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What changed in FirstCash Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of FirstCash Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+342 added−380 removedSource: 10-K (2025-02-03) vs 10-K (2024-02-05)

Top changes in FirstCash Holdings, Inc.'s 2024 10-K

342 paragraphs added · 380 removed · 283 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

99 edited+20 added−33 removed125 unchanged
Biggest changeThe following table shows the percentage of AFF's 2023 originations attributable to these vertical channels: Year Ended December 31, 2023 Furniture 48 % Automotive 19 % Jewelry 8 % Other 25 % Total 100 % A significant portion of AFF’s revenue is concentrated with its top merchant partners.
Biggest changeThe following table shows the percentage of AFF's gross transaction volumes originated attributable to these vertical channels for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 Furniture 37 % 48 % 52 % Automotive 24 % 19 % 20 % Jewelry 10 % 8 % 5 % Elective Medical 12 % 7 % 2 % Other 17 % 18 % 21 % Total 100 % 100 % 100 % A significant portion of AFF’s gross transaction volumes have historically been concentrated with certain large merchant partners, many of which were also concentrated within the furniture vertical, which has suffered from declining sales, store closures and bankruptcies over the past few years.
The Company maintains complaint resolution policies and procedures as well as a whistleblower hotline available to all employees and external stakeholders to report (anonymously if desired) any matter of concern. The communications hotline is managed by an independent third party, and such communications are routed to appropriate functions such as Human Resources, Legal or Compliance.
The Company maintains complaint resolution policies and procedures as well as a confidential whistleblower hotline available to all employees and external stakeholders to report (anonymously, if desired) any matter of concern. The communications hotline is managed by an independent third party, and such communications are routed to appropriate functions such as Human Resources, Legal or Compliance.
In addition, the Company offers a LTO option at its U.S. pawn stores through AFF (as further described below). Retail sales are seasonally highest in the fourth quarter, associated with holiday shopping, and, to a lesser extent, in the first quarter, due to tax refund proceeds received by customers in the U.S.
In addition, the Company offers an LTO option at its U.S. pawn stores through AFF (as further described below). Retail sales are seasonally highest in the fourth quarter, associated with holiday shopping, and, to a lesser extent, in the first quarter, due to tax refund proceeds received by customers in the U.S.
Existing customers have access to AFF’s customer service team and online customer portal to answer questions about their lease, RISA or loan or to provide comments or complaints about merchant partners. For those customers that utilize AFF’s LTO solution and choose not to renew their lease, AFF’s customer service team can also assist with the non-renewal process.
Customers have access to AFF’s customer service team and online customer portal to answer questions about their lease, RISA or loan or to provide comments or complaints about merchant partners. For those customers that utilize AFF’s LTO solution and choose not to renew their lease, AFF’s customer service team can also assist with the non-renewal process.
In Latin America, the number of unbanked or under-banked consumers can be as much as 75% of the population. As a result, the majority of the Company’s customers have limited access to traditional forms of credit or capital.
In Latin America, the number of unbanked or under-banked consumers can be as much as 75% of the local population. As a result, the majority of the Company’s customers have limited access to traditional forms of credit or capital.
Given that pawn loans are non-recourse, the Company’s pawn stores do not perform any debt collection activities. • A “single point of contact” issue resolution function is available to all customers, including customer service hotlines and websites. • Strict data privacy and protection policies are maintained for personal information of customers and employees. • Introduction of any significant new products, services and business lines are subject to approval by the Board.
Given that pawn loans are non-recourse, the Company’s pawn stores do not perform any debt collection activities. • A “single point of contact” issue resolution function is available to all customers, including customer service hotlines and websites. • Strict data privacy and protection policies are maintained to safeguard the personal information of customers and employees. • Introduction of any significant new products, services and business lines are subject to approval by the Board.
The basis for the Company’s determination of the retail value also includes such sources as precious metals spot markets, catalogs, blue books, online auction sites and retailer advertisements.
The basis for the Company’s determination of the retail value also includes such sources as precious metals spot markets, catalogs, blue books, online marketplaces and auction sites and retailer advertisements.
These statutes and regulations prescribe, among other things, the general terms of the Company’s pawn loan agreements, including maximum service fees and/or interest rates that may be charged and collected and mandatory consumer disclosures, as well as maximum interest rates/finance charges or leasing fees (as applicable), consumer disclosures, contractual terms and other matters directly related to the Company’s retail POS payments solutions platform activities.
These statutes and regulations prescribe, among other things, the general terms of the Company’s pawn loan agreements, including maximum service fees and/or interest rates that may be charged and collected and mandatory consumer disclosures, as well as maximum interest rates/finance charges or leasing fees (as applicable), consumer disclosures, contractual terms and other matters directly related to the Company’s retail POS payment solutions platform activities.
To ensure merchant quality, each prospective merchant goes through a vetting and approval process and, once approved, they must sign a merchant agreement that identifies the roles and responsibilities of both the merchant and AFF. Merchants also receive appropriate training so they can properly represent AFF’s retail POS payment solutions to their customers and ensure regulatory compliance.
To ensure merchant quality, each prospective merchant goes through a vetting and approval process and, once approved, they must sign a merchant agreement that identifies the roles and responsibilities of both the merchant and AFF. Merchants also receive appropriate training so they can properly represent AFF’s retail POS payment products to their customers and ensure regulatory compliance.
Upon approval, the applicant then electronically signs their agreement, officially becoming a customer of AFF, and completes their purchase of goods or services using the POS payment option applicable for that particular merchant location. Customers can begin making scheduled payments, which can be managed by the customer via phone or online.
Upon approval, the applicant then electronically signs their agreement, officially becoming a customer of AFF, and completes their purchase of goods or services using the POS payment product applicable for that particular merchant location. Customers can begin making scheduled payments, which can be managed by the customer via phone or online.
Upon submission of an application, AFF’s platform typically communicates a decision (either directly for LTO or RISA products or on behalf of the Bank for the bank loan product) electronically within seconds, providing a near-immediate response to the applicant.
Upon receipt of an application, AFF’s platform typically communicates a decision (either directly for LTO or RISA products or on behalf of the Bank for the bank loan product) electronically within seconds, providing a near-immediate response to the applicant.
After origination of the loan by the Bank, AFF purchases the rights to the cash flows of the loan from the Bank but does not purchase the loan itself. AFF then assumes responsibility for sub-servicing the loan on behalf of the Bank for the remaining term of the loan.
After origination of the loan by the Bank, AFF purchases the rights to a portion of the cash flows of the loan from the Bank but does not purchase the loan itself. AFF then assumes responsibility for sub-servicing the loan on behalf of the Bank for the remaining term of the loan.
Traditional lenders such as banks, credit unions, credit card providers or other small loan providers do not efficiently or effectively offer micro credit products of this size. Applying for a pawn loan is simple, requiring only a valid government ID and an item of personal property owned by the customer.
Traditional lenders such as banks, credit unions, credit card providers or other small loan providers do not efficiently or effectively offer micro-credit products of this size. 10 Table of Contents Applying for a pawn loan is simple, requiring only a valid government ID and an item of personal property owned by the customer.
For instance, the Company participated in the Government Program of Youth Building the Future in Mexico in 2023 by providing year-long apprenticeships to female participants aspiring to build careers in legal, human resources, and information technology. The Mexico Secretary of Labor awarded the Company the Recognition of Social Commitment as a result of the Company’s participation in this program.
For instance, the Company participated in the Government Program of Youth Building the Future in Mexico in 2024 by providing year-long apprenticeships to female participants aspiring to build careers in legal, human resources, and information technology industries. The Mexico Secretary of Labor awarded the Company the Recognition of Social Commitment as a result of the Company’s participation in this program.
Risk 9 Table of Contents Factors.” Retail POS Payment Solutions Business Strategy AFF’s business strategy is to continue building market share through additional expansion of both its brick-and-mortar and online merchant base while increasing customer utilization rates by continuous improvement and enhancement of its omni-channel user experience.
Risk Factors.” Retail POS Payment Solutions Business Strategy AFF’s business strategy is to continue building market share through additional expansion of both its brick-and-mortar and online merchant base while increasing customer utilization rates by continuous improvement and enhancement of its omni-channel user experience.
In addition, through AFF, the Company provides POS payment solutions through technology-enabled virtual LTO and consumer finance platforms with minimal environmental impact. In summary, the Company provides millions of customers with rapid access to capital while operating its business in a manner that results in a positive impact on its employees, communities and the environment.
In addition, through AFF, the Company provides POS payment solutions through technology-enabled virtual LTO and consumer finance platforms with minimal environmental impact. In summary, the Company offers its customers rapid access to capital while operating its business in a manner that results in a positive impact on its employees, communities and the environment.
These efforts include the following: • Providing all store support team members and all management across the Company access to a library of third-party courses enabling the development of new employment-related skills that contribute to career growth and development. • Delivering an in-house designed continuous learning program to avail store team members a career path with the destination of their choosing while using custom learning solutions designed to add and confirm both competencies and proficiencies throughout all levels of their career.
These efforts include the following: • Providing all store support team members and all management across the Company access to a library of third-party courses enabling the development of new employment-related skills that contribute to career growth and development. • Delivering an in-house designed continuous learning program to avail store team members a career path using custom learning solutions designed to add and confirm both competencies and proficiencies throughout all levels of their career.
All operators must also comply with additional customer notice and disclosure provisions, bonding and insurance requirements to insure against loss or insolvency, reporting of certain types of suspicious transactions, and reporting to state law enforcement officials of certain transactions (or 18 Table of Contents series of transactions) on a monthly basis to states’ attorneys general offices.
All operators must also comply with additional customer notice and disclosure provisions, bonding and insurance requirements to insure against loss or insolvency, reporting of certain types of suspicious transactions, and reporting to state law enforcement officials of certain transactions (or series of transactions) on a monthly basis to states’ attorneys general offices.
The following is a description of the three primary retail POS payment options offered by AFF: • LTO — LTO transactions involve the purchase by AFF of tangible personal property directly from the merchant partner and a subsequent lease of that merchandise by AFF to the customer through a consumer rental purchase agreement under applicable state laws.
The following is a description of the three retail POS payment products offered by AFF: • LTO — LTO transactions involve the purchase by AFF of tangible personal property directly from the merchant partner and a subsequent lease of that merchandise by AFF to the customer through a consumer rental purchase agreement under applicable state laws.
The Company does not own, lease or operate any long-haul trucks to support its 2,997 pawn locations and, other than operating small storefront locations which are typically 5,000 square feet or less, the Company’s operations leave a limited carbon footprint compared to manufacturers and retailers selling new merchandise with extensive supply chain and distribution channels.
The Company does not own, lease or operate any long-haul trucks to support its 3,026 pawn locations and, other than operating small storefront locations which are typically 5,000 square feet or less, the Company’s operations leave a limited carbon footprint compared to manufacturers and retailers selling new merchandise with extensive supply chain and distribution channels.
Over the last five years, 756 pawn stores have been opened or acquired, with the net store count growing at a compound annual store growth rate of 4% over this period. The Company intends to open or acquire additional stores in locations where management believes appropriate consumer demand and other favorable conditions exist.
Over the last five years, 576 pawn stores have been opened or acquired, with the net store count growing at a compound annual store growth rate of 2% over this period. The Company intends to open or acquire additional stores in locations where management believes appropriate consumer demand and other favorable conditions exist.
The Company has also established relationships and supports certain foundations and social programs in Mexico that provide internships, reading initiatives and recycling programs for disadvantaged citizens.
The Company has also established relationships and supports certain foundations and social programs in Mexico that provide internships, reading initiatives and educational programs for disadvantaged citizens.
The law is intended to promote the availability of credit to all creditworthy applicants without regard to race, color, religion, or other prohibited bases, and to prevent discrimination on the basis of any of those factors in any aspect of a credit transaction.
The law is intended to promote the availability of credit to all creditworthy applicants without regard to race, color, religion, or other prohibited bases, and to prevent discrimination on the basis of any of those factors in any 14 Table of Contents aspect of a credit transaction.
The more restrictive state LTO laws limit the retail price for an item, limit the total cost of ownership that a customer may be required to pay to obtain ownership of an item, and/or regulate the "cost-of-rental" amount that LTO companies may charge on LTO transactions, generally defining "cost-of-rental" as lease fees paid in excess of the "retail" price of the goods.
The more restrictive state LTO laws limit the retail price for an item, limit the total cost of ownership that a customer may be required to pay to obtain ownership of an item, and/or regulate the “cost-of-rental” amount that LTO companies may charge on LTO transactions, generally defining “cost-of-rental” as lease fees paid in excess of the “retail” price of the goods.
Risk Factors—Regulatory, Legislative and Legal Risks and General Economic and Market Risks.” On October 5, 2017, the CFPB released its small-dollar loan rule (the “SDL Rule”), which was subsequently revised on July 7, 2020. Traditional possessory, non-recourse pawn loans are not covered under the SDL Rule.
Risk Factors—Regulatory, Legislative and Legal Risks and General Economic and Market Risks.” On October 6, 2017, the CFPB issued its small-dollar loan rule (the “SDL Rule”), which was subsequently revised on July 7, 2020. Traditional possessory, non-recourse pawn loans are not covered under the SDL Rule.
The Company enters into agreements with its employees, consultants and partners, and through these and other confidentiality or non-compete agreements, the Company attempts to control access to and distribution of its software, documentation and other proprietary technology and information.
The Company enters into agreements with its employees, consultants and partners, and through these and other confidentiality or non-compete agreements, the Company attempts to 9 Table of Contents control access to and distribution of its software, documentation and other proprietary technology and information.
Each of the Company’s 2,997 pawn locations provides consumers a neighborhood-based market to buy and resell pre-owned and popular consumer products in a safe environment along with access to a quick and convenient source of short-term cash through non-recourse pawn transactions.
Each of the Company’s 3,026 pawn locations provides consumers a neighborhood-based market to buy and resell pre-owned and popular consumer products in a safe environment, along with access to a quick and convenient source of short-term cash through non-recourse pawn transactions.
This proprietary decisioning platform is used to determine whether a particular applicant meets AFF’s LTO or RISA decisioning criteria or the Bank’s loan qualifications for a particular amount. The sophisticated algorithms consider external and internal data points beyond traditional credit scores, allowing AFF or the Bank to approve customers that do not have a credit score.
Decisioning Process A proprietary decisioning platform is utilized by AFF to determine whether a particular applicant meets AFF’s LTO or RISA decisioning criteria or the Bank’s loan qualifications for a particular amount. Sophisticated algorithms consider external and internal data points beyond traditional credit scores, allowing AFF or the Bank to approve customers that do not have a credit score.
The Company is working to further reduce energy consumption by retrofitting buildings with LED lighting and reducing corporate travel by utilizing remote work and meeting technologies. Safe Capital Access Solutions in Underserved Communities It is estimated by multiple studies and surveys that approximately 25% of U.S. households remain unbanked or under-banked.
The Company is working to further reduce energy consumption by retrofitting buildings with LED lighting and reducing corporate travel by utilizing remote meeting technologies. Safe Capital Access Solutions in Underserved Communities According to multiple studies and surveys, approximately 25% of U.S. households remain unbanked or under-banked.
The learning takes a blended approach involving formal courses, self-directed learning and on-the-job applications. • Coordinating and enrolling training, at least annually, including compliance and anti-harassment training to all team members, as well as ethics and leadership training to all management-level team members. • Providing team members with recurring training on critical issues such as safety and security, lending and collection practices, ethics and integrity, information security and other compliance matters. • Offering a tuition reimbursement program to U.S. employees for courses related to current or future roles at the Company and also discounted tuition rates to select universities. • Offering all U.S. eligible employees health and life insurance benefits and a comprehensive suite of well-being offerings, including unlimited health coaching sessions, unlimited financial coaching sessions with a certified financial planner and counseling/emotional support through the Company’s Employee Assistance program. • Matching team members’ 401(k) plan contributions for all U.S. employees after one year of service. • Offering access to thousands of partner discounts for services and products through the partner portal. • Offering a “work now - paid tomorrow” program through the Earned Wage Access Program. • Providing all employees in Latin America public healthcare and other statutory benefits where required by statute.
The learning takes a blended approach involving formal courses, self-directed learning and on-the-job applications. • Coordinating and enrolling training, at least annually, including compliance and anti-harassment training to all team members, as well as ethics and leadership training to all management-level team members. • Providing team members with recurring training on critical issues such as safety and security, lending and collection practices, ethics and integrity, information security and other compliance matters. • Offering a tuition reimbursement program to U.S. employees for courses related to current or future roles at the Company and also discounted tuition rates to select universities. • Offering eligible U.S. employees private health and life insurance benefits and a comprehensive suite of well-being offerings, including health coaching sessions, financial coaching sessions with a certified financial planner and counseling/emotional support through the Company’s Employee Assistance program. • Matching team members’ 401(k) plan contributions for all U.S. employees after one year of service. 12 Table of Contents • Offering access to thousands of partner discounts for services and products through the partner portal. • Providing all employees in Latin America public healthcare and other statutory benefits.
The Company does not investigate the creditworthiness of the borrower, primarily relying instead on the marketability and expected sales value of pledged goods as a basis for the amount loaned. Pawn loans are non-recourse loans, and a customer does not have a legal obligation to repay a pawn loan.
The Company does not investigate the creditworthiness of the borrower through third party reporting services, instead relying primarily on the marketability and expected sales value of pledged goods as a basis for the amount loaned. Pawn loans are non-recourse loans, and a customer does not have a legal obligation to repay a pawn loan.
Item 1. Business Overview FirstCash Holdings, Inc., along with its wholly owned subsidiaries (together, the “Company”), is the leading operator of pawn stores in the U.S. and Latin America and is also a leading provider of technology-driven, retail point-of-sale (“POS”) payment solutions focused on serving credit-constrained consumers in the U.S and Puerto Rico.
Item 1. Business Overview FirstCash Holdings, Inc., along with its wholly owned subsidiaries (together, “FirstCash” or the “Company”), is the leading operator of pawn stores in the U.S. and Latin America and is also a leading provider of technology-driven, retail POS payment solutions focused on serving credit-constrained consumers in the U.S and Puerto Rico.
Like Mexico, department agencies, including local and state police officials, have unlimited and discretionary authority in their application of their rules and requirements. FirstCash Website The Company’s primary corporate website is www.firstcash.com .
Like Mexico, department agencies, including local and state police officials, in Guatemala, El Salvador and Colombia have unlimited and discretionary authority in their application of their rules and requirements. FirstCash Website The Company’s primary corporate website is www.firstcash.com .
Generally, these states are located in the Southeast, Midwest, Southwest and Mountain West regions of the country, which is where the majority of the Company’s U.S. stores are located. 1 Table of Contents Historically, competitor pawn stores in Latin America have limited square footage and focus on providing loans collateralized by gold jewelry or small electronics.
Generally, these states are located in the Southeast, Midwest, Southwest and Mountain West regions of the country, which is where the majority of the Company’s U.S. stores are located. Historically, competitor pawn stores in Latin America have less square footage and focus primarily on providing loans collateralized by gold jewelry or small electronics.
The following table details store count activity for the year ended December 31, 2023: U.S.
The following table details store count activity for the year ended December 31, 2024: U.S.
The customer enters into a RISA with the merchant, and AFF subsequently purchases the RISA from the merchant partner and services the account through the end of the contractual term.
The customer enters into a RISA with the merchant and AFF subsequently purchases the RISA from the merchant partner and services the account through the end of the 7 Table of Contents contractual term.
Unlike most brick-and-mortar or online retailers, the Company does not rely on supply chains or manufacturing of its inventories, as it sources the majority of its inventory from forfeited pawn loan collateral and merchandise purchased directly from customers.
Unlike most brick-and-mortar or online retailers, the Company does not rely on supply chains or manufacturing of its inventories, as it sources the majority of its inventory from forfeited pawn loan collateral and merchandise purchased directly from customers living or working near the Company’s pawn stores.
