5%6% compared with the prior year. The increase in operating expenses was primarily due to anincreased increaselabor inand thevariable averagecompensation store count.expenses.

The U.S. segment pre-tax operating income for 20242025 was $397.3$452.6 million, which generated a pre-tax segment operating margin of 25%26% compared to $336.3$397.3 million and 25% in the prior year, respectively. The increase in the segment pre-tax operating income and margin reflected increased net revenue from both acquired and existing stores,revenue, partially offset by an increase in segment expenses.

Latin America pawn segment pre-tax operating income for 20242025 compared to 20232024 was impacted by a 3%5% unfavorable change in the average value of the Mexican peso compared to the U.S. dollar. The translated value of Latin American earning assets as of December 31, 20242025 compared to December 31, 20232024 wasbenefited also impacted byfrom a 20%11% unfavorablefavorable change in the end-of-period Mexican peso compared to the U.S. dollar. Constant currency results are non-GAAP financial measures, which exclude the effects of foreign currency translation and are calculated by translating current-year results at prior-year average exchange rates. See the “Constant Currency Results” section in “Non-GAAP Financial Information” below for additional discussion of constant currency operating results.

Latin America retail merchandise sales increased 2%8% (4%13% on a constant currency basis) to $541.8$584.1 million during 20242025 compared to $533.6$541.8 million for 2023.2024. Same-store retail sales increased 1%7% (4%12% on a constant currency basis) during 20242025 compared to 2023.2024. The increase in total and same-store retail sales was primarily due to strong demand for value priced merchandise and increased inventory levels throughoutduring 20242025 andcompared greaterto demand for value-priced, pre-owned merchandise.2024. The gross profit margin on retail merchandise sales was 35% during both 20242025 and 2023.2024.

Latin America inventories decreasedincreased 1%45% (17%29% increase on a constant currency basis) to $129.3 million at December 31, 2025 compared to $89.1 million at December 31, 2024 compared to $90.2 million at December 31, 2023.2024. The increase in constant currency inventories was primarily due to increases in pawn loan receivable balances over the past several quarters creating more forfeited inventory and a slightly increased mix of higher value jewelry inventory. Inventories aged greater than one year in Latin America were 1%1.4% at both December 31, 20242025 and 2023.2024.

Latin America pawn loan receivables decreasedincreased 5%38% (13%23% increase on a constant currency basis) as of December 31, 20242025 compared to December 31, 2023.2024. On a same-store basis, pawn loan receivables decreasedalso 6%increased 38% (12%23% increase on a constant currency basis) as of December 31, 20242025 compared to December 31, 2023.2024. The increase in constant currency total and same-store pawn receivables is primarily due to increasing demand for pawn loans and larger loan sizes, driven in part by higher gold prices and a slightly increased mix of higher value jewelry loans.

Latin America pawn loan fees increased 4%10% (7%15% on a constant currency basis) to $231.9$254.1 million during 20242025 compared to $222.8$231.9 million for 2023.2024. Same-store pawn loan fees also increased 4%9% (7%14% on a constant currency basis) during 20242025 compared to 2023.2024. The constant currency increase in total and same-store pawn loan fees was primarily due to increased averageconstant currency pawn receivable balances outstanding during 2024.receivables.

Operating expenses increased 7%5% (9%10% on a constant currency basis) to $272.1 million during 2025 compared to $259.3 million during 2024 compared to $243.1 million during 2023.2024. Same-store operating expenses also increased 6%5% (9%10% on a constant currency basis) compared to the prior year. The constant currency increase in total and same-store operating expenses was primarily driven by increased store counts, accelerated store opening activity, general inflationary impacts and continued increases in the federally mandated minimum wage and increased costs associated with required employee benefit programs.wage.

The segment pre-tax operating income for 20242025 was $150.2$177.4 million, which generated a pre-tax segment operating margin of 19%20% compared to $156.2$150.2 million and 19% in the prior year, respectively. The decreaseincrease in the segment pre-tax operating income and margin reflected an increase in segment expenses, partially offset by the increase in net revenue.revenue, partially offset by an increase in operating expenses.

