UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2018~~2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________to__________

Commission File Number 1-38315

CURO GROUP HOLDINGS CORP.

(Exact name of registrant as specified in its charter)



Delaware		90-0934597
(State or other jurisdiction Of incorporation or organization)		(I.R.S. Employer Identification No.)

3527 North Ridge Road, Wichita, KS		67205
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (316) ~~425-1410~~772-3801

Former name, former address and former fiscal year, if changed since last report: No Changes

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value per share	CURO	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☐		Accelerated filer	☐☒
Non-accelerated filer	☒☐	~~(Do not check if a smaller reporting company)~~
Smaller reporting company	☐☒		Emerging growth company	☒☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

At May 1, ~~2018~~2020 there were ~~45,561,419~~40,789,687 shares of the registrant’s Common Stock, $0.001 par value per share, outstanding.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

FORM 10-Q

FIRST QUARTER ENDED MARCH 31, ~~2018~~2020

INDEX



		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets –
	March 31, ~~2018~~2020 and December 31, ~~2017~~2019	35
	Condensed Consolidated Statements of ~~Income~~Operations –
	Three months ended March 31, ~~2018~~2020 and ~~2017~~2019	46
	Condensed Consolidated Statements of Comprehensive Income –
	Three months ended March 31, ~~2018~~2020 and ~~2017~~2019	57
	Condensed Consolidated Statements of Cash Flows -–
	Three months ended March 31, ~~2018~~2020 and ~~2017~~2019	68
	Notes to ~~Interim~~Condensed Consolidated Financial Statements	710
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	5157
Item 4.	Controls and Procedures	5157

PART 2 – OTHER INFORMATION

Item 1.	Legal Proceedings	5257
Item 1A.	Risk Factors	5258
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5258
Item 3.	Defaults Upon Senior Securities	5258
Item 4.	Mine Safety Disclosures	5258
Item 5.	Other Information	5258
Item 6.	Exhibits	X59

SIGNATURES		60

GLOSSARY

Terms and abbreviations used throughout this report are defined below.



Term or abbreviation		Definition
12.00% Senior Secured Notes		12.00% Senior Secured Notes, issued in February and November 2017 for a total of $470.0 million due March 1, 2022, fully extinguished September 2018
2017 Tax Act		Tax Cuts and Jobs Act of 2017
2019 Form 10-K		Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 9, 2020.
8.25% Senior Secured Notes		8.25% Senior Secured Notes, issued in August 2018 for $690.0 million, which mature on September 1, 2025
Ad Astra		Ad Astra Recovery Services, Inc., our former provider of third-party collection services for the U.S. business that we acquired in January 2020
Adjusted EBITDA		EBITDA plus or minus certain non-cash and other adjusting items; Refer to "Supplemental Non-GAAP Financial Information" for additional details.
ALL		Allowance for loan losses
Allowance Build		Incremental COVID-related provision expense as a result of additions to the Allowance for Loan Losses
Allowance coverage		Allowance for loan losses as a percentage of gross loans receivable
AOCI		Accumulated Other Comprehensive Income (Loss)
ASC		Accounting Standards Codification
ASU		Accounting Standards Update
Average gross loans receivable		Utilized to calculate product yield and NCO rates; calculated as average of beginning of quarter and end of quarter gross loans receivable
CAB		Credit access bureau
CARES Act		Coronavirus Aid, Relief, and Economic Security Act
Cash Money		Cash Money Cheque Cashing Inc., a Canadian subsidiary
Cash Money Revolving Credit Facility		C$10.0 million revolving credit facility with Royal Bank of Canada
CECL		Current expected credit loss
CFTC		CURO Financial Technologies Corp., a wholly-owned subsidiary of the Company
CODM		Chief Operating Decision Maker
Condensed Consolidated Financial Statements		The unaudited condensed consolidated financial statements presented in this Form 10-Q
COVID-19		An infectious disease caused by the 2019 novel coronavirus disease
CSO		Credit services organization
EBITDA		Earnings Before Interest, Taxes, Depreciation and Amortization
EPS		Earnings per share
Exchange Act		Securities Exchange Act of 1934
FASB		Financial Accounting Standards Board
FFL		Friedman Fleischer & Lowe Capital Partners II, L.P. and its affiliated investment funds, a related party to the Company
Form 10-Q		Quarterly Report on Form 10-Q
Gross Combined Loans Receivable		Gross loans receivable plus loans originated by third-party lenders which are Guaranteed by the Company
Guaranteed by the Company		Loans originated by third-party lenders through CSO program which we guarantee but are not include in the Condensed Consolidated Financial Statements
Katapult		Cognical Holdings, Inc. (formerly known as Zibby), a private lease-to-own platform for online, brick and mortar and omni-channel retailers
NCO		Net charge-off; total charge-offs less total recoveries
NOL		Net operating loss
Non-Recourse Canada SPV Facility		A four-year revolving credit facility with Waterfall Asset Management, LLC with capacity up to C$250.0 million
Non-Recourse U.S. SPV Facility		A four year, asset-backed revolving credit facility with Atalaya Capital Management with capacity up to $200.0 million if certain conditions are met
ROU		Right of use



