Insiders ranked by realized 90-day signed return on their open-market trades at Firstcash Holdings, Inc.. Minimum 3 scored trades. Returns are signed - a sale followed by a rally counts against the insider.
Real-time Form 4 intelligence. Smarter insider tracking.
YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.04pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.21pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.13pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
failures+2
adversely+1
loss+1
penalties+1
damage+1
Positive rising
effective+4
advances+2
achieve+1
innovations+1
enhancements+1
Risk Factors (Item 1A)
14,982 words
Item 1A. Risk Factors
Important risk factors that could materially affect the Company’s business, financial condition or results of operations in future periods are described below. These factors are not intended to be an all-encompassing list of risks and uncertainties and are not the only risks and uncertainties facing the Company. 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.
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, online consumer lenders, banks, credit unions, POS consumer finance companies, LTO companies, buy-now/pay later (“BNPL”) providers along with general, specialty and online retailers, governmental entities and other organizations offering similar financial services and retail products to those offered by the Company.
• 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 execute its business strategy and drive organic growth.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
litigation+4
closing+3
forfeited+2
loss+1
delinquency+1
Positive rising
strong+3
leading+2
favorable+1
benefited+1
MD&A (Item 7)
10,876 words
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
The Company’s primary business line is the operation of retail pawn stores, also known as “pawnshops,” which focus on serving cash- and credit-constrained consumers. The Company is the leading operator of pawn stores in the U.S., Latin America and the U.K. Pawn stores help customers meet small short-term cash needs by providing non-recourse pawn loans and buying merchandise directly from customers. Personal property, such as jewelry, electronics, tools, appliances, sporting goods and musical instruments, is pledged and held as collateral for the pawn loans over the term of the loan. Pawn stores also generate retail sales primarily from the merchandise acquired through collateral forfeitures and over-the-counter purchases from customers.
The Company completed the acquisition of H&T, the leading pawn operator in the United Kingdom with 286 store locations, on August 14, 2025, the date which the balance sheet and operating results of H&T were included in the Company’s consolidated financial results. For further detail, see Note 3 of Notes to Consolidated Financial Statements.
The Company is also a leading provider of customer payment solutions at the POS for retailers of consumer goods and services, which it conducts solely through AFF. The Company’s customer payment solutions business line 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. AFF’s retail partners provide consumer goods and services to their customers and use AFF’s LTO and retail finance solutions to facilitate payments on such transactions.
• The inability to successfully identify attractive acquisition targets, realize anticipated benefits from 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 future growth is dependent on its ability to keep pace with technological advances, including the adoption of generative artificial intelligence and other machine learning technologies, to remain competitive.
• 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 current 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.
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 the U.S., Latin America and the U.K., and all consumer finance and lease-to-own companies that serve credit-constrained consumers, including the Company, face increasing regulatory scrutiny under the current regulatory environment.
• 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.
• 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, in the U.S., Latin America and the U.K., 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.
Table of Contents
Risks Related to Financial and Tax Matters
• 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.
• Adverse changes in interest rates could negatively impact the Company’s operating results.
• Declines in commodity market prices of gold, other precious metals and diamonds could negatively affect the Company’s profits.
• The Company’s financial position and results of operations may change significantly due to fluctuations in currency exchange rates in Latin American markets and in the U.K.
• Unexpected changes in both domestic and foreign tax laws and policies could negatively impact the Company’s operating results.
Risks Related to Economic and Market Environment
• A sustained deterioration of economic conditions or an economic crisis, and government actions taken to limit the impact of such an economic crisis, could reduce demand or profitability for the Company’s products and services which would result in reduced earnings.
• A severe public health or safety emergency and government stimulus programs related thereto could materially and adversely impact the Company’s business and results of operations.
• Climate change, including increased frequency of extreme weather events, and related regulations could adversely affect the Company’s business and results of operations.
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 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.
• If the bank partner loan origination model used by AFF is successfullychallenged 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.
Strategic and Business Risks
Competition from other pawnshops, POS consumer finance and BNPL companies, other short-term consumer lenders, other LTO companies, governmental entities and other organizations offering similar financial services and retail products offered by the Company could adversely affect the Company’s results of operations.
The Company’s principal competitors are other pawnshops, branch-based consumer lenders, banks, credit unions, credit card issuers, online lenders, POS consumer finance and BNPL companies, LTO companies, general, specialty and online retailers, governmental entities and other organizations offering similar financial services and retail products to those offered by the Company. In addition, banks, credit card issuers, consumer finance companies and retailers continue to develop and enhance lending and retail POS payment products and services designed to compete for the credit-constrained customer, many of which have greater financial resources and brand recognition than the Company. Significant increases in the number and size of competitors for the Company’s business could result in a decrease in the number of the Company’s pawn transactions or in AFF’s transaction volumes, resulting in lower levels of revenue and earnings.
Furthermore, the Company’s retail pawn operations have many competitors, such as retailers of new and pre-owned merchandise, other pawnshops, thrift shops, online retailers of new and pre-owned merchandise, online marketplace and auction sites and social media platforms. Many consumers view these competitors as a safer, more price-competitive or convenient option for acquiring similar products as those sold by the Company. 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.
Table of Contents
In Mexico, the Company’s pawn stores also compete directly with government-sponsored or affiliated non-profit foundations operating pawn stores. 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.
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.
Although the Company actively manages its product and service offerings to ensure that such offerings meet the needs and preferences of its customer base (and merchant partners, in the case of the AFF business), the demand for a particular product or service may decrease due to a variety of factors, including many that the Company may not be able to control, anticipate or respond to in a timely manner, such as the availability and pricing of competing products or technology, adoption of digital wallets and currencies, changes in customers’ financial conditions as a result of changes in unemployment levels, declines in consumer spending habits related to general economic conditions, inflation, weather events, public health and safety issues, fuel prices, interest rates, government-sponsored economic stimulus programs, social welfare or benefit programs, minimum wage increase, real or perceived loss of consumer confidence or regulatory restrictions that increase or reduce customer access to particular products. The AFF business also competes in an industry that is subject to significant technological change and disruption, and AFF’s ability to meet the needs of both merchants and consumers is dependent on its ability to adequately adapt and respond to these changes.
The Company’s retail sales depend in large part on sufficient inventory levels, driven primarily by forfeited collateral on pawn loans. If demand for pawn loans decreases, inventory levels typically decline, which can negatively impact retail sales.
Should the Company fail to adapt to a significant change in its customers’ demand for, or regular access to, its products, the Company’s revenue could decrease significantly. Even if the Company makes adaptations, its customers or merchants may resist or may reject products or services whose adaptations make them less attractive or less available. 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. These factors and circumstances could adversely affect the Company’s ability to grow.
The success of the Company’s organic expansion strategy is subject to many external factors, including regulatory restrictions, general economic conditions and acceptance of the Company’s products. With respect to the Company’s pawn business, organic growth is largely driven by the ability to increase the productivity of its existing stores and successfully open new stores, which new store openings are impacted by the availability of sites with favorable customer demographics, limited competition from other pawn stores, community acceptance, suitable lease terms, its ability to attract, train and retain qualified associates and management personnel, the ability to obtain required government permits and licenses and the ability to complete construction and obtain utilities in a timely manner. With respect to the AFF business, organic growth is largely driven by the ability of AFF to expand its network of merchant partners, increase utilization of its products at its merchant partners and improve its technology to support increased growth, meet the needs of its merchants and consumers and make effective pricing and approval decisions with respect to its products. Some of these factors are beyond the Company’s control. The failure to execute the Company’s organic expansion strategy would adversely affect the Company’s ability to expand its business and could materially adversely affect its business, prospects, results of operations and financial condition.
The inability to successfully identify attractive acquisition targets, realize anticipated benefits from and integrate completed acquisitions could adversely affect results.
The Company has historically grown in large part through strategic acquisitions, and the Company’s strategy is to continue to pursue attractive acquisition opportunities if and when they become available. The success of an acquisition is subject to numerous internal and external factors, such as competition rules, the ability to consolidate information technology and accounting functions, the management of additional sales, administrative, operations and management personnel, overall management of a larger organization, competitive market forces, and general economic and regulatory factors. It is possible that the integration process could result in unrealized administrative and operational synergies, the loss of key employees, the disruption of ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect the Company’s ability to maintain relationships with customers, employees, or other third parties or the Company’s ability to achieve the anticipated benefits of such acquisitions
Table of Contents
and could harm its financial performance. Furthermore, future acquisitions may be in jurisdictions in which the Company does not currently operate or in lines of business that are new to the Company, which could make the successful consummation and integration of any such acquisitions more difficult. Acquisition targets may also become increasingly scarce in future periods or harder to acquire at attractive valuations. Failure to successfully integrate an acquisition could adversely affect the Company’s business, results of operations and financial condition, and failure to successfully identify attractive acquisition targets and complete such acquisitions on favorable terms could have an adverse effect on the Company’s growth. Additionally, any acquisition carries the risk that the Company may not realize a return on the acquisition or the Company’s investment.
The Company’s future success is largely dependent upon the ability of its management team to successfully execute its business strategy.
The Company’s future success, including its ability to achieve its growth and profitability goals, is dependent on the ability of its management team to execute its long-term business strategy, which requires them to, among other things: (1) pursue organic growth by opening new pawn stores and expanding AFF’s network of merchant partners, (2) identify attractive acquisition opportunities, close on such acquisitions on favorable terms and successfully integrate acquired businesses, (3) encourage and improve customer traffic at its pawn stores and the utilization of AFF’s products with its existing merchant partners, (4) improve the customer experience at its pawn stores and for AFF’s merchant partners and customers, (5) enhance productivity of its pawn stores, including through investments in technology, (6) control expenses in line with current projections, (7) keep pace with technological change and improve the Company’s proprietary pawn POS and loan management system and AFF’s proprietary lease and loan management system and decisioning platform, and (8) effectively maintain its compliance programs and respond to regulatory developments and changes that impact its business. Failure of management to execute its business strategy could negatively impact the Company’s business, growth prospects, financial condition or results of 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.
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. The Company’s senior management team has significant pawn industry experience as well as public company experience, which the Company believes is unique in the pawn industry. Furthermore, H&T’s and AFF’s senior management teams provide the Company with significant experience with the U.K. pawn market and retail POS payment solutions industry, respectively. The loss of services of any member of the Company’s senior management could adversely affect the Company’s business until a suitable replacement can be found, if at all. There may be a limited number of persons with the requisite skills to serve in these positions, and the Company cannot ensure that it would be able to identify or employ such qualified personnel on acceptable terms. Furthermore, a significant increase in the costs to retain any members of the Company’s senior management could adversely affect the Company’s business and operations.
The Company depends on hiring, training and retaining an adequate number of qualified employees to run its businesses.
The Company’s pawn businesses rely heavily on hourly retail employees along with supervisory employees, while AFF relies heavily on sales, information technology, data science and customer service employees. The Company must attract, train, and retain a large number of employees, while at the same time controlling labor costs. In particular, the Company’s in-store positions have historically had high turnover rates, which can lead to increased training, retention and other costs and impair the overall customer service and efficiencies at the Company’s pawn stores. There has also been an increase in labor shortages and competition for employees, especially with respect to the Company’s hourly in-store employees, including from retailers and the restaurant industries. The Company also faces meaningful competition for AFF’s salesforce, information technology, call center and data science teams. The lack of availability of adequate employees or the Company’s inability to attract and retain qualified employees, or an increase in wages and benefits to current employees, could adversely affect its business, results of operations, cash flows and financial condition.
Furthermore, federal, state or locally legislated increases in the minimum wage, as well as increases in additional labor cost components such as employee benefit costs, workers’ compensation insurance rates, compliance costs, fines and, in Mexico, additional costs associated with labor agreements, unions and profit sharing requirements, would increase the Company’s labor costs, which could have a material adverse effect on its business, prospects, results of operations and financial condition.
Table of Contents
The Company’s business depends on the uninterrupted operation of the Company’s facilities, systems and business functions, including its information technology and other business systems, and reliance on other companies to provide key components of its business systems.
The Company’s business depends highly upon its ability to perform, in an efficient and uninterrupted fashion, necessary business functions such as operating, managing and securing its retail locations, technical support centers, security monitoring, treasury and accounting functions and other administrative support functions. Additionally, the Company’s storefront operations depend on the efficiency and reliability of the Company’s proprietary pawn POS and loan management systems and AFF depends on its systems to process its transaction volume and effectively take applications, decision and service its customers. Furthermore, third parties provide a number of key components necessary to the Company’s business functions and systems. Any problems caused by these third parties could adversely affect the Company’s ability to deliver products and services to its customers and otherwise conduct its business. A shut-down of or inability to access these systems due to a power outage, a cybersecurity breach or attack, a breakdown or failure of one or more of its information technology, telecommunications or other systems, or sustained or repeated disruptions of such systems could significantly impair its ability to perform such functions on a timely basis and could result in a deterioration of the Company’s ability to perform its day-to-day operations, provide customer service or perform other necessary business functions.