The following table providesdetails aretail detailPOS ofpayment solutions gross transaction volumes originated during the year ended December 31, 20242025 as compared to the year ended December 31, 20232024 (dollars in thousands):

(1)Includes $0.2 million and $0.5 million of intersegment transactions as of both December 31, 20242025 and 2023,2024, respectively, related to the Company offering AFF’s LTO payment solution in its U.S. pawn stores that are eliminated upon consolidation. Excluding these intersegment transactions, consolidated net leased merchandise as of December 31, 2024 and 2023 totaled $128.4 million and $171.2 million, respectively.

Leased merchandise, before allowance for lease losses, decreased 22%14% as of December 31, 20242025 compared to December 31, 2023.2024. The decrease was primarily due to decreased gross transaction volumes originated dueresulting to weakness in furniture originations andfrom the bankruptcy filings in late 2024 for two of AFF’s larger retail furniture merchant partners.partners, A-Freight and Conn’s.

The allowance for lease losses decreased 16%20% to $64.9 million as of December 31, 2025 compared to $80.7 million as of December 31, 2024 compared to $95.8 million as of December 31, 2023,2024, which was primarily due to the decrease in leased merchandise,merchandise partiallyand offset by slightly higherlower lease loss provisioning rates used during 20242025 as compared to 2023.2024. As a percentage of lease merchandise, the allowance was 36% at December 31, 2025 and 39% at December 31, 2024 and 36% at December 31, 2023.2024.

Leased merchandise income increaseddecreased 2%27% to $559.0 million during 2025 compared to $766.2 million during 2024 compared to $752.7 million during 2023,2024, which was primarily due to slightly higher average rental rates, partially offset by slightly lower average leased merchandise balances outstanding during 20242025 compared to 2023.2024.

Depreciation of leased merchandise increaseddecreased 5%26% to $320.1 million during 2025 compared to $434.9 million during 20242024, comparedprimarily due to $413.5the milliondecrease duringin 2023.leased merchandise balances outstanding. As a percentage of leased merchandise income, depreciation of leased merchandise increased towas 57% during 2024both compared2025 toand 55% during 2023, primarily as a result of a slight increase in customers taking advantage of early buyout or other early payment options.2024.

Provision for lease losses decreased 8%26% to $120.7 million during 2025 compared to $163.9 million during 2024 compared to $177.4 million during 2023,2024, which was primarily due to the 9%23% decrease in gross transaction volumes. As a percentage of gross transaction volume, the provision for lease losses increaseddecreased to 29%27.7% during 20242025 compared to 28%28.8% during 2023.2024.

Retail Finance and Lending Operations

Finance receivables, before allowance for loan losses, increaseddecreased 26%3% as of December 31, 20242025 compared to December 31, 2023.2024. The increasedecrease was primarily due to increaseddecreased gross transaction volumes in certainthe non-furniturelater industrypart verticals.of 2025 compared to the later part of 2024, in part as a result of shifting a portion of transaction volume to OBS Loans beginning in the third quarter of 2025.

The allowance for loan losses increaseddecreased 21%9% to $106.3 million as of December 31, 2025 compared to $117.0 million as of December 31, 2024 compared to $96.5 million as of December 31, 2023,2024, which was primarily due to the increasedecrease in finance receivables,receivables partially offset by slightlyand lower loan loss provisioning rates used during 20242025 as compared to 2023.2024. As a percentage of finance receivables, the allowance was 41% at December 31, 2025 compared to 44% at December 31, 2024 compared to 46% at December 31, 2023.2024.

Interest and fees on finance receivables increased 5%27% to $311.2 million during 2025 compared to $245.9 million during 2024 compared to $233.8 million during 2023.2024. The increase was primarily due to the higher year-over-yearaverage finance receivable balances,balances outstanding during 2025 compared to 2024, partially offset by a slight decline in portfolio yield primarily as a result of AFF expanding its offerings and merchant relationships in certain services sector verticals during 2024,verticals, some of which are provided at lower interest rates.