Term or abbreviation		Definition
RSU		Restricted Stock Unit
SEC		Securities and Exchange Commission
Senior Revolver		Senior Secured Revolving Loan Facility
SRC		Smaller Reporting Company
Stride Bank		In 2019, we partnered with Stride Bank, N.A. to launch a bank-sponsored Unsecured Installment loan originated by Stride Bank. We market and service loans on behalf of Stride Bank and the bank licenses our proprietary credit decisioning for Stride Bank's scoring and approval.
U.S.		United States of America
US GAAP		Generally accepted accounting principles in the United States
VIE		Variable Interest Entity; our wholly-owned, bankruptcy-remote special purpose subsidiary

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

March 31,
2018 December 31,
2017
(Unaudited)
ASSETS
Cash $ 130,739
$ 162,374
Restricted cash (includes restricted cash of consolidated VIEs of $12,268 and $6,871 as of March 31, 2018 and December 31, 2017, respectively) 17,656
12,117
Gross loans receivable (includes loans of consolidated VIEs of $186,492 and $213,846 as of March 31, 2018 and December 31, 2017, respectively) 389,838
432,837
Less: allowance for loan losses (includes loans of consolidated VIEs of $36,619 and $46,140 as of March 31, 2018 and December 31, 2017, respectively) (60,886 ) (69,568 )
Loans receivable, net 328,952
363,269
Deferred income taxes 1,817
772
Income taxes receivable —
3,455
Prepaid expenses and other 32,753
42,512
Property and equipment, net 83,522
87,086
Goodwill 145,764
145,607
Other intangibles, net of accumulated amortization of $42,540 and $41,156 as of March 31, 2018 and December 31, 2017, respectively) 31,961
32,769
Other 12,217
9,770
Total Assets $ 785,381
$ 859,731
LIABILITIES AND STOCKHOLDER’S EQUITY
Accounts payable and accrued liabilities $ 52,860
$ 55,792
Deferred revenue 10,152
11,984
Income taxes payable 8,734
4,120
Accrued interest (includes accrued interest of consolidated VIEs of $1,263 and $1,266 as of March 31, 2018 and December 31, 2017, respectively) 6,384
25,467
Credit services organization guarantee liability 10,412
17,795
Deferred rent 11,732
11,577
Long-term debt (includes long-term debt and issuance costs of consolidated VIEs of $115,071 and $3,921 as of March 31, 2018 and $124,590 and $4,188 as of December 31, 2017, respectively) 622,644
706,225
Subordinated shareholder debt 2,322
2,381
Other long-term liabilities 6,199
5,768
Deferred tax liabilities 11,393
11,486
Total Liabilities 742,832
852,595
Commitments and contingencies

Stockholder's Equity

Preferred stock - $0.001 par value, 25,000,000 shares authorized and no shares were issued at either period end —
—
Class A common stock - $0.001 par value; 225,000,000 shares authorized; issued and outstanding of 45,561,419 and 44,561,419 as of March 31, 2018 and December 31, 2017, respectively) 9
8
Paid-in capital 61,056
46,079
Retained earnings 27,279
3,988
Accumulated other comprehensive loss (45,795 ) (42,939 )
Total Stockholder’s Equity 42,549
7,136
Total Liabilities and Stockholder’s Equity $ 785,381
$ 859,731