Security breaches, cyber attacks or fraudulent activity could result in damage to the Company’s operations or lead to reputational damage and expose the Company to significant liabilities.
An important component of the Company’s business involves collection, storage, use, disclosure, processing, transfer and other handling of a wide variety of sensitive, regulated and/or confidential information, including personally identifiable information, for various purposes in its business with customers and employees. While the Company’s pawn business has historically acquired and maintained minimal personal information (primarily name, address, government identification numbers and date of birth), AFF obtains additional personal information, including social security numbers, dates of birth, bank account and payment card information and data from consumer reporting agencies (including credit report information) from its customers, increasing the potential risk of unauthorized access to such confidential information. The Company is under constant threat of loss due to the velocity and sophistication of security breaches and cyber attacks. These security incidents and cyber attacks may be in the form of computer hacking, acts of vandalism or theft, malware, computer viruses or other malicious codes, phishing, employee error or malfeasance, catastrophes or unforeseen events or other cyber attacks. A security breach of the Company’s computer systems, or those of the Company’s third-party service providers, including as a result of cyber attacks, could cause loss of Company assets, sensitive customer or employee information, transaction data, interrupt or damage its operations or harm its reputation. In addition, the Company could be subject to liability if confidential customer or employee information is misappropriated from its computer systems. Any compromise of security, including security breachesperpetrated on persons with whom the Company has commercial relationships, that results in the unauthorized access to or use of personal information or the unauthorized access to or use of confidential employee, customer, supplier or Company information, could result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to the Company’s reputation, and a loss of confidence of the Company’s customers, vendors and others, which could harm its business and operations. Any compromise of security could deter people from entering into transactions that involve transmitting confidential information to the Company’s systems and could harm relationships with the Company’s suppliers, which could have a material adverse effect on the Company’s business. Actual or anticipated cyber attacks may cause the Company to incur substantial costs, including costs to prevent future attacks and investigate actual attacks, deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants. Despite the Company’s implementation of significant security measures, including the use of encryption and authentication technology to provide security and authentication to effectively secure transmission of confidential information, these systems may still be vulnerable to physical break-ins, computer viruses, programming errors, attacks by third-parties or similar disruptiveproblems. The Company may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber attacks . Moreover, the Company may be unable to anticipate cyber attacks, react in a timely manner, or implement adequate preventative or remedial measures. Although the Company monitors its systems in order to detect security breaches or instances of unauthorized access to confidential information, there is no guarantee that its monitoring efforts will be effective. While the Company has not experienced any material losses relating to cyber attacks or other information security breaches to date, the Company and AFF have been the subject of attempted hacking and cyber attacks and there can be no assurance that the Company will not suffer significant losses or reputational harm in the future.
Additionally, the regulatory environment related to information security and data collection, retention, use and privacy is increasingly rigorous, with new and constantly changing requirements applicable to the Company’s business, and compliance with those requirements could result in additional costs, such as increased investment in technology or investigative expenses, the costs of compliance with privacy laws, and fines, penalties and costs incurred to prevent or remediate information security or cyber breaches. For example, the GDPR imposes strict data protection requirements and significant penalties for
Table of Contents
noncompliance. Furthermore, various regulators and regulations require notice of any data security breaches that involve personal information. These mandatory disclosures are costly to implement and often lead to widespread negative publicity, which may cause consumers to lose confidence in the effectiveness of the Company’s data security measures. Any security breachsuffered by the Company or its vendors, any unauthorized, accidental, or unlawful access or loss of data, or the perception that any such event has occurred, could result in a disruption to the Company’s operations, litigation, an obligation to notify regulators and affected individuals, the triggering of indemnification and other contractual obligations, regulatory investigations, government fines and penalties, reputational damage, and loss of customers and ecosystem partners, and its business could be materially and adversely affected. For additional information on cybersecurity, see “Item 1C. Cybersecurity.”
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.
The Company’s future growth is dependent on its ability to keep pace with the adoption of technological advances, including generative artificial intelligence and other machine learning technologies, to remain competitive.
The Company’s industry is marked by rapid technological developments and innovations, such as the use of artificial intelligence and machine learning, to conform to evolving industry standards. The Company may be required to make significant investments in its information technology systems, including those related to artificial intelligence and machine learning, in order to maintain its competitive position in the market. If the Company is unable to provide enhancements and new features and integrations for its existing products, develop new products that achieve market acceptance, or innovate quickly enough to keep pace with these rapid technological developments, its business could be harmed. Furthermore, the technical challenges associated with developing this technology may be significant, leading to risk of equipment failures, customer disruptions, or vulnerabilities that could compromise the integrity, security, or privacy of certain customer information. These failures could result in reputational damage, legal liabilities, or loss in customer confidence. Moreover, transitioning to these new or upgraded systems or technological developments requires significant capital investments and personnel resources. Implementation is also highly dependent on the coordination of numerous associates, contractors and software and system providers. If the Company’s information technology systems, upgrades and associated change management are not adequate to support its business and its strategic initiatives, the Company’s financial condition and results of operations could be adversely affected, and its business may become less competitive.
Because the Company maintains a significant supply of cash, pawn loan collateral and retail inventories in its pawn stores and certain processing centers, the Company may be subject to employee and third-party robberies, riots, looting, burglaries and thefts. The Company may also be subject to liability as a result of crimes at its pawn stores.
The Company’s business requires it to maintain a significant supply of cash, loan collateral and inventories, including gold and other precious metals, in most of its pawn stores and certain storage and processing locations. As a result, the Company is subject to the risk of employee and third-party robberies, riots, looting, burglaries and thefts. Although the Company has implemented various programs in an effort to reduce these risks and utilizes various security measures at its facilities, there can be no assurance that robberies, riots, looting, burglaries and thefts will not occur. Robberies, riots, looting, burglaries and thefts could lead to losses and shortages and could adversely affect the Company’s business, prospects, results of operations and financial condition. The Company maintains a program of insurance coverage for various types of property, casualty and other risks. 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.
If the Company is unable to protect its intellectual property rights, its ability to compete could be negatively impacted.
The success of the Company’s business depends to a certain extent upon the value associated with its intellectual property rights, including its proprietary, internally developed POS and loan management system that is in use in its pawn stores and its proprietary application and decisioning technology that is used by the AFF business. The Company relies on a combination of trademarks, trade dress, trade secrets, proprietary software, mobile applications, website domain names and other rights, including confidentiality procedures and contractual provisions, to protect its proprietary technology, processes and other intellectual property. While the Company intends to vigorously protect its trademarks and proprietary systems againstinfringement, it may not be successful. In addition, the laws of certain foreign countries may not protect intellectual property rights to the same extent as the laws of the U.S. The costs required to protect the Company’s intellectual property rights and trademarks could be substantial.
Table of Contents
The Company’s businesses are typically subject to seasonality, which causes the Company’s revenues and operating cash flows to fluctuate and may adversely affect the Company’s ability to borrow on its unsecured credit facilities, service its debt obligations and fund its operations.
The Company’s U.S. pawn business typically experiences reduced demand in the first and second quarters as a result of its customers’ receipt of federal tax refund checks, typically in February of each year, while demand typically increases during the third and fourth quarters. The Company’s pawn business usually experiences seasonal growth of service fees in the third and fourth quarter of each year due to loan balance growth. Service fees generally decline in the first and second quarter of each year due to the typical repayment of pawn loans associated with statutory bonuses received by customers in the fourth quarter in Mexico and with tax refund proceeds typically received by customers in the first quarter in the U.S. The AFF business experiences significantly higher originations in the fourth quarter associated with holiday shopping, which shopping also generally positively impacts retail sales in the Company’s pawn stores in the fourth quarter, and reduced demand in the first and second quarters as retail expenditures are generally lower in these quarters.
This seasonality requires the Company to manage its cash flows over the course of the year. If a governmental authority were to pursue economic stimulus actions or issue additional tax refunds, tax credits or other transfer payments at other times during the year, such actions could have a material adverse effect on the Company’s business, prospects, results of operations and financial condition during these periods. 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.
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. Certain banks have made strategic decisions to limit or restrict branch-based cash handling services. Additionally, actions by federal regulators in the U.S., Latin American countries where the Company operates and the U.K. have caused some commercial banks, including certain banks used by the Company, to cease offering such services to the Company and other businesses in the pawn, LTO and consumer finance industries. The Company also relies significantly on outside vendors to provide services related to financial transaction processing (including credit and debit card processors), utilities, store security, armored transport, precious metal smelting and sales, data and voice networks and other information technology products and services. The failure or inability of any of these third-party financial institutions or vendors to provide such services could limit the Company’s ability to grow its business and could increase the Company’s costs of doing business, which could adversely affect the Company’s operations if the Company is unable to timely replace them with comparable service providers at a comparable cost.
Regulators and payment processors are scrutinizing certain consumer finance companies’ access to the Automated Clearing House (“ACH”) system to disburse and collect proceeds and repayments for consumer finance products, and any interruption or limitation on the Company’s ability to access this critical system would materially adversely affect its business.
It has been reported over the past several years that actions, such as Operation Choke Point, by the U.S. 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).
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. These actions have reduced the number of banks and payment processors who provide commercial banking services, credit facilities and ACH payment processing services which could conceivably make it increasingly difficult to find banking partners and payment processors in the future and/or lead to significantly increased costs for capital and these services. Furthermore, the Company also relies on credit card companies and payment processors for a significant portion of its retail sales as well as payments on its pawn loans, LTO, RISA and bank loan products. These companies may decide to cease doing business with the Company due to regulatory or reputational concerns. If the Company is unable to maintain access to needed services on favorable terms, the Company would have to materially alter, or possibly discontinue, some or all of its business if alternative processors are not available.
Table of Contents
The Company’s risk management efforts may not be effective.
The Company could incur substantial losses and its business operations could be disrupted if the Company does not effectively identify, manage, monitor and mitigate financial risks, such as credit risk, interest rate risk, commodity pricing risk, prepayment risk, liquidity risk and other market-related risks, as well as regulatory and operational risks related to its business, assets and liabilities. The Company’s risk management policies, procedures and techniques may not be sufficient to identify all of the risks it is exposed to, mitigate the risks the Company has identified or identify concentrations of risk or additional risks to which the Company may become subject in the future.
Regulatory, Legislative and Legal Risks
The Company’s products and services are subject to extensive regulation and supervision under various federal, state and local laws, ordinances and regulations in the U.S., Latin America and the U.K. If changes in regulations affecting the Company’s pawn business or the AFF business create increased restrictions, or have the effect of prohibiting pawn loans or POS payment products in the jurisdictions where the Company currently operates, such regulations could materially impair or reduce the Company’s business and limit its expansion into new markets.
The Company’s products and services are subject to extensive regulation and supervision under various federal, state and local laws, ordinances and regulations in the U.S., Latin America and the U.K. Federal and state regulatory authorities are increasingly focused on consumer finance and retail POS payment products, such as those offered by the Company, for credit-constrained consumers. The Company faces the risk that restrictions or limitations on pawn loans and retail POS payment products resulting from the enactment, change, interpretation or enforcement of laws and regulations in the U.S., Latin America or the U.K. could have a negative effect on the Company’s business activities. For example, certain states have capped interest rates on consumer loans at 36% and there has been legislation proposed at the 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. In addition, certain consumer advocacy groups, federal, state and local legislators and governmental agencies have also asserted that rules, laws and regulations should be tightened so as to severely limit, if not eliminate, the availability of pawn transactions, POS payment products and buy/sell agreements to consumers.
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. 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 adequatelydisclose the material terms of loans to the borrowers and otherwise engaging in discriminatory lending practices or unfair, deceptive or abusive acts or practices.
In particular, with respect to the Company’s pawn business, restrictions and regulations such as licensing requirements for pawn stores and their employees, customer identification requirements, suspicious activity reporting, disclosure requirements and limits on interest rates, loan service fees, or other fees have been and continue to be proposed. Adoption of such federal, state or local regulation or legislation in the U.S., Latin America and the U.K. could restrict, or even eliminate, the availability of pawn transactions and buy/sell agreements at some or all of the Company’s locations, which would adversely affect the Company’s operations and financial condition.
In addition, certain aspects of the AFF business, such as the content of its advertising and other disclosures to customers about transactions, its collection practices, the manner in which AFF contacts its customers, the decisioning process regarding whether to enter into a transaction with a potential customer, its credit reporting practices and the manner in which it processes and stores certain customer, employee and other information are subject to federal and state laws and regulatory oversight. These applicable state and federal privacy laws will require AFF to design, implement and maintain different types of privacy- and access-related compliance controls and programs simultaneously in multiple states, thereby further increasing the complexity and cost of compliance.
Moreover, certain states limit the total amount or rate of finance charge that AFF may charge a customer for the customer to achieve ownership of the leased merchandise at the end of the lease term. Additional states may elect to implement similar limits or states with existing limits may elect to further lower the total cost that AFF may charge a customer to achieve ownership of the leased merchandise at the end of the lease term, which could have an adverse effect on the Company’s results of operations and financial condition.