While the Company believes such actions have been without merit, there is no guarantee that an adverse outcome in such matters would not have an adverse impact on the Company. 17 Table of Contents U.S.
While the Company believes such actions have been without merit, there is no guarantee that an adverse outcome in such matters would not have an adverse impact on the Company. U.S.
The Company employed approximately 7,800 employees in the U.S. as of December 31, 2023, including approximately 1,200 persons employed in executive, supervisory, administrative and accounting functions. None of the Company’s U.S. employees are covered by collective bargaining agreements.
The Company employed approximately 8,200 employees in the U.S. as of December 31, 2024, including approximately 1,200 persons employed in executive, supervisory, administrative and accounting functions. None of the Company’s U.S. employees are covered by collective bargaining agreements.
During 2023, the Company estimates that it recycled over 50,000 ounces of gold and approximately 40,000 carats of diamonds with a combined market value of over $125 million. This process helps reduce demand for mined precious metals and diamonds, which benefits the environment by reducing carbon emissions, water usage and other harmful environmental impacts of mining.
During 2024, the Company estimates that it recycled over 57,000 ounces of gold and approximately 47,000 carats of diamonds with a combined market value of over $132 million. This process helps reduce demand for mined precious metals and diamonds, which benefits the environment by reducing carbon emissions, water usage and other harmful environmental impacts of mining.
Anti-Corruption — The Company is subject to the U.S. Foreign Corrupt Practices Act (“FCPA”) and other similar laws in other jurisdictions, which generally prohibit 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.
Foreign Corrupt Practices Act (“FCPA”) and other similar laws in other jurisdictions, which generally prohibit 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 contributes to its communities by providing these customers with instant access to capital through very small, non-recourse pawn loans or by purchasing merchandise from such customers. The average credit provided by the Company’s pawn business to a customer is $258 in the U.S. and $95 in Latin America.
The Company contributes to its communities by providing these customers with instant access to capital through very small, non-recourse pawn loans or by purchasing merchandise from such customers. The average credit provided by the Company’s pawn business to a customer is $283 in the U.S. and $87 in Latin America as of December 31, 2024.
In Mexico, the Company’s largest Latin American market, most management-level employees and tenured store and administrative employees are provided private health insurance. All eligible employees in Mexico also participate in a statutory profit sharing program. Workplace Profile As of December 31, 2023, the Company had approximately 19,000 employees across six countries (the U.S., Mexico, Guatemala, Colombia, El Salvador and Jamaica).
Most management-level employees and tenured store and administrative employees in Mexico are provided private health insurance. • All eligible employees in Mexico participate in a statutory profit sharing program. Workplace Profile As of December 31, 2024, the Company had approximately 20,000 employees across six countries (the U.S., Mexico, Guatemala, El Salvador, Colombia and Jamaica).
Environmental, Social and Governance Overview Pawnshops are neighborhood-based stores that contribute to the modern “circular economy” which encourages reduced resource consumption and waste, decreased environmental footprints and emissions along with economic growth and job creations.
Corporate Responsibility and Sustainability Overview Pawnshops are neighborhood-based stores that contribute to the modern “circular economy” which encourages reduced resource consumption and waste, decreased environmental footprints and emissions, along with economic growth and job creation.
Customers can cancel their agreements at any time, without penalty, by 7 Table of Contents returning the merchandise.
Customers can cancel their agreements at any time, without penalty, by returning the merchandise.
AFF facilitates the RISA retail POS payment option with merchant partners in 20 U.S. states, and such option accounted for 10% of AFF’s total revenues during 2023. • Bank-originated installment loans — The customer enters into an installment loan directly with a Utah state-chartered non-member bank (the “Bank”), for the purchase of a good or service from the merchant partner.
AFF facilitates the RISA retail POS payment product with merchant partners in 22 U.S. states, and such product accounted for 13% of AFF’s gross transaction volumes during 2024. • Bank-originated installment loans — The customer enters into an installment loan directly with a Utah state-chartered non-member bank (the “Bank”), for the purchase of a good or service from the merchant partner.
The virtual nature of AFF’s business model means it operates no retail or consumer facing facilities and has a limited administrative facilities footprint of less than 46,000 square feet. 11 Table of Contents Social and Corporate Responsibility The Company promotes a strong corporate culture that emphasizes ethics, accountability and treating customers fairly.
Most other customer communications are handled by phone, online or electronic communications. The virtual nature of AFF’s business model means it operates no retail or consumer facing facilities and has a limited administrative facilities footprint of less than 46,000 square feet. Social and Corporate Responsibility The Company promotes a strong corporate culture that emphasizes ethics, accountability and treating customers fairly.
Mexico (State of Mexico) 215 Ohio 59 Veracruz 207 North Carolina 54 Puebla 114 Georgia 49 Tamaulipas 99 Tennessee 48 Nuevo Leon 95 Arizona 47 Jalisco 85 Illinois 36 Baja California 81 Nevada 30 Estado de Ciudad de Mexico (State of Mexico City) 71 Louisiana 29 Chiapas 67 Washington 29 Oaxaca 58 Maryland 28 Coahuila 55 South Carolina 27 Hidalgo 54 Colorado 25 Guanajuato 51 Alabama 24 Tabasco 46 Kentucky 23 Chihuahua 45 Indiana 22 Sonora 41 Missouri 22 Quintana Roo 31 Oklahoma 19 Sinaloa 30 Virginia 13 Michoacan 29 Alaska 6 Morelos 27 Utah 6 San Luis Potosi 26 Oregon 5 Guerrero 24 District of Columbia 3 Durango 22 North Dakota 3 Aguascalientes 21 South Dakota 3 Queretaro 21 Mississippi 2 Campeche 18 Iowa 1 Tlaxcala 18 Nebraska 1 Yucatan 18 Wyoming 1 Zacatecas 18 U.S. total 1,183 Baja California Sur 13 Colima 11 Nayarit 10 1,721 Guatemala 65 Colombia 14 El Salvador 14 Latin America total 1,814 6 Table of Contents Pawn Operations Competitive Environment The Company encounters significant competition in connection with all aspects of its pawn operations.
Mexico (State of Mexico) 213 North Carolina 74 Veracruz 199 Ohio 56 Puebla 115 Tennessee 49 Tamaulipas 101 Arizona 47 Nuevo Leon 100 Georgia 47 Jalisco 82 Illinois 36 Baja California 81 Nevada 30 Estado de Ciudad de Mexico (State of Mexico City) 73 Louisiana 29 Chiapas 68 Washington 29 Coahuila 62 Maryland 28 Oaxaca 58 South Carolina 27 Hidalgo 57 Alabama 24 Guanajuato 53 Colorado 24 Sonora 42 Kentucky 23 Tabasco 41 Indiana 22 Chihuahua 40 Missouri 21 Sinaloa 31 Oklahoma 19 Quintana Roo 30 Virginia 13 Michoacan 30 Alaska 6 San Luis Potosi 29 Oregon 5 Durango 29 Utah 5 Morelos 27 District of Columbia 3 Queretaro 22 North Dakota 3 Aguascalientes 19 South Dakota 3 Tlaxcala 19 Mississippi 2 Yucatan 19 Iowa 1 Campeche 18 Nebraska 1 Zacatecas 18 Wyoming 1 Baja California Sur 14 U.S. total 1,200 Guerrero 14 Colima 11 Nayarit 10 1,725 Guatemala 72 El Salvador 17 Colombia 12 Latin America total 1,826 6 Table of Contents Pawn Operations Competitive Environment The Company encounters significant competition in connection with all aspects of its pawn operations.
AFF offers the LTO retail POS payment option to merchant partners in 45 U.S. states, the District of Columbia and Puerto Rico, and such option accounted for 76% of AFF’s total revenues during 2023. • RISA — The RISA transaction involves the purchase of either tangible personal property or services from the merchant partner by the customer.
AFF offers the LTO retail POS payment product to merchant partners in 45 U.S. states, the District of Columbia and Puerto Rico, and such product accounted for 53% of AFF’s gross transaction volumes during 2024. • Retail installment sales agreement (“RISA”) — The RISA transaction involves the purchase of either tangible personal property or services from the merchant partner by the customer.
The Company employed approximately 11,200 employees in Latin America as of December 31, 2023, including approximately 1,000 persons employed in executive, supervisory, administrative and accounting functions. The Company’s Mexico employees are covered by labor agreements as required under Mexico’s Federal Labor Law.
The Company employed approximately 11,600 employees in Latin America as of December 31, 2024, including approximately 900 persons employed in executive, supervisory, administrative and accounting functions. The Company’s Mexico employees are covered by labor agreements as required under Mexico’s Federal Labor Law. None of the Company’s other Latin American employees are covered by collective bargaining agreements.
Total employee compensation is typically above the minimum wage standards in each country in which it operates. The Company also believes in fairly compensating its employees by providing the ability to share in the Company’s profitability.
Employee Empowerment The Company is committed to creating a safe, trusted and professional environment in which its employees can thrive. Total employee compensation is typically above the minimum wage standards in each country in which it operates. The Company also believes in fairly compensating its employees by providing the ability to share in the Company’s profitability.
The FTC regulates the safeguarding requirements of the GLBA for non-bank lenders through its Safeguard Rules and recently amended the Safeguard Rules, which became effective on June 9, 2023, and with which the Company is required to comply.
The FTC regulates the safeguarding requirements of the GLBA for non-bank lenders through its Safeguard Rules, as amended, with which the Company is required to comply.
AFF employs an automated application decisioning process, creating a highly efficient, scalable model. While the Bank utilizes AFF’s technology platform to process and evaluate consumer applications originated by the Bank, all credit underwriting and approval criteria used by the Bank to underwrite the loans are provided and approved under the Bank’s exclusive authority.
While the Bank utilizes AFF’s technology platform to process and evaluate consumer applications originated by the Bank, all credit underwriting and approval criteria used by the Bank to underwrite the loans are provided and approved under the Bank’s exclusive authority.
The following table details stores opened and acquired over the five-year period ended December 31, 2023: Year Ended December 31, 2023 2022 2021 2020 2019 U.S. pawn segment: New locations opened 5 — 1 — — Locations acquired 91 30 46 22 27 Total additions 96 30 47 22 27 Latin America pawn segment: New locations opened 61 45 60 75 89 Locations acquired — 1 — 40 163 Total additions 61 46 60 115 252 Total: New locations opened 66 45 61 75 89 Locations acquired 91 31 46 62 190 Total additions 157 76 107 137 279 For additional information on store count activity, see “Pawn Store Locations” below. 3 Table of Contents New Store Openings The Company typically opens new stores in under-served markets and neighborhoods.
The following table details stores opened and acquired over the five-year period ended December 31, 2024: Year Ended December 31, 2024 2023 2022 2021 2020 U.S. pawn segment: New locations opened 1 5 — 1 — Locations acquired 28 91 30 46 22 Total additions 29 96 30 47 22 Latin America pawn segment: New locations opened 60 61 45 60 75 Locations acquired 10 — 1 — 40 Total additions 70 61 46 60 115 Total: New locations opened 61 66 45 61 75 Locations acquired 38 91 31 46 62 Total additions 99 157 76 107 137 For additional information on store count activity, see “Pawn Store Locations” below.
A large percentage of the population in Mexico and other countries in Latin America is unbanked or under-banked with limited access to traditional consumer credit. The Company believes there is opportunity for further expansion in Mexico and other Latin American countries due to the large potential consumer base and limited competition from other large format, full-service pawn store operators.
The Company believes there is opportunity for further expansion in Mexico and 1 Table of Contents other Latin American countries due to the large potential consumer base and limited competition from other large format, full-service pawn store operators.
Human Capital Resources In managing its human capital resources, the Company aims to attract a qualified and diverse workforce through an inclusive and accessible recruiting process that utilizes online recruiting platforms, campus outreach, internships and job fairs.
Human Capital Resources In managing its human capital resources, the Company aims to attract a qualified, professional workforce through an inclusive and accessible job posting and recruiting process.
In order to increase retention of its employees, the Company is focused on providing competitive and attractive wages and benefits (which includes a store-level profit-sharing program for its pawn store employees) and extensive training and advancement opportunities as well as fostering a diverse, safe, healthy and secure workplace. 12 Table of Contents The Company believes that it complies with all applicable state, local and international laws governing nondiscrimination in employment in jurisdictions in which the Company operates.
In order to increase retention of its employees, the Company is focused on providing competitive and attractive wages and benefits (which includes a store-level profit-sharing program for its pawn store employees) and extensive training and advancement opportunities as well as fostering safe, healthy and secure workplace.
The Company was named as a defendant in a lawsuit brought by the CFPB alleging violations of the MLA as discussed elsewhere herein. 16 Table of Contents Servicemembers Civil Relief Act (“SCRA”) — The federal SCRA and similar state laws apply to certain transactions between the Company and servicemembers called to active duty in the United States military as defined within the SCRA, and may include reservists and members of the National Guard.
Servicemembers Civil Relief Act (“SCRA”) — The SCRA and similar state laws apply to certain transactions between the Company and servicemembers called to active duty in the United States military as defined within the SCRA, and may include reservists and members of the National Guard.
All applicants and employees are treated with the same high level of respect regardless of their gender, ethnicity, religion, national origin, age, marital status, political affiliation, sexual orientation, gender identity, disability or protected veteran status.
The Company believes that it complies with all applicable state, local and international laws governing nondiscrimination in employment in jurisdictions in which it operates. All applicants and employees are treated with the same high level of respect regardless of their gender, ethnicity, religion, national origin, age, marital status, political affiliation, sexual orientation, gender identity, disability or protected veteran status.
There is no collections process, and the decision to not repay the loan will not affect the customer’s credit score with any credit reporting agency and rarely affects their ability to obtain a subsequent pawn loan from the Company. The average amount of a pawn loan at December 31, 2023 was $258 in the U.S. and $95 in Latin America.
There is no collections process, and the decision to not repay the loan will not affect the customer’s credit score with any credit reporting agency and rarely affects the customer’s ability to obtain a subsequent pawn loan from the Company.
Customer Service AFF believes its strong focus on building a positive relationship with the customer and ensuring high levels of customer satisfaction generates repeat customer business and long-lasting relationships with its merchant partners. AFF strives to make the application process for its LTO, RISA or bank loan products user-friendly for its customers.
Customer Service AFF believes its strong focus on building a positive relationship with the customer and ensuring high levels of customer satisfaction generates repeat customer business and long-lasting relationships with its merchant partners.
Merchant partners are subject to suspension and/or termination if, based upon the results of AFF’s monitoring, they are found to be out of compliance with the merchant agreement, have low lease or loan quality performance, have elevated customer complaint volume or fail to comply with applicable laws.
Merchant partners are subject to suspension and/or termination if, based upon the results of AFF’s monitoring, they are found to be out of compliance with the merchant agreement, have low lease or loan quality performance, have elevated customer complaint volume or fail to comply with applicable laws. 8 Table of Contents AFF currently has approximately 13,600 active retail merchant partner locations and e-commerce platforms offering its leasing and financing products.
As of December 31, 2023, the Company operated 2,997 pawn store locations composed of 1,183 stores in 29 U.S. states and the District of Columbia, 1,721 stores in 32 states in Mexico, 65 stores in Guatemala, 14 stores in Colombia and 14 stores in El Salvador.
As of December 31, 2024, the Company operated 3,026 pawn store locations composed of 1,200 stores in 29 U.S. states and the District of Columbia, 1,725 stores in 32 states in Mexico, 72 stores in Guatemala, 17 stores in El Salvador and 12 stores in Colombia.
Complaint trends and statistics compiled from the Company’s internal complaint resolution procedures and along with all communications made to the whistleblower hotline are reported to the Board quarterly for review and further investigation, if warranted.
A whistleblower hotline review committee, which includes members from Human Resources, Legal and Compliance, review all cases as a group before any case is closed. Complaint trends and statistics compiled from the Company’s internal complaint resolution procedures and along with all communications made to the whistleblower hotline are reported to the Board quarterly for review and further investigation, if warranted.
Retail customers can use cash or credit cards for retail purchases or can purchase merchandise on an interest-free “layaway” plan. Should the customer fail to make a required payment pursuant to a layaway plan, the item is returned to inventory and all or a portion of previous payments are typically forfeited to the Company.
Should the customer fail to make a required payment pursuant to a layaway plan, the item is returned to inventory and all or a portion of previous payments are typically forfeited to the Company.
As a large and significant acquirer and reseller of pre-owned items, the Company believes it extends the life of these products and helps reduce demand for newly manufactured and distributed products, thereby reducing carbon emissions and water usage, resulting in a positive impact to the environment. 10 Table of Contents The Company estimates that it resold approximately 12 million individual used or pre-owned consumer product items in its pawn stores during 2023, with a commercial value of approximately $1.4 billion.
As a large and significant acquirer and reseller of pre-owned items, the Company believes it extends the life of these products and helps reduce demand for newly manufactured and distributed products, thereby reducing carbon emissions and water usage, resulting in a positive impact to the environment.
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.
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.
Some states also specifically regulate via statutes and regulations the RISA transactions that AFF purchases from merchants. The scope of such RISA regulation varies from state to state.
A number of other states have adopted, or are proposing to enact, similar comprehensive data privacy laws. 16 Table of Contents Some states also specifically regulate, via statutes and regulations, the RISA transactions that AFF purchases from merchants. The scope of such RISA regulation varies from state to state.
Each of these retail POS payment options is subject to AFF’s (or AFF’s partner bank’s) proprietary technology-driven decisioning process as further described below. AFF’s ability to customize the technology and offer a choice between retail POS payment options provides its merchant partners the ability to identify the most effective solution for its business and customers.
AFF’s ability to customize the technology and offer a choice between retail POS payment products provides its merchant partners the ability to identify the most effective solution for its business and customers.
The Company operates two business lines, pawn operations and retail POS payment solutions, which are organized into three reportable segments. The U.S. pawn segment consists of pawn operations in 29 U.S. states and the District of Columbia, while the Latin America pawn segment consists of pawn operations in Mexico, Guatemala, Colombia and El Salvador.
The U.S. pawn segment consists of pawn operations in 29 U.S. states and the District of Columbia, while the Latin America pawn segment consists of pawn operations in Mexico, Guatemala, El Salvador and Colombia.
Governmental Regulation General Overview The Company’s pawn and retail POS payments solutions businesses are subject to significant regulation by various laws, regulations, ordinances and regulatory pronouncements from federal, state and municipal governmental entities in the U.S. and Latin America, all of which are constantly evolving and subject to potentially significant changes.
As part of this assessment, the Board and the Nominating and Corporate Governance Committee seek a board that includes directors from diverse professional backgrounds with a broad spectrum of experience and expertise and a reputation for integrity. 13 Table of Contents Governmental Regulation General Overview The Company’s pawn and retail POS payment solutions businesses are subject to significant regulation by various laws, regulations, ordinances and regulatory pronouncements from federal, state and municipal governmental entities in the U.S. and Latin America, all of which are constantly evolving and subject to potentially significant changes.
As required by applicable law, the amounts of these charges are disclosed to the customer on the pawn ticket. Pawn loan fees accounted for 21% of the Company’s consolidated revenue during 2023. The amount the Company is willing to finance for a pawn loan is primarily based on a percentage of the estimated retail value of the collateral.
Pawn loan fees accounted for 45% of the Company’s consolidated net revenue during 2024. 2 Table of Contents The amount the Company is willing to finance for a pawn loan is primarily based on a percentage of the estimated retail value of the collateral.
The Company is certified in Mexico as an Empresa Socialmente Responsable (“ESR”), or a socially responsible company under the XII Latin American Meeting of Corporate Social Responsibility Framework.
Accordingly, the Company has focused significant time and resources on corporate and social responsibility initiatives in supporting disadvantaged people who live and work in this market. 11 Table of Contents The Company is certified in Mexico as an Empresa Socialmente Responsable (“ESR”), or a socially responsible company under the XII Latin American Meeting of Corporate Social Responsibility Framework.