	March 31, 2020			December 31, 2019
	March 31, 2020			December 31, 2019
ASSETS
Cash	$	138,714		$	75,242
Restricted cash (includes restricted cash of consolidated VIEs of $22,317 and $17,427 as of March 31, 2020 and December 31, 2019, respectively)	41,527			34,779
Gross loans receivable (includes loans of consolidated VIEs of $231,258 and $244,492 as of March 31, 2020 and December 31, 2019, respectively)	564,437			665,828
Less: allowance for loan losses (includes allowance for losses of consolidated VIEs of $27,421 and $24,425 as of March 31, 2020 and December 31, 2019, respectively)	(99,842		)	(106,835		)
Loans receivable, net	464,595			558,993
Income taxes receivable	24,435			11,426
Prepaid expenses and other	34,120			35,890
Property and equipment, net	66,787			70,811
Right of use asset - operating leases	114,272			117,453
Deferred tax assets	—			5,055
Goodwill	132,825			120,609
Other intangibles, net	33,944			33,927
Other assets	15,547			17,710
Total Assets	$	1,066,766		$	1,081,895
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities (includes accounts payable and accrued liabilities of consolidated VIEs of $13,267 and $13,462 as of March 31, 2020 and December 31, 2019, respectively)	$	53,603		$	60,083
Deferred revenue	6,655			10,170
Lease liability - operating leases	121,715			124,999
Accrued interest (includes accrued interest of consolidated VIEs of $627 and $871 as of March 31, 2020 and December 31, 2019, respectively)	5,392			19,847
Liability for losses on CSO lender-owned consumer loans	9,189			10,623
Debt (includes debt and issuance costs of consolidated VIEs of $87,365 and $2,491 as of March 31, 2020 and $115,243 and $3,022 as of December 31, 2019, respectively)	788,451			790,544
Other long-term liabilities	9,095			10,664
Deferred tax liabilities	13,095			4,452
Total Liabilities	1,007,195			1,031,382
Commitments and contingencies (Note 13)
Stockholders' Equity
Preferred stock - $0.001 par value, 25,000,000 shares authorized; no shares were issued	—			—
Common stock - $0.001 par value; 225,000,000 shares authorized; 46,934,750 and 46,770,765 shares issued; and 40,779,447 and 41,156,224 shares outstanding at the respective period ends	9			9
Treasury stock, at cost - 6,155,303 and 5,614,541 shares as of the respective period ends	(77,852		)	(72,343		)
Paid-in capital	70,798			68,087
Retained earnings	127,472			93,423
Accumulated other comprehensive loss	(60,856		)	(38,663		)
Total Stockholders' Equity	59,571			50,513
Total Liabilities and Stockholders' Equity	$	1,066,766		$	1,081,895

See accompanying Notes to unaudited Condensed Consolidated Financial Statements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS

(in ~~thousands)~~thousands, except per share data)

(unaudited)


	Three Months Ended March 31,				Three Months Ended March 31,
	2018		2017		2020		2019
Revenue	$	261,758	$	224,580	$	280,806	$	277,939
Provision for losses	81,031		61,736		113,536		102,385
Net revenue	180,727		162,844		167,270		175,554

Cost of providing services
Salaries and benefits	26,918		26,433		26,007		28,701
Occupancy	13,427		14,095		14,016		14,237
Office	6,981		4,868		5,674		5,113
Other costs of providing services	14,400		14,855		9,655		14,220
Advertising	9,756		7,688		12,219		7,786
Total cost of providing services	71,482		67,939		67,571		70,057
Gross margin	109,245		94,905		99,699		105,497

Operating expense
Corporate, district and other	40,454		32,993
Corporate, district and other expenses					42,807		49,088
Interest expense	22,349		23,366		17,324		17,690
Loss on extinguishment of debt	11,683		12,458
Loss from equity method investment					1,618		—
Total operating expense	74,486		68,817		61,749		66,778
Net income before income taxes	34,759		26,088
Income from continuing operations before income taxes					37,950		38,719
Provision for income taxes	11,467		9,450		1,937		10,046
Net income from continuing operations					36,013		28,673
Net income (loss) from discontinued operations, before income tax					390		(39,048		)
Income tax expense (benefit) related to disposition					98		(47,423		)
Net income from discontinued operations					292		8,375
Net income	$	23,292	$	16,638	$	36,305	$	37,048

Basic earnings per share:
Continuing operations					$	0.88	$	0.62
Discontinued operations					0.01		0.18
Basic earnings per share					$	0.89	$	0.80

Diluted earnings per share:
Continuing operations					$	0.86	$	0.61
Discontinued operations					0.01		0.18
Diluted earnings per share					$	0.87	$	0.79