Table of Contents
The complexity of the political and regulatory environment in which the Company operates and the related cost of compliance are both increasing due to the changing political landscape, additional legal and regulatory requirements, the Company’s ongoing expansion into new markets and the fact that foreign laws occasionally are vague or conflict with domestic laws. In addition to potential damage to the Company’s reputation and brand, failure to comply with applicable federal, state and local laws and regulations, such as those outlined elsewhere in these risk factors may result in the Company being subject to claims, lawsuits, fines and adverse publicity that could have a material adverse effect on its business, results of operations and financial condition.
The FTC and the CFPB have regulatory, supervisory and enforcement powers over providers of consumer financial products and services in the U.S., and each could exercise its enforcement powers in ways that could have a material adverse effect on the Company’s business and financial results.
The FTC is charged with preventingunfair or deceptive acts or practices and false or misleading advertisements, and the CFPB is charged with preventingunfair, deceptive or abusive acts or practices with respect to consumer financial goods and services. To this end, the FTC and CFPB have been exercising their supervisory and investigative powers over certain non-bank providers of consumer financial products and services. In particular, both the FTC and CFPB have the authority to issue civil investigative demands and pursue administrative proceedings or litigation for actual or perceived violations of some federal consumer laws. In these proceedings, the FTC can seek consent orders, confidential memorandums of understanding, cease and desist orders (which can include orders for redisclosure, restitution or rescission of contracts, as well as affirmative or injunctive relief) and monetary penalties. The CFPB’s examination authority permits its examiners to inspect the books and records of providers of short-term, small dollar loans and to ask questions about their business practices. As a result of these examinations of non-bank providers of consumer credit, the Company could be subject to specific enforcement action, including monetary penalties, which could adversely affect the Company.
Also, where a company is alleged to have violated Title X of the Dodd-Frank Act or CFPB regulations implemented under Title X of the Dodd-Frank Act, the Dodd-Frank Act empowers state attorneys general and certain state regulators to bring civil actions to remedy allegedviolations of law. If the CFPB or one or more state attorneys general or state regulators believe that the Company has violated any of the applicable laws or regulations or any consent orders or confidential memorandums of understanding against or with the Company, they could exercise their enforcement powers in ways that could have a material adverse effect on the Company’s business and financial results.
See “Item 1. Business—Governmental Regulation” for a further discussion of the regulatory authority of the CFPB.
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.
Governments, including agencies at the national, state and local levels, may seek to enforce or impose new laws, regulatory restrictions, licensing requirements or taxes that affect the Company’s products or services it offers, the terms on which it may offer such products and services, and the disclosure, compliance and reporting obligations it must fulfill in connection with its business. They may also interpret or enforce existing requirements in new ways that could restrict the Company’s ability to continue its current methods of operation or to expand operations, could impose significant additional compliance costs, and could have a material adverse effect on the Company’s financial condition and results of operations. In some cases, these measures could even directly prohibit some or all of the Company’s current business activities in certain jurisdictions or render them unprofitable and/or impractical to continue.
Media reports, statements made by regulators and elected officials and the general public perception that pawnshops, LTO and retail finance products for credit-constrained consumers are predatory or abusive could materially adversely affect the Company’s businesses. In recent years, consumer advocacy groups and some media reports, in the U.S., Latin America and the U.K., have advocated governmental action to prohibit or place severe restrictions on the Company’s products and services.
Reports and statements made by consumer advocacy groups, members of the media, regulators and elected officials often focus on the annual or monthly cost to a consumer of pawn, LTO and certain retail finance transactions, which are higher than the interest typically charged by banks to consumers with better credit histories. These reports and statements typically characterize these products as predatory or abusive and often focus on alleged instances of pawn operators purchasing or accepting stolen property as pawn collateral. If the negative characterization of the Company’s businesses becomes increasingly accepted by consumers, demand for its products could significantly decrease, which could materially affect the Company’s results of operations and financial condition. Additionally, if the negative characterization of these types of transactions becomes
Table of Contents
increasingly accepted by legislators and regulators, the Company could become subject to more restrictive laws and regulations that could have a material adverse effect on the Company’s financial condition and results of operations. 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.
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. 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. Thus, the Company’s arbitration agreements, if enforced, have the effect of mitigating, but not eliminating, class and collective action liability.
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. 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.
Any judicial or administrative decision, federal legislation or agency rule that would impair the Company’s ability to enter into and enforce consumer arbitration agreements with class action waivers could significantly increase the Company’s exposure to class action litigation as well as litigation in plaintiff-friendly jurisdictions. Such litigation could have a material adverse effect on the Company’s business, results of operations and financial condition.
Current and future litigation or regulatory proceedings in the U.S., Latin America and the U.K. could have a material adverse effect on the Company’s business, prospects, results of operations and financial condition.
The Company or its subsidiaries has been, is, or may become involved in lawsuits, arbitration claims (including mass arbitrations), regulatory or administrative proceedings, examinations, investigations, consent orders, memorandums of understanding, audits, other actions arising in the ordinary course of business, including those related to consumer financial protection, federal or state wage and hour laws, product liability, unclaimed property, employment, personal injury, and other matters that could cause it to incur substantial expenditures and generate adverse publicity. In particular, the Company may be involved in lawsuits, arbitration claims or regulatory actions related to consumer finance and protection, employment, marketing, unclaimed property, competition matters, and other matters, including class action lawsuits brought against it for allegedviolations of the Fair Labor Standards Act, state wage and hour laws, state or federal advertising laws, consumer protection, lending and other laws. The consequences of defending proceedings or an adverse ruling in any current or future litigation, arbitration claims (including mass arbitrations), judicial or administrative proceeding, including consent orders or memorandums of understanding, could cause the Company to incur substantial legal fees, have to refund fees and/or interest collected, refund the principal amount of advances, pay treble or other multiples of damages, pay monetary penalties, fines, and/or modify or terminate the Company’s operations in particular states or countries. Defense or filing of any lawsuit, arbitration claims or administrative proceeding, even if successful, could require substantial time, resources, and attention of the Company’s management and could require the expenditure of significant amounts for legal fees and other related costs. Settlement of lawsuits or administrative proceedings may also result in significant payments and modifications to the Company’s operations. Due to the inherent uncertainties of litigation, administrative proceedings and other claims, the Company cannot accurately predict the ultimate outcome of any such matters.
Adverse court and administrative interpretations or enforcement of the various laws and regulations under which the Company operates could require the Company to alter the products that it offers or cease doing business in the jurisdiction where the court, state or federal agency interpretation and enforcement is applicable. The Company is also subject to regulatory proceedings, and the Company could sufferlosses from interpretations and enforcement of state or federal laws in those regulatory proceedings, even if it is not a party to those proceedings. 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.
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.
Because the Company accepts firearms as pawn collateral and buys and sells firearms, ammunition and certain related accessories in many of its U.S. pawn locations, the Company is required to comply with U.S. federal, state and local laws and regulations pertaining to the pawning, purchase, storage, transfer and sale of such products, and the Company is subject to reputational harm if a customer purchases or redeems a pawned firearm that is later involved in a shooting or other crime.
Over the past several years, the purchase, sale and ownership of firearms, ammunition and certain related accessories have been the subject of increased media scrutiny and federal, state and local regulation. If enacted, new laws and regulations could limit the types of licenses, firearms, ammunition and certain related accessories that the Company is permitted to purchase and sell and could impose new restrictions and requirements on the manner in which the Company pawns, offers, purchases and sells these products, which could have a material adverse effect on the Company’s business, prospects, results of operations and financial condition.
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. 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 litigationagainst the Company. Commencement of such lawsuits or any adverse media attention against the Company could have a material adverse effect on its business, reputation, prospects, results of operations and financial condition.
The Company is subject to the FCPA, anti-money laundering laws and other anti-corruption laws, and the Company’s failure to comply with these laws could result in penalties that could have a material adverse effect on its business, results of operations and financial condition.
The Company is subject to the FCPA, which generally prohibits companies and their agents or intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business and/or other benefits. The Company is also subject to anti-money laundering laws in the U.S., Latin America and the U.K. and anti-terrorism financing laws and regulations, including the Bank Secrecy Act and the Patriot Act . Furthermore, AFF is required under its agreements with its originating bank partner to maintain an enterprise-wide program designed to enable it to comply with all applicable anti-money laundering and anti-terrorism financing laws and regulations, including the Bank Secrecy Act and the Patriot Act. Although the Company has policies and procedures designed to ensure that it, its employees, agents, and intermediaries comply with the FCPA, anti-money laundering laws and other similar laws and regulations, there can be no assurance that such policies or procedures will work effectively all of the time or protect the Company against liability for actions taken by its employees, agents, and intermediaries with respect to its business or any businesses that it may acquire. In the event the Company believes, or has reason to believe, its employees, agents, or intermediaries have or may have violated applicable anti-corruption laws in the jurisdiction in which it operates, including the FCPA, the Company may be required to investigate or have a third party investigate the relevant facts and circumstances, which can be expensive and require significant time and attention from senior management. The Company’s continued operation and expansion outside the U.S., especially in Latin America, could increase the risk, perceived or otherwise, of such violations in the future.
If the Company is found to have violated the FCPA, anti-money laundering laws or other similar laws, the Company may be subject to criminal and civil penalties and other remedial measures, which could have an adverse effect on its business, results of operations, financial condition, and relationship with regulators and the Bank. Investigation of any potential or perceived violations of the FCPA, anti-money laundering laws or other similar laws by U.S. or foreign authorities could harm the Company’s reputation and could have a material adverse effect on its business, results of operations and financial condition.
Failure to maintain certain criteria required by various federal, state and local regulatory bodies could result in fines or the loss of the Company’s licenses to conduct business.
The Company’s pawn businesses are subject to significant registration and licensing requirements from various federal, state and municipal governmental entities in the U.S., Latin America and the U.K. Many of these regulatory bodies require registration and licenses of stores and employees to conduct the Company’s business and have established criteria the Company must meet in order to obtain, maintain, and renew those licenses. In addition, the AFF business is also subject to certain states’ laws which regulate and require licensing, registration, notice filing or other approval by parties that engage in certain activity
Table of Contents
regarding consumer finance transactions, including facilitating and assisting such transactions in certain circumstances. Furthermore, certain states and localities have also adopted laws requiring licensing, registration, notice filing, or other approval for consumer debt collection or servicing, and/or purchasing or selling consumer loans. From time to time, the Company is subject to audits in various jurisdictions to ensure it is meeting the applicable requirements to maintain the applicable licenses and registrations.
Failure to meet the Company’s legal compliance requirements could result in substantial fines and penalties, store closures, the temporary or permanent suspension of operations, the revocation of existing licenses and/or the denial of new and renewal licensing requests. The Company cannot guarantee future license applications or renewals will be granted. 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.
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 and U.K. markets.
The Company derives significant revenue, earnings and cash flow from operations in Latin America and the U.K., where business operations are transacted primarily in Mexican pesos and British pounds sterling, and to a lesser extent in Guatemalan quetzales and Colombian pesos. The Company’s exposure to currency exchange rate fluctuations results primarily from the translation exposure associated with the preparation of the Company’s consolidated financial statements, as well as from transaction exposure associated with transactions and assets and liabilities denominated in currencies other than the respective subsidiaries’ functional currencies. While the Company’s consolidated financial statements are reported in U.S. dollars, the financial statements of the Company’s foreign subsidiaries are prepared using their respective functional currency and translated into U.S. dollars by applying appropriate exchange rates. As a result, fluctuations in the exchange rate of the U.S. dollar relative to the foreign currencies could cause significant fluctuations in the value of the Company’s assets, liabilities, stockholders’ equity and operating results. In addition, while expenses with respect to foreign operations are generally denominated in the same currency as corresponding sales, the Company has transaction exposure to the extent expenditures are incurred in currencies other than the respective subsidiaries’ functional currencies. The costs of doing business in foreign jurisdictions also may increase as a result of adverse currency rate fluctuations. In addition, changes in currency rates could negatively affect customer demand, especially in Latin America and in U.S. stores located near the Mexican border. For a detailed discussion of the impact of fluctuations in currency exchange rates, see “Item 7A. Quantitative and Qualitative Disclosures About Market Risk.”
Risks and uncertainties related to the Company’s foreign operations could negatively impact the Company’s operating results.