Provision for loan losses increased 17%13% to $162.7 million during 2025 compared to $143.8 million during 2024 compared to $123.0 million during 2023,2024, which was primarily due to the 26%15% increase in gross transaction volumes, partially offset by a slight decrease in the net provisioning rates used during 2024 based on lower than expected loss rates on older vintages.volumes. As a percentage of gross transaction volume, the provision for loan losses decreased to 28%27.8% during 20242025 compared to 30%28.2% during 2023.2024.

The Company completed the acquisition of H&T, the leading pawn operator in the United Kingdom, on August 14, 2025, the date on which the balance sheet and operating results of H&T were included in the Company’s consolidated financial results.

As of MarchJune 31,30, 2026, the Company operated 3,3343,343 pawn store locations composed of 1,2071,212 stores in 29 U.S. states and the District of Columbia, 1,7331,729 stores in 32 states in Mexico, 7577 stores in Guatemala, 18 stores in El Salvador, 12 stores in Colombia and 289295 stores in the U.K.

The following tabletables detailsdetail pawn store count activity for the three and six months ended MarchJune 31,30, 2026:

As of MarchJune 31,30, 2026, AFF provided LTO and retail POS payment solutions for consumer goods and services through a network of approximately 16,60016,700 active retail merchant partner locations located in all 50 U.S. states and the District of Columbia, up from approximately 14,50015,300 locations at MarchJune 31,30, 2025.

The financial statements have been prepared in accordance with GAAP. The significant accounting policies and estimates that the Company believes are the most critical to aid in fully understanding and evaluating its reported financial results have been reported in the Company’s 2025 Annual Report on Form 10-K. There have been no changes to the Company’s significant accounting policies for the threesix months ended MarchJune 31,30, 2026.

Operating Results for the Three Months Ended MarchJune 31,30, 2026 Compared to the Three Months Ended MarchJune 31,30, 2025

The following tables and related discussion set forth key operating and financial data for the Company’s operations by reporting segment as of and for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 (in thousands).

Corporate expenses and income, which include administrative expenses, corporate depreciation and amortization, interest expense, interest income, loss (gain) on foreign exchange, merger and acquisition expenses, and other income, net, are presented on a consolidated basis and are not allocated between the segments. Intersegment transactions related to AFF’s LTO payment solution product offered in U.S. pawn stores are eliminated from consolidated totals.

The following tables detail earning assets, which consist of pawn loans and inventories as well as other earning asset metrics of the Company’s pawn segments, as of MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025 (dollars in thousands, except as otherwise noted):

U.S. retail merchandise sales increased 13%10% to $283.8$275.7 million during the firstsecond quarter of 2026 compared to $251.2$249.9 million for the firstsecond quarter of 2025. Same-store retail sales increased 9%8% in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. The increase in total and same-store retail sales was primarily due to continued strong demand for value priced merchandise and increased inventory levels during the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. The gross profit margin on retail merchandise sales in the U.S. increasedwas to 44%43% during both the firstsecond quarter of 2026 compared to 42% during the first quarter ofand 2025.

U.S. wholesale scrap jewelry revenue, consisting primarily of gold sales, increased 41%152% to $47.4$72.3 million during the firstsecond quarter of 2026 compared to $33.5$28.7 million during the firstsecond quarter of 2025. The scrap gross profit margin in the U.S. was 24%16% compared to the prior-year margin of 19%.9%. The increase in wholesale scrap jewelry revenue was primarily due to increases in pawn lending activity over the past several quarters, which created more forfeited collateral to scrap, and the increase in gold prices over the past year.

U.S. inventories increased 27%28% to $311.6$324.1 million at MarchJune 31,30, 2026 compared to $246.2$252.9 million at MarchJune 31,30, 2025. The increase was primarily due to increases in pawn lending activity over the past several quarters, which created more forfeited inventory available for sale.sale, partially offset by an increase in forfeited collateral that was scrapped. Inventories aged greater than one year in the U.S. were 1.7%1.5% at bothJune March30, 31,2026, 2026which andexcludes aged inventories from certain recently acquired stores, compared to 1.9% at June 30, 2025.

U.S. pawn loan receivables as of MarchJune 31,30, 2026 increased 21%20% in total and 19% on a same-store basis compared to MarchJune 31,30, 2025. The Company believes the increase in same-store pawn receivables was primarily due to continued strong customer demand from a combination of more customer transactions and an increase in the average loan amount requested by customers.