Weighted average common shares outstanding:
Basic	45,506		37,895		40,817		46,424
Diluted	47,416		38,959		41,892		47,319
Net income per common share:
Basic earnings per share	$	0.51	$	0.44
Diluted earnings per share:	$	0.49	$	0.43

See accompanying Notes to unaudited Condensed Consolidated Financial ~~Statements.~~

Statements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

Three Months Ended
March 31,
2018 2017
Net income $ 23,292
$ 16,638
Other comprehensive income (loss):

Cash flow hedges, net of $0 tax in all periods 54
(42 )
Foreign currency translation adjustment, net of $0 tax in all periods (2,910 ) 2,790
Other comprehensive income (loss) (2,856 ) 2,748
Comprehensive income $ 20,436
$ 19,386



	Three Months Ended March 31,
	2020			2019
Net income	$	36,305		$	37,048
Other comprehensive (loss) income:
Foreign currency translation adjustment, net of $0 tax in both periods	(22,193		)	16,695
Other comprehensive (loss) income	(22,193		)	16,695
Comprehensive income	$	14,112		$	53,743

See accompanying Notes to unaudited Condensed Consolidated Financial Statements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF CASH FLOWS

(dollars in ~~thousands)~~thousands, unaudited)

~~(unaudited)~~

Three Months Ended March 31,
2018 2017
Cash flows from operating activities
Net income $ 23,292
$ 16,638
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 4,660
4,654
Provision for loan losses 81,031
61,736
Amortization of debt issuance costs (34 ) 770
Amortization of bond discount/(premium) 1,163
14
Deferred income tax benefit (1,094 ) (504 )
Loss on disposal of property and equipment 478
10
Loss on extinguishment of debt 11,683
12,458
Call premium payment from debt extinguishment (9,300 ) —
Increase in cash surrender value of life insurance (1,482 ) (502 )
Share-based compensation expense 1,842
126
Changes in operating assets and liabilities:
Loans receivable (55,975 ) (34,818 )
Prepaid expenses and other assets 9,739
4,792
Accounts payable and accrued liabilities (3,239 ) (9,345 )
Deferred revenue (1,734 ) (1,715 )
Income taxes payable 19,629
(841 )
Income taxes receivable (7,411 ) 3,816
Deferred rent 180
194
Accrued Interest (19,084 ) (292 )
Other liabilities 443
(266 )
Net cash provided by operating activities 54,787
56,925
Cash flows from investing activities
Purchase of property, equipment and software (1,609 ) (3,093 )
Cash paid for Cognical Holdings preferred shares (958 ) —
Changes in restricted cash (5,403 ) (6,993 )
Net cash (used in) investing activities (7,970 ) (10,086 )
Cash flows from financing activities
Net proceeds from issuance of common stock 13,135
—
Proceeds from Non-Recourse U.S. SPV facility and ABL facility 3,000
19,802
Payments on Non-Recourse U.S. SPV facility and ABL facility (12,519 ) (11,797 )
Proceeds from issuance of 12.00% Senior Secured Notes —
461,329
Payments on 10.75% Senior Secured Notes —
(426,034 )
Payments on 12.00% Senior Secured Notes (77,500 ) —
Payments on 12.00% Senior Cash Pay Notes —
(125,000 )
Debt issuance costs paid (71 ) (13,690 )
Proceeds from credit facilities 10,000
—
Payments on credit facilities (10,000 ) —
Net cash (used in) financing activities (73,955 ) (95,390 )
Effect of exchange rate changes on cash
(4,497 ) 829
Net (decrease) in cash (31,635 ) (47,722 )
Cash at beginning of period 162,374
193,525
Cash at end of period $ 130,739
$ 145,803