As of December 31, 2025, the Company had 1,837 pawn store locations in Latin America, including 1,732 in Mexico, 75 in Guatemala, 18 in El Salvador and 12 in Colombia, and 286 stores in the U.K. The Company plans to open or acquire additional pawn stores in Latin America and the U.K. in the future. In addition, AFF owns customer service call centers operating in Jamaica and Mexico and utilizes third-party call center services located in the Dominican Republic. Doing business in foreign countries, especially in Latin America, involves increased risks related to geo-political events, political instability, corruption, economic volatility, property crime, drug cartel and gang-related violence, social and ethnic unrest including riots and looting, enforcement of property rights, governmental regulations, tax policies, banking policies or restrictions, foreign investment policies, public safety, health and security, anti-money laundering regulations, interest rate regulation and import/export regulations, among others. As in many developing markets, there are also uncertainties in the Latin American countries the Company operates in as to how both local law and U.S. federal law is applied, including laws related to commercial transactions and foreign investment. As a result, actions or events could occur in these foreign countries that are beyond the Company’s control, which could restrict or eliminate the Company’s ability to operate some or all of its locations in these countries or significantly reduce customer traffic, product demand and the expected profitability of such operations.
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.
Many of the foreign countries in which the Company operates impose costs on non-domestic companies through the use of local regulations, tariffs, labor controls and other federal or state requirements or legislation. In addition, the U.S., China, Canada, Mexico, European Union and other countries have imposed, or threatened to impose, new or enhanced tariffs, quotas, trade barriers and other restrictions on imports into their respective territories. Numerous trade restrictions are currently in
Table of Contents
effect and such restrictions, coupled with the risk of retaliatory steps taken in response to such restrictions, could potentially serve to depress economic activity generally in the U.S., adversely affecting consumers and contributing to general market volatility.
Furthermore, Mexico’s judiciary is undergoing a substantial overhaul via a 2024 constitutional reform, transitioning from an appointed system to one where federal judges, magistrates, and even Supreme Court justices are popularly elected by vote, starting with 2025 elections, to combat corruption but raising concerns about independence, expertise, and potential political influence from the ruling party. Key changes include popular elections, restructuring governing bodies (replacing the Federal Judiciary Council), reducing Supreme Court size, and lowering qualifications for some judges, creating significant debate over the rule of law and stability. There is no guarantee as to the impact these reforms may have on our Mexican operations if at all.
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.
As of December 31, 2025, the Company had outstanding principal indebtedness of $2,224.0 million and availability of $178.0 million under its credit facilities, subject to certain financial covenants. The Company's level of indebtedness could:
• make it more difficult for the Company to satisfy its obligations with respect to its senior unsecured notes and its other indebtedness, resulting in possible defaults on and acceleration of such indebtedness;
• require the Company to dedicate a substantial portion of its cash flow from operations to the payment of principal and interest on its indebtedness, thereby reducing the availability of such cash flows to fund originations in the AFF business, working capital, acquisitions, new store openings, capital expenditures and other general corporate purposes;
• limit the Company’s ability to obtain additional financing for working capital, financing originations from the AFF business, acquisitions, new store openings, capital expenditures, debt service requirements and other general corporate purposes;
• limit the Company’s ability to refinance indebtedness or cause the associated costs of such refinancing to increase;
• restrict the ability of the Company’s subsidiaries to pay dividends or otherwise transfer assets to the Company, which could limit its ability to, among other things, make required payments on its debt;
• increase the Company’s vulnerability to general adverse economic and industry conditions, including interest rate fluctuations (because a portion of its borrowings are at variable rates of interest); and
• place the Company at a competitive disadvantage compared to other companies with proportionately less debt or comparable debt at more favorable interest rates who, as a result, may be better positioned to withstand economic downturns.
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. However, the Company’s future access to the debt capital markets could become restricted due to a variety of factors, including a deterioration of the Company’s performance or financial condition, regulatory challenges facing the Company or industry, overall industry prospects or changes in debt capital markets or the economy generally and a general bias of some large banks against lending to companies operating in the pawn and specialty finance industries. Inability to access the credit markets on acceptable terms, if at all, could have a material adverse effect on the Company’s financial condition and ability to fund future growth.
Additionally, the Company’s debt instruments include certain affirmative and negative covenants that require the Company to comply with certain financial covenants and impose restrictions on the Company’s financial and business operations, including limitations on liens, indebtedness, fundamental changes, asset dispositions, dividends and other similar restricted payments, transactions with affiliates, payments and modifications of certain existing debt, future negative pledges, and changes in the nature of the Company’s business. A failure to comply with the covenants contained in the Company’s debt instruments could result in an event of default or an acceleration of debt under its debt instruments. In addition, the Company’s debt instruments contain cross-default provisions that could result in its debt being declared immediately due and payable under a number of debt instruments, even if the Company defaults on only one debt instrument. In such event, it is possible that the Company would not be able to satisfy its obligations under all of such accelerated indebtedness simultaneously.
Table of Contents
Determining the AFF business’ allowance for lease and loan losses and liability for off-balance sheet credit exposure requires many assumptions and complex analyses. If the estimates prove incorrect, the AFF business may incur net charge-offs in excess of its reserves or liabilities, or may be required to increase its provision for lease and loan losses, either of which would adversely affect the Company’s results of operations.
The Company’s ability to measure and report its financial position and results of operations is influenced by the need to estimate the impact or outcome of future events on the basis of information available at the time of the issuance of the financial statements. An accounting estimate is considered critical if it requires that management make assumptions about matters that were highly uncertain at the time the accounting estimate was made. If actual results differ from the judgments and assumptions, such differences may have an adverse impact on the results of operations and cash flows. Management has processes in place to monitor these judgments and assumptions, but these processes may not ensure that the judgments and assumptions are correct.
The Company maintains an allowance for lease and loan losses and a liability for off-balance sheet credit exposure related to the OBS Loans at a level believed to be sufficient to cover estimated lifetime losses expected to be incurred. These estimates are highly dependent upon the reasonableness of its assumptions and the predictability of the relationships that drive the results of its valuation methodologies. The Company performs a quantitative analysis to compute historical losses to estimate the allowance for future lease and loan losses and the liability for off-balance sheet credit exposure. Loss experience, first payment default histories, contractual delinquency of lease and loan receivables and OBS Loans and management’s judgment are factors used in assessing the overall adequacy of the allowance and liability and the resulting provision for lease and loan losses. Changes in estimates and assumptions can significantly affect the allowance, liability and provision for lease and loan losses. It is possible that the Company will experience losses that are different from its current estimates. If the Company’s estimates and assumptions prove incorrect and its allowance for lease and loan losses and liability for off-balance sheet credit exposure are insufficient, it may incur net charge-offs in excess of its reserves or liability, or it could be required to increase its provision for lease and loan losses, either of which would adversely affect its results of operations.
The Company is subject to goodwill impairment risk.
At December 31, 2025, the Company had $2,023.4 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. Management performs periodic reviews of the carrying value of goodwill to determine whether events and circumstances indicate that an impairment in value may have occurred. A variety of factors could cause the carrying value of goodwill to become impaired. A write-down of the carrying value of goodwill could result in a non-cash charge, which could have an adverse effect on the Company’s results of operations.
Declines in commodity market prices of gold, other precious metals and diamonds could negatively affect the Company’s profits.
The Company’s profitability could be adversely impacted by commodity market fluctuations. As of December 31, 2025, approximately 75% of the Company’s pawn loans were collateralized with jewelry, which is primarily gold, and 62% 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. 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, a significant decline in market prices could result in a lower balance of pawn loans outstanding for the Company, as customers would receive lower loan amounts for individual pieces of jewelry or other gold items. For a detailed discussion of the impact of a decline in market prices on wholesale scrap jewelry sales, see “Item 7A. Quantitative and Qualitative Disclosures About Market Risk.”
Unexpected changes in both domestic and foreign tax laws and policies could negatively impact the Company’s operating results.
The Company’s financial results may be negatively impacted by changes in domestic or foreign tax laws, administrative interpretations of such laws and enforcement of policies, including, but not limited to, an increase in statutory tax rates, changes in allowable expense deductions, or the imposition of new withholding requirements on repatriation of foreign earnings.
For example, on July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, introducing broad changes to the U.S. tax code, including modifications to corporate and international provisions, which are primarily effective for the Company beginning in 2026 and 2027. The Company is continuing to assess OBBBA’s impact on its financial results. In addition, various foreign taxing jurisdictions enacted local legislation formally adopting the Global Anti-Base Erosion Model Rules (“Pillar
Table of Contents
Two”), which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development Pillar Two Framework. The effective dates were generally January 1, 2024, and January 1, 2025 for different aspects of the rules and vary by jurisdiction. More jurisdictions are expected to implement the model rules under local law in the future, with varying effective dates. Additionally, OBBBA includes modifications to the international tax framework. While the Company continues to evaluate the effect of these legislative changes as additional guidance becomes available, uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions.
The application of indirect taxes, such as sales and value-added taxes, is a complex and evolving issue. Failure to comply with such tax provisions or a successful assertion by a jurisdiction requiring the Company to collect taxes in a location or for transactions where or for which the Company presently does not, could result in substantial tax liabilities as well as penalties and interest. In addition, if the tax authorities in jurisdictions where the Company is already subject to sales tax or other indirect tax obligations were to successfullychallenge the Company’s positions, the Company’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.
The Company’s business and financial results are dependent on overall economic conditions in the geographies in which it operates. In particular, the Company’s business relies heavily on consumer spending, both with respect to retail sales at its pawnshops and demand for AFF’s products to facilitate purchases at its merchant partners. A sustained or rapid downturn in economic conditions generally results in lower consumer confidence and demand for discretionary consumer goods and services, weakening demand for AFF’s products and demand for pre-owned merchandise sold in the Company’s pawnshops. While demand for pawn loans generally remains strong in periods of economic uncertainty, there is no guarantee that such demand would not decrease in future downturns. Furthermore, in periods of economic expansion and high employment, demand for pawn loans can suffer.
The current economic environment, characterized by elevated inflation, elevated interest rates, declines in consumer confidence and uncertainty about economic stability, has increased demand for pawn loans in the U.S. Conversely these conditions, coupled with tighter decisioning, adversely affected merchant sales volumes in certain categories and demand in general for AFF’s products in 2025. While retail sales at the Company’s pawnshops, due in part to the “deep value” nature of the products sold at its pawnshops, and demand for pawn loans have not been adversely affected by such economic trends in 2025, there is no guarantee that they will not be adversely affected should economic conditions deteriorate further. A sustained deterioration in the economy could reduce the demand and resale value of pre-owned merchandise and reduce the amount that the Company could effectively lend on an item of collateral. Such reductions could adversely affect pawn loan balances, pawn redemption rates, inventory balances, inventory mixes, sales volumes and gross profit margins.
Furthermore, economic conditions and demand may also fluctuate by geographic region. The current geographic concentration of the Company’s pawn stores and AFF’s merchant partners creates exposure to local economies and politics, and regional downturns, including with respect to Latin American economies and politics, which tend to be more volatile than the U.S. and U.K. economies. Any unforeseen events or circumstances that negatively affect these areas could materially adversely affect the Company’s revenues and profitability.
The price of the Company’s common stock may fluctuate significantly.
The market price of the Company’s common stock may fluctuate significantly as a result of a variety of factors, many of which are beyond the Company’s control. 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.
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. 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.
Table of Contents
Inclement weather, natural disasters or health epidemics can adversely impact the Company’s operating results.
The occurrence of weather events and natural disasters such as rain, cold weather, snow, wind, storms, hurricanes, earthquakes, volcanic eruptions, or health epidemics in the Company’s markets could adversely affect consumer traffic, retail sales, pawn loan and pawn redemption activities and LTO, RISA and installment loan originations and could have a material adverse effect on the Company’s results of operations. 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.
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. New governmental regulations or guidance relating to climate change, as well as changes in consumers’ and businesses’ behaviors and business preferences, may affect whether and on what terms and conditions the Company will engage in certain activities or offer certain products or services. The governmental and supervisory focus on climate change could also result in the Company becoming subject to new or heightened regulatory requirements. Any such new or heightened requirements could result in increased regulatory, compliance or other costs. The Company’s business, reputation and ability to attract and retain employees may also be harmed if the Company’s response to climate change is perceived to be ineffective or insufficient.
Adverse real estate market fluctuations and/or the inability to renew and extend store operating leases could affect the Company’s profits.
The Company leases most of its pawn store locations. Many of the store leases, especially in Latin America, include annual rent escalations tied to the local consumer price index. A significant rise in real estate prices or real property taxes could also result in an increase in store lease costs as the Company opens new locations and renews leases for existing locations, thereby negatively impacting the Company’s results of operations. In addition, the inability of the Company to renew, extend or replace expiring store leases could have an adverse effect on the Company’s results of operations. The Company also owns the land and buildings for a significant number of its U.S. pawn locations, which could be impacted by adverse market fluctuations.
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.