U.S. pawn loan fees increased 14%15% to $157.8$150.1 million during the firstsecond quarter of 2026 compared to $137.9$130.9 million for the firstsecond quarter of 2025. Same-store pawn loan fees increased 13%14% in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. The increase in total and same-store pawn loan fees was due to the higher pawn receivable balances.

U.S. operating expenses increased 12%6% to $143.9$142.4 million during the firstsecond quarter of 2026 compared to $129.0$133.8 million during the firstsecond quarter of 2025 while same-store operating expenses increased 10%5% compared with the prior-year period. The increase in operating expenses was primarily due to increased labor and variable compensation expenses.

The U.S. segment pre-tax operating income for the firstsecond quarter of 2026 was $141.4$129.2 million, which generated a pre-tax segment operating margin of 29%26% compared to $113.1$98.3 million and 27%24% in the prior year, respectively. The increase in the segment pre-tax operating income and margin reflected increased net revenue, partially offset by an increase in segment expenses.

Latin America segment pre-tax operating income for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 benefited from aan 14%11% favorable change in the average value of the Mexican peso compared to the U.S. dollar. The translated value of Latin American earning assets as of MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025 also benefited from ana 11%7% favorable change in the end-of-period Mexican peso compared to the U.S. dollar. Constant currency results are non-GAAP financial measures, which exclude the effects of foreign currency translation and are calculated by translating current-year results at prior-year average exchange rates. See the “Constant Currency Results” section in “Non-GAAP Financial Information” below for additional discussion of constant currency operating results.

Latin America retail merchandise sales increased 33%28% (15% on a constant currency basis) to $159.8$174.3 million during the firstsecond quarter of 2026 compared to $120.5$136.0 million for the firstsecond quarter of 2025. Same-store retail sales also increased 33%28% (15% on a constant currency basis) during the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. The increase in constant currency total and same-store retail sales was primarily due to strong demand for value priced merchandise and increased inventory levels during the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. The gross profit margin on retail merchandise sales was 35% during both the firstsecond quarter of 2026 andcompared to 36% during the second quarter of 2025.

Latin America wholesale scrap jewelry revenue, consisting primarily of gold sales, increased 113%279% to $20.6$38.2 million during the firstsecond quarter of 2026 compared to $9.7$10.1 million during the firstsecond quarter of 2025. The scrap gross profit margin in Latin America was 18%14% comparedfor toboth the prior-yearsecond marginquarter of 16%.2026 and 2025. The increase in wholesale scrap jewelry revenue was primarily due to increases in pawn lending activity over the past several quarters, which created more forfeited collateral to scrap, and the increase in gold prices over the past year.

Latin America inventories increased 63%57% (46%45% on a constant currency basis) to $144.0$161.0 million at MarchJune 31,30, 2026 compared to $88.5$102.8 million at MarchJune 31,30, 2025. The increase in constant currency inventories was primarily due to increased pawn lending activity over the past several quarters, creating more forfeited inventory and a slightly increased mix of higher value jewelry inventory.inventory, partially offset by an increase in forfeited collateral that was scrapped. Inventories aged greater than one year in Latin America were 1.3%1.2% at MarchJune 31,30, 2026 compared to 1.5% at MarchJune 31,30, 2025.

Latin America pawn loan receivables increased 45%32% (30%22% on a constant currency basis) as of MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025. On a same-store basis, pawn loan receivables also increased 45%32% (30%22% on a constant currency basis) as of MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025. The increase in constant currency total and same-store pawn receivables is primarily due to the increased number of pawn loans and larger average loan sizes, driven in part by an increased mix of higher value jewelry loans.

Latin America pawn loan fees increased 42%33% (23%19% on a constant currency basis), totaling $76.6$79.6 million during the firstsecond quarter of 2026 compared to $53.9$59.9 million for the firstsecond quarter of 2025. Same-store pawn fees also increased 42%33% (23%19% on a constant currency basis) in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. The constant currency increase in total and same-store pawn loan fees was primarily due to increased constant currency pawn receivables.