State and local agencies, including local and state police officials, often have unlimited and discretionary authority to suspend store operations pending an investigation of suspicious pawn transactions or resolution of actual or alleged regulatory, licensing and permitting issues.
State and local agencies, including local and state police officials, often have unlimited and discretionary authority to suspend store operations pending an investigation of suspicious pawn transactions or resolution of actual or alleged regulatory, licensing and permitting issues. 17 Table of Contents Other Latin American Federal and Local Regulations Similar to Mexico, certain federal, department and local governmental entities in Guatemala, El Salvador and Colombia also regulate the pawn industry and retail and commercial businesses.
The Company also acquires limited quantities of new or refurbished general merchandise inventories directly from wholesalers and manufacturers. Merchandise acquired by the Company through forfeited pawn loan collateral is carried in inventory at the amount of the related pawn loan, exclusive of any accrued service fees, and purchased inventory is carried at cost.
Merchandise inventory is acquired primarily through forfeited pawn loan collateral and, to a lesser extent, through purchases of used goods directly from the general public. The Company also acquires limited quantities of new or refurbished merchandise inventories directly from wholesalers and manufacturers.
The Company does not record pawn loan losses or charge-offs because the amount advanced becomes the carrying cost of the forfeited collateral that is to be recovered through the merchandise sales function described above. 2 Table of Contents Pawn loan fees are typically calculated as a percentage of the pawn loan amount based on the size, duration and type of collateral of the pawn loan and generally range from 4% to 25% per month, as permitted by applicable law.
The Company does not record pawn loan losses or charge-offs because the amount advanced becomes the carrying cost of the forfeited collateral that is to be recovered through the merchandise sales function described above.
The Company complies with notice and opt-out requirements for prescreen solicitations and for certain information sharing under the FCRA and conducts reasonable investigations of disputes as applicable. The Company also has implemented an identity theft prevention program to fulfill the requirements of the Red Flags Regulations and Guidelines issued under the Fair and Accurate Credit Transactions Act (“FACTA”).
The Company complies with notice and opt-out requirements for prescreen solicitations and for certain information sharing under the FCRA and conducts reasonable investigations of disputes as applicable.
The Company also melts certain quantities of scrap jewelry and sells the gold, silver and diamonds in the commodity markets. Merchandise sales accounted for 48% of the Company’s consolidated revenue during 2023. Merchandise inventory is acquired primarily through forfeited pawn loan collateral and, to a lesser extent, through purchases of used goods directly from the general public.
The Company also melts certain quantities of scrap jewelry and sells the gold, silver and diamonds in the commodity markets. Gross profit from pawn merchandise sales accounted for 38% of the Company’s consolidated net revenue during 2024.
AFF also constantly monitors consumer preferences and trends to ensure that the solutions offered through their merchant partners are aligned with the needs of the merchant partner and its customers. AFF attracts and sources new merchants through various channels, including field sales representatives, national sales, independent sales representatives, buying groups, AFF’s website and strategic integrations via waterfall lending platforms.
Merchant Relationships AFF attracts and sources new merchants through various channels, including field sales representatives, national sales, buying groups, AFF’s website and strategic integrations via waterfall lending platforms.
Products Offered by AFF AFF’s merchant partners may provide consumer goods and services to their customers using one of AFF’s retail POS payment options, including a LTO product, a merchant-based retail installment sales agreement (“RISA”) or a bank-originated installment loan, to facilitate payments on such transactions.
Net revenues (gross profit) from AFF accounted for 17% of the Company’s consolidated net revenues during 2024. Products Offered by AFF AFF’s merchant partners may provide consumer goods and services to their customers using one of AFF’s retail POS payment products to facilitate payments on such transactions.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to the Company’s Regulatory, Legislative and Legal Environment • The Company’s products and services are subject to extensive regulation and supervision under various federal, state and local laws, ordinances and regulations in both the U.S. and Latin America, and all consumer finance companies that serve credit-constrained consumers, including the Company, face increasing regulatory scrutiny under the current presidential administration in the U.S. and in the current regulatory environment. • The adoption of new laws or regulations or adverse changes in, or the interpretation or enforcement of, existing laws or regulations affecting the Company’s products and services could adversely affect its financial condition and operating results. • The Company is the subject of a lawsuit initiated by the CFPB alleging (i) violations of the MLA and (ii) violations of a consent order the Company’s predecessor entered into with the CFPB. • If the bank partner loan origination model used by AFF is successfully challenged or deemed impermissible, AFF could be found to be in violation of licensing, interest rate limit, lending or brokering laws and could face penalties, fines, a determination that certain of the loans are void or voidable, litigation or regulatory enforcement. • 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 have a material adverse effect on the Company’s businesses. • Current and future litigation or regulatory proceedings, both in the U.S. and Latin America, could have a material adverse effect on the Company’s business, prospects, results of operations and financial condition. • The sale and pawning of firearms, ammunition and certain related accessories is subject to current and potential regulation and exposes the Company to reputational and litigation risk if such firearms, ammunition and related accessories lead to deaths, injuries or are utilized in the commission of a crime.
Biggest changeRisk Factor Summary Risks Related to the Company’s Strategy, Business and Operations • The Company faces significant competition from other pawnshops, branch-based consumer lenders, banks, credit unions, online lenders, POS consumer finance 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. • A decrease in demand for the Company’s products and services and the failure of the Company to adapt to such changes could adversely affect the Company’s results of operations. • The Company’s future success is largely dependent upon the ability of its management team to successfully execute its business strategy and drive organic growth. • The inability to successfully identify attractive acquisition targets, realize administrative and operational synergies and integrate completed acquisitions could adversely affect results. • The Company depends on its senior management and hiring, training and retaining an adequate number of qualified employees to run its businesses. • Security breaches, cyber attacks or fraudulent activity could result in damage to the Company’s operations or lead to reputational damage and could expose the Company to significant liabilities. • The Company’s businesses are typically subject to seasonality, which causes the Company’s revenues and operating cash flows to fluctuate. • The Company’s financial position and results of operations may fluctuate significantly due to fluctuations in currency exchange rates in most Latin American markets. • Changes impacting international trade, such as proposed or enacted tariffs, including pursuant to policies of the incoming 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. 18 Table of Contents Risks Related to the Company’s Regulatory, Legislative and Legal Environment • The Company’s products and services are subject to extensive regulation and supervision under various federal, state and local laws, ordinances and regulations in both the U.S. and Latin America, and all consumer finance companies that serve credit-constrained consumers, including the Company, face increasing regulatory scrutiny under the current regulatory environment. • The adoption of new laws or regulations or adverse changes in, or the interpretation or enforcement of, existing laws or regulations affecting the Company’s products and services could adversely affect its financial condition and operating results. • The Company is the subject of a lawsuit initiated by the CFPB alleging (1) violations of the MLA and (2) violations of a consent order the Company’s predecessor entered into with the CFPB. • If the bank partner loan origination model used by AFF is successfully challenged or deemed impermissible, AFF could be found to be in violation of licensing, interest rate limit, lending or brokering laws and could face penalties, fines, a determination that certain of the loans are void or voidable, litigation or regulatory enforcement. • 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 have a material adverse effect on the Company’s businesses. • Current and future litigation or regulatory proceedings, both in the U.S. and Latin America, could have a material adverse effect on the Company’s business, prospects, results of operations and financial condition. • The sale and pawning of firearms, ammunition and certain related accessories is subject to current and potential regulation and exposes the Company to reputational and litigation risk if such firearms, ammunition and related accessories lead to deaths, injuries or are utilized in the commission of a crime.
Furthermore, if any firearms sold by the Company are used in the commitment of any crimes or mass shootings, it could result in significant adverse media attention against the Company, have a material adverse impact on the reputation of the Company and result in material litigation against the Company.
Furthermore, if any firearms sold by the Company are used in the commitment of any crimes or shootings, it could result in significant adverse media attention against the Company, have a material adverse impact on the reputation of the Company and result in material litigation against the Company.
The attractiveness of AFF’s platform to merchants depends upon, among other things, the size of its consumer base, its brand and reputation, the amount of merchant premium, discounts or profit share paid or received by AFF, its ability to sustain its value proposition to merchants for customer acquisition by demonstrating higher conversion at checkout, the attractiveness to merchants of AFF’s technology and data-driven platform, services and products offered by competitors, and its ability to perform under, and maintain, its merchant agreements.
The attractiveness of AFF’s platform to merchants depends upon, among other things, the size of its consumer base, its brand and reputation, the amount of merchant premium or discounts paid or received by AFF, its ability to sustain its value proposition to merchants for customer acquisition by demonstrating higher conversion at checkout, the attractiveness to merchants of AFF’s technology and data-driven platform, services and products offered by competitors, and its ability to perform under, and maintain, its merchant agreements.
If adopted as proposed, the guidance would result in increased supervisory attention of institutions 28 Table of Contents that engage in significant lending activities through third parties, including at least one examination every 12 months, as well as supervisory expectations for a third-party lending risk management program and third-party lending policies that contain certain minimum requirements, such as self-imposed limits as a percentage of total capital for each third-party lending relationship and for the overall loan program, relative to origination volumes, credit exposures (including pipeline risk), growth, loan types, and acceptable credit quality.
If adopted as proposed, the guidance would result in increased supervisory attention of institutions that engage in significant lending activities through third parties, including at least one examination every 12 months, as well as supervisory expectations for a third-party lending risk management program and third-party lending policies that contain certain minimum requirements, such as self-imposed limits as a percentage of total capital for each third-party lending relationship and for the overall loan program, relative to origination volumes, credit exposures (including pipeline risk), growth, loan types, and acceptable credit quality.
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 2023, there is no guarantee that they will not be adversely affected should economic conditions deteriorate further.
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, there is no guarantee that they will not be adversely affected should economic conditions deteriorate further.
However, the insurance program generally has large deductibles and co-insurance requirements and may not be adequate to cover all such losses. The Company could also experience liability or adverse publicity arising from such crimes. Any such event may have a material and adverse effect on the Company’s business, prospects, results of operations and financial condition.
However, the insurance program generally has large deductibles and co-insurance requirements and may not be adequate to cover all such losses. The Company could also experience liability or adverse publicity arising from such crimes. Any such 23 Table of Contents event may have a material and adverse effect on the Company’s business, prospects, results of operations and financial condition.
In any event, the effect of any product or service change on the results of the Company’s business may not be fully ascertainable until the change has been in effect for some time. The Company’s organic growth is subject to external factors and other circumstances over which it has limited control or that are beyond its control.
In any event, the effect of any product or service change on the results of the Company’s business may not be fully ascertainable until the change has been in effect for some time. 20 Table of Contents The Company’s organic growth is subject to external factors and other circumstances over which it has limited control or that are beyond its control.
Specifically, the Company has significant exposure to fluctuations and devaluations of the Mexican peso and the health of the Mexican economy, which, in each case, may be negatively impacted by changes in U.S. trade treaties, including the United States-Mexico-Canada 32 Table of Contents Agreement and corporate tax policy.
Specifically, the Company has significant exposure to fluctuations and devaluations of the Mexican peso and the health of the Mexican economy, which, in each case, may be negatively impacted by changes in U.S. trade treaties, including the United States-Mexico-Canada Agreement and corporate tax policy.
In such event, it is possible that the Company would not be able to satisfy its obligations under all of such accelerated indebtedness simultaneously. Determining the AFF business’ allowance for lease and loan losses requires many assumptions and complex analyses.
In such event, it is possible that the Company would not be able to satisfy its obligations under all of such accelerated indebtedness simultaneously. 32 Table of Contents Determining the AFF business’ allowance for lease and loan losses requires many assumptions and complex analyses.
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.
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 22 Table of Contents potential risk of unauthorized access to such confidential information.
While both the securities class action and derivative action have been dismissed, there is no guarantee that the Company will not become subject to future securities litigation related to the CFPB lawsuit, including in the event of an adverse outcome in the CFPB lawsuit.
While both the securities class action and derivative action 26 Table of Contents have been dismissed, there is no guarantee that the Company will not become subject to future securities litigation related to the CFPB lawsuit, including in the event of an adverse outcome in the CFPB lawsuit.
Additionally, any acquisition carries the risk that the Company may not realize a return on the acquisition or the Company’s investment. 22 Table of Contents The Company’s future success is largely dependent upon the ability of its management team to successfully execute its business strategy.
Additionally, any acquisition carries the risk that the Company may not realize a return on the acquisition or the Company’s investment. The Company’s future success is largely dependent upon the ability of its management team to successfully execute its business strategy.
In addition, if the tax authorities in jurisdictions where AFF is already subject to sales tax or other indirect tax obligations were to successfully challenge AFF’s positions, AFF’s tax liability could increase substantially. General Economic and Market Risks General economic conditions may have a material adverse impact on the Company’s business and financial results.
In addition, if the tax authorities in jurisdictions where AFF is already subject to sales tax or other indirect tax obligations were to successfully challenge AFF’s positions, AFF’s tax liability could increase substantially. 33 Table of Contents General Economic and Market Risks General economic conditions may have a material adverse impact on the Company’s business and financial results.
For additional information on cybersecurity, see “Item 1C. Cybersecurity.” 24 Table of Contents Lastly, the Company’s cyber and other insurance policies carry retention and coverage limits, which may not be adequate to reimburse for losses caused by security breaches, and the Company may not be able to collect fully, if at all, under these insurance policies.
For additional information on cybersecurity, see “Item 1C. Cybersecurity.” Lastly, the Company’s cyber and other insurance policies carry retention and coverage limits, which may not be adequate to reimburse for losses caused by security breaches, and the Company may not be able to collect fully, if at all, under these insurance policies.
Risks Related to the AFF Business If AFF is unable to attract additional merchants and retain and grow its relationships with its existing merchant partners, its business, results of operations, financial condition and future prospects would be materially and adversely affected.
If AFF is unable to attract additional merchants and retain and grow its relationships with its existing merchant partners, its business, results of operations, financial condition and future prospects would be materially and adversely affected.
A significant and sustained decline in gold and/or other precious metal and diamond prices could result in decreased merchandise sales and related margins, 36 Table of Contents decreased inventory valuations and sub-standard collateralization of outstanding pawn loans.
A significant and sustained decline in gold and/or other precious metal and diamond prices could result in decreased merchandise sales and related margins, decreased inventory valuations and sub-standard collateralization of outstanding pawn loans.
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 31 Table of Contents such transactions in certain circumstances.
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.
As of December 31, 2023, approximately 61% of the Company’s pawn loans were collateralized with jewelry, which is primarily gold, and 50% of its inventories consisted of jewelry, which is also primarily gold. The Company sells significant quantities of gold, other precious metals and diamonds acquired through collateral forfeitures or direct purchases from customers.
As of December 31, 2024, approximately 65% of the Company’s pawn loans were collateralized with jewelry, which is primarily gold, and 52% of its inventories consisted of jewelry, which is also primarily gold. The Company sells significant quantities of gold, other precious metals and diamonds acquired through collateral forfeitures or direct purchases from customers.
If AFF is unable to fully collect on its leases, RISAs and bank loans, the performance of its lease and loan portfolio will be adversely affected, which could result in additional provisions for lease and loan losses and loss of revenue, cash flow and profitability.
If AFF is unable to fully collect on its leases, RISAs and bank loans, the performance of its lease and loan portfolio will be adversely affected, which could result in additional provisions for lease and loan losses and loss of revenue, cash flow and profitability. Item 1B. Unresolved Staff Comments None.
At December 31, 2023, the Company had $1,727.7 million of goodwill on its consolidated balance sheet, all of which represents assets capitalized in connection with the Company’s acquisitions and business combinations. Accounting for goodwill requires significant management estimates and judgment.
At December 31, 2024, the Company had $1,787.2 million of goodwill on its consolidated balance sheet, all of which represents assets capitalized in connection with the Company’s acquisitions and business combinations. Accounting for goodwill requires significant management estimates and judgment.
AFF depends on sales at its merchant partners to drive its transaction volume. If AFF’s merchant partners experience a general decline in sales, it could negatively impact AFF’s transaction volume.
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.
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.
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.
The current economic environment, characterized by rising inflation, higher interest rates, declines in consumer confidence and uncertainly about economic stability and a potential recession, has increased demand for pawn loans in the U.S. Conversely these conditions, coupled with tighter decisioning, adversely affected demand for AFF’s products in 2023.
The current economic environment, characterized by rising inflation, higher interest rates, declines in consumer confidence and uncertainly about economic stability and a potential recession, 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.
Climate change could adversely affect the Company’s business and damage its reputation. Concerns over the long-term impacts of climate change have led and will continue to lead to governmental efforts around the world to mitigate those impacts. Consumers and businesses are also changing their behavior and business preferences as a result of these concerns.
Concerns over the long-term impacts of climate change have led and will continue to lead to governmental efforts around the world to mitigate those impacts. Consumers and businesses are also changing their behavior and business preferences as a result of these concerns.
These broad market fluctuations may adversely affect the trading price of the Company’s common stock. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. Inclement weather, natural disasters or health epidemics can adversely impact the Company’s operating results.
Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. Inclement weather, natural disasters or health epidemics can adversely impact the Company’s operating results.
AFF’s transaction volume is dependent on the support of its platform by its merchant partners. AFF depends on its merchants to drive transaction volume by supporting its platform over alternative payment options for credit-constrained customers and by prominently presenting AFF’s platform as an attractive payment option for these customers.
AFF depends on its merchants to drive transaction volume by supporting its platform over alternative payment options for credit-constrained customers and by prominently presenting AFF’s platform as an attractive payment option for these customers.
Additionally, Congress has considered legislation that would generally limit or prohibit mandatory dispute arbitration in certain consumer contracts, and it has adopted such prohibitions with respect to certain mortgage loans and certain consumer loans to active-duty members of the military and their dependents.
Therefore, it is possible that the Company’s consumer arbitration agreements will be rendered unenforceable. Additionally, Congress has considered legislation that would generally limit or prohibit mandatory dispute arbitration in certain consumer contracts, and it has adopted such prohibitions with respect to certain mortgage loans and certain consumer loans to active-duty members of the military and their dependents.
Risks Related to the AFF Business • The AFF business is dependent on merchant partners for its transaction volume, and its growth is primarily driven by the success of its existing merchant partners, its ability to retain and grow its relationships with existing merchant partners, and its ability to attract new merchant relationships. • The AFF business derives a significant portion of its revenue from several top merchant partners.
Risks Related to the AFF Business • The AFF business is dependent on merchant partners for its transaction volume, and its growth is primarily driven by the success of its existing merchant partners, its ability to retain and grow its relationships with existing merchant partners, and its ability to attract new merchant relationships.
As of December 31, 2023, including the Company's senior unsecured notes and the Company’s unsecured credit facilities, the Company had outstanding principal indebtedness of $1,618.0 million and availability of $104.7 million under its unsecured credit facilities, subject to certain financial covenants.
As of December 31, 2024, including the Company's senior unsecured notes and the Company’s unsecured credit facilities, the Company had outstanding principal indebtedness of $1,748.0 million and availability of $528.9 million under its unsecured credit facilities, subject to certain financial covenants.
Any of these events could have a material adverse effect on the Company’s business, prospects, results of operations and financial condition and could impair the Company’s ability to continue current operations. 30 Table of Contents The sale and pawning of firearms, ammunition and certain related accessories is subject to current and potential regulation, which could have a material adverse effect on the Company’s reputation, business, prospects, results of operations and financial condition.
The sale and pawning of firearms, ammunition and certain related accessories is subject to current and potential regulation, which could have a material adverse effect on the Company’s reputation, business, prospects, results of operations and financial condition.
If AFF is not able to retain its existing merchant partners, attract additional merchants and expand revenue and volume of transactions from existing merchants, it will not be able to continue to grow its business, and its business, results of operations, financial condition and future prospects would be materially and adversely affected.
If AFF is not able to retain its existing merchant partners, attract additional merchants and expand revenue and volume of transactions from existing merchants, it will not be able to continue to grow its business, and its business, results of operations, financial condition and future prospects would be materially and adversely affected. 35 Table of Contents AFF’s transaction volume is dependent on the support of its platform by its merchant partners.