AFF depends on sales at its merchant partners to drive its transaction volume. If AFF’s merchant partners experience a general decline in sales or close their locations, it could negatively impact AFF’s transaction volume. The loss of business, transaction volumes or platform support from one or more of its top merchant partners could have a material adverse effect on the AFF business. Furthermore, a number of AFF’s legacy merchant partners operate brick-and-mortar retail locations, many of which are furniture stores which have been impacted industry-wide by sales declines over the past several years. Certain of AFF’s larger furniture-focused merchant partners have experienced lagging sales, store closures and, in some instances, including Conn’s Appliances, Inc. (“Conn’s”) and American Freight, Inc. (“A-Freight”) , bankruptcies, which has and is expected to continue to negatively impact AFF’s originations. In the event that AFF is not able to replace origination volume from these brick-and-mortar retailers, its transaction volume and results of operations could be materially impacted.
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.
AFF’s continued success is dependent on its ability to maintain and expand its merchant partner base and the volume of transactions from these merchants in order to grow revenue on its platform. Its ability to retain and grow its relationships with its merchant partners depends on the willingness of merchants to partner with AFF. 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,
Table of Contents
services and products offered by competitors, and its ability to perform under, and maintain, its merchant agreements. It is also important that AFF partner with merchants with growing sales across a diverse mix of retail channels to mitigate risk associated with changing consumer spending behavior, economic conditions and other factors that may affect a particular type of merchant or industry. Additionally, AFF’s agreements with its merchant partners are generally terminable for convenience.
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.
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. The degree to which these merchants successfully integrate the AFF platform into their website or in their store, such as by prominently featuring the platform on such websites or in such stores, has a material impact on AFF’s transaction volume. 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.
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. 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.
AFF’s bank loan product is offered pursuant to its agreement with the Bank, and such agreement is non-exclusive, short-term in duration and subject to termination by the Bank partner upon the occurrence of certain events. If that agreement is terminated and AFF is unable to either replace the commitments of the Bank or substitute its other products for the bank loan product, its business, results of operations, financial condition, and future prospects may be materially affected.
AFF serves as a marketer, service provider and sub-servicer of loans originated by a Utah-chartered state bank. Under this arrangement, AFF purchases a portion of the cash flows originated by the Bank and sub-services the loans thereafter while the Bank retains ownership of the loans at all times. AFF does not originate or ultimately control the pricing or functionality of the loans. The Bank makes all key decisions regarding marketing, underwriting, product features and pricing. AFF generates revenues through the loans and through marketing and sub-servicing fees paid by the Bank. If the Bank were to change its pricing, underwriting or marketing of the loans in a way that decreases revenues or increases losses, then the profitability of each loan could be reduced. Loans originated through the Bank’s program represent a material amount of AFF’s total origination volume. AFF’s bank loan product relies on the Bank originating the loans that are facilitated through AFF’s platform and complying with various federal, state and other laws. The current loan program agreement expires in August 2028. In addition, upon the occurrence of certain early termination events, either AFF or the Bank may terminate the loan program agreement immediately upon written notice to the other party. The Bank could decide not to work with AFF for any reason, could make working with AFF cost-prohibitive or could decide to enter into an exclusive or more favorable relationship with one or more of AFF’s competitors. If the Bank were to suspend, limit or cease its operations, or if AFF’s relationship with the Bank were to otherwise terminate for any reason (including, but not limited to, its failure to comply with regulatory actions), AFF would need to implement a substantially similar arrangement with another bank, obtain additional state licenses or curtail its offering of a direct-to-consumer loan product through its platform. If AFF needs to enter into alternative arrangements with a different bank to replace its existing arrangements, it may not be able to negotiate a comparable alternative arrangement in a timely manner or at all. If AFF is unable to enter into an alternative arrangement with different banks to fully replace or supplement its relationship with the Bank, AFF would potentially need to cease offering its bank loan product or other direct-to-consumer installment loans. In the event that AFF’s relationship with the Bank were terminated and it is unable to substitute another one of its products at the merchants that utilize such bank loan products, its business, results of operations, financial condition and future prospects may be materially affected.
Table of Contents
AFF’s business relies extensively on its proprietary decisioning platform, and if such platform is not effective it could have a material impact on AFF’s business, financial condition and results of operations.
AFF’s business is largely predicated on the effectiveness of its proprietary decisioning platform and model, and AFF relies extensively on this platform for LTO, RISA and bank loan decisioning. AFF’s platform relies heavily on AFF’s modeling and analytics as well as information provided by applicants and third-party data providers and credit reporting agencies. To the extent that applicants provide inaccurate or unverifiable information or data from third-party providers is incomplete or inaccurate, then AFF’s platform will not be able to perform effectively, which could result in wrong or sub-optimal decisions with respect to applicants. 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. 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. Furthermore, the models underlying AFF’s decisioning platform may prove in practice to be less predictive than AFF expects for a variety of reasons, including as a result of errors in constructing, interpreting or using the models or the use of inaccurate assumptions (including failures to update assumptions appropriately or in a timely manner). 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.
AFF’s ability to collect scheduled payments under its leases, RISAs and bank loans is dependent on its customers’ continuing financial stability, and, consequently, collections can be adversely affected by a number of factors, including general economic conditions, inflationary impacts and individual factors such as job loss, divorce, death, illness, personal bankruptcy and customer fraud. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and debtor relief laws, may limit the amount that can be recovered on AFF’s leases, RISAs and bank loans. Federal, state or other restrictions could impair the ability of AFF or the third-party collection services utilized by AFF to collect amounts owed and due on the leases and loans facilitated through its platform. Furthermore, AFF relies on its proprietary decisioning platform to decision its LTO, RISA and bank loan products and customizes this technology to individual merchants and merchandise categories. There is no guarantee that this technology or platform will be effective in making decisions that minimize credit losses. Furthermore, the platform relies on an experienced data science team. In the event the platform is not effective or cannot be supported at the required levels, AFF could experience increased credit losses.
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’s originating bank partner model is successfullychallenged 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 programs accounted for 6% of the Company’s consolidated net revenues during 2025 . 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 successfullychallenged, it may be found to be in violation of state licensing requirements and state laws regulating interest rates and fees and disclosures. In the event of such a challenge or if AFF’s arrangements with the Bank were to end for any reason, AFF would need to find and rely on an alternative bank relationship, rely on existing state licenses, obtain new state licenses, pursue a bank charter, offer consumer loans and/or be subject to the interest rate limitations of certain states.
AFF could be subject to litigation, whether private or governmental, or administrative action regarding the above claims. The potential consequences of an adverse determination could include the inability to collect loans at the contracted interest rates, licensing violations, loans deemed unenforceable or void, the reduction of interest or principal, or other penalties or damages. Third-party purchasers of loans facilitated through AFF’s platform also may be subject to scrutiny or similar litigation, whether based upon the inability to rely upon the “valid when made” doctrine or because a party other than the Bank is deemed the true lender.
Table of Contents
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 Bank is supervised and examined by both the State of Utah, which charters the Bank, and the FDIC. If the FDIC or the Utah Department of Financial Institutions considers any aspect of the Bank-originated products to be inconsistent with its guidance, the Bank may be required to alter or discontinue the product.
On July 29, 2016, the board of directors of the FDIC released examination guidance relating to third-party lending, which, if finalized, would apply to all FDIC-supervised institutions that engage in third-party lending programs, including certain bank products. The proposed guidance elaborates on previously-issued agency guidance on managing third-party risks and specifically addresses third-party lending arrangements where an FDIC-supervised institution relies on a third party to perform one or more significant aspects of the lending process. The types of relationships that would be covered by the guidance include (but are not limited to) relationships for originating loans on behalf of, through or jointly with third parties, or using platforms developed by third parties. 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 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.
The Company’s two business lines are organized into four reportable segments. The U.S. pawn segment consists of pawn operations in 29 U.S. states and the District of Columbia; the Latin America pawn segment consists of pawn operations in Mexico, Guatemala, El Salvador and Colombia; and the U.K. pawn segment consists of pawn operations in England, Scotland and Wales. The retail POS payment solutions segment consists of the operations of AFF in the U.S. Financial information regarding the Company’s revenue and long-lived assets by geographic area is provided in Note 17 of Notes to Consolidated Financial Statements.
Critical Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, related revenue and expenses, and disclosure of gain and loss contingencies at the date of the financial statements. Such estimates, assumptions and judgments are subject to a number of risks and uncertainties, which may cause actual results to differ materially from the Company’s estimates.
The critical accounting policies and estimates that could have a significant impact on the Company’s results of operations are described in Note 2 of Notes to Consolidated Financial Statements. The Company believes the following critical accounting policies describe the more significant judgments and estimates used in the preparation of its consolidated financial statements.
Pawn loans and revenue recognition — Pawn loans are secured by the customer’s pledge of tangible personal property, which the Company holds during the term of the loan. If a pawn loan defaults, the Company relies on the sale of the pawned property to recover the principal amount of an unpaid pawn loan, plus a yield on the investment, as the Company’s pawn loans are non-recourse against the customer. The Company accrues pawn loan fee revenue on a constant-yield basis over the life of the pawn loan for all pawns for which the Company deems collection to be probable based on historical pawn redemption statistics, which is included in accounts receivable, net in the accompanying consolidated balance sheets. If the pawn loan is not repaid prior to the expiration of the pawn loan term, including any extension or grace period, if applicable, the principal amount loaned becomes the inventory carrying value of the forfeited collateral, which is typically recovered through sales of the forfeited items at prices well above the carrying value. 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.
Leased merchandise and revenue recognition — The Company provides merchandise, consisting primarily of furniture and mattresses, appliances, jewelry, electronics and automotive products, to customers of its merchant partners for lease under certain terms agreed to by the customer. The customer has the right to acquire the title either through an early buyout option or through payment of all required lease payments. The Company maintains ownership of the leased merchandise until all payment obligations are satisfied under the lease agreement. The customer has the right to cancel the lease at any time by returning the merchandise. Leased merchandise contracts can typically be renewed for weekly, bi-weekly, semi-monthly, and monthly renewal periods and are generally renewed for between six and 24 months. Leased merchandise is stated at depreciated cost. The Company depreciates leased merchandise over the life of the lease and assumes no salvage value. Depreciation is
Table of Contents
accelerated upon an early buyout. 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. Initial direct costs related to the Companyʼs lease agreements are added to the basis of the leased property and recognized over the lease term in proportion to the recognition of lease income. The Company typically charges the customer a non-refundable processing fee at lease inception and may also receive a discount from or pay a premium to certain merchant partners for leases originated at their locations, which are deferred and amortized using the straight-line method as adjustments to lease income over the contractual life of the related leased merchandise. Unamortized fees, discounts and premiums are recognized in full upon early buyout or charge-off.
The Company accrues lease income earned but not yet collected as accrued rent receivable, which is included in accounts receivable, net in the accompanying consolidated balance sheets. Alternatively, lease payments received in excess of the amount earned are recognized as deferred revenue, which is included in customer deposits and prepayments in the accompanying consolidated balance sheets. Customer payments are first applied to applicable sales tax and scheduled lease payments, then applied to any uncollected fees, such as late fees and insufficient fund fees. The Company collects sales taxes on behalf of the customer and remits all applicable sales taxes collected to the respective jurisdiction.
Provision for lease losses — The Company records a provision for lease losses on an allowance method, which estimates the leased merchandise losses incurred but not yet identified by management as of the end of the accounting period. The allowance for lease losses is based primarily upon historical loss experience, with consideration given to recent and forecasted business trends including, but not limited to, loss trends, delinquency levels, economic conditions, underwriting and collection practices.
The Company charges off leased merchandise when a lease is 90 days or more contractually past due. If an account is deemed to be uncollectible prior to this date, the Company will charge off the leased merchandise at the point in time it is deemed uncollectible.
Finance receivables and revenue recognition — The Company purchases and services retail finance receivables, the term of which typically range from six to 24 months, directly from its merchant partners or from its bank partner. The Company has a partnership with a Utah state-chartered bank that requires the Company to purchase the rights to the cash flows associated with certain finance receivables marketed to retail consumers on the bank’s behalf. The bank establishes the underwriting criteria for the finance receivables originated by the bank.
Interest income is recognized using the interest method over the life of the finance receivable for all loans for which the Company deems collection to be probable based on historical loan redemption statistics and stops accruing interest upon charge-off. Charges for late fees and insufficient fund fees are recognized as income when collected. The Company receives an origination fee on newly purchased bank loans and may receive a discount from or pay a premium to certain merchant partners for finance receivables purchased from them, which are deferred and amortized using the interest method as adjustments to yield over the contractual life of the related finance receivable. Unamortized origination fees, discounts and premiums are recognized in full upon early payoff or charge-off.
The Company offers customers an early payoff discount on most of its finance receivables, whereby the customer has between 90 and 101 days to pay the full principal balance without incurring any interest charge. If the borrower does not pay the full principal balance prior to the expiration of the early payoff discount period, interest charges are applied retroactively to the inception date of the loan. 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.
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 segments its finance receivable portfolio into pools of receivables with similar risk characteristics, which include loan product and monthly origination vintage, and evaluates each pool for impairment.