Operating expenses increased 31%28% (14%15% on a constant currency basis) to $80.7$82.2 million during the firstsecond quarter of 2026 compared to $61.4$64.4 million during the firstsecond quarter of 2025. Same-store operating expenses also increased 31%28% (14%15% on a constant currency basis) compared to the prior-year period. The constant currency increase in total and same-store operating expenses was primarily driven by general inflationary impacts and continued increases in the federally mandated minimum wage.

The segment pre-tax operating income for the firstsecond quarter of 2026 was $50.9$58.1 million, which generated a pre-tax segment operating margin of 20% compared to $31.4$41.0 million and 17%20% in the prior year, respectively. The increase in the segment pre-tax operating income and margin reflected increased net revenue, partially offset by an increase in segment expenses.

The U.K. pawn segment contributed $101.7$95.3 million in revenue and $39.2$33.6 million in segment pre-tax operating income for the firstsecond quarter of 2026. The resulting segment pre-tax operating margin was 39%.35%.

U.K. pawn loan receivables were $215.4$217.4 million and inventories were $83.2$85.4 million as of MarchJune 31,30, 2026.

The following table details retail POS payment solutions gross transaction volumes originated during the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025 (in thousands):

(1) For the three months ended MarchJune 31,30, 2026, includes $14.4$13.2 million of OBS Loans.

The following table details retail POS payment solutions earning assets as of MarchJune 31,30, 2026 as compared to MarchJune 31,30, 2025 (in thousands):

(1)Includes less than $0.1 million and $0.2 million of intersegment transactions as of MarchJune 31,30, 2026 and 2025, respectively, related to the Company offering AFF’s LTO payment solution in its U.S. pawn stores that are eliminated upon consolidation.

(2)Does not include $32.9$35.2 million of outstanding OBS Loans held by AFF’s bank partner as of MarchJune 31,30, 2026. Combined finance receivables, before allowance for loan losses, and OBS Loans totaled $276.8$271.2 million as of MarchJune 31,30, 2026. See the “OBS Loans” section in Note 89 of Notes to Consolidated Financial Statements.

The following table details certain retail POS payment solutions portfolio metrics for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025:

Leased merchandise, before allowance for lease losses, decreased 8%17% to $158.5$141.7 million as of MarchJune 31,30, 2026 compared to $172.9$170.8 million as of MarchJune 31,30, 2025. The decrease was primarily due to decreased gross transaction volumes originatedas throughouta 2025result resultingof fromcontinued weakness in the bankruptcy filings in late 2024 for two of AFF’s larger retail furniture merchant partners.industry.

The allowance for lease losses decreased 11%18% to $61.2$57.1 million as of MarchJune 31,30, 2026 compared to $69.1$70.0 million as of MarchJune 31,30, 2025, which was primarily due to the decrease in leased merchandise balances outstanding. As a percentage of leased merchandise, the allowance was 39%40% at MarchJune 31,30, 2026 and 40%41% at MarchJune 31,30, 2025.

Leased merchandise income decreased 17% to $130.2$115.5 million during the firstsecond quarter of 2026 compared to $156.9$139.8 million during the firstsecond quarter of 2025, which was primarily due to lower average leased merchandise balances outstanding during the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025.

Depreciation of leased merchandise decreased 9% to $81.4$71.7 million during the firstsecond quarter of 2026 compared to $89.1$78.5 million during the firstsecond quarter of 2025, primarily due to the decrease in leased merchandise balances outstanding partially offset by increased early buyout activity resulting in an increase in accelerated depreciation during the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. As a percentage of leased merchandise income, depreciation of leased merchandise increased to 62% during the firstsecond quarter of 2026 from 57%56% during the firstsecond quarter of 2025.

Provision for lease losses increaseddecreased 8%25% to $29.9$24.5 million during the firstsecond quarter of 2026 compared to $27.6$32.7 million during the firstsecond quarter of 2025, which was primarily due to the 3%22% increasedecrease in gross transaction volumes and slightly higherlower lease loss provisioning rates used during the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. As a percentage of gross transaction volume, the provision for lease losses increaseddecreased to 31%29% during the firstsecond quarter of 2026 compared to 29%30% during the firstsecond quarter of 2025.