See “Item 1. Business—Governmental Regulation” for a further discussion of the regulatory authority of the CFPB. The FDIC has issued examination guidance affecting AFF’s unaffiliated third-party lender and these or subsequent new rules and regulations could have a significant impact on AFF’s Bank-originated products. The installment loans are originated by the Bank using technology and marketing services provided by AFF.
The FDIC has issued examination guidance affecting AFF’s unaffiliated third-party lender and these or subsequent new rules and regulations could have a significant impact on AFF’s Bank-originated products. The installment loans are originated by the Bank using technology and marketing services provided by AFF.
AFF relies on its originating bank partner model to comply with various federal, state and other laws. If the legal structure underlying AFF’s relationship with the Bank was successfully challenged, it may be found to be in violation of state licensing requirements and state laws regulating interest rates and fees and disclosures.
If the legal structure underlying AFF’s relationship with the Bank was successfully challenged, it may be found to be in violation of state licensing requirements and state laws regulating interest rates and fees and disclosures.
As of December 31, 2023, the Company had 1,814 pawn store locations in Latin America, including 1,721 in Mexico, 65 in Guatemala, 14 in Colombia and 14 in El Salvador, and the Company plans to open or acquire additional pawn stores in Latin America in the future.
As of December 31, 2024, the Company had 1,826 pawn store locations in Latin America, including 1,725 in Mexico, 72 in Guatemala, 17 in El Salvador and 12 in Colombia, and the Company plans to open or acquire additional pawn stores in Latin America in the future.
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.
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.
In addition, the Company may incur property, casualty or other losses not covered by insurance. Losses not covered by insurance could be substantial and may increase the Company’s expenses, which could harm the Company’s results of operations and financial condition. Furthermore, the frequency and severity of these weather events and natural disasters may increase as a result of climate change.
In addition, the Company may incur property, casualty or other losses not covered by insurance. Losses not covered by insurance could be substantial and may increase the Company’s expenses, which could harm the Company’s results of operations and financial condition.
Additionally, the Company’s storefront operations depend on the efficiency and reliability of the Company’s proprietary pawn POS and loan management system and 23 Table of Contents AFF depends on its systems to process its transaction volume and effectively take applications, decision and service its customers.
Additionally, the Company’s storefront operations depend on the efficiency and reliability of the Company’s proprietary pawn POS and loan management system 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.
However, a number of state and federal circuit courts and the National Labor Relations Board have concluded that arbitration agreements with consumer class action waivers are “unconscionable” and hence unenforceable, particularly where a small dollar amount is in controversy on an individual basis. Therefore, it is possible that the Company’s consumer arbitration agreements will be rendered unenforceable.
Thus, the Company’s arbitration agreements, if enforced, have the effect of mitigating, but not eliminating, class and collective action liability. 28 Table of Contents However, a number of state and federal circuit courts and the National Labor Relations Board have concluded that arbitration agreements with consumer class action waivers are “unconscionable” and hence unenforceable, particularly where a small dollar amount is in controversy on an individual basis.
The loss of business, transaction volumes or platform support from one or more of these top merchant partners could have a material adverse effect on the AFF business. • The AFF business relies extensively on its proprietary decisioning platform and, if such platform is not effective, it could have a material impact on the AFF business and its financial condition and results of operations. 20 Table of Contents • If the AFF business is unable to collect on its leases, RISAs and bank loans, the performance of its lease and finance receivables portfolio would be adversely affected.
The loss of business, transaction volumes or platform support from one or more of these top merchant partners could have a material adverse effect on the AFF business. • The AFF business relies extensively on its proprietary decisioning platform and, if such platform is not effective, it could have a material impact on the AFF business and its financial condition and results of operations. • If the AFF business is unable to collect on its leases, RISAs and bank loans, the performance of its lease and finance receivables portfolio would be adversely affected. 19 Table of Contents Strategic and Business Risks Increased competition from other pawnshops, POS consumer finance 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.
On November 12, 2021, the CFPB initiated a civil action in the United States District Court for the Northern District of Texas against FirstCash, Inc. and Cash America West, Inc., two of the Company’s subsidiaries, alleging violations of the MLA in connection with pawn transactions.
On November 12, 2021, the CFPB initiated a civil action in the United States District Court for the Northern District of Texas (the “District Court”) against FirstCash, Inc. and Cash America West, Inc., and later amended the complaint to include numerous Company subsidiaries as defendants. The CFPB lawsuit alleges violations of the MLA in connection with pawn transactions.
If the Company’s revenues were to fall substantially below what it would normally expect during certain periods, the Company’s annual financial results, its ability to borrow on its unsecured credit facilities, and its ability to service its debt obligations or fund its operations, including originations for the AFF business, could be adversely affected. 25 Table of Contents The failure or inability of third parties who provide products, services or support to the Company to maintain such products, services or support could disrupt Company operations or result in a loss of revenue.
If the Company’s revenues were to fall substantially below what it would normally expect during certain periods, the Company’s annual financial results, its ability to borrow on its unsecured credit facilities, and its ability to service its debt obligations or fund its operations, including originations for the AFF business, could be adversely affected.
AFF also competes with many of these retailers for consumers desiring to purchase lower cost merchandise for cash or on credit. In Mexico, the Company’s pawn stores also compete directly with government-sponsored or affiliated non-profit foundations operating pawn stores.
AFF also competes with many of these retailers for consumers desiring to purchase lower cost merchandise for cash or on credit. Furthermore, many of AFF’s merchants operate at brick-and-mortar retail locations that are subject to increased competition from online or lower-cost competitors. In Mexico, the Company’s pawn stores also compete directly with government-sponsored or affiliated non-profit foundations operating pawn stores.
Any such changes in regulations, trade treaties, corporate tax policy, import taxes or adverse court or administrative interpretations of the foregoing could adversely and significantly affect the Mexican economy and ultimately the Mexican peso, which could adversely and significantly affect the Company’s financial position and results of the Company’s Latin America pawn operations.
Any such changes in regulations, trade treaties, corporate tax policy, import taxes or adverse court or administrative interpretations of the foregoing could adversely and significantly affect the Mexican economy and ultimately the Mexican peso, which could adversely and significantly affect the Company’s financial position and results of the Company’s Latin America pawn operations. 31 Table of Contents Accounting, Tax and Financial Risks The Company’s existing and future levels of indebtedness could adversely affect its financial health, its ability to obtain financing in the future, its ability to react to changes in its business and its ability to fulfill its obligations under such indebtedness.
If the Company were to lose any of its licenses to conduct its business, it could result in the temporary or permanent closure of stores and/or cessation of consumer lending activities, any of which could adversely affect the Company’s business, results of operations and cash flows.
If the Company were to lose any of its licenses to conduct its business, it could result in the temporary or permanent closure of stores and/or cessation of consumer lending activities, any of which could adversely affect the Company’s business, results of operations and cash flows. 30 Table of Contents Foreign Operations Risks The Company’s financial position and results of operations may change significantly due to fluctuations in currency exchange rates in Latin American markets.
Further, if the Company’s growth is not effectively managed, the Company’s business, financial condition, results of operations and future prospects could be negatively affected, and the Company may not be able to continue to implement its business strategy and successfully conduct its operations.
Further, if the Company’s growth is not effectively managed, the Company’s business, financial condition, results of operations and future prospects could be negatively affected, and the Company may not be able to continue to implement its business strategy and successfully conduct its operations. 21 Table of Contents Operational Risks The Company depends on its senior management and may not be able to retain those employees or recruit additional qualified personnel.
The Company may fail to meet the expectations of its stockholders or securities analysts at some point in the future, and its stock price could decline as a result.
The Company may fail to meet the expectations of its stockholders or securities analysts at some point in the future, and its stock price could decline as a result. This volatility may prevent investors from being able to sell their common stock at or above the price they paid for their common stock.
As part of this process, merchants are generally contractually required to comply with AFF’s policies, procedures, marketing materials, and training materials. In the event that a merchant or merchant employee fails to adequately and correctly describe the terms and conditions of the lease, RISA or bank loan product, the merchant and/or AFF may be subject to consumer complaints and/or lawsuits.
In the event that a merchant or merchant employee fails to adequately and correctly describe the terms and conditions of the lease, RISA or bank loan product, the merchant and/or AFF may be subject to consumer complaints and/or lawsuits.
The loss of services of any member of the Company’s senior management, including AFF’s management, could adversely affect the Company’s business until a suitable replacement can be found, if at all.
Furthermore, AFF’s senior management team provides the Company with significant experience with retail POS payment solutions for credit-constrained customers. The loss of services of any member of the Company’s senior management, including AFF’s management, could adversely affect the Company’s business until a suitable replacement can be found, if at all.
Foreign Operations Risks The Company’s financial position and results of operations may change significantly due to fluctuations in currency exchange rates in Latin American markets. The Company derives significant revenue, earnings and cash flow from operations in Latin America, where business operations are transacted primarily in Mexican pesos, and in Guatemalan quetzales and Colombian pesos to a lesser extent.
The Company derives significant revenue, earnings and cash flow from operations in Latin America, where business operations are transacted primarily in Mexican pesos, and in Guatemalan quetzales and Colombian pesos to a lesser extent.
For example, certain states have capped interest rates on consumer loans 26 Table of Contents at 36% and there has been legislation proposed at the Federal level and in other states to implement a comparable cap on interest rates on consumer loans.
For example, certain states have capped interest rates on consumer loans at 36% and there has been legislation proposed at the Federal 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.
The failure by AFF’s merchants to effectively present, integrate, and support its platform would have a material and adverse effect on AFF’s originations and, as a result, on its business, results of operations, financial condition and future prospects. 33 Table of Contents Furthermore, AFF relies on these merchants to comply with all applicable laws and regulations associated with the LTO, RISA and bank loan products offered by AFF.
The failure by AFF’s merchants to effectively present, integrate, and support its platform would have a material and adverse effect on AFF’s originations and, as a result, on its business, results of operations, financial condition and future prospects.
Any of the foregoing impacts of the Company’s level of indebtedness could have a material adverse effect on its business, financial condition and results of operations.
Any of the foregoing impacts of the Company’s level of indebtedness could have a material adverse effect on its business, financial condition and results of operations. Furthermore, the Company has, in the past, accessed the debt capital markets to refinance existing debt obligations and to obtain capital to finance growth.
It is difficult to assess the likelihood of the enactment of any unfavorable federal or state legislation or local ordinances, and there can be no assurance that additional legislative, administrative or regulatory initiatives will not be enacted that would severely restrict, prohibit, or eliminate the Company’s ability to offer certain products and services.
These orders and legislation could change banking statutes and our operating environment in substantial and unpredictable ways by increasing or decreasing the cost of doing business, limiting or expanding permissible activities, or affecting the competitive balance among financial institutions. 25 Table of Contents Consequently, it is difficult to assess the likelihood of the enactment of any unfavorable federal or state legislation or local ordinances, and there can be no assurance that additional legislative, administrative or regulatory initiatives will not be enacted that would severely restrict, prohibit, or eliminate the Company’s ability to offer certain products and services.
The potential errors or inaccuracies in AFF’s decisioning platform and models may be material and affect a significant number of transactions, which could have a material and adverse effect on AFF’s business. If AFF is unable to collect on its leases, RISAs and bank loans, the performance of its lease and loan portfolio would be adversely affected.
The 36 Table of Contents potential errors or inaccuracies in AFF’s decisioning platform and models may be material and affect a significant number of transactions, which could have a material and adverse effect on AFF’s business.
In the past, this heightened regulatory scrutiny by the Justice Department, the FDIC and other regulators has caused some banks and ACH payment processors to cease doing business with consumer finance companies who are operating legally, without regard to whether those companies are complying with applicable laws, simply to avoid the risk of heightened scrutiny or even litigation.
Department of Justice (the “Justice Department”), the Federal Deposit Insurance Corporation (the “FDIC”) and certain state regulators appear to be intended to discourage banks, card and ACH payment processors from providing access to card platforms and the ACH system for certain lenders that they believe are operating illegally, cutting off their access to the ACH system to either debit or credit customer accounts (or both). 24 Table of Contents In the past, this heightened regulatory scrutiny by the Justice Department, the FDIC and other regulators has caused some banks and ACH payment processors to cease doing business with consumer finance companies who are operating legally, without regard to whether those companies are complying with applicable laws, simply to avoid the risk of heightened scrutiny or even litigation.
Furthermore, any negative public perception of pawnshops generally would also likely have a material negative impact on the Company’s retail operations, including reducing the number of consumers willing to shop at the Company’s stores. 29 Table of Contents Judicial or administrative decisions, CFPB rulemaking, amendments to the Federal Arbitration Act (the “FAA”) or new legislation could render the arbitration agreements the Company uses illegal or unenforceable.
Furthermore, any negative public perception of pawnshops generally would also likely have a material negative impact on the Company’s retail operations, including reducing the number of consumers willing to shop at the Company’s stores.
AFF’s transaction volume is dependent on sales at its merchant partners and any decline in such sales or interruptions, inventory shortages and other factors affecting the supply chains of AFF’s merchant partners could have a material and adverse effect on AFF’s results of operations, financial condition and future prospects.
A discussion of certain other market risks is covered in “Item 7A. Quantitative and Qualitative Disclosures About Market Risk.” Risks Related to the AFF Business AFF’s transaction volume is dependent on sales at its merchant partners and any decline in such sales could have a material and adverse effect on AFF’s results of operations, financial condition and future prospects.
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.
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. 29 Table of Contents Furthermore, the Company may incur losses and reputational damage due to lawsuits relating to its performance of background checks on firearms purchases as mandated by state and federal law, the selling of firearms or the improper use of firearms sold by the Company, including lawsuits by individuals, municipalities, state or federal agencies or other organizations attempting to recover damages or costs from firearms retailers relating to the sale or misuse of firearms.
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, AFF’s senior management team provides the Company with significant experience with retail POS payment solutions for credit-constrained customers.
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.
AFF’s data providers could also stop providing data, provide untimely, incorrect or incomplete data, or increase the costs for their data for a variety of reasons, including security or regulatory concerns or for competitive reasons. 34 Table of Contents If AFF were to lose access to this external data or if such access is restricted or becomes more expensive, it could have a material effect on AFF’s business.
AFF’s data providers could also stop providing data, provide untimely, incorrect or incomplete data, or increase the costs for their data for a variety of reasons, including security or regulatory concerns or for competitive reasons.
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.
The failure or inability of third parties who provide products, services or support to the Company to maintain such products, services or support could disrupt Company operations or result in a loss of revenue. 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.
If AFF’s originating bank partner model is successfully challenged or deemed impermissible, AFF could be found to be in violation of licensing, interest rate limit, lending or brokering laws and could face penalties, fines, litigation or regulatory enforcement. Loans originated through the Bank’s program accounted for 3% of the Company’s consolidated net revenues during 2023 .
While the guidance has never formally been adopted, it is the Company’s understanding that the FDIC has relied upon it in its examination of third-party lending arrangements. 27 Table of Contents If AFF’s originating bank partner model is successfully challenged or deemed impermissible, AFF could be found to be in violation of licensing, interest rate limit, lending or brokering laws and could face penalties, fines, litigation or regulatory enforcement.
The Mexican government could take regulatory or administrative actions that would harm the Company’s ability to compete profitably in the Mexico market.
The Mexican government could take regulatory or administrative actions that would harm the Company’s ability to compete profitably in the Mexico market. Increased competition or aggressive marketing and pricing practices by these competitors could result in decreased revenue, margins and inventory turnover rates in the Company’s retail operations.
Increased competition or aggressive marketing and pricing practices by these competitors could result in decreased revenue, margins and inventory turnover rates in the Company’s retail operations. 21 Table of Contents A decrease in demand for the Company’s products and services and the failure of the Company to adapt to such decreases could adversely affect the Company’s results of operations.
A decrease in demand for the Company’s products and services and the failure of the Company to adapt to such decreases could adversely affect the Company’s results of operations.
This volatility may prevent investors from being able to sell their common stock at or above the price they paid for their common stock. 37 Table of Contents In addition, the stock markets in general have experienced volatility recently that has often been unrelated to the operating performance of particular companies.
In addition, the stock markets in general have experienced volatility recently that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of the Company’s common stock.
The Company includes dispute arbitration provisions in its employment agreements and in its pawn, LTO and retail finance agreements to the extent permitted to do so under applicable law. These provisions are designed to allow the Company to resolve any employee or customer disputes through individual arbitration rather than in court.
Judicial or administrative decisions, CFPB rulemaking, amendments to the Federal Arbitration Act (the “FAA”) or new legislation could render the arbitration agreements the Company uses illegal or unenforceable. The Company includes dispute arbitration provisions in its employment agreements and in its pawn, LTO and retail finance agreements to the extent permitted to do so under applicable law.
The Company’s arbitration provisions explicitly provide that all arbitrations will be conducted on an individual basis and not on a class or collective basis. Thus, the Company’s arbitration agreements, if enforced, have the effect of mitigating, but not eliminating, class and collective action liability.
These provisions are designed to allow the Company to resolve any employee or customer disputes through individual arbitration rather than in court. The Company’s arbitration provisions explicitly provide that all arbitrations will be conducted on an individual basis and not on a class or collective basis.
AFF derives a significant portion of its revenue from several top merchant partners. The loss of business from one or more of these top merchant partners could have a material adverse effect on the AFF business. Historically, AFF has relied on a limited number of merchant partners for a significant portion of its total revenues and 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 in 2024.
Removed
Additional risks not currently known to the Company or that it currently deems to be immaterial also may materially and adversely affect its business, financial condition or results of operations in future periods. 19 Table of Contents Risk Factor Summary Risks Related to the Company’s Strategy, Business and Operations • The Company faces significant competition from other pawnshops, branch-based consumer lenders, banks, credit unions, online lenders, POS consumer finance 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. • A decrease in demand for the Company’s products and services and the failure of the Company to adapt to such decreases could adversely affect the Company’s results of operations. • The Company’s future success is largely dependent upon the ability of its management team to successfully execute its business strategy and drive organic growth. • The inability to successfully identify attractive acquisition targets, realize administrative and operational synergies and integrate completed acquisitions could adversely affect results. • The Company depends on its senior management and hiring, training and retaining an adequate number of qualified employees to run its businesses. • Security breaches, cyber attacks or fraudulent activity could result in damage to the Company’s operations or lead to reputational damage and could expose the Company to significant liabilities. • The Company’s businesses are typically subject to seasonality, which causes the Company’s revenues and operating cash flows to fluctuate. • The Company’s financial position and results of operations may fluctuate significantly due to fluctuations in currency exchange rates in Latin American markets. • Changes impacting international trade and corporate tax and other related regulatory provisions may have an adverse effect on the Company’s financial condition and results of operations.
Added
Additional risks not currently known to the Company or that it currently deems to be immaterial also may materially and adversely affect its business, financial condition or results of operations in future periods.
Removed
Strategic and Business Risks Increased competition from other pawnshops, POS consumer finance 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.
Added
The CFPB, state and federal banking regulatory agencies, state attorneys general offices, the Federal Trade Commission, the U.S. Department of Justice, the U.S. Department of Housing and Urban Development and state and local governmental authorities continue to monitor lending practices.
Removed
Operational Risks The Company depends on its senior management and may not be able to retain those employees or recruit additional qualified personnel. The Company depends on its senior management to execute its business strategy and oversee its operations.
Added
State, local and federal governmental agencies have imposed sanctions on originators for practices including, but not limited to, charging borrowers excessive fees, steering borrowers to loans with higher costs or more onerous terms, imposing higher interest rates than the borrower’s credit risk warrants, failing to adequately disclose the material terms of loans to the borrowers and otherwise engaging in discriminatory lending practices or unfair, deceptive or abusive acts or practices.
Removed
Department of Justice (the “Justice Department”), the Federal Deposit Insurance Corporation (the “FDIC”) and certain state regulators appear to be intended to discourage banks and ACH payment processors from providing access to the ACH system for certain lenders that they believe are operating illegally, cutting off their access to the ACH system to either debit or credit customer accounts (or both).