The Company calculates the allowance for loan losses based on historical loss information and incorporates observable and forecasted economic conditions over a reasonable and supportable forecast period covering the full contractual life of finance receivables. Incorporating observable and forecasted economic conditions could have a material impact on the measurement of the allowance to the extent that forecasted economic conditions change significantly. The Company may also consider other qualitative factors to address recent and forecasted business trends in estimating the allowance, as necessary, including, but not limited to, loss trends, delinquency levels, economic conditions, underwriting and collection practices. The allowance for loan
Table of Contents
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. If an account is deemed to be uncollectible prior to this date, the Company will charge off the finance receivable at the point in time it is deemed uncollectible.
Off-balance sheet installment loans — During the third quarter of 2025, the Company began assisting certain customers in applying for an OBS Loan that is underwritten and fully retained by a bank partner. After origination of the OBS Loan by the bank, the Company assumes responsibility for servicing the loan on behalf of the bank for the remaining term of the loan. The Company does not purchase the loan or the rights to a portion of the cash flows of the loan from the bank. As such, these loans are not reflected on the Company’s balance sheet as a finance receivable.
The Company receives certain servicing and other fees associated with performing OBS Loans from the bank, which are included in interest and fees on finance receivables in the accompanying consolidated statements of income. However, if an OBS Loan becomes 90 days contractually past due, the Company is obligated to reimburse the bank for the outstanding principal amount plus accrued interest. This obligation constitutes an off-balance sheet credit exposure for which the Company is required to recognize, upon inception of the obligation, a liability for the expected lifetime losses, which is included in accrued liabilities in the accompanying consolidated balance sheets.
The Company calculates the liability for expected lifetime losses based on historical loss information and incorporates observable and forecasted economic conditions over a reasonable and supportable forecast period covering the full contractual life of the off-balance sheet credit exposure. Incorporating observable and forecasted economic conditions could have a material impact on the measurement of the liability to the extent that forecasted economic conditions change significantly. The Company may also consider other qualitative factors to address recent and forecasted business trends in estimating the liability, as necessary, including, but not limited to, loss trends, delinquency levels, economic conditions, underwriting and collection practices. The liability for off-balance sheet credit exposure is maintained at a level considered appropriate to cover expected lifetime losses of the off-balance sheet credit exposure, and the appropriateness of the liability is evaluated at each period end.
Business combinations — Business combination accounting requires the Company to determine the fair value of all assets acquired, including identifiable intangible assets, liabilities assumed and contingent consideration issued in a business combination. The total consideration of the acquisition is allocated to the assets and liabilities in amounts equal to the estimated fair value of each asset and liability as of the acquisition date, and any remaining acquisition consideration is classified as goodwill. This allocation process requires extensive use of estimates and assumptions. When appropriate, the Company utilizes independent valuation experts to advise and assist in determining the fair value of the assets acquired and liabilities assumed in connection with a business acquisition, in determining appropriate amortization methods and periods for identified intangible assets and in determining the fair value of contingent consideration, which is reviewed at each subsequent reporting period with changes in the fair value of the contingent consideration recognized in the consolidated statement of income. See Note 3 of Notes to Consolidated Financial Statements.
Goodwill and other indefinite-lived intangible assets — Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in each business combination. The Company performs its goodwill impairment assessment annually as of October 1, and between annual assessments if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company’s reporting units, which are tested for impairment, are U.S. pawn, Latin America pawn, U.K. pawn and retail POS payment solutions. The Company may assess goodwill for impairment at a reporting unit level by first assessing a range of qualitative factors, including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company’s products and services, regulatory and political developments, entity specific factors, such as strategy and changes in key personnel, and overall financial performance. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company proceeds to the quantitative impairment testing methodology, or at the Company’s option, it may proceed directly to the quantitative impairment testing methodology for a reporting unit. See Note 14 of Notes to Consolidated Financial Statements.
The 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. See Note 14 of Notes to Consolidated Financial Statements.
Table of Contents
Results of Operations
2025 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, 2025 as compared to the year ended December 31, 2024 (in thousands, except per share amounts):
Year Ended December 31,
As Reported (GAAP)
Adjusted (Non-GAAP)
Increase /
Increase /
(Decrease)
(Decrease)
Revenue
Net income
Diluted earnings per share
EBITDA (non-GAAP measure)
Weighted-average diluted shares
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.
The following charts present net income, adjusted net income, diluted earnings per share, adjusted diluted earnings per share, EBITDA, adjusted EBITDA and revenue for the years ended December 31, 2025, 2024 and 2023 (in millions, except per share amounts):
* Non-GAAP financial measures. See “Non-GAAP Financial Information” for additional discussion of non-GAAP financial measures.
Table of Contents
The following charts present total assets and earning assets as of December 31, 2025, 2024 and 2023 (in millions):
The following charts present share repurchases, dividends paid, operating cash flow and adjusted free cash flow for the years ended December 31, 2025, 2024 and 2023 (in millions):
* Non-GAAP financial measures. See “Non-GAAP Financial Information” for additional discussion of non-GAAP financial measures.
Operating Results for the Twelve Months Ended December 31, 2025 Compared to the Twelve Months Ended December 31, 2024
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, 2025 and 2024. For similar operating and financial data and discussion of the Company’s 2024 results compared to its 2023 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, 2024, which was filed with the SEC on February 3, 2025.
Stores included in the same-store calculations presented in the U.S. pawn segment and Latin America pawn segment sections below are those stores that were opened or acquired prior to the beginning of the prior-year comparative period and remained open through the end of the reporting period. 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.
Table of Contents
The following tables present segment information for the year ended December 31, 2025 as compared to the year ended December 31, 2024 (in thousands). Operating expenses include salary and benefit expenses of pawn store-level employees and certain of AFF’s operations-focused departments, occupancy costs, bank and other payment processing charges, data analytics and decisioning costs, information technology costs, advertising costs, security, insurance, utilities, supplies, other costs incurred by the pawn stores and other operational costs incurred by AFF. Administrative expenses and amortization expense of acquired intangible assets are not included in the segment pre-tax operating income.
Year Ended December 31, 2025
Pawn
Latin
America
Pawn
Pawn (1)
Retail POS
Payment
Solutions
Corporate/
Intersegment Eliminations
Consolidated
Revenue:
Retail merchandise sales
Pawn loan fees
Leased merchandise income
Interest and fees on finance receivables
Wholesale scrap jewelry sales
Other revenue
Total revenue
Cost of revenue:
Cost of retail merchandise sold
Depreciation of leased merchandise
Provision for lease losses
Provision for loan losses
Cost of wholesale scrap jewelry sold
Other cost of revenue
Total cost of revenue
Net revenue
Expenses and other income:
Operating expenses
Administrative expenses
Depreciation and amortization
Interest expense
Interest income
Gain on foreign exchange
Merger and acquisition expenses
Other income, net
Total expenses and other income
Income (loss) before income taxes
(1) Reflects the operations of H&T for the period August 14, 2025 to December 31, 2025 as a result of the completion of the H&T Acquisition on August 14, 2025.
(2) Represents the elimination of intersegment transactions related to the Company offering AFF’s LTO payment solution in its U.S. pawn stores.
Table of Contents
Year Ended December 31, 2024
Pawn
Latin
America
Pawn
Pawn
Retail POS
Payment
Solutions
Corporate/
Intersegment Eliminations
Consolidated
Revenue:
Retail merchandise sales
Pawn loan fees
Leased merchandise income
Interest and fees on finance receivables
Wholesale scrap jewelry sales
Total revenue
Cost of revenue:
Cost of retail merchandise sold
Depreciation of leased merchandise
Provision for lease losses
Provision for loan losses
Cost of wholesale scrap jewelry sold
Total cost of revenue
Net revenue
Expenses and other income:
Operating expenses
Administrative expenses
Depreciation and amortization
Interest expense
Interest income
Loss on foreign exchange
Merger and acquisition expenses
Other income, net
Total expenses and other income
Income (loss) before income taxes
(1) Represents the elimination of intersegment transactions related to the Company offering AFF’s LTO payment solution in its U.S. pawn stores.
Table of Contents
The following tables detail earning assets, which consist of pawn loans and inventories as well as other earning asset metrics of the pawn segments, as of December 31, 2025 as compared to December 31, 2024 (dollars in thousands, except as otherwise noted):
As of December 31, 2025
Pawn
Latin America
Pawn
Pawn
Total
Pawn
Earning assets:
Pawn loans
Inventories
Average outstanding pawn loan amount (in ones)
Composition of pawn collateral:
Jewelry
General merchandise
Composition of inventories:
Jewelry
General merchandise
Percentage of inventory aged greater than one year
Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories)
2.8 times
4.0 times
2.5 times
3.1 times
Store count
Average store count
As of December 31, 2024
Pawn
Latin America
Pawn
Pawn
Total
Pawn
Earning assets:
Pawn loans
Inventories
Average outstanding pawn loan amount (in ones)
Composition of pawn collateral:
Jewelry
General merchandise
Composition of inventories:
Jewelry
General merchandise
Percentage of inventory aged greater than one year
Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories)
2.8 times
4.2 times
3.2 times
Store count
Average store count
Table of Contents
U.S. Pawn Segment
Retail Merchandise Sales Operations
U.S. retail merchandise sales increased 8% to $1,046.3 million during 2025 compared to $969.4 million for 2024. Same-store retail sales increased 6% during 2025 compared to 2024. The increase in total and same-store retail sales was primarily due to continued strong demand for value priced merchandise and increased inventory levels during 2025 compared to 2024. The gross profit margin on retail merchandise sales in the U.S. was 42% during both 2025 and 2024.
U.S. inventories increased 17% to $286.1 million at December 31, 2025 compared to $245.5 million at December 31, 2024. The increase was primarily due to increases in pawn loan receivable balances creating more forfeited inventory. Inventories aged greater than one year in the U.S. were 1.8% at December 31, 2025 compared to 1.5% at December 31, 2024.
Pawn Lending Operations
U.S. pawn loan receivables as of December 31, 2025 increased 14% in total and 12% on a same-store basis compared to December 31, 2024. The Company believes the increase in same-store pawn receivables was primarily due to continued strong customer demand from a combination of more customer transactions and larger loan amounts requested by the Company’s customers.
U.S. pawn loan fees increased 10% to $555.0 million during 2025 compared to $505.3 million for 2024. Same-store pawn loan fees increased 9% during 2025 compared to 2024. The increase in total and same-store pawn loan fees was primarily due to higher pawn loan balances.
Segment Expenses
U.S. store operating expenses increased 7% to $536.6 million during 2025 compared to $503.6 million during 2024 while same-store operating expenses increased 6% compared with the prior year. The increase in operating expenses was primarily due to increased labor and variable compensation expenses.
Segment Pre-Tax Operating Income
The U.S. segment pre-tax operating income for 2025 was $452.6 million, which generated a pre-tax segment operating margin of 26% compared to $397.3 million and 25% in the prior year, respectively. The increase in the segment pre-tax operating income and margin reflected increased net revenue, partially offset by an increase in segment expenses.
Latin America Pawn Segment
Latin America pawn segment pre-tax operating income for 2025 compared to 2024 was impacted by a 5% unfavorable change in the average value of the Mexican peso compared to the U.S. dollar. The translated value of Latin American earning assets as of December 31, 2025 compared to December 31, 2024 benefited from a 11% favorable change in the end-of-period Mexican peso compared to the U.S. dollar. Constant currency results are non-GAAP financial measures, which exclude the effects of foreign currency translation and are calculated by translating current-year results at prior-year average exchange rates. See the “Constant Currency Results” section in “Non-GAAP Financial Information” below for additional discussion of constant currency operating results.
Retail Merchandise Sales Operations
Latin America retail merchandise sales increased 8% (13% on a constant currency basis) to $584.1 million during 2025 compared to $541.8 million for 2024. Same-store retail sales increased 7% (12% on a constant currency basis) during 2025 compared to 2024. The increase in total and same-store retail sales was primarily due to strong demand for value priced merchandise and increased inventory levels during 2025 compared to 2024. The gross profit margin on retail merchandise sales was 35% during both 2025 and 2024.
Latin America inventories increased 45% (29% increase on a constant currency basis) to $129.3 million at December 31, 2025 compared to $89.1 million at December 31, 2024. The increase in constant currency inventories was primarily due to increases in pawn loan receivable balances over the past several quarters creating more forfeited inventory and a slightly increased mix of higher value jewelry inventory. Inventories aged greater than one year in Latin America were 1.4% at both December 31, 2025 and 2024.
Table of Contents
Pawn Lending Operations
Latin America pawn loan receivables increased 38% (23% increase on a constant currency basis) as of December 31, 2025 compared to December 31, 2024. On a same-store basis, pawn loan receivables also increased 38% (23% increase on a constant currency basis) as of December 31, 2025 compared to December 31, 2024. The increase in constant currency total and same-store pawn receivables is primarily due to increasing demand for pawn loans and larger loan sizes, driven in part by higher gold prices and a slightly increased mix of higher value jewelry loans.