	Three Months Ended March 31,
	2020			2019
Cash flows from operating activities
Net income from continuing operations	$	36,013		$	28,673
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation and amortization	4,537			4,920
Provision for loan losses	113,536			102,385
Amortization of debt issuance costs and bond discount	688			872
Deferred income tax (benefit) expense	14,093			(10,343		)
Loss on disposal of property and equipment	44			991
Loss from equity method investment	1,618			—
Share-based compensation	3,194			2,172
Changes in operating assets and liabilities:
Accrued interest on loans receivable	16,671			1,937
Prepaid expenses and other assets	982			9,938
Other assets	332			(6,374		)
Accounts payable and accrued liabilities	(7,492		)	2,326
Deferred revenue	(3,276		)	(1,709		)
Income taxes payable	—			29,562
Income taxes receivable	(13,134		)	(9,890		)
Accrued interest	(14,389		)	(15,329		)
Other liabilities	(1,548		)	868
Net cash provided by continuing operating activities	151,869			140,999
Net cash provided by (used in) discontinued operating activities	390			(504		)
Net cash provided by operating activities	152,259			140,495
Cash flows from investing activities
Purchase of property, equipment and software	(3,658		)	(3,119		)
Loans receivable originated or acquired	(439,244		)	(420,568		)
Loans receivable repaid	378,843			355,621
Investments in Katapult	—			(1,568		)
Acquisition of Ad Astra, net of acquiree's cash received	(14,418		)	—
Net cash used in continuing investing activities	(78,477		)	(69,634		)
Net cash used in discontinued investing activities	—			(14,213		)
Net cash used in investing activities	(78,477		)	(83,847		)
Cash flows from financing activities
Proceeds from Non-Recourse Canada SPV facility	23,560			3,762
Payments on Non-Recourse Canada SPV facility	(42,497		)	(24,831		)
Debt issuance costs paid	(150		)	(199		)
Proceeds from credit facilities	69,938			30,478
Payments on credit facilities	(44,938		)	(50,478		)
Proceeds from exercise of stock options	126			40
Payments to net share settle restricted stock units vesting	(609		)	(37		)
Repurchase of common stock	(5,908		)	—
Dividends paid to stockholders	(2,247		)	—
Net cash used in financing activities ⁽¹⁾	(2,725		)	(41,265		)
Effect of exchange rate changes on cash and restricted cash	(837		)	1,938
Net increase in cash and restricted cash	70,220			17,321
Cash and restricted cash at beginning of period	110,021			99,857
Cash and restricted cash at end of period	180,241			117,178
(1) Financing activities were not impacted by discontinued operations

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(dollars in thousands, unaudited)

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets to the totals above:



	March 31,
	2020		2019
Cash	$	138,714	$	82,859
Restricted cash (includes restricted cash of consolidated VIEs of $22,317 and $15,460 as of March 31, 2020 and March 31, 2019, respectively)	41,527		34,319
Total cash and restricted cash used in the Statements of Cash Flows	180,241		117,178

See accompanying Notes to unaudited Condensed Consolidated Financial Statements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(unaudited)~~

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS

Nature of Operations and Basis of Presentation

The terms ~~“CURO," "CGHC," "we,” “our,” “us,”~~“CURO" and the ~~“Company,”~~“Company” refer to CURO Group Holdings Corp. and its directly and indirectly owned subsidiaries as a combined entity, except where otherwise stated. The term "CFTC" refers to CURO Financial Technologies Corp., a subsidiary of CURO, and its directly and indirectly ownedwholly-owned subsidiaries as a consolidated entity, except where otherwise stated.

CURO is a growth-oriented, technology-enabled, highly-diversified consumer finance company serving a wide range of underbanked consumers in the U.S., Canada and, through February 25, 2019, the U.K.

The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements ~~have been prepared~~ in accordance with ~~accounting principles generally accepted in the United States of America (“~~US ~~GAAP”),~~GAAP, and with the accounting policies described in ~~our 2017 Annual Report~~its 2019 Form 10-K filed with the SEC on ~~Form 10-K.~~ March 9, 2020. Interim results of operations are not necessarily indicative of the results that might be expected for future interim periods or for the year ending December 31, 2020.

Certain information and note disclosures normally included in ~~our~~ annual financial statements prepared in accordance with US GAAP have been condensed or omitted, although ~~we believe~~the Company believes that the disclosures are adequate to enable a reasonable understanding of the information presented. Additionally, the Company qualifies as an SRC as defined by the SEC, which allows registrants to report information under scaled disclosure requirements. SRC status is determined on an annual basis as of the last business day of the most recently completed second fiscal quarter. Under these rules, the Company met the definition of an SRC as of June 30, 2019, and it will reevaluate as of June 30, 2020.

The ~~unaudited~~ Condensed Consolidated Financial Statements and the accompanying notes ~~(the “Interim Statements”)~~ reflect all adjustments (consisting only of adjustments of a normal and recurring nature) which are, in the opinion of management, necessary to present fairly ~~our~~the Company's results of operations, financial position and cash flows for the periods presented.