Added
Donald Trump became president on January 20, 2025, and at this juncture, it is unclear whether a new CFPB Director appointed by the Trump Administration will be less aggressive in its regulatory and enforcement approach.
Removed
If such caps were implemented more broadly, they could have a material impact on the Company’s revenues and profitability.
Added
In addition to the specific laws described above, it is anticipated that the Trump administration will promulgate a number of executive orders and propose legislation that could directly impact the regulation of the financial services industry.
Removed
Moreover, the Company expects the current presidential administration in the U.S. to devote substantial attention to consumer protection matters, including more aggressive enforcement actions, and, as a result, businesses transacting with credit-constrained consumers could be held to higher standards of monitoring, disclosure and reporting, regardless of whether new laws or regulations governing the Company’s industry are adopted.
Added
The CFPB is seeking an injunction, redress for affected borrowers and a civil monetary penalty. After an initial period of pre-trial activity, the case was stayed on November 4, 2022, pending the Supreme Court review of the Fifth Circuit's decision in Community Financial v.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe cybersecurity program of the Company interfaces with other functional areas within the Company, including but not limited to the Company’s business segments and information technology, legal, risk, human resources and internal audit departments, as well as external third-party partners, to identify and understand potential cybersecurity threats.
Biggest changeThe Company has training and awareness programs designed to educate its employees about cybersecurity risks and how to protect the Company, its customers and themselves from cyberattacks and to keep its employees informed about cybersecurity threats and how to stay safe online, including secure access practice, phishing schemes, remote work and response to suspicious activities. 37 Table of Contents The cybersecurity program of the Company interfaces with other functional areas within the Company, including but not limited to the Company’s business segments and information technology, legal, risk, human resources and internal audit departments, as well as external third-party partners, to identify and understand potential cybersecurity threats.
The Company’s CIO, together with other members of the SIRT, bring a wealth of expertise to their respective roles, including expertise in security technologies; designing and implementing security strategies; security standards such as NIST, ISO, COBIT and ITIL; risk management and incident response.
The Company’s CIO, together with other members of the SIRT, bring a wealth of expertise to their respective roles, including expertise in security technologies; designing and implementing security strategies; security standards such as NIST, ISO, COBIT and ITIL; and risk management and incident response.
As part of its oversight responsibilities, the Audit Committee is responsible for discussing with management the Company’s major risk exposures, such as cybersecurity, and the steps management has taken to monitor and control those exposures, including the Company’s risk assessment and risk management policies.
As part of its oversight responsibilities, the Audit Committee is responsible for discussing with management the Company’s major risk exposures, related to cybersecurity and technology, and the steps management has taken to monitor and control those exposures, including the Company’s risk assessment and risk management policies.
The Board is responsible for overseeing and monitoring the material risks facing the Company. The Board has tasked the Audit Committee of the Board with leading the Company’s cyber and technology risk mitigation efforts.
The Board has tasked the Audit Committee of the Board with leading the Company’s cyber and technology risk mitigation efforts.
For more information on how cybersecurity risk could materially affect the Company’s business strategy, results of operations, or financial condition, please refer to Item 1A Risk Factors. 39 Table of Contents Governance Given the Company’s status as a pawn store operator and payment solutions company entrusted with the safeguarding of sensitive customer information, the Board believes that a strong enterprise cybersecurity program is vital to the Company’s overall enterprise risk management.
Risk Factors.” Governance Given the Company’s status as a pawn store operator and payment solutions company entrusted with the safeguarding of sensitive customer information, the Board believes that a strong enterprise cybersecurity program is vital to the Company’s overall enterprise risk management. The Board is responsible for overseeing and monitoring the material risks facing the Company.
Removed
The Company has training and awareness programs designed to educate its employees about cybersecurity risks and how to protect the Company, its customers and themselves from cyberattacks and to keep its employees informed about cybersecurity threats and how to stay safe online, including secure access practice, phishing schemes, remote work and response to suspicious activities.
Added
For more information on how cybersecurity risk could materially affect the Company’s business strategy, results of operations, or financial condition, please refer to “Item 1A.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeBusiness—Pawn Store Locations.” The following table details material corporate locations leased by the Company (dollars in thousands): Description Location Square Footage Lease Expiration Date Monthly Rental Payment Administrative offices Monterrey, Mexico 50,000 July 31, 2027 $ 59 Administrative offices Coppell, Texas 26,000 June 30, 2029 47 Administrative offices Mexico City, Mexico 8,000 March 31, 2024 21 Most leases require the Company to maintain the property and pay the cost of insurance and property taxes.
Biggest changeBusiness—Pawn Store Locations.” 38 Table of Contents The following table details material corporate locations leased by the Company (dollars in thousands): Description Location Square Footage Lease Expiration Date Monthly Rental Payment Administrative offices Monterrey, Mexico 50,000 July 31, 2027 $ 61 Administrative offices Coppell, Texas 26,000 June 30, 2029 46 Administrative offices Mexico City, Mexico 8,000 March 31, 2025 22 Most leases require the Company to maintain the property and pay the cost of insurance and property taxes.
The Company believes termination of any particular lease would not have a material adverse effect on the Company’s operations. The Company believes the facilities currently owned and leased by it as pawn stores are suitable for such purpose and considers its equipment, furniture and fixtures to be in good condition. 40 Table of Contents
The Company believes termination of any particular lease would not have a material adverse effect on the Company’s operations. The Company believes the facilities currently owned and leased by it as pawn stores are suitable for such purpose and considers its equipment, furniture and fixtures to be in good condition.
All store leases provide for specified periodic rental payments ranging from approximately $1,000 to $25,000 per month as of December 31, 2023. In addition, the Company leases call center space in Jamaica and Mexico to support the AFF customer service operations. For more information about the Company’s pawn store locations, see “Item 1.
All store leases provide for specified periodic rental payments ranging from approximately $1,000 to $27,000 per month as of December 31, 2024. In addition, the Company leases call center space in Jamaica and Mexico to support the AFF customer service operations. For more information about the Company’s pawn store locations, see “Item 1.
Leased facilities are generally leased for a term of three to five years with one or more options to renew. A majority of the store leases can be terminated early upon an adverse change in law which negatively affects the store’s profitability. The Company’s leases expire on dates ranging from 2024 to 2045.
Leased facilities are generally leased for a term of three to five years with one or more options to renew. A majority of the store leases can be terminated early upon an adverse change in law which negatively affects the store’s profitability. The Company’s leases expire on dates ranging from 2025 to 2062.
As of December 31, 2023, the Company owned the real estate and buildings for 342 of its pawn stores and its Company’s corporate headquarters in Fort Worth, Texas. As of December 31, 2023, the Company leased 2,682 pawn store locations that were open or were in the process of opening.
As of December 31, 2024, the Company owned the real estate and buildings for 400 of its pawn stores and its Company’s corporate headquarters in Fort Worth, Texas. As of December 31, 2024, the Company leased 2,638 pawn store locations that were open or were in the process of opening.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The following table provides information about purchases made by the Company of shares of its common stock during the three months ended December 31, 2023 (dollars in thousands, except per share amounts): Total Number Of Shares Purchased Average Price Paid Per Share Total Number Of Shares Purchased As Part Of Publicly Announced Plans Approximate Dollar Value Of Shares That May Yet Be Purchased Under The Plans (1) October 1 through October 31, 2023 — $ — — $ 200,000 November 1 through November 30, 2023 — — — 200,000 December 1 through December 31, 2023 — — — 200,000 Total — — — (1) In July 2023, the Company’s Board of Directors authorized an additional common stock repurchase program for up to $200.0 million of the Company’s outstanding common stock, of which the entire $200.0 million is currently remaining. 42 Table of Contents Performance Graph The graph set forth below compares the cumulative total stockholder return on the common stock of the Company for the period from December 31, 2018 through December 31, 2023, with the cumulative total return on the Standard & Poor’s (“S&P”) MidCap 400 Index and the Russell 2000 Index, representing broad-based equity market indexes, and the S&P MidCap 400 Financials Index and the S&P MidCap 400 Consumer Discretionary Index, representing industry-based indexes, over the same period (assuming the investment of $100 on December 31, 2018 and assuming the reinvestment of all dividends on the date paid).
Biggest changeIssuer Purchases of Equity Securities The following table provides information about purchases made by the Company of shares of its common stock during the three months ended December 31, 2024 (dollars in thousands, except per share amounts): Total Number Of Shares Purchased Average Price Paid Per Share Total Number Of Shares Purchased As Part Of Publicly Announced Plans Approximate Dollar Value Of Shares That May Yet Be Purchased Under The Plans (1) October 1 through October 31, 2024 — $ — — $ 115,000 November 1 through November 30, 2024 — — — 115,000 December 1 through December 31, 2024 — — — 115,000 Total — — — (1) In July 2023, the Company’s Board of Directors authorized a common stock repurchase program for up to $200.0 million of the Company’s outstanding common stock, of which $115.0 million is currently remaining.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities General Market Information The Company’s common stock is quoted on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “FCFS.” On January 31, 2024, there were approximately 209 stockholders of record of the Company’s common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities General Market Information The Company’s common stock is quoted on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “FCFS.” On January 29, 2025, there were approximately 199 stockholders of record of the Company’s common stock.
In January 2024, the Company’s Board declared a $0.35 per share first quarter cash dividend on common shares outstanding, or an aggregate of $15.8 million based on the December 31, 2023 share count, to be paid on February 28, 2024 to stockholders of record as of February 14, 2024.
In January 2025, the Company’s Board declared a $0.38 per share first quarter cash dividend on common shares outstanding, or an aggregate of $17.0 million based on the December 31, 2024 share count, to be paid on February 28, 2025 to stockholders of record as of February 14, 2025.
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Recent Sales of Unregistered Securities None. 40 Table of Contents Performance Graph The graph set forth below compares the cumulative total stockholder return on the common stock of the Company for the period from December 31, 2019 through December 31, 2024, with the cumulative total return on the Standard & Poor’s (“S&P”) MidCap 400 Index and the Russell 2000 Index, representing broad-based equity market indexes, and the S&P MidCap 400 Financials Index and the S&P MidCap 400 Consumer Discretionary Index, representing industry-based indexes, over the same period (assuming the investment of $100 on December 31, 2019 and assuming the reinvestment of all dividends on the date paid).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table provides a reconciliation between net income and diluted earnings per share, calculated in accordance with GAAP, to adjusted net income and adjusted diluted earnings per share, which are shown net of tax (unaudited, in thousands, except per share amounts): Year Ended December 31, 2023 2022 2021 In Thousands Per Share In Thousands Per Share In Thousands Per Share Net income and diluted earnings per share, as reported $ 219,301 $ 4.80 $ 253,495 $ 5.36 $ 124,909 $ 3.04 Adjustments, net of tax: Merger and acquisition expenses 6,089 0.13 2,878 0.06 11,872 0.29 Non-cash foreign currency (gain) loss related to lease liability (1,778) (0.04) (930) (0.02) 451 0.01 AFF purchase accounting and other adjustments (1) 54,341 1.19 82,432 1.74 37,278 0.91 Gain on revaluation of contingent acquisition consideration — — (90,035) (1.91) (13,761) (0.33) Other expenses (income), net (1,079) (0.02) (2,103) (0.04) 730 0.02 Adjusted net income and diluted earnings per share $ 276,874 $ 6.06 $ 245,737 $ 5.19 $ 161,479 $ 3.94 (1) See detail of the AFF purchase accounting and other adjustments in tables below. 64 Table of Contents The following table provides a reconciliation of the gross amounts, the impact of income taxes and the net amounts for the adjustments included in the table above (unaudited, in thousands): Year Ended December 31, 2023 2022 2021 Pre-tax Tax After-tax Pre-tax Tax After-tax Pre-tax Tax After-tax Merger and acquisition expenses $ 7,922 $ 1,833 $ 6,089 $ 3,739 $ 861 $ 2,878 $ 15,449 $ 3,577 $ 11,872 Non-cash foreign currency (gain) loss related to lease liability (2,540) (762) (1,778) (1,329) (399) (930) 644 193 451 AFF purchase accounting and other adjustments (i) 70,574 16,233 54,341 107,055 24,623 82,432 48,413 11,135 37,278 Gain on revaluation of contingent acquisition consideration — — — (109,549) (19,514) (90,035) (17,871) (4,110) (13,761) Other expenses (income), net (1,402) (323) (1,079) (2,731) (628) (2,103) 949 219 730 Total adjustments $ 74,554 $ 16,981 $ 57,573 $ (2,815) $ 4,943 $ (7,758) $ 47,584 $ 11,014 $ 36,570 (i) The following table details AFF purchase accounting and other adjustments (in thousands): 65 Table of Contents Year Ended December 31, 2023 2022 2021 Pre-tax Tax After-tax Pre-tax Tax After-tax Pre-tax Tax After-tax Amortization of fair value adjustment on acquired finance receivables $ — $ — $ — $ 42,657 $ 9,811 $ 32,846 $ 1,708 $ 392 $ 1,316 Amortization of fair value adjustment on acquired leased merchandise — — — 7,697 1,772 5,925 404 93 311 Amortization of acquired intangible assets 56,606 13,020 43,586 56,701 13,040 43,661 2,051 472 1,579 Other non-recurring costs included in administrative expenses related to a discontinued finance product 13,968 3,213 10,755 — — — — — — Provision for loan losses (establish initial allowance for expected lifetime credit losses for non-purchase credit deteriorated (”PCD”) loans) — — — — — — 44,250 10,178 34,072 Total AFF purchase accounting and other adjustments $ 70,574 $ 16,233 $ 54,341 $ 107,055 $ 24,623 $ 82,432 $ 48,413 $ 11,135 $ 37,278 66 Table of Contents Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA The Company defines EBITDA as net income before income taxes, depreciation and amortization, interest expense and interest income and adjusted EBITDA as EBITDA adjusted for certain items, as listed below, that management considers to be non-operating in nature and not representative of its actual operating performance.
Biggest changeThe following table provides a reconciliation between net income and diluted earnings per share, calculated in accordance with GAAP, to adjusted net income and adjusted diluted earnings per share, which are shown net of tax (unaudited, in thousands, except per share amounts): Year Ended December 31, 2024 2023 2022 2024 2023 2022 In Thousands In Thousands In Thousands Per Share Per Share Per Share Net income and diluted earnings per share, as reported $ 258,815 $ 219,301 $ 253,495 $ 5.73 $ 4.80 $ 5.36 Adjustments, net of tax: Merger and acquisition expenses 1,706 6,089 2,878 0.04 0.13 0.06 Non-cash foreign currency loss (gain) related to lease liability 2,627 (1,778) (930) 0.06 (0.04) (0.02) AFF purchase accounting and other adjustments 38,289 54,341 82,432 0.85 1.19 1.74 Gain on revaluation of contingent acquisition consideration — — (90,035) — — (1.91) Other expenses (income), net 1,243 (1,079) (2,103) 0.02 (0.02) (0.04) Adjusted net income and diluted earnings per share $ 302,680 $ 276,874 $ 245,737 $ 6.70 $ 6.06 $ 5.19 62 Table of Contents Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA The Company defines EBITDA as net income before income taxes, depreciation and amortization, interest expense and interest income and adjusted EBITDA as EBITDA adjusted for certain items, as listed below, that management considers to be non-operating in nature and not representative of its actual operating performance.
The U.S. pawn segment consists of pawn operations in the U.S., while the Latin America pawn segment consists of pawn operations in Mexico, Guatemala, Colombia and El Salvador. The retail POS payment solutions segment consists of the operations of AFF in the U.S. and Puerto Rico.
The U.S. pawn segment consists of pawn operations in the U.S. while the Latin America pawn segment consists of pawn operations in Mexico, Guatemala, El Salvador and Colombia. The retail POS payment solutions segment consists of the operations of AFF in the U.S. and Puerto Rico.
Also included are stores that were relocated during the applicable period within a specified distance and are serving the same market, where there is not a significant change in store size, and where there is not a significant overlap or gap in timing between the opening of the new store and the closing of the existing store. 48 Table of Contents U.S.
Also included are stores that were relocated during the applicable period within a specified distance and are serving the same market, where there is not a significant change in store size, and where there is not a significant overlap or gap in timing between the opening of the new store and the closing of the existing store. 46 Table of Contents U.S.
The Company intends to continue repurchases under its active share repurchase program, including through open market transactions under trading plans in accordance with Rule 10b5-1 and Rule 10b-18 under the Exchange Act of 1934, as amended, subject to a variety of factors, including, but not limited to, the level of cash balances, liquidity needs, credit availability, debt covenant restrictions, general business and economic conditions, regulatory requirements, the market price of the Company’s stock, the Company’s dividend policy and the availability of alternative investment opportunities.
The Company intends to continue repurchases under its active share repurchase program, including through open market transactions under trading plans in accordance with Rule 10b5-1 and Rule 10b-18 under the Exchange Act subject to a variety of factors, including, but not limited to, the level of cash balances, liquidity needs, credit availability, debt covenant restrictions, general business and economic conditions, regulatory requirements, the market price of the Company’s stock, the Company’s dividend policy and the availability of alternative investment opportunities.
Business—Governmental Regulation.” If needed, the Company could seek to raise additional funds from a variety of sources, including, but not limited to, repatriation of excess cash held in Latin America, the sale of assets, reductions in operating expenses, capital expenditures and dividends, the forbearance or deferral of operating expenses, the issuance of debt or equity utilizing other structured financing arrangements, the leveraging of currently unencumbered real estate owned by the Company and/or changes to its management of current assets.
Business—Governmental Regulation.” If needed, the Company could seek to raise additional funds from a variety of sources, including, but not limited to, repatriation of excess cash held in Latin America, the sale of assets, reductions in operating expenses, capital expenditures and dividends, the forbearance or deferral of operating expenses, the issuance of debt or equity utilizing other structured financing arrangements, the leveraging of currently unencumbered real estate owned by the Company and/or changes to its management 59 Table of Contents of current assets.
Retail sales are seasonally higher in the fourth quarter as a result of holiday shopping and, to a lesser extent, in the first quarter due to the disbursement of tax refunds in the U.S. Recent Accounting Pronouncements See discussion in Note 2 of Notes to Consolidated Financial Statements. 69 Table of Contents
Retail sales are seasonally higher in the fourth quarter as a result of holiday shopping and, to a lesser extent, in the first quarter due to the disbursement of tax refunds in the U.S. Recent Accounting Pronouncements See discussion in Note 2 of Notes to Consolidated Financial Statements. 65 Table of Contents
Operating expenses include salary and benefit expense of pawn store-level employees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the pawn stores. Year Ended December 31, 2023 2022 Increase U.S.
Operating expenses include salary and benefit expense of pawn store-level employees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the pawn stores. Year Ended December 31, 2024 2023 Increase U.S.
The Company assesses 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.
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.
Liquidity and Capital Resources Material Capital Requirements The Company’s primary capital requirements include the following: • Expand pawn operations through growth of pawn receivables and inventories in existing stores, new store openings, strategic acquisitions of pawn stores and purchases of underlying real estate at existing locations; • Expand retail POS payment solutions operations through growth of the business generated from new and existing merchant partners; and • Return capital to shareholders through dividends and stock repurchases.
Liquidity and Capital Resources Material Capital Requirements The Company’s primary capital requirements include: • The expansion of pawn operations through growth of pawn receivables and inventories in existing stores, new store openings, strategic acquisitions of pawn stores and purchases of underlying real estate at existing locations; • The expansion of retail POS payment solutions operations through growth of the business generated from new and existing merchant partners; and • The return of capital to shareholders through dividends and stock repurchases.
Constant currency results reported herein are calculated by translating certain balance sheet and income statement items denominated in local currencies using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations for purposes of evaluating period-over-period comparisons.
Constant currency results reported herein are calculated by translating certain balance sheet and income statement items denominated in local currencies using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations for purposes of 64 Table of Contents evaluating period-over-period comparisons.