Finance receivables, before allowance for loan losses, decreased 7%15% as of MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025. The decrease was primarily due to a shift in a number of finance receivable transaction volumes to OBS Loans, which are not included on the Company’s balance sheet. As of MarchJune 31,30, 2026, the outstanding amount of OBS Loans originated and held by the Company’s bank partner was $32.9$35.2 million. Including the OBS Loans, finance receivables, before allowance for loan losses would have increaseddecreased 5%2% as of MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025, which iswas consistentprimarily withdue to the 3%8% increasedecrease in gross transaction volume, which includes OBS Loans originated.

The allowance for loan losses decreased 12%15% to $104.6$105.0 million as of MarchJune 31,30, 2026 compared to $118.3$122.9 million as of MarchJune 31,30, 2025, which was primarily due to the decrease in finance receivables outstanding. As a percentage of finance receivables, the allowance was 43%44% at Marchboth 31,June 30, 2026 compared to 45% at March 31,and 2025.

Interest and fees on retail finance products increaseddecreased 1%3% to $74.3$74.0 million during the firstsecond quarter of 2026 compared to $73.4$76.1 million during the firstsecond quarter of 2025. The increasedecrease was primarily due to higher combined average finance receivable and OBS Loan balances outstanding during the first quarter of 2026 compared to the first quarter of 2025, partially offset by a slight decline in portfolio yield primarily as a result of AFF expanding its offerings and merchant relationships in certain services sector verticals over the past twelve months, some of which are provided at lower interest rates.rates, partially offset by higher combined average finance receivable and OBS Loan balances outstanding during the second quarter of 2026 compared to the second quarter of 2025.

Provision for loan losses increaseddecreased 18%4% to $42.8$39.9 million during the firstsecond quarter of 2026 compared to $36.4$41.8 million during the firstsecond quarter of 2025, which was primarily due to the 3%8% increasedecrease in gross transaction volumes, $7.6partially millionoffset in provision expense related to the off-balance sheet credit exposure of the OBS Loans, andby slightly higher loan loss provisioning rates used during the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. As a percentage of gross transaction volume, the provision for loan losses increased to 29% during the firstsecond quarter of 2026 from 26%28% during the firstsecond quarter of 2025.

Operating expenses decreased 2% to $23.8 million during the firstsecond quarter of 2026 compared to $24.2$24.3 million during the firstsecond quarter of 2025. As a percentage of segment revenues, operating expenses increased to 12%13% during the firstsecond quarter of 2026 compared to 11% during the firstsecond quarter of 2025.

The retail POS payment solutions segment pre-tax operating income for the firstsecond quarter of 2026 was $25.9$28.7 million compared to $52.3$37.9 million in the firstsecond quarter of 2025. The decrease was primarily the result of the decrease in segment net revenue, partially offset by a decrease in operating expenses.revenue.

Administrative expenses increased 36%13% to $65.8$66.8 million during the firstsecond quarter of 2026 compared to $48.5$59.3 million in the firstsecond quarter of 2025, primarily due to the addition of administrative expenses of H&T, increased variable compensation, general inflationary impacts and aan 14%11% change in the average value of the Mexican peso resulting in higher U.S. dollar translated administrative expenses in Latin America.America, partially offset by the $11.0 million CFPB litigation settlement accrued for in the second quarter of 2025. As a percentage of revenue, administrative expenses weredecreased to 6% in both the firstsecond quarter of 2026 andcompared to 7% during the second quarter of 2025.

Depreciation and amortization increased 26%27% to $16.1$16.3 million during the firstsecond quarter of 2026 compared to $12.8 million in the firstsecond quarter of 2025, primarily due to the addition of depreciation and amortization expenses of H&T during the firstsecond quarter of 2026.

Interest expense increased 26%36% to $34.5$35.7 million during the firstsecond quarter of 2026 compared to $27.5$26.3 million in the firstsecond quarter of 2025, primarily due to increased outstanding long-term debt balances. See Note 78 of Notes to Consolidated Financial Statements and “Liquidity and Capital Resources.”