COVID-19

A novel strain of coronavirus, COVID-19, surfaced in late 2019 and has subsequently spread worldwide, including to the U.S. and Canada. On March 11, 2020, the World Health Organization categorized COVID-19 as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. Macroeconomic conditions, in general, and the Company's operations have been significantly affected by the COVID-19 pandemic and there are no reliable estimates of how long the pandemic will last or the scope or magnitude of its near-term or long-term impact. In response, various governmental bodies have issued decrees prohibiting certain businesses from continuing to operate and certain classes of workers from reporting to work. However, CURO's operations have been designated as essential financial services by federal guidelines and local regulations. As a provider of an essential service, the Company remains focused on protecting the health and wellbeing of its employees, customers and the communities in which it operates while assuring the continuity of its business operations. While CURO continues serving its customers through both store and online channels, store hours are reduced, enhanced cleaning protocols for all facilities are in place, and social distancing guidelines are in effect to aid in combating the spread of the pandemic.

On March 27, 2020, the U.S. government enacted the CARES Act, which includes modifications to the limitation on business interest expense and net operating loss provisions, and provides a payment delay of employer payroll taxes during 2020 after the date of enactment. The ~~adjustments consist solely~~Company expects to delay payment of ~~normal recurring adjustments.~~employer payroll taxes otherwise due in 2020 with 50% due by December 31, 2021 and the remaining 50% by December 31, 2022.

Refer to Note 7, "Income Taxes" for the CARES Act impact to the Company's provision for income taxes.

In light of COVID-19, the Company also considered implications of the pandemic on its estimates and assumptions as of March 31, 2020. After review of the information available regarding conditions as of March 31, 2020, the Company increased its allowance for loan losses, as disclosed in Note 3, "Loans and Receivable and Revenue." The ~~Interim Statements should~~increase in volatility of foreign currency exchange rates between the U.S. dollar and Canadian dollar, as a result of COVID-19 and other factors such as oil price volatility, had a material impact on the Company's Condensed Consolidated Balance Sheet. Gross loans receivable in Canada decreased $26.5 million, or 8.7%, as a result of fluctuations in the foreign currency exchange rate from December 31, 2019 to March 31, 2020 between the U.S dollar and Canadian dollar.

The effect of the COVID-19 pandemic will not be ~~read~~fully reflected in ~~conjunction with~~ the ~~Consolidated Financial Statements and related Notes included in our 2017 Annual Report on Form 10-K. Interim~~Company's results of operations ~~are not necessarily indicative~~and overall financial performance until future periods. The extent of ~~results that may be expected for future interim periods or for~~ the ~~entire year ending December 31, 2018.~~impact of COVID-19 on the Company's business is highly uncertain and difficult to predict, as information is rapidly evolving with respect to the duration and severity of the pandemic.

We completed our initial public offering ("IPO") in December 2017. Prior to our IPO we filed a certificate of amendment to our certificate of incorporation that effected a 36-for-1 split of our common stock. All share and per share data have been retroactively adjusted for all periods presented to reflect the stock split as if the stock split had occurred at the beginning of the earliest period presented.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise generally applicable to public companies. We have elected to take advantage of these reduced reporting and other requirements available to us.

Principles of Consolidation

The Condensed Consolidated Financial Statements include the accounts of CURO and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.

Ad Astra Acquisition

On January 3, 2020, the Company acquired 100% of the outstanding stock of Ad Astra, a related party, for total consideration of $14.4 million, net of cash received. Prior to the acquisition, Ad Astra was the Company's exclusive provider of third-party collection services for owned and managed loans in the U.S. that are in later-stage delinquency. Ad Astra, now a wholly-owned subsidiary, is included in the Condensed Consolidated Financial Statements. Prior to the acquisition, all costs related to Ad Astra were included in "Other costs of providing services." Following the acquisition, operating costs for Ad Astra are included within "Corporate, district and other expenses," consistent with presentation of other internal collection costs. See Note 17, "Acquisition" for further information.

U.K. Segment Placed into Administration

On February 25, 2019, the Company placed its U.K. segment into administration, which resulted in the treatment of the U.K. segment as discontinued operations for all periods presented. Throughout this Form 10-Q, current and prior period financial information is presented on a continuing operations basis, excluding the results and positions of the U.K. segment. See Note 15, "Discontinued Operations" for additional information.