The following charts present net income, adjusted net income, diluted earnings per share, adjusted diluted earnings per share, EBITDA, adjusted EBITDA, revenue and adjusted revenue for the years ended December 31, 2023, 2022 and 2021 (in millions, except per share amounts): * Non-GAAP financial measures.
The following charts present net income, adjusted net income, diluted earnings per share, adjusted diluted earnings per share, EBITDA, adjusted EBITDA, revenue and adjusted revenue for the years ended December 31, 2024, 2023 and 2022 (in millions, except per share amounts): * Non-GAAP financial measures.
In addition to utilizing cash flows generated from its own operations to fund expected 2024 growth, AFF has access to the additional sources of liquidity described below if needed to fund further expansion activities.
In addition to utilizing cash flows generated from its own operations to fund expected 2025 growth, AFF has access to the additional sources of liquidity described below if needed to fund further expansion activities.
The following table presents segment pre-tax operating income and other operating metrics of the Latin America pawn segment for the year ended December 31, 2023 as compared to the year ended December 31, 2022 (dollars in thousands).
The following table presents segment pre-tax operating income and other operating metrics of the Latin America pawn segment for the year ended December 31, 2024 as compared to the year ended December 31, 2023 (dollars in thousands).
Pawn Segment The following table presents segment pre-tax operating income and other operating metrics of the U.S. pawn segment for the year ended December 31, 2023 compared to the year ended December 31, 2022 (dollars in thousands).
Pawn Segment The following table presents segment pre-tax operating income and other operating metrics of the U.S. pawn segment for the year ended December 31, 2024 compared to the year ended December 31, 2023 (dollars in thousands).
The characteristics of the Company’s current assets, specifically the ability to rapidly liquidate gold jewelry inventory, which accounts for 50% of total inventory, give the Company flexibility to quickly increase cash flow if necessary.
The characteristics of the Company’s current assets, specifically the ability to rapidly liquidate gold jewelry inventory, which accounts for 52% of total inventory, give the Company flexibility to quickly increase cash flow if necessary.
The allowance for loan losses is maintained at a level considered appropriate to cover expected lifetime losses on the finance receivable portfolio, and the appropriateness of the allowance is evaluated at each period end. The Company charges off finance receivables when a receivable is 90 days or more contractually past due.
The allowance for loan losses is maintained at a level considered appropriate to cover expected lifetime losses on the finance receivable portfolio, and the appropriateness of the allowance is evaluated at each period end. 43 Table of Contents The Company charges off finance receivables when a receivable is 90 days or more contractually past due.
All of the Company’s leased merchandise represents on-lease merchandise and all leases are operating leases. Lease income is recognized over the lease term and is recorded net of any sales taxes collected. Charges for late fees and insufficient fund fees are recognized as income when collected.
All of the Company’s leased merchandise represents on-lease merchandise and all leases are operating leases. 42 Table of Contents Lease income is recognized over the lease term and is recorded net of any sales taxes collected. Charges for late fees and insufficient fund fees are recognized as income when collected.
For similar operating and financial data and discussion of the Company’s 2022 results compared to its 2021 results, refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 6, 2023.
For similar operating and financial data and discussion of the Company’s 2023 results compared to its 2022 results, refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 5, 2024.
However, free cash flow and adjusted free cash flow have limitations as analytical tools and should not be considered in isolation or as a substitute for cash flow from operating activities or other income statement data prepared in accordance with GAAP.
However, free cash flow and adjusted free cash flow have limitations as analytical tools and should not be considered in isolation or as a substitute for cash flow from operating activities or other 63 Table of Contents income statement data prepared in accordance with GAAP.
The Company’s retail POS 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 all 50 states in the U.S., the District of Columbia and Puerto Rico.
The Company’s retail POS 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.
The increase in the segment pre-tax operating income reflected an increase in net revenue, partially offset by the increase in segment expenses. 54 Table of Contents Retail POS Payment Solutions Segment Retail POS Payment Solutions Operating Results The following table presents segment pre-tax operating income of the retail POS payment solutions segment for the year ended December 31, 2023 as compared to the year ended December 31, 2022 (dollars in thousands).
The decrease in the segment pre-tax operating income reflected an increase in segment expenses, partially offset by the increase in net revenue. 52 Table of Contents Retail POS Payment Solutions Segment Retail POS Payment Solutions Operating Results The following table presents segment pre-tax operating income of the retail POS payment solutions segment for the year ended December 31, 2024 as compared to the year ended December 31, 2023 (dollars in thousands).
The adjusted amounts for 2022 and 2021 exclude these fair value purchase accounting adjustments. Constant Currency Results The Company’s reporting currency is the U.S. dollar, however, certain performance metrics discussed in this report are presented on a “constant currency” basis, which is considered a non-GAAP financial measure.
The adjusted amount for 2022 excludes these fair value purchase accounting adjustments. Constant Currency Results The Company’s reporting currency is the U.S. dollar, however, certain performance metrics discussed in this report are presented on a “constant currency” basis, which is considered a non-GAAP financial measure.
In July 2023, the Company’s Board of Directors authorized a new common stock repurchase program for up to $200.0 million of the Company’s outstanding common stock, of which the entire $200.0 million is currently remaining.
In July 2023, the Board authorized a common stock repurchase program for up to $200.0 million of the Company’s outstanding common stock, of which $115.0 million is currently remaining.
Return of Capital to Shareholders In January 2024, the Company’s Board declared a $0.35 per share first quarter cash dividend on common shares outstanding, or an aggregate of $15.8 million based on the December 31, 2023 share count, to be paid on February 28, 2024 to stockholders of record as of February 14, 2024.
Return of Capital to Shareholders In January 2025, the Company’s Board declared a $0.38 per share first quarter cash dividend on common shares outstanding, or an aggregate of $17.0 million based on the December 31, 2024 share count, to be paid on February 28, 2025 to stockholders of record as of February 14, 2025.
During 2023, the gross profit margin on retail merchandise sales in the U.S. was 43% compared to a margin of 42% during 2022, reflecting continued demand for value-priced, pre-owned merchandise and low levels of aged inventory. U.S. inventories increased 10% from $202.6 million at December 31, 2022 to $221.8 million at December 31, 2023.
During 2024, the gross profit margin on retail merchandise sales in the U.S. was 42% compared to a margin of 43% during 2023, reflecting continued demand for value-priced, pre-owned merchandise and low levels of aged inventory. U.S. inventories increased 11% to $245.5 million at December 31, 2024 compared to $221.8 million at December 31, 2023.
Segment Pre-Tax Operating Income The U.S. segment pre-tax operating income for 2023 was $336.3 million, which generated a pre-tax segment operating margin of 25% compared to $291.1 million and 23% in the prior year, respectively.
Segment Pre-Tax Operating Income The U.S. segment pre-tax operating income for 2024 was $397.3 million, which generated a pre-tax segment operating margin of 25% compared to $336.3 million and 25% in the prior year, respectively.
The Company purchased the real estate at 44 store locations, primarily from landlords at existing stores, for a cumulative purchase price of $70.5 million during 2023. Expand Retail POS Payment Solutions Operations AFF expects to expand its business primarily by promoting and expanding relationships with both new and existing customers and retail merchant partners.
The Company purchased the real estate at 58 store locations, primarily from landlords at existing stores, for a cumulative purchase price of $86.1 million during 2024. 58 Table of Contents Expand Retail POS Payment Solutions Operations AFF expects to expand its business primarily by promoting and expanding relationships with both new and existing customers and retail merchant partners.
Segment Pre-Tax Operating Income The segment pre-tax operating income for 2023 was $156.2 million, which generated a pre-tax segment operating margin of 19% compared to $142.0 million and 21% in the prior year, respectively.
Segment Pre-Tax Operating Income The segment pre-tax operating income for 2024 was $150.2 million, which generated a pre-tax segment operating margin of 19% compared to $156.2 million and 19% in the prior year, respectively.
Pawn Lending Operations U.S. pawn loan receivables as of December 31, 2023 increased 22% in total and 14% on a same-store basis compared to December 31, 2022.
Pawn Lending Operations U.S. pawn loan receivables as of December 31, 2024 increased 15% in total and 12% on a same-store basis compared to December 31, 2023.
The Company’s other material, indefinite-lived intangible assets consist of certain trade names and pawn licenses. The Company performs its indefinite-lived intangible asset impairment assessment annually as of December 31, and between annual assessments if an event occurs or circumstances change that would more likely than not reduce the fair value of an indefinite-lived intangible asset below its carrying amount.
The Company performs its indefinite-lived intangible asset impairment assessment annually as of December 31, and between annual assessments if an event occurs or circumstances change that would more likely than not reduce the fair value of an indefinite-lived intangible asset below its carrying amount.
The Company elected to repatriate cash of $31.0 million from certain foreign subsidiaries during 2023. 61 Table of Contents The Company’s liquidity is affected by a number of factors, including changes in general customer traffic and demand, pawn loan balances, loan-to-value ratios, collection of pawn fees, merchandise sales, inventory levels, LTO merchandise, finance receivable balances, collection of lease and finance receivable payments, seasonality, operating expenses, administrative expenses, expenses related to merger and acquisition activities, litigation-related expenses, tax rates, gold prices, foreign currency exchange rates and the pace of new pawn store expansion and acquisitions.
The Company’s liquidity is affected by a number of factors, including changes in general customer traffic and demand, pawn loan balances, loan-to-value ratios, collection of pawn fees, merchandise sales, inventory levels, LTO merchandise, finance receivable balances, collection of lease and finance receivable payments, seasonality, operating expenses, administrative expenses, expenses related to merger and acquisition activities, litigation-related expenses, tax rates, gold prices, foreign currency exchange rates and the pace of new pawn store expansion and acquisitions.
Excluding the intersegment transactions, the provision for lease losses during 2023 and 2022 totaled $175.9 million and $139.5 million, respectively. (2) Calculated as provision for lease or loan losses as a percentage of the respective gross transaction volume originated.
Excluding these intersegment transactions, consolidated provision for lease losses during 2024 and 2023 totaled $163.4 million and $175.9 million, respectively. (2) Calculated as provision for lease or loan losses as a percentage of the respective gross transaction volume originated.
Additionally, the following table provides reconciliations of total revenue and total net revenue, presented in accordance with GAAP, to adjusted total revenue and adjusted net revenue, which excludes the impacts of purchase accounting (in thousands): Year Ended December 31, 2023 2022 2021 Total revenue, as reported $ 3,151,796 $ 2,728,942 $ 1,698,965 AFF purchase accounting and other adjustments (1) — 42,657 1,708 Adjusted total revenue $ 3,151,796 $ 2,771,599 $ 1,700,673 Total net revenue, as reported $ 1,507,239 $ 1,264,586 $ 919,152 AFF purchase accounting and other adjustments (1) — 50,354 46,362 Adjusted total net revenue $ 1,507,239 $ 1,314,940 $ 965,514 (1) As a result of purchase accounting, AFF’s as reported amounts for 2022 and 2021 contain significant fair value adjustments.
Additionally, the following table provides reconciliations of total revenue and total net revenue, presented in accordance with GAAP, to adjusted total revenue and adjusted net revenue, which excludes the impacts of purchase accounting (in thousands): Year Ended December 31, 2024 2023 2022 Total revenue, as reported $ 3,388,514 $ 3,151,796 $ 2,728,942 AFF purchase accounting and other adjustments (1) — — 42,657 Adjusted total revenue $ 3,388,514 $ 3,151,796 $ 2,771,599 Total net revenue, as reported $ 1,629,532 $ 1,507,239 $ 1,264,586 AFF purchase accounting and other adjustments (1) — — 50,354 Adjusted total net revenue $ 1,629,532 $ 1,507,239 $ 1,314,940 (1) As a result of purchase accounting, AFF’s as reported amount for 2022 contains significant fair value adjustments.
As of December 31, 2023, the Company’s primary sources of liquidity were $127.0 million in cash and cash equivalents and $104.7 million of available and unused funds under the Company's revolving unsecured credit facilities, subject to certain financial covenants (see Note 11 of Notes to Consolidated Financial Statements).
As of December 31, 2024, the Company’s primary sources of liquidity were $175.1 million in cash and cash equivalents and $528.9 million of available and unused funds under the Company's revolving unsecured credit facilities, subject to certain financial covenants (see Note 11 of Notes to Consolidated Financial Statements).
Inventories aged greater than one year in Latin America were 1% at both December 31, 2023 and 2022. 53 Table of Contents Pawn Lending Operations Latin America pawn loan receivables increased 18% (3% on a constant currency basis) as of December 31, 2023 compared to December 31, 2022.
Inventories aged greater than one year in Latin America were 1% at both December 31, 2024 and 2023. 51 Table of Contents Pawn Lending Operations Latin America pawn loan receivables decreased 5% (13% increase on a constant currency basis) as of December 31, 2024 compared to December 31, 2023.
See the Latin America pawn segment tables in “Results of Operations” above for additional reconciliation of certain constant currency amounts to as reported GAAP amounts. 68 Table of Contents The following table provides exchange rates for the Mexican peso, Guatemalan quetzal and Colombian peso for the current and prior-year periods: 2023 2022 2021 Rate % Change Over Prior- Year Period Favorable / (Unfavorable) Rate % Change Over Prior- Year Period Favorable / (Unfavorable) Rate Mexican peso / U.S. dollar exchange rate: End-of-period 16.9 13 % 19.4 6 % 20.6 Twelve months ended 17.8 11 % 20.1 1 % 20.3 Guatemalan quetzal / U.S. dollar exchange rate: End-of-period 7.8 1 % 7.9 (3) % 7.7 Twelve months ended 7.8 (1) % 7.7 — % 7.7 Colombian peso / U.S. dollar exchange rate: End-of-period 3,822 21 % 4,810 (21) % 3,981 Twelve months ended 4,328 (2) % 4,253 (14) % 3,742 Effects of Inflation While the impacts of inflation have been widely reported and may be ongoing into the foreseeable future, the Company does not believe inflation had a material effect on the Company’s overall results of operations in 2023.
The following table provides exchange rates for the Mexican peso, Guatemalan quetzal and Colombian peso for the current and prior-year periods: 2024 2023 2022 Rate % Change Over Prior- Year Period Favorable / (Unfavorable) Rate % Change Over Prior- Year Period Favorable / (Unfavorable) Rate Mexican peso / U.S. dollar exchange rate: End-of-period 20.3 (20) % 16.9 13 % 19.4 Twelve months ended 18.3 (3) % 17.8 11 % 20.1 Guatemalan quetzal / U.S. dollar exchange rate: End-of-period 7.7 1 % 7.8 1 % 7.9 Twelve months ended 7.8 — % 7.8 (1) % 7.7 Colombian peso / U.S. dollar exchange rate: End-of-period 4,409 (15) % 3,822 21 % 4,810 Twelve months ended 4,071 6 % 4,328 (2) % 4,253 Effects of Inflation While the impacts of inflation have been widely reported and may be ongoing into the foreseeable future, the Company does not believe inflation had a material effect on the Company’s overall results of operations in 2024.
The following table reconciles cash flow from operating activities to free cash flow and adjusted free cash flow (unaudited, in thousands): 67 Table of Contents Year Ended December 31, 2023 2022 2021 Cash flow from operating activities $ 416,142 $ 469,305 $ 223,304 Cash flow from investing activities: Pawn loans, net (1) (34,978) (35,817) (73,340) Finance receivables, net (115,442) (85,353) (5,844) Purchases of furniture, fixtures, equipment and improvements (60,148) (35,586) (42,022) Free cash flow 205,574 312,549 102,098 Merger and acquisition expenses paid, net of tax benefit 6,089 2,878 11,872 Adjusted free cash flow $ 211,663 $ 315,427 $ 113,970 (1) Includes the funding of new loans net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral.
The following table reconciles cash flow from operating activities to free cash flow and adjusted free cash flow (unaudited, in thousands): Year Ended December 31, 2024 2023 2022 Cash flow from operating activities $ 539,958 $ 416,142 $ 469,305 Cash flow from investing activities: Pawn loans, net (1) (71,999) (34,978) (35,817) Finance receivables, net (139,314) (115,442) (85,353) Purchases of furniture, fixtures, equipment and improvements (68,245) (60,148) (35,586) Free cash flow 260,400 205,574 312,549 Merger and acquisition expenses paid, net of tax benefit 1,706 6,089 2,878 Adjusted free cash flow $ 262,106 $ 211,663 $ 315,427 (1) Includes the funding of new loans net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral.
See Note 14 of Notes to Consolidated Financial Statements. 46 Table of Contents Results of Operations 2023 Consolidated Operating Results Highlights The following table sets forth revenue, net income, diluted earnings per share, adjusted net income, adjusted diluted earnings per share, EBITDA and adjusted EBITDA for the year ended December 31, 2023 as compared to the year ended December 31, 2022 (in thousands, except per share amounts): Year Ended December 31, As Reported (GAAP) Adjusted (Non-GAAP) 2023 2022 2023 2022 Revenue $ 3,151,796 $ 2,728,942 $ 3,151,796 $ 2,771,599 Net income $ 219,301 $ 253,495 $ 276,874 $ 245,737 Diluted earnings per share $ 4.80 $ 5.36 $ 6.06 $ 5.19 EBITDA (non-GAAP measure) $ 493,784 $ 496,860 $ 511,732 $ 437,344 Weighted-average diluted shares 45,693 47,330 45,693 47,330 See “Non-GAAP Financial Information—Adjusted Net Income and Adjusted Diluted Earnings Per Share and —Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA” below.
See Note 14 of Notes to Consolidated Financial Statements. 44 Table of Contents Results of Operations 2024 Consolidated Operating Results Highlights The following table sets forth revenue, net income, diluted earnings per share, adjusted net income, adjusted diluted earnings per share, EBITDA and adjusted EBITDA for the year ended December 31, 2024 as compared to the year ended December 31, 2023 (in thousands, except per share amounts): Year Ended December 31, As Reported (GAAP) Adjusted (Non-GAAP) 2024 2023 2024 2023 Revenue $ 3,388,514 $ 3,151,796 $ 3,388,514 $ 3,151,796 Net income $ 258,815 $ 219,301 $ 302,680 $ 276,874 Diluted earnings per share $ 5.73 $ 4.80 $ 6.70 $ 6.06 EBITDA (non-GAAP measure) $ 551,008 $ 493,784 $ 558,437 $ 511,732 Weighted-average diluted shares 45,168 45,693 45,168 45,693 See “Non-GAAP Financial Information—Adjusted Net Income and Adjusted Diluted Earnings Per Share and —Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA” below.
(3) Calculated as charge-offs, net of recoveries, as a percentage of the respective average earning asset balance before allowance for lease or loan losses (adjusted to exclude any fair value purchase accounting adjustments, as applicable).
(3) Calculated as charge-offs, net of recoveries, as a percentage of the respective average earning asset balance before allowance for lease or loan losses.
The translated value of Latin American earning assets as of December 31, 2023 compared to December 31, 2022 also benefited from a 13% favorable change in the end-of-period Mexican peso compared to the U.S. dollar.
The translated value of Latin American earning assets as of December 31, 2024 compared to December 31, 2023 was also impacted by a 20% unfavorable change in the end-of-period Mexican peso compared to the U.S. dollar.