Latin America pawn loan fees increased 10% (15% on a constant currency basis) to $254.1 million during 2025 compared to $231.9 million for 2024. Same-store pawn loan fees increased 9% (14% on a constant currency basis) during 2025 compared to 2024. The constant currency increase in total and same-store pawn loan fees was primarily due to increased constant currency pawn receivables.
Segment Expenses
Operating expenses increased 5% (10% on a constant currency basis) to $272.1 million during 2025 compared to $259.3 million during 2024. Same-store operating expenses also increased 5% (10% on a constant currency basis) compared to the prior year. The constant currency increase in total and same-store operating expenses was primarily driven by general inflationary impacts and continued increases in the federally mandated minimum wage.
Segment Pre-Tax Operating Income
The segment pre-tax operating income for 2025 was $177.4 million, which generated a pre-tax segment operating margin of 20% compared to $150.2 million and 19% in the prior year, respectively. The increase in the segment pre-tax operating income and margin reflected the increase in net revenue, partially offset by an increase in operating expenses.
U.K. Pawn Segment
The segment contribution reflects the results of operations of H&T for the period August 14, 2025 to December 31, 2025 as a result of the completion of the H&T Acquisition on August 14, 2025. See Note 3 of Notes to Consolidated Financial Statements for additional information about the H&T Acquisition.
The U.K. pawn segment contributed $150.7 million in revenue and $52.5 million in pre-tax segment operating income for 2025. The resulting pre-tax segment operating margin was 35%.
U.K. pawn loan receivables were $213.5 million and inventories were $71.9 million as of December 31, 2025.
Table of Contents
Retail POS Payment Solutions Segment
The following table details retail POS payment solutions gross transaction volumes originated during the year ended December 31, 2025 as compared to the year ended December 31, 2024 (dollars in thousands):
Year Ended December 31,
Leased merchandise
Finance receivables (1)
Total gross transaction volume
(1) For the year ended December 31, 2025 includes $32.6 million of OBS Loans the Company began offering during the third quarter of 2025.
The following table details retail POS payment solutions earning assets as of December 31, 2025 as compared to December 31, 2024 (dollars in thousands):
As of December 31,
Leased merchandise, net:
Leased merchandise, before allowance for lease losses
Less allowance for lease losses
Leased merchandise, net (1)
Finance receivables, net:
Finance receivables, before allowance for loan losses
Less allowance for loan losses
Finance receivables, net
(1) Includes $0.2 million of intersegment transactions as of both December 31, 2025 and 2024, respectively, related to the Company offering AFF’s LTO payment solution in its U.S. pawn stores that are eliminated upon consolidation.
The following table details the changes in the allowance for lease and loan losses and other portfolio metrics during the year ended December 31, 2025 as compared to the year ended December 31, 2024 (dollars in thousands):
Year ended December 31,
Leased merchandise portfolio metrics:
Provision rate (1)
Average monthly net charge-off rate (2)
Delinquency rate (3)
Finance receivables portfolio metrics:
Provision rate (1)
Average monthly net charge-off rate (2)
Delinquency rate (3)
(1) Calculated as provision for lease or loan losses as a percentage of the respective gross transaction volume originated.
(2) Calculated as charge-offs, net of recoveries, as a percentage of the respective average earning asset balance before allowance for lease or loan losses.
(3) 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).
Table of Contents
LTO Operations
Leased merchandise, before allowance for lease losses, decreased 14% as of December 31, 2025 compared to December 31, 2024. The decrease was primarily due to decreased gross transaction volumes originated resulting from the bankruptcy filings in late 2024 for two of AFF’s larger retail furniture merchant partners, A-Freight and Conn’s.
The allowance for lease losses decreased 20% to $64.9 million as of December 31, 2025 compared to $80.7 million as of December 31, 2024, which was primarily due to the decrease in leased merchandise and lower lease loss provisioning rates used during 2025 as compared to 2024. As a percentage of lease merchandise, the allowance was 36% at December 31, 2025 and 39% at December 31, 2024.
Leased merchandise income decreased 27% to $559.0 million during 2025 compared to $766.2 million during 2024, which was primarily due to lower average leased merchandise balances outstanding during 2025 compared to 2024.
Depreciation of leased merchandise decreased 26% to $320.1 million during 2025 compared to $434.9 million during 2024, primarily due to the decrease in leased merchandise balances outstanding. As a percentage of leased merchandise income, depreciation of leased merchandise was 57% during both 2025 and 2024.
Provision for lease losses decreased 26% to $120.7 million during 2025 compared to $163.9 million during 2024, which was primarily due to the 23% decrease in gross transaction volumes. As a percentage of gross transaction volume, the provision for lease losses decreased to 27.7% during 2025 compared to 28.8% during 2024.
Retail Finance and Lending Operations
Finance receivables, before allowance for loan losses, decreased 3% as of December 31, 2025 compared to December 31, 2024. The decrease was primarily due to decreased gross transaction volumes in the later part of 2025 compared to the later part of 2024, in part as a result of shifting a portion of transaction volume to OBS Loans beginning in the third quarter of 2025.
The allowance for loan losses decreased 9% to $106.3 million as of December 31, 2025 compared to $117.0 million as of December 31, 2024, which was primarily due to the decrease in finance receivables and lower loan loss provisioning rates used during 2025 as compared to 2024. As a percentage of finance receivables, the allowance was 41% at December 31, 2025 compared to 44% at December 31, 2024.
Interest and fees on finance receivables increased 27% to $311.2 million during 2025 compared to $245.9 million during 2024. The increase was primarily due to the higher average finance receivable balances outstanding during 2025 compared to 2024, partially offset by a slight decline in portfolio yield primarily as a result of AFF expanding its offerings and merchant relationships in certain services sector verticals, some of which are provided at lower interest rates.
Provision for loan losses increased 13% to $162.7 million during 2025 compared to $143.8 million during 2024, which was primarily due to the 15% increase in gross transaction volumes. As a percentage of gross transaction volume, the provision for loan losses decreased to 27.8% during 2025 compared to 28.2% during 2024.
Segment Expenses
Operating expenses decreased 31% to $94.8 million during 2025 compared to $138.0 million during 2024. The decrease was primarily due to the elimination of certain expenses associated with supporting the A-Freight and Conn’s relationships along with continued realization of operating synergies, primarily in technology and development infrastructure, coupled with other cost reduction initiatives. As a percentage of segment revenues, operating expenses decreased to 11% during 2025 from 14% during 2024.
Segment Pre-Tax Operating Income
The retail POS payment solutions segment pre-tax operating income during 2025 was $169.1 million, which generated a pre-tax segment operating margin of 19% compared to $128.6 million and 13% in the prior year, respectively. The increase in the segment pre-tax operating income and margin was primarily the result of the decrease in operating expenses, partially offset by a decrease in segment net revenue.
Table of Contents
Corporate Expenses and Taxes
Administrative expenses increased 31% to $232.8 million during 2025 compared to $178.0 million during 2024, primarily due to the CFPB litigation settlement in 2025, the incremental administrative expenses of H&T since the acquisition date, increased variable compensation expense and general inflationary impacts, partially offset by a 5% change in the average value of the Mexican peso resulting in lower U.S. dollar translated administrative expenses in Latin America. As a percentage of revenue, administrative expenses increased to 6% during 2025 compared to 5% during 2024.
Depreciation and amortization increased 7% to $56.6 million during 2025 compared to $52.8 million during 2024, primarily due to the addition of depreciation and amortization expenses of H&T during 2025.
Interest expense increased 15% to $121.3 million during 2025 compared to $105.2 million for 2024, primarily due to increased outstanding long-term debt balances associated with 2025 acquisition activity. See Note 11 of Notes to Consolidated Financial Statements and “Liquidity and Capital Resources.”
Merger and acquisition expenses increased 545% to $14.4 million during 2025 compared to $2.2 million during 2024. The increase was due primarily to expenses associated with the H&T Acquisition.
Consolidated effective income tax rates for 2025 and 2024 were 26.2% and 24.5%, respectively. The increase in the effective tax rate was primarily due to certain non-deductible expenses incurred in 2025 related to the settlement of the CFPB lawsuit and certain acquisition costs associated with the H&T Acquisition. See Note 12 of Notes to Consolidated Financial Statements.
Liquidity and Capital Resources
Material Capital Requirements
The Company’s primary capital requirements include:
• Expansion of pawn operations through growth of pawn receivables and inventories in existing stores, new store openings, strategic acquisitions and purchases of underlying real estate at new and existing locations;
• Growth of earning assets in the retail POS payment solutions operations through transaction volumes generated from new and existing merchant partners; and
• Return of capital to shareholders through dividends and stock repurchases.
Other material capital requirements include operating expenses (see Note 4 of Notes to Consolidated Financial Statements regarding operating lease commitments), maintenance capital expenditures related to its facilities, technology platforms, general corporate operating activities, income tax payments and debt service, among others. The Company believes that net cash provided by operating activities and available and unused funds under its revolving credit facilities will be adequate to meet its liquidity and capital needs for these items over the next 12 months and also in the longer term beyond the next 12 months.
Expand Pawn Operations
The Company intends to continue expansion of its pawn operations through growth of pawn receivables and inventories in existing stores along with new store openings and acquisitions.
On August 14, 2025, the Company completed its previously announced acquisition of H&T, the leading pawn operator in the United Kingdom with 286 store locations. Under the terms of the H&T Acquisition, H&T shareholders received 650 pence per share in cash. The total equity value for the H&T Acquisition, including cash consideration for the shares, was £289.1 million ($392.4 million USD using the August 13, 2025 closing GBP/USD exchange rate of 1.36). H&T had outstanding indebtedness of £79.6 million as of August 14, 2025 ($108.0 million USD using the August 13, 2025 closing GBP/USD exchange rate of 1.36), which the Company assumed upon closing. The Company also incurred additional costs, expenses and fees for professional services, financing and other transaction and integration costs in connection with the H&T Acquisition and expects to continue to incur additional integration costs during 2026. The substantial majority of these costs will be non-recurring expenses relating to the H&T Acquisition. The Company financed the H&T Acquisition and other costs with available funds under the Credit Facility.
Table of Contents
During 2025, the Company also acquired 23 pawn stores in the U.S. for a cumulative purchase price of $106.3 million, net of cash acquired and subject to future post-closing adjustments. The Company evaluates potential acquisitions based upon growth potential, purchase price, available liquidity, strategic fit and quality of management personnel, among other factors. During 2025, the Company also opened 32 new locations in Latin America, two new stores in the U.S. and one new store in the U.K.
For 2026, the Company expects to continue adding store locations through new store openings and acquisitions. Future store openings and acquisitions are subject to the Company’s ability to identify acquisition opportunities and new location sites in markets with attractive demographics and favorable regulatory environments. The Company currently has no other contractual commitments for materially significant future acquisitions, business combinations or capital commitments.
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. During 2025, the Company purchased the real estate at 43 store locations, primarily from landlords at existing stores, for a cumulative purchase price of $61.9 million. As of December 31, 2025, the Company owned the real estate at a total of 443 pawn locations, primarily in the U.S., along with its corporate headquarters building in Fort Worth, Texas.
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. In addition, AFF has made, and intends to continue to make, investments in its customer and merchant support operations and facilities, its technology platforms and its proprietary decisioning platforms and processes. In addition to utilizing cash flows generated from its own operations to fund expected 2026 growth, AFF has access to the additional sources of liquidity described below if needed to fund further expansion activities.
Return of Capital to Shareholders
During 2025, the Company paid quarterly cash dividends to its shareholders totaling $70.9 million. In January 2026, the Board declared a $0.42 per share first quarter cash dividend on common shares outstanding, or an aggregate of $18.5 million based on the December 31, 2025 share count, to be paid on February 27, 2026 to stockholders of record as of February 18, 2026. While the Company currently expects to continue the payment of quarterly cash dividends, the amount, declaration and payment of cash dividends in the future (quarterly or otherwise) will be made by the Board, from time to time, subject to the Company’s financial condition, results of operations, business requirements, compliance with legal requirements, debt covenant restrictions and other relevant factors.
In July 2023, the Board authorized a common stock repurchase program for up to $200.0 million of the Company’s outstanding common stock. During 2025, the Company repurchased a total of 912,000 shares of common stock at an aggregate cost of $115.0 million and an average cost per share of $126.03, which completed the share repurchase program authorized in July 2023. The Company incurred $1.2 million and $0.9 million of excise taxes during 2025 and 2024, respectively.
In October 2025, the Board authorized an additional common stock repurchase program for up to $150.0 million of the Company’s outstanding common stock, of which the entire $150.0 million is currently remaining. 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.
Sources of Liquidity
The Company regularly evaluates opportunities to optimize its capital structure, including through consideration of the issuance of debt or equity, to refinance existing debt and to enter into interest rate hedge transactions, such as interest rate swap agreements. As of December 31, 2025, the Company’s primary sources of liquidity were $125.2 million in cash and cash equivalents, $171.9 million of available and unused funds under the Company's revolving unsecured credit facilities and $6.1 million of available and unused funds under the Company’s revolving secured credit facility, subject to certain financial covenants (see Note 11 of Notes to Consolidated Financial Statements). The Company had working capital of $1,448.7 million as of December 31, 2025.