Equity Investment in Unconsolidated Entity

The Company holds an equity investment in Katapult, a private lease-to-own platform for online, brick and mortar and omni-channel retailers. Katapult provides customers with payment options in store or via the Katapult link on a retailer's website. As of March 31, 2020, the Company owned 42.5% of Katapult. The Company records the equity method investment in "Other assets" on the Condensed Consolidated Balance Sheets. See Note 8, "Fair Value Measurements" for additional detail on Katapult's fair value considerations.

Use of Estimates

The preparation of Condensed Consolidated Financial Statements in conformity with US GAAP requires management to make estimates and assumptions, such as those posed by COVID-19, that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the periods ~~reported.~~presented. Some of the significant estimates that ~~we have~~the Company made in the accompanying Condensed Consolidated Financial Statements include allowances for loan losses, certain assumptions related to equity investments, goodwill and intangibles, accruals related to self-insurance, ~~Credit Services Organization ("CSO") guarantee~~CSO liability for losses and estimated tax liabilities. Actual results may differ from those estimates.

~~Nature of Operations~~Goodwill

~~We are~~The annual impairment review for goodwill, done on October 1, consists of performing a ~~growth-oriented, technology-enabled, highly-diversified consumer finance company serving~~qualitative assessment to determine whether it is more likely than not that a ~~wide range~~reporting unit’s fair value is less than its carrying amount as a basis for determining whether or not further testing is required. The Company may elect to bypass the qualitative assessment and proceed directly to the two-step process, for any reporting unit, in any period. The Company can resume the qualitative assessment for any reporting unit in any subsequent period. If the Company determines, on the basis of ~~underbanked consumers in~~qualitative factors, that it is more likely than not that the ~~United States,~~fair value of the ~~United Kingdom~~reporting unit is less than the carrying amount, the Company will then apply a two-step process of (i) determining the fair value of the reporting unit and ~~Canada.~~(ii) comparing it to the carrying value of the net assets allocated to the reporting unit. When performing the two-step process, if the fair value of the reporting unit exceeds its carrying value, no further analysis or write-down of goodwill is required. In the event the estimated fair value of a reporting unit is less than the carrying value, the Company would recognize an impairment loss equal to such excess, which could significantly and adversely impact reported results of operations and stockholders’ equity.

During the fourth quarter of 2019, the Company performed a quantitative assessment for the U.S. and Canada reporting units. Management concluded that the estimated fair values of these two reporting units were greater than their respective carrying values. Due to COVID-19, the Company determined that a goodwill impairment evaluation triggering event occurred during the three months ended March 31, 2020. After performing an interim review of impairment as of March 31, 2020, both reporting units continue to have estimated fair values greater than their respective carrying values.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

~~(unaudited)~~

Refer to Note 16, "Goodwill" for further information.

Recently Adopted Accounting Pronouncements

ASU 2018-15

In ~~May 2017,~~August 2018, the ~~Financial Accounting Standards Board ("FASB")~~FASB issued ASU ~~2017-09,~~2018-15, ~~Compensation - Stock Compensation (Topic 718): Scope of Modification~~Customer's Accounting ~~("ASU 2017-09"). Under modification accounting, an entity is required to re-value its equity awards each time there~~ for Implementation Costs Incurred in a Cloud Computing Arrangement that is a ~~modification~~Service Contract (“ASU 2018-15”). ASU 2018-15 requires implementation costs incurred by customers in cloud computing arrangements to be deferred over the ~~terms~~non-cancellable term of the ~~awards.~~cloud computing arrangements plus any optional renewal periods (i) that are reasonably certain to be exercised by the customer or (ii) for which exercise of the renewal option is controlled by the cloud service provider. The ~~provisions in~~Company adopted ASU ~~2017-09 provide guidance about which changes to the terms or conditions of~~2018-15 on a share-based payment award require an entity to account for the effects of a modification, unless certain conditions are met. The amendments in this update were effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. ASU 2017-09 was effective for usprospective basis as of January 1, ~~2018.~~2020. The adoption of ~~this amendment~~ASU 2018-15 did not have a material impact on ~~our~~the unaudited Condensed Consolidated Financial Statements.