Excluding the intersegment transactions, consolidated net leased merchandise as of December 31, 2023 and 2022 totaled $171.2 million and $153.3 million, respectively. 56 Table of Contents The following table details the changes in the allowance for lease and loan losses and other portfolio metrics during the year ended December 31, 2023 as compared to the year ended December 31, 2022 (dollars in thousands): Adjusted (5) Year Ended Year Ended December 31, December 31, 2022 Increase 2023 2022 Increase (Non-GAAP) (Non-GAAP) Allowance for lease losses: Balance at beginning of period $ 79,576 $ 5,442 1,362 % $ 66,968 19 % Provision for lease losses (1) 177,418 140,118 27 % 140,118 27 % Charge-offs (167,952) (70,343) 139 % (131,869) 27 % Recoveries 6,710 4,359 54 % 4,359 54 % Balance at end of period $ 95,752 $ 79,576 20 % $ 79,576 20 % Leased merchandise portfolio metrics: Provision rate (2) 28 % 27 % Average monthly net charge-off rate (3) 5.4 % 4.9 % Delinquency rate (4) 21.7 % 21.0 % Allowance for loan losses: Balance at beginning of period $ 84,833 $ 75,574 12 % Provision for loan losses 123,030 118,502 4 % Charge-offs (117,961) (114,535) 3 % Recoveries 6,552 5,292 24 % Balance at end of period $ 96,454 $ 84,833 14 % Finance receivables portfolio metrics: Provision rate (2) 30 % 36 % Average monthly net charge-off rate (3) 4.7 % 4.5 % Delinquency rate (4) 21.8 % 20.7 % (1) Includes a provision increase of $1.6 million and $0.6 million from intersegment transactions during 2023 and 2022, 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. 54 Table of Contents The following table details the changes in the allowance for lease and loan losses and other portfolio metrics during the year ended December 31, 2024 as compared to the year ended December 31, 2023 (dollars in thousands): Year Ended December 31, Increase / 2024 2023 (Decrease) Allowance for lease losses: Balance at beginning of period $ 95,752 $ 79,576 20 % Provision for lease losses (1) 163,937 177,418 (8) % Charge-offs (186,123) (167,952) 11 % Recoveries 7,095 6,710 6 % Balance at end of period $ 80,661 $ 95,752 (16) % Leased merchandise portfolio metrics: Provision rate (2) 29 % 28 % Average monthly net charge-off rate (3) 6.3 % 5.4 % Delinquency rate (4) 24.4 % 21.7 % Allowance for loan losses: Balance at beginning of period $ 96,454 $ 84,833 14 % Provision for loan losses 143,827 123,030 17 % Charge-offs (130,812) (117,961) 11 % Recoveries 7,536 6,552 15 % Balance at end of period $ 117,005 $ 96,454 21 % Finance receivables portfolio metrics: Provision rate (2) 28 % 30 % Average monthly net charge-off rate (3) 4.3 % 4.7 % Delinquency rate (4) 20.0 % 21.8 % (1) Includes $0.5 million and $1.6 million of provision for lease losses from intersegment transactions during 2024 and 2023, respectively, related to the Company offering AFF’s LTO payment solution in its U.S. pawn stores that are eliminated upon consolidation.
Pawn Segment Earning assets: Pawn loans $ 344,152 $ 282,089 22 % Inventories 221,843 202,594 10 % $ 565,995 $ 484,683 17 % Average outstanding pawn loan amount (in ones) $ 258 $ 247 4 % Composition of pawn collateral: General merchandise 30 % 30 % Jewelry 70 % 70 % 100 % 100 % Composition of inventories: General merchandise 43 % 41 % Jewelry 57 % 59 % 100 % 100 % Percentage of inventory aged greater than one year 1 % 1 % Inventory turnover (trailing twelve months cost of merchandise sales divided by average inventories) 2.8 times 2.7 times Retail Merchandise Sales Operations U.S. retail merchandise sales increased 4% to $854.2 million during 2023 compared to $818.5 million for 2022.
Pawn Segment Earning assets: Pawn loans $ 396,667 $ 344,152 15 % Inventories 245,492 221,843 11 % $ 642,159 $ 565,995 13 % Average outstanding pawn loan amount (in ones) $ 283 $ 258 10 % Composition of pawn collateral: General merchandise 28 % 30 % Jewelry 72 % 70 % 100 % 100 % Composition of inventories: General merchandise 41 % 43 % Jewelry 59 % 57 % 100 % 100 % Percentage of inventory aged greater than one year 1 % 1 % Inventory turnover (trailing twelve months cost of merchandise sales divided by average inventories) 2.8 times 2.8 times Store count 1,200 1,183 1 % Average store count 1,195 1,135 5 % Retail Merchandise Sales Operations U.S. retail merchandise sales increased 13% to $969.4 million during 2024 compared to $854.2 million for 2023.
Cash Flows and Liquidity Metrics The following tables set forth certain historical information with respect to the Company’s sources and uses of cash and other key indicators of liquidity (dollars in thousands): Year Ended December 31, 2023 2022 2021 Cash flow provided by operating activities $ 416,142 $ 469,305 $ 223,304 Cash flow used in investing activities (462,332) (336,443) (744,637) Cash flow provided by (used in) financing activities 51,313 (139,273) 576,993 As of December 31, 2023 2022 2021 Working capital $ 971,009 $ 835,133 $ 737,151 Current ratio 3.9:1 3.8:1 2.9:1 Cash Flow Provided by Operating Activities Net cash provided by operating activities decreased $53.2 million, or 11%, from $469.3 million for 2022 to $416.1 million for 2023, as a decrease in net income of $34.2 million was partially offset by net changes in certain non-cash adjustments to reconcile net income to operating cash flow and net changes in other operating assets and liabilities (as detailed in the consolidated statements of cash flows).
Cash Flows and Liquidity Metrics The following tables set forth certain historical information with respect to the Company’s sources and uses of cash and other key indicators of liquidity (dollars in thousands): Year Ended December 31, 2024 2023 2022 Cash flow provided by operating activities $ 539,958 $ 416,142 $ 469,305 Cash flow used in investing activities (441,591) (462,332) (336,443) Cash flow (used in) provided by financing activities (38,193) 51,313 (139,273) As of December 31, 2024 2023 2022 Working capital $ 1,064,344 $ 971,009 $ 835,133 Current ratio 4.1:1 3.9:1 3.8:1 Cash Flow Provided by Operating Activities Net cash provided by operating activities increased $123.8 million, or 30%, from $416.1 million for 2023 to $540.0 million for 2024 due to net changes in certain non-cash adjustments to reconcile net income to operating cash flow and net changes in other operating assets and liabilities (as detailed in the consolidated statements of cash flows) and an increase in net income of $39.5 million.
The Company has determined no allowance related to credit losses on pawn loans is required, as the fair value of the pledged collateral is significantly in excess of the pawn loan amount. Pawn inventories and revenue recognition — Pawn inventories represent merchandise acquired from forfeited pawn loans and merchandise purchased directly from the general public.
The Company has determined no allowance related to credit losses on pawn loans is required, as the fair value of the pledged collateral is significantly in excess of the pawn loan amount.
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. See Note 14 of Notes to Consolidated Financial Statements.
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.
The following table provides a reconciliation of net income to EBITDA and adjusted EBITDA (unaudited, in thousands): Year Ended December 31, 2023 2022 2021 Net income $ 219,301 $ 253,495 $ 124,909 Income taxes 73,548 70,138 41,593 Depreciation and amortization 109,161 103,832 45,906 Interest expense 93,243 70,708 32,386 Interest income (1,469) (1,313) (696) EBITDA 493,784 496,860 244,098 Adjustments: Merger and acquisition expenses 7,922 3,739 15,449 Non-cash foreign currency (gain) loss related to lease liability (2,540) (1,329) 644 AFF purchase accounting and other adjustments (1) 13,968 50,354 46,362 Gain on revaluation of contingent acquisition consideration — (109,549) (17,871) Other expenses (income), net (1,402) (2,731) 949 Adjusted EBITDA $ 511,732 $ 437,344 $ 289,631 (1) Excludes $56.6 million, $56.7 million and $2.1 million of amortization expense related to identifiable intangible assets as a result of the AFF Acquisition for 2023, 2022 and 2021, respectively, which is already included in the add-back of depreciation and amortization to net income used to calculate EBITDA.
The following table provides a reconciliation of net income to EBITDA and adjusted EBITDA (unaudited, in thousands): Year Ended December 31, 2024 2023 2022 Net income $ 258,815 $ 219,301 $ 253,495 Income taxes 83,961 73,548 70,138 Depreciation and amortization (1) 104,941 109,161 103,832 Interest expense 105,226 93,243 70,708 Interest income (1,935) (1,469) (1,313) EBITDA 551,008 493,784 496,860 Adjustments: Merger and acquisition expenses 2,228 7,922 3,739 Non-cash foreign currency loss (gain) related to lease liability 3,755 (2,540) (1,329) AFF purchase accounting and other adjustments (2) — 13,968 50,354 Gain on revaluation of contingent acquisition consideration — — (109,549) Other expenses (income), net 1,446 (1,402) (2,731) Adjusted EBITDA $ 558,437 $ 511,732 $ 437,344 (1) Includes $49.7 million, $56.6 million and $56.7 million of amortization expense related to identifiable intangible assets as a result of the AFF acquisition for 2024, 2023 and 2022, respectively.
Non-GAAP Financial Information The Company uses certain financial calculations such as adjusted net income, adjusted diluted earnings per share, EBITDA, adjusted EBITDA, free cash flow, adjusted free cash flow, adjusted retail POS payment solutions segment metrics and constant currency results as factors in the measurement and evaluation of the Company’s operating performance and period-over-period growth.
In addition, the Company paid withholding taxes on net share settlements of restricted stock awards during 2024 of $7.0 million compared to $2.5 million during 2023. 60 Table of Contents Non-GAAP Financial Information The Company uses certain financial calculations such as adjusted net income, adjusted diluted earnings per share, EBITDA, adjusted EBITDA, free cash flow, adjusted free cash flow, adjusted retail POS payment solutions segment metrics and constant currency results as factors in the measurement and evaluation of the Company’s operating performance and period-over-period growth.
The increase in the segment pre-tax operating income and margin reflected an improved net revenue margin partially offset by the increase in segment expenses. 51 Table of Contents Latin America Pawn Segment Latin America pawn segment pre-tax operating income for 2023 compared to 2022 benefited from an 11% favorable change in the average value of the Mexican peso compared to the U.S. dollar.
The increase in the segment pre-tax operating income reflected increased net revenue from both acquired and existing stores, partially offset by an increase in segment expenses. 49 Table of Contents Latin America Pawn Segment Latin America pawn segment pre-tax operating income for 2024 compared to 2023 was impacted by a 3% unfavorable change in the average value of the Mexican peso compared to the U.S. dollar.
On a same-store basis, pawn loan receivables increased 17% (3% on a constant currency basis) as of December 31, 2023 compared to December 31, 2022.
On a same-store basis, pawn loan receivables decreased 6% (12% increase on a constant currency basis) as of December 31, 2024 compared to December 31, 2023.
The increase was primarily due to inventories at acquired stores and a modest increase in same-store inventories. Inventories aged greater than one year in the U.S. were 1% at both December 31, 2023 and 2022.
The increase was primarily due to incremental inventories from acquired stores and an increase in same-store inventories as a result of the higher pawn loan balances noted below. Inventories aged greater than one year in the U.S. were 1% at both December 31, 2024 and 2023.
In addition, the Company does not consider these merger and acquisition expenses to be related to the organic operations of the acquired businesses or its continuing operations, and such expenses are generally not relevant to assessing or estimating the long-term performance of the acquired businesses.
The Company does not consider these items to be related to the organic operations of the acquired businesses or its continuing operations and are generally not relevant to assessing or estimating the long-term performance of the acquired businesses. In addition, excluding these items allows for more accurate comparisons of the financial results to prior periods.
Future store openings are subject to the Company’s ability to identify locations in markets with attractive demographics, available real estate with favorable leases and limited competition. 60 Table of Contents Although viewed by management as a discretionary expenditure not required to operate its pawn stores, the Company may continue to strategically purchase real estate from its landlords at existing stores or in conjunction with pawn store acquisitions as opportunities arise at reasonable valuations.
Although viewed by management as a discretionary expenditure not required to operate its pawn stores, the Company may continue to strategically purchase real estate from its landlords at existing stores or in conjunction with pawn store acquisitions as opportunities arise at reasonable valuations.
Operating expenses include salary and benefit expenses of certain operations-focused departments, merchant partner incentives, bank and other payment processing charges, credit reporting costs, information technology costs, advertising costs and other operational costs incurred by AFF.
Operating expenses include salary and benefit expenses of certain operations-focused departments, merchant partner incentives, bank and other payment processing charges, credit reporting costs, information technology costs, advertising costs and other operational costs incurred by AFF. Administrative expenses and amortization expense of intangible assets related to the purchase of AFF are not included in the segment pre-tax operating income.
During 2023, the Company acquired 91 pawn stores in the U.S. and acquired two pawn licenses to open pawn stores in the state of Nevada for a cumulative purchase price of $178.6 million, net of cash acquired and subject to future post-closing adjustments.
During 2024, the Company acquired 28 pawn stores in the U.S., acquired 10 pawn stores in Mexico and acquired one pawn license that was used to open a new pawn store in the state of Nevada for a cumulative purchase price of $107.6 million, net of cash acquired and subject to future post-closing adjustments.
On an adjusted basis, excluding the impacts of fair value purchase accounting, interest and fees on finance receivables increased 4% which was primarily due to higher average year-over-year finance receivable balances, 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 in 2023, some of which provide slightly lower interest rates.
The increase was primarily due to the higher year-over-year finance receivable balances, 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, some of which are provided at lower interest rates.
The following table provides a detail of gross transaction volumes originated during the year ended December 31, 2023 as compared to the year ended December 31, 2022 (dollars in thousands): Years Ended December 31, 2023 2022 Increase Leased merchandise $ 623,069 $ 518,173 20 % Finance receivables 405,765 333,052 22 % Total gross transaction volume $ 1,028,834 $ 851,225 21 % 55 Table of Contents The following table details retail POS payment solutions earning assets as of December 31, 2023 as compared to December 31, 2022 (dollars in thousands): As of December 31, 2023 2022 Increase Leased merchandise, net: Leased merchandise, before allowance for lease losses $ 267,458 $ 233,974 14 % Less allowance for lease losses (95,752) (79,576) 20 % Leased merchandise, net (1) $ 171,706 $ 154,398 11 % Finance receivables, net: Finance receivables, before allowance for loan losses $ 210,355 $ 188,327 12 % Less allowance for loan losses (96,454) (84,833) 14 % Finance receivables, net $ 113,901 $ 103,494 10 % (1) Includes $0.5 million and $1.1 million of intersegment transactions as of December 31, 2023 and 2022, 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 provision for lease losses during 2024 and 2023 totaled $163.4 million and $175.9 million, respectively. 53 Table of Contents The following table provides a detail of gross transaction volumes originated during the year ended December 31, 2024 as compared to the year ended December 31, 2023 (dollars in thousands): Years Ended December 31, Increase / 2024 2023 (Decrease) Leased merchandise $ 568,635 $ 623,069 (9) % Finance receivables 510,231 405,765 26 % Total gross transaction volume $ 1,078,866 $ 1,028,834 5 % The following table details retail POS payment solutions earning assets as of December 31, 2024 as compared to December 31, 2023 (dollars in thousands): As of December 31, Increase / 2024 2023 (Decrease) Leased merchandise, net: Leased merchandise, before allowance for lease losses $ 209,333 $ 267,458 (22) % Less allowance for lease losses (80,661) (95,752) (16) % Leased merchandise, net (1) $ 128,672 $ 171,706 (25) % Finance receivables, net: Finance receivables, before allowance for loan losses $ 264,506 $ 210,355 26 % Less allowance for loan losses (117,005) (96,454) 21 % Finance receivables, net $ 147,501 $ 113,901 29 % (1) Includes $0.2 million and $0.5 million of intersegment transactions as of December 31, 2024 and 2023, respectively, related to the Company offering AFF’s LTO payment solution in its U.S. pawn stores that are eliminated upon consolidation.
The Company believes this improves comparability of operating results for current periods presented with prior periods. 63 Table of Contents Adjusted Net Income and Adjusted Diluted Earnings Per Share Management believes the presentation of adjusted net income and adjusted diluted earnings per share provides investors with greater transparency and provides a more complete understanding of the Company’s financial performance and prospects for the future by excluding items that management believes are non-operating in nature and not representative of the Company’s core operating performance.
The Company has adjusted the applicable financial measures to exclude these remeasurement gains or losses (1) because they are non-cash, non-operating items that could create volatility in the Company’s consolidated results of operations due to the magnitude of the end of period lease liability being remeasured and (2) to improve comparability of current periods presented with prior periods. 61 Table of Contents Adjusted Net Income and Adjusted Diluted Earnings Per Share Management believes the presentation of adjusted net income and adjusted diluted earnings per share provides investors with greater transparency and provides a more complete understanding of the Company’s financial performance and prospects for the future by excluding items that management believes are non-operating in nature and are not representative of the Company’s core operating performance.
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 years ended December 31, 2023 and 2022.
See “Non-GAAP Financial Information” for additional discussion of non-GAAP financial measures. 45 Table of Contents Operating Results for the Twelve Months Ended December 31, 2024 Compared to the Twelve Months Ended December 31, 2023 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 years ended December 31, 2024 and 2023.
Provision for loan losses increased 4% to $123.0 million during 2023 compared to $118.5 million during 2022, which was primarily due to the 22% increase in gross transaction volumes, mostly offset by a decrease in loan loss provisioning rates used during 2023 compared to 2022.
Provision for loan losses increased 17% to $143.8 million during 2024 compared to $123.0 million during 2023, which was primarily due to the 26% 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.
The increase in total and same-store operating expenses was primarily driven by general inflationary impacts and increases in the federally mandated minimum wage and increased costs of required employee benefit programs.
Same-store operating expenses increased 6% (9% on a constant currency basis) compared to the prior year. The 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.
The Company accrues interest income during the early payoff discount period but records a reserve for loans expected to pay the full principal balance prior to the expiration of the early payoff discount period based on historical payment patterns. 45 Table of Contents Provision for loan losses — Expected lifetime losses on finance receivables are recognized upon loan purchase, which requires the Company to make its best estimate of probable lifetime losses at the time of purchase.
The Company accrues interest income during the early payoff discount period but records a reserve for loans expected to pay the full principal balance prior to the expiration of the early payoff discount period based on historical payment patterns.
Cash Flow Used in Investing Activities Net cash used in investing activities increased $125.9 million, or 37%, from $336.4 million during 2022 to $462.3 million during 2023.
Cash Flow Used in Investing Activities Net cash used in investing activities decreased $20.7 million, or 4%, from $462.3 million during 2023 to $441.6 million during 2024.
Net borrowings on the credit facilities were $230.3 million during 2023 compared to net borrowings of $80.0 million during 2022. The Company paid debt issuance costs of $0.3 million during 2023 compared to $1.8 million during 2022.
Net payments on the credit facilities were $370.0 million during 2024 compared to net borrowings of $230.3 million during 2023.
(4) Calculated as the percentage of the respective contractual earning asset balance owed that is 1 to 89 days past due (the Company charges off leases and finance receivables when they are 90 days or more contractually past due). (5) As a result of purchase accounting, AFF’s as reported allowance for lease losses during 2022 contains significant fair value adjustments.
(4) Calculated as the percentage of the respective contractual earning asset balance owed that is 1 to 89 days past due (the Company charges off leases and finance receivables when they are 90 days or more contractually past due). 55 Table of Contents LTO Operations Leased merchandise, before allowance for lease losses, decreased 22% as of December 31, 2024 compared to December 31, 2023.
See Note 11 of Notes to Consolidated Financial Statements and “Liquidity and Capital Resources.” Merger and acquisition expenses increased 112% to $7.9 million during 2023 compared to $3.7 million during 2022, reflecting an increased level of acquisition activity in 2023 compared to 2022.
See Note 11 of Notes to Consolidated Financial Statements and “Liquidity and Capital Resources.” Merger and acquisition expenses decreased 72% to $2.2 million during 2024 compared to $7.9 million during 2023, reflecting a decreased level of acquisition activity in 2024 compared to 2023. Consolidated effective income tax rates for 2024 and 2023 were 24.5% and 25.1%, respectively.
During 2023, the Company repurchased a total of 1,248,000 shares of common stock at an aggregate cost of $114.4 million and an average cost per share of $91.58. The aggregate cost and average cost per share does not include the effect of the 1% excise tax on certain share repurchases enacted under the inflation Reduction Act of 2022.