Table of Contents
The Company’s cash and cash equivalents as of December 31, 2025 included $43.8 million held by its foreign subsidiaries. These cash balances, which are primarily held in Mexican pesos and British pounds sterling, are associated with foreign earnings the Company has asserted are indefinitely reinvested and which the Company plans to use to support its continued growth plans outside the U.S. through funding of capital expenditures, acquisitions, operating expenses or other similar cash needs of the Company’s foreign operations.
The Company’s liquidity is affected by a number of factors, including changes in general customer traffic and demand, pawn loan balances, 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. Additionally, a prolonged reduction in earnings and EBITDA could limit the Company’s future ability to fully borrow on its credit facilities under current leverage covenants. Regulatory developments affecting the Company’s operations may also impact profitability and liquidity. See “Item 1. Business—Governmental Regulation.”
If needed, the Company could seek to raise additional funds from a variety of sources, including, but not limited to, the sale of assets, reductions in operating expenses, capital expenditures and dividends, the forbearance or deferral of certain operating expenses, the issuance of debt or equity securities, 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. The characteristics of the Company’s current assets, specifically the ability to rapidly liquidate gold jewelry inventory, which accounts for 62% of total inventory, give the Company flexibility to quickly increase cash flow if necessary.
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,
Cash flow provided by operating activities
Cash flow used in investing activities
Cash flow provided by (used in) financing activities
As of December 31,
Working capital
Current ratio
Cash Flow Provided by Operating Activities
Net cash provided by operating activities increased $46.0 million, or 9%, from $540.0 million for 2024 to $585.9 million for 2025 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 $71.6 million.
Cash Flow Used in Investing Activities
Net cash used in investing activities increased $386.5 million, or 88%, from $441.6 million during 2024 to $828.0 million during 2025. Cash flows from investing activities are utilized primarily to fund acquisitions, purchases of furniture, fixtures, equipment and improvements, which includes capital expenditures for improvements to existing pawn stores and for new pawn store openings and other corporate assets, and discretionary purchases of store real property. In addition, cash flows related to the funding of new pawn loans, net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral and changes in net finance receivables, are included in investing activities. The Company paid $54.9 million for furniture, fixtures, equipment and improvements and $61.9 million for discretionary pawn store real property purchases during 2025 compared to $68.2 million and $86.1 million in 2024, respectively. The Company paid $475.1 million in cash related to pawn store acquisitions during 2025 compared to $76.0 million during 2024. The Company funded a net
Table of Contents
increase in pawn loans of $137.9 million during 2025 and $72.0 million during 2024. The Company funded a net increase in finance receivables of $98.3 million during 2025 and $139.3 million during 2024.
Cash Flow Provided by Financing Activities
Net cash used in financing activities decreased $214.6 million, or 562%, from net cash used in financing activities of $38.2 million during 2024 to net cash provided by financing activities of $176.4 million during 2025. Net borrowings on credit facilities were $368.9 million during 2025 compared to net payments of $370.0 million during 2024. During 2024, the Company received $500.0 million in proceeds from the private offering of senior unsecured notes which was used to repay a portion of the outstanding balance on the Credit Facility, after payment of fees and expenses related to the offering. The Company paid debt issuance costs of $10.4 million during 2024. The Company funded $115.8 million for share repurchases during 2025, compared to $85.0 million during 2024. The Company paid dividends of $70.9 million during 2025 compared to $65.8 million during 2024. In addition, the Company paid withholding taxes of $5.8 million on net share settlements of restricted stock awards during 2025 compared to $7.0 million during 2024.
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 and constant currency results as factors in the measurement and evaluation of the Company’s operating performance and period-over-period growth. The Company derives these financial calculations on the basis of methodologies other than GAAP, primarily by excluding from a comparable GAAP measure certain items the Company does not consider to be representative of its actual operating performance. These financial calculations are “non-GAAP financial measures” as defined under the SEC rules. The Company uses these non-GAAP financial measures in operating its business because management believes they are less susceptible to variances in actual operating performance that can result from the excluded items, other infrequent charges and currency fluctuations. The Company presents these financial measures to investors because management believes they are useful to investors in evaluating the primary factors that drive the Company’s core operating performance and provide greatertransparency into the Company’s results of operations. However, items that are excluded and other adjustments and assumptions that are made in calculating these non-GAAP financial measures are significant components in understanding and assessing the Company’s financial performance. These non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, the Company’s GAAP financial measures. Further, because these non-GAAP financial measures are not determined in accordance with GAAP, and are thus susceptible to varying calculations, the non-GAAP financial measures, as presented, may not be comparable to other similarly-titled measures of other companies.
The Company has adjusted the applicable financial calculations to exclude merger and acquisition expenses and amortization of acquired intangible assets, the CFPB litigation settlement and certain other income and expenses. The Company does not consider these items to be related to the organic operations of the Company’s businesses or its continuing operations and are generally not relevant to assessing or estimating the long-term performance of the Company. In addition, excluding these items allows for more accurate comparisons of the financial results to prior periods. Merger and acquisition expenses include incremental costs directly associated with merger and acquisition activities, including professional fees, legal expenses, severance, retention and other employee-related costs, contract breakage costs and costs related to the consolidation of technology systems and corporate facilities, among others.
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 greatertransparency 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. In addition, management believes the adjustments shown below are useful to investors in order to allow them to compare the Company’s financial results for the current periods presented with the prior periods presented.
The 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,
In Thousands
In Thousands
In Thousands
Per Share
Per Share
Per Share
Net income and diluted earnings per share, as reported
Adjustments, net of tax:
Merger and acquisition expenses
Purchase accounting and other adjustments
CFPB litigation settlement
Other (income) expense, net
Adjusted net income and diluted earnings per share
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 Company believes EBITDA and adjusted EBITDA are commonly used by investors to assess a company’s financial performance, and adjusted EBITDA is used as a starting point in the calculation of the consolidated total debt ratio as defined in the Company’s senior unsecured notes. The following table provides a reconciliation of net income to EBITDA and adjusted EBITDA (unaudited, in thousands):
Year Ended December 31,
Net income
Income taxes
Depreciation and amortization (1)
Interest expense
Interest income
EBITDA
Adjustments:
Merger and acquisition expenses
Purchase accounting and other adjustments (2)
CFPB litigation settlement
Other (income) expense, net
Adjusted EBITDA
(1) Includes $53.5 million, $49.7 million and $56.6 million of amortization expense related to identifiable intangible assets for 2025, 2024 and 2023, respectively.
(2) For 2023, amount represents other non-recurring costs included in administrative expenses related to a discontinued finance product.
Table of Contents
Free Cash Flow and Adjusted Free Cash Flow
For purposes of its internal liquidity assessments, the Company considers free cash flow and adjusted free cash flow. The Company defines free cash flow as cash flow from operating activities less purchases of furniture, fixtures, equipment and improvements and net fundings/repayments of pawn loan and finance receivables, which are considered to be operating in nature by the Company but are included in cash flow from investing activities. Adjusted free cash flow is defined as free cash flow adjusted for merger and acquisition expenses paid that management considers to be non-operating in nature.
Free cash flow and adjusted free cash flow are commonly used by investors as additional measures of cash, generated by business operations, that may be used to repay scheduled debt maturities and debt service or, following payment of such debt obligations and other non-discretionary items, that may be available to invest in future growth through new business development activities or acquisitions, repurchase stock, pay cash dividends or repay debt obligations prior to their maturities. These metrics can also be used to evaluate the Company’s ability to generate cash flow from business operations and the impact that this cash flow has on the Company’s liquidity. 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. 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,
Cash flow from operating activities
Cash flow from investing activities:
Pawn loans made
Pawn loans repaid
Recovery of pawn loan principal through sale of forfeited collateral
Investments in finance receivables
Proceeds from finance receivables
Purchases of furniture, fixtures, equipment and improvements
Free cash flow
Merger and acquisition expenses paid, net of tax benefit
Adjusted free cash flow
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 Company’s management uses constant currency results to evaluate operating results of business operations in Latin America and the U.K., which are transacted in local currencies in Mexico, Guatemala, Colombia and the U.K. The Company also has operations in El Salvador, where the reporting and functional currency is the U.S. dollar.
The Company believes constant currency results provide valuable supplemental information regarding the underlying performance of its business operations in Latin America and the U.K., consistent with how the Company’s management evaluates such performance and operating results. 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.
Table of Contents
The following table presents segment information for the Latin America pawn segment for the year ended December 31, 2025 using the exchange rate from the prior-year comparable periods (unaudited, in thousands):
Year Ended December 31, 2025
Currency
Constant Currency
Exchange Rate
Basis
U.S. Dollar Basis
Fluctuations
(Non-GAAP)
Revenue:
Retail merchandise sales
Pawn loan fees
Wholesale scrap jewelry sales
Total revenue
Cost of revenue:
Cost of retail merchandise sold
Cost of wholesale scrap jewelry sold
Total cost of revenue
Net revenue
Segment expenses:
Operating expenses
Depreciation
Total segment expenses
Segment pre-tax operating income
The following table presents earning assets and average outstanding pawn loan amount for the Latin America pawn segment as of December 31, 2025 using the exchange rate from the prior-year comparable period (unaudited, in thousands, except as otherwise noted):
As of December 31, 2025
Currency
Constant Currency
Exchange Rate
Basis
U.S. Dollar Basis
Fluctuations
(Non-GAAP)
Earning assets:
Pawn loans
Inventories
Average outstanding pawn loan amount (in ones)
Table of Contents
The following table provides exchange rates for the Mexican peso, Guatemalan quetzal, Colombian peso and British pound sterling for the current and prior-year periods:
Rate
% Change
Over Prior-
Year Period
Favorable /
(Unfavorable)
Rate
% Change
Over Prior-
Year Period
Favorable /
(Unfavorable)
Rate
U.S. dollar / Mexican peso exchange rate:
End-of-period
Twelve months ended
U.S. dollar / Guatemalan quetzal exchange rate:
End-of-period
Twelve months ended
U.S. dollar / Colombian peso exchange rate:
End-of-period
Twelve months ended
British pound sterling / U.S. dollar exchange rate:
End-of-period
Twelve months ended
Table of Contents
Off-Balance Sheet Arrangements
During the third quarter of 2025, the Company began assisting certain customers in applying for an OBS Loan that is underwritten and fully retained by a bank partner. After origination of the OBS Loan by the bank, the Company assumes responsibility for servicing the loan on behalf of the bank for the remaining term of the loan. The Company does not purchase the loan or the rights to a portion of the cash flows of the loan from the bank. As such, these loans are not reflected on the Company’s balance sheet as a finance receivable. As of December 31, 2025, the outstanding amount of OBS Loans originated and held by the bank was $ 28.1 million.
The Company receives certain servicing and other fees associated with performing OBS Loans from the bank, which are included in interest and fees on finance receivables in the accompanying consolidated statements of income. However, if an OBS Loan becomes 90 days contractually past due, the Company is obligated to reimburse the bank for the outstanding principal amount plus accrued interest. This obligation constitutes an off-balance sheet credit exposure for which the Company is required to recognize, upon inception of the obligation, a liability for the expected lifetime losses. As of December 31, 2025, a liability of $13.8 million was included in accrued liabilities in the accompanying consolidated balance sheets.
The liability for off-balance sheet credit exposure is maintained at a level considered appropriate to cover expected lifetime losses of the off-balance sheet credit exposure, and the appropriateness of the liability is evaluated at each period end. For further detail, see the “Off-balance sheet installment loans” section in Note 2 of Notes to Consolidated Financial Statements.
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 2025. Depending on the severity and persistence of these inflationary pressures, the Company could see a negative impact on its customers’ ability to pay for its goods and services, including an impact on the collectability of its accounts receivable, which could result in increased charge-offs of AFF’s finance receivables and leased merchandise. The Company could also see increases in wages and other operating costs. Furthermore, inflation could also weaken sales at AFF’s merchant partners, negatively impacting AFF’s originations.
However, inflationary economic environments could also benefit the Company by increasing customer demand for value-priced products, lending services in its pawn stores and demand for POS payment solutions provided by AFF.
Seasonality
The Company’s business is subject to seasonal variations, and operating results for each quarter and year-to-date periods are not necessarily indicative of the results of operations for the full year. Typically, the Company experiences seasonal growth of pawn service fees in the third and fourth quarter of each year due to pawn loan balance growth. Pawn service fees generally decline in the first and second quarter of each year after the typical repayment period of pawn loans due to statutory bonuses received by customers in the fourth quarter in Mexico and with tax refund proceeds received by customers in the first quarter in the U.S. In addition, AFF customers generally exercise the early buyout option on their existing lease or finance receivable more frequently during the first quarter due to tax refund proceeds. 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.