ASU 2018-13

In August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which amends ASC 820, Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The Company adopted ASU 2018-13 as of January 1, 2020, which did not have a material impact on the unaudited Condensed Consolidated Financial Statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

~~In February 2018, the FASB issued~~ ASU ~~2018-02,~~ ~~Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive income~~ ("ASU 2018-02"). Current US GAAP requires deferred tax liabilities and assets to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the period the change is enacted, including items of other comprehensive income for which the related tax effects are presented in other comprehensive income (“stranded tax effects”). ASU 2018-02 allows, but does not require, companies to reclassify stranded tax effects caused by the 2017 Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. Additionally, ASU 2018-02 requires new disclosures by all companies, whether they opt to do the reclassification or not. The provisions of ASU 2018-02 are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. Companies should apply the proposed amendments either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. We are currently assessing the impact adoption of ASU 2018-02 will have on our Consolidated Financial Statements.

~~In September 2017, the FASB issued ASU 2017-13,~~ Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments ("ASU 2017-13"). ASU 2017-13 amends the early adoption date option for public business entities related to the adoption of ASU No. 2014-09 and ASU No. 2016-02. We are currently assessing the impact adoption of Topic 606 and Topic 842 will have on our Consolidated Financial Statements.

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~ ("ASU 2017-04"). The amendments in ASU 2017-04 simplified the goodwill impairment test by eliminating Step 2 of the test which requires an entity to compute the implied fair value of goodwill. Instead, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, and is limited to the amount of total goodwill allocated to that reporting unit. Under ASU 2017-04, an entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The provisions of ASU 2017-04 are effective for a public entity's annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and effective for us, as an emerging growth company, in fiscal years beginning after December 15, 2021. We are currently assessing the impact adoption of ASU 2017-04 will have on our Consolidated Financial Statements.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the definition of a Business~~ ("ASU 2017-01"). The amendments in ASU 2017-01 narrow the definition of a business and provide a framework that gives an entity a basis for making reasonable judgments about whether a transaction involves an asset or a business and provide a screen to determine when a set (an integrated set of assets and activities) is not a business. The screen requires a determination that when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, the amendments in ASU 2017-01 (i) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

output and (ii) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. ASU 2017-01 is effective prospectively for public companies for annual periods beginning after December 15, 2017 including interim periods therein, and it will be effective for us, as an emerging growth company, for annual periods beginning after December 15, 2018 and interim periods beginning after December 15, 2019. We are currently assessing the impact adoption of ASU 2017-01 will have on our Consolidated Financial Statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash ("ASU 2016-18"). The amendments in ASU 2016-18 require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for public companies for fiscal years beginning after December 15, 2017 and interim periods therein, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2018 and interim periods beginning after December 15, 2019. The amendments should be applied using a retrospective transition method to each period presented. We are currently assessing the impact adoption of ASU 2016-18 will have on our Consolidated Financial Statements.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)~~ (“ASU 2016-15”). The amendments in ASU 2016-15 provide guidance on eight specific cash flow issues, including debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, distributions received from equity method investees and beneficial interests in securitization transactions. ASU 2016-15 is effective for public companies for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. We are currently assessing the potential impact ASU 2016-15 will have on our Consolidated Statements of Cash Flows.2016-13

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,”~~” ("~~ and subsequent amendments to the guidance: ASU ~~2016-13"). This~~2018-19 in November 2018, ASU ~~modifies~~2019-04 in April 2019, ASU 2019-05 in May 2019, ASU 2019-10 and 11 in November 2019, and ASU 2020-02 in February 2020. The standard, as amended, changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace the current “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they currently do under the other-than-temporary impairment model. The standard also simplifies the accounting model for purchased credit-impaired debt securities and loans. The amendment will affect loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to ~~utilize~~receive cash. ASU 2019-04 clarifies that equity instruments without readily determinable fair values for which an ~~expected loss methodology in place~~entity has elected the measurement alternative should be remeasured to fair value as of the ~~currently used incurred loss methodology,~~date that an observable transaction occurred. ASU 2019-05 provides an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost. ASU 2019-10 amends the mandatory effective date for ASU 2016-13. The amendments are effective for fiscal years beginning after December 15, 2022 for entities that are eligible to be defined by the SEC as a SRC, for which ~~will result in~~ the ~~more timely recognition of losses.~~Company qualifies. ASU 2019-11 provides clarity and improves the codification to ASU 2016-13. The amendments should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. As issued, ASU 