During 2024, the Company repurchased a total of 721,000 shares of common stock at an aggregate cost of $85.0 million and an average cost per share of $117.90. During 2023, the Company repurchased 1,248,000 shares of common stock at an aggregate cost of $114.4 million and an average cost per share of $91.58.
See the retail POS payment solutions segment tables in “Results of Operations” above for additional reconciliation of certain amounts adjusted to exclude the impacts of purchase accounting to as reported GAAP amounts.
See the Latin America pawn segment tables in “Results of Operations” above for additional reconciliation of certain constant currency amounts to as reported GAAP amounts.
As a percentage of finance receivables, the allowance increased from 45% at December 31, 2022 to 46% at December 31, 2023. This increase was primarily due to the 22% increase in gross transaction volume compared to 2022. Interest and fees on finance receivables increased 29% to $233.8 million during 2023 compared to $181.3 million during 2022.
As a percentage of finance receivables, the allowance was 44% at December 31, 2024 compared to 46% at December 31, 2023. Interest and fees on finance receivables increased 5% to $245.9 million during 2024 compared to $233.8 million during 2023.
The increase in total pawn receivables was due to incremental pawn loans from acquired stores and an increase in same-store pawn receivables, which the Company believes was primarily due to continued inflationary pressures driving additional demand for pawn loans and tightened underwriting for other competing forms of consumer credit. 50 Table of Contents U.S. pawn loan fees increased 17% to $435.8 million during 2023 compared to $373.4 million for 2022.
The Company believes the increase in same-store pawn receivables was primarily due to continued inflationary pressures driving additional demand for pawn loans and higher gold prices, which increased customers’ jewelry collateral value. 48 Table of Contents U.S. pawn loan fees increased 16% to $505.3 million during 2024 compared to $435.8 million for 2023.
During 2022, the portion of the AFF Acquisition consideration paid in cash, net of cash acquired, was $25.0 million. The Company paid $60.1 million for furniture, fixtures, equipment and improvements and $70.5 million for discretionary pawn store real property purchases during 2023 compared to $35.6 million and $82.9 million in 2022, respectively.
The Company paid $68.2 million for furniture, fixtures, equipment and improvements and $86.1 million for discretionary pawn store real property purchases during 2024 compared to $60.1 million and $70.5 million in 2023, respectively. The Company paid $76.0 million in cash related to pawn store acquisitions during 2024 compared to $181.3 million during 2023.
Constant Currency Basis Year Ended Year Ended December 31, Increase / December 31, 2023 (Decrease) 2023 2022 Increase (Non-GAAP) (Non-GAAP) Latin America Pawn Segment Revenue: Retail merchandise sales $ 533,612 $ 447,523 19 % $ 474,744 6 % Pawn loan fees 222,774 187,974 19 % 198,013 5 % Wholesale scrap jewelry sales 46,917 39,969 17 % 46,917 17 % Total revenue 803,303 675,466 19 % 719,674 7 % Cost of revenue: Cost of retail merchandise sold 345,309 288,449 20 % 307,442 7 % Cost of wholesale scrap jewelry sold 37,276 33,411 12 % 33,006 (1) % Total cost of revenue 382,585 321,860 19 % 340,448 6 % Net revenue 420,718 353,606 19 % 379,226 7 % Segment expenses: Operating expenses 243,146 193,254 26 % 217,507 13 % Depreciation and amortization 21,350 18,325 17 % 19,199 5 % Total segment expenses 264,496 211,579 25 % 236,706 12 % Segment pre-tax operating income $ 156,222 $ 142,027 10 % $ 142,520 — % Operating metrics: Retail merchandise sales margin 35 % 36 % 35 % Net revenue margin 52 % 52 % 53 % Segment pre-tax operating margin 19 % 21 % 20 % 52 Table of Contents The following table details earning assets, which consist of pawn loans and inventories as well as other earning asset metrics of the Latin America pawn segment, as of December 31, 2023 as compared to December 31, 2022 (dollars in thousands, except as otherwise noted): Constant Currency Basis As of December 31, Increase / As of December 31, 2023 (Decrease) 2023 2022 Increase (Non-GAAP) (Non-GAAP) Latin America Pawn Segment Earning assets: Pawn loans $ 127,694 $ 108,528 18 % $ 112,110 3 % Inventories 90,246 85,745 5 % 79,218 (8) % $ 217,940 $ 194,273 12 % $ 191,328 (2) % Average outstanding pawn loan amount (in ones) $ 95 $ 83 14 % $ 84 1 % Composition of pawn collateral: General merchandise 63 % 67 % Jewelry 37 % 33 % 100 % 100 % Composition of inventories: General merchandise 67 % 71 % Jewelry 33 % 29 % 100 % 100 % Percentage of inventory aged greater than one year 1 % 1 % Inventory turnover (trailing twelve months cost of merchandise sales divided by average inventories) 4.4 times 4.2 times Retail Merchandise Sales Operations Latin America retail merchandise sales increased 19% (6% on a constant currency basis) to $533.6 million during 2023 compared to $447.5 million for 2022.
Constant Currency Basis Year Ended Year Ended December 31, Increase / December 31, Increase / 2024 (Decrease) 2024 2023 (Decrease) (Non-GAAP) (Non-GAAP) Latin America Pawn Segment Revenue: Retail merchandise sales $ 541,787 $ 533,612 2 % $ 556,686 4 % Pawn loan fees 231,864 222,774 4 % 238,305 7 % Wholesale scrap jewelry sales 38,237 46,917 (19) % 38,237 (19) % Total revenue 811,888 803,303 1 % 833,228 4 % Cost of revenue: Cost of retail merchandise sold 350,906 345,309 2 % 360,452 4 % Cost of wholesale scrap jewelry sold 31,086 37,276 (17) % 31,977 (14) % Total cost of revenue 381,992 382,585 — % 392,429 3 % Net revenue 429,896 420,718 2 % 440,799 5 % Segment expenses: Operating expenses 259,307 243,146 7 % 266,102 9 % Depreciation and amortization 20,369 21,350 (5) % 20,855 (2) % Total segment expenses 279,676 264,496 6 % 286,957 8 % Segment pre-tax operating income $ 150,220 $ 156,222 (4) % $ 153,842 (2) % Operating metrics: Retail merchandise sales margin 35 % 35 % 35 % Net revenue margin 53 % 52 % 53 % Segment pre-tax operating margin 19 % 19 % 18 % 50 Table of Contents The following table details earning assets, which consist of pawn loans and inventories as well as other earning asset metrics of the Latin America pawn segment, as of December 31, 2024 as compared to December 31, 2023 (dollars in thousands, except as otherwise noted): Constant Currency Basis As of December 31, As of December 31, 2024 Increase 2024 2023 (Decrease) (Non-GAAP) (Non-GAAP) Latin America Pawn Segment Earning assets: Pawn loans $ 121,200 $ 127,694 (5) % $ 143,805 13 % Inventories 89,088 90,246 (1) % 105,686 17 % $ 210,288 $ 217,940 (4) % $ 249,491 14 % Average outstanding pawn loan amount (in ones) $ 87 $ 95 (8) % $ 103 8 % Composition of pawn collateral: General merchandise 58 % 63 % Jewelry 42 % 37 % 100 % 100 % Composition of inventories: General merchandise 65 % 67 % Jewelry 35 % 33 % 100 % 100 % Percentage of inventory aged greater than one year 1 % 1 % Inventory turnover (trailing twelve months cost of merchandise sales divided by average inventories) 4.2 times 4.4 times Store count 1,826 1,814 1 % Average store count 1,821 1,791 2 % Retail Merchandise Sales Operations Latin America retail merchandise sales increased 2% (4% on a constant currency basis) to $541.8 million during 2024 compared to $533.6 million for 2023.
Latin America pawn loan fees increased 19% (5% on a constant currency basis), to $222.8 million during 2023 compared to $188.0 million for 2022. Same-store pawn loan fees increased 18% (5% on a constant currency basis) during 2023 compared to 2022. The increase in total and same-store constant currency pawn loan fees was primarily due to increased pawn receivable balances.
The constant currency increase in total and same-store pawn loan fees was primarily due to increased average pawn receivable balances outstanding during 2024. Segment Expenses Operating expenses increased 7% (9% on a constant currency basis) to $259.3 million during 2024 compared to $243.1 million during 2023.
Leased merchandise income increased 21% to $752.7 million during 2023 compared to $622.2 million during 2022, which was primarily due to the higher leased merchandise balances. Depreciation of leased merchandise increased 17% to $413.5 million during 2023 compared to $354.1 million during 2022.
Leased merchandise income increased 2% to $766.2 million during 2024 compared to $752.7 million during 2023, which was primarily due to slightly higher average rental rates, partially offset by slightly lower average leased merchandise balances outstanding during 2024 compared to 2023. Depreciation of leased merchandise increased 5% to $434.9 million during 2024 compared to $413.5 million during 2023.
While acquisitions are an important part of the Company’s overall strategy, the Company has adjusted the applicable financial calculations to exclude merger and acquisition expenses, including the Company’s transaction expenses incurred in connection with its acquisition of AFF and the impacts of purchase accounting with respect to the AFF Acquisition, in order to allow more accurate comparisons of the financial results to prior periods.
While acquisitions are an important part of the Company’s overall strategy, the Company has adjusted the applicable financial calculations to exclude merger and acquisition expenses and amortization of acquired AFF intangible assets.
The Company funded $114.4 million for share repurchases and paid dividends of $61.9 million during 2023, compared to funding $157.9 million of share repurchases and dividends paid of $59.6 million during 2022. In addition, the Company paid withholding taxes on net share settlements of restricted stock awards during 2023 of $2.5 million.
The Company funded $85.0 million for share repurchases and paid dividends of $65.8 million during 2024, compared to funding $114.4 million of share repurchases and dividends paid of $61.9 million during 2023.
Same-store retail sales decreased 2% during 2023 compared to 2022. The increase in total retail sales was primarily due to sales contributions from acquired stores, whereas the decrease in same-store retail sales was primarily due to lower than normal inventory levels in these locations during much of 2023 compared to 2022.
Same-store retail sales increased 6% during 2024 compared to 2023. The increase in total retail sales was primarily due to incremental sales contributions from acquired stores and an increase in same-store sales.
The Company paid $181.3 million in cash related to pawn store acquisitions during 2023 compared to $71.8 million during 2022. The Company funded a net increase in pawn loans of $35.0 million during 2023 and $35.8 million during 2022.
The Company funded a net increase in pawn loans of $72.0 million during 2024 and $35.0 million during 2023. The Company funded a net increase in finance receivables of $139.3 million during 2024 and $115.4 million during 2023.
The Company evaluates potential acquisitions based upon growth potential, purchase price, available liquidity, strategic fit and quality of management personnel, among other factors. For 2024, the Company expects to add approximately 75 store locations through new store openings and acquisitions.
The Company evaluates potential acquisitions based upon growth potential, purchase price, available liquidity, strategic fit and quality of management personnel, among other factors. During 2024, the Company also opened 60 new locations in Latin America and one location in the U.S. The combined investment in leasehold improvements and other fixed assets for these new locations totaled $19.3 million.
Consolidated Results of Operations The following table reconciles pre-tax operating income of the Company’s U.S. pawn segment, Latin America pawn segment and retail POS payment solutions segment, discussed above, to consolidated net income for the year ended December 31, 2023 as compared to the year ended December 31, 2022 (dollars in thousands): Year Ended December 31, Increase / 2023 2022 (Decrease) Consolidated Results of Operations Segment pre-tax operating income: U.S. pawn $ 336,306 $ 291,113 16 % Latin America pawn 156,222 142,027 10 % Retail POS payment solutions (1) 132,016 59,191 123 % Intersegment eliminations (2) 581 (1,096) (153) % Consolidated segment pre-tax operating income 625,125 491,235 27 % Corporate expenses and other income: Administrative expenses 176,315 147,943 19 % Depreciation and amortization 59,196 59,390 — % Interest expense 93,243 70,708 32 % Interest income (1,469) (1,313) 12 % Gain on foreign exchange (1,529) (585) 161 % Merger and acquisition expenses 7,922 3,739 112 % Gain on revaluation of contingent acquisition consideration — (109,549) 100 % Other expenses (income), net (1,402) (2,731) 49 % Total corporate expenses and other income 332,276 167,602 98 % Income before income taxes 292,849 323,633 (10) % Provision for income taxes 73,548 70,138 5 % Net income $ 219,301 $ 253,495 (13) % (1) The AFF segment results for 2022 are significantly impacted by certain purchase accounting adjustments, as noted in the retail POS payment solutions segment results of operations above.
The decrease was primarily the result of the slight decrease in net revenue. 56 Table of Contents Consolidated Results of Operations The following table reconciles pre-tax operating income of the Company’s U.S. pawn segment, Latin America pawn segment and retail POS payment solutions segment, discussed above, to consolidated net income for the year ended December 31, 2024 as compared to the year ended December 31, 2023 (dollars in thousands): Year Ended December 31, Increase / 2024 2023 (Decrease) Consolidated Results of Operations Segment pre-tax operating income: U.S. pawn $ 397,293 $ 336,306 18 % Latin America pawn 150,220 156,222 (4) % Retail POS payment solutions 128,629 132,016 (3) % Intersegment eliminations (1) 280 581 (52) % Consolidated segment pre-tax operating income 676,422 625,125 8 % Corporate expenses and other income: Administrative expenses 173,199 176,315 (2) % Depreciation and amortization 52,809 59,196 (11) % Interest expense 105,226 93,243 13 % Interest income (1,935) (1,469) 32 % Loss (gain) on foreign exchange 2,641 (1,529) (273) % Merger and acquisition expenses 2,228 7,922 (72) % Other expenses (income), net (522) (1,402) (63) % Total corporate expenses and other income 333,646 332,276 — % Income before income taxes 342,776 292,849 17 % Provision for income taxes 83,961 73,548 14 % Net income $ 258,815 $ 219,301 18 % (1) Represents the elimination of intersegment transactions related to the Company offering AFF’s LTO payment solution in its U.S. pawn stores.
Same-store pawn loan fees increased 11% during 2023 compared to 2022. The increase in total and same-store pawn loan fees was primarily due to higher average pawn receivables and increased portfolio yield, driven by slightly improved customer redemption rates. Segment Expenses U.S. store operating expenses increased 11% to $451.5 million during 2023 compared to $407.0 million during 2022.
Same-store pawn loan fees increased 11% during 2024 compared to 2023. The increase in total and same-store pawn loan fees was primarily due to store growth and increased same-store pawn receivables.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDuring 2023, the average market price of gold increased by 8% from $1,800 to $1,942 per ounce. The price of gold at December 31, 2023 was $2,078 per ounce compared to $1,814 at December 31, 2022.
Biggest changeDuring 2024, the average market price of gold increased by 23% from $1,942 to $2,385 per ounce. The price of gold at December 31, 2024 was $2,609 per ounce compared to $2,078 at December 31, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” for further discussion of Latin America constant currency results. The Company does not typically use long-term foreign exchange contracts or derivatives to hedge foreign currency exposures. The volatility of exchange rates depends on many factors that it cannot forecast with reliable accuracy.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” for further discussion of Latin America constant currency results. The Company does not use long-term foreign exchange contracts or derivatives to hedge foreign currency exposures. The volatility of exchange rates depends on many factors that it cannot forecast with reliable accuracy.
The impact of foreign exchange rates in Guatemala and Colombia is not material to the Company’s financial position or results of operations. 70 Table of Contents Interest Rate Risk The Company is potentially exposed to market risk in the form of interest rate risk for its long-term unsecured lines of credit.
The impact of foreign exchange rates in Guatemala and Colombia is not material to the Company’s financial position or results of operations. 66 Table of Contents Interest Rate Risk The Company is potentially exposed to market risk in the form of interest rate risk for its long-term unsecured lines of credit.
The Company’s continued Latin America expansion increases exposure to exchange rate fluctuations and, as a result, such fluctuations could have a significant impact on future results of operations. The average value of the Mexican peso to the U.S. dollar exchange rate for 2023 was 17.8 to 1 compared to 20.1 to 1 in 2022 and 20.3 to 1 in 2021.
The Company’s continued Latin America expansion increases exposure to exchange rate fluctuations and, as a result, such fluctuations could have a significant impact on future results of operations. The average value of the Mexican peso to the U.S. dollar exchange rate for 2024 was 18.3 to 1 compared to 17.8 to 1 in 2023 and 20.1 to 1 in 2022.
At December 31, 2023, the Company had $568.0 million outstanding under its U.S. revolving line of credit. The revolving lines of credit are generally priced with a variable rate based on a fixed spread over SOFR or the Mexican Central Bank’s interbank equilibrium rate (“TIIE”) and repriced with any changes in SOFR or TIIE.
At December 31, 2024, the Company had $198.0 million outstanding under its U.S. revolving line of credit. The revolving lines of credit are generally priced with a variable rate based on a fixed spread over SOFR or the Mexican Central Bank’s interbank equilibrium rate (“TIIE”) and repriced with any changes in SOFR or TIIE.
A one-point change in the average Mexican peso to the U.S. dollar exchange rate would have impacted 2023 annual earnings by approximately $3.5 million.
A one-point change in the average Mexican peso to the U.S. dollar exchange rate would have impacted 2024 annual earnings by approximately $3.4 million.
The Company also has operations in El Salvador where the reporting and functional currency is the U.S. dollar. On a dollar-translated basis, Latin America revenues and cost of revenues accounted for 25% and 23%, respectively, of consolidated amounts for the year ended December 31, 2023.
The Company also has operations in El Salvador where the reporting and functional currency is the U.S. dollar. On a dollar-translated basis, Latin America revenues and cost of revenues accounted for 24% and 22%, respectively, of consolidated amounts for the year ended December 31, 2024.
At December 31, 2023, the fair value of the Company’s fixed rate debt was approximately $987.0 million and the outstanding principal of the Company’s fixed rate debt was $1,050.0 million. The fair value estimate of the Company’s fixed rate debt was estimated based on quoted prices in markets that are not active.
At December 31, 2024, the fair value of the Company’s fixed rate debt was approximately $1,503.0 million and the outstanding principal of the Company’s fixed rate debt was $1,550.0 million. The fair value estimate of the Company’s fixed rate debt was estimated based on quoted prices in markets that are not active.
For the year ended December 31, 2023, the Company’s Latin America revenues and pre-tax operating income would have been approximately $83.6 million and $13.7 million lower, respectively, had foreign currency exchange rates remained consistent with those for the year ended December 31, 2022. See “Item 7.
For the year ended December 31, 2024, the Company’s Latin America revenues and pre-tax operating income would have been approximately $21.3 million and $3.6 million higher, respectively, had foreign currency exchange rates remained consistent with those for the year ended December 31, 2023. See “Item 7.
Based on the $568.0 million in outstanding borrowings at December 31, 2023, a 1% (100 basis points) increase in interest rates would have increased the Company’s annual interest expense by approximately $5.7 million for 2023.
Based on the $198.0 million in outstanding borrowings at December 31, 2024, a 1% (100 basis points) increase in interest rates would have increased the Company’s annual interest expense by approximately $2.0 million for 2024.
At December 31, 2023, the Company held approximately $156.0 million in jewelry inventories, which were primarily gold, representing 50% of total inventory. In addition, approximately $287.8 million, or 61%, of total pawn loans were collateralized by jewelry, which was also primarily gold. Of the Company’s total retail merchandise revenue during 2023, approximately $524.9 million, or 38%, was from jewelry sales.
At December 31, 2024, the Company held approximately $174.0 million in jewelry inventories, which were primarily gold, representing 52% of total inventory. In addition, approximately $336.6 million, or 65%, of total pawn loans were collateralized by jewelry, which was also primarily gold. Of the Company’s total retail merchandise revenue during 2024, approximately $602.8 million, or 40%, was from jewelry sales.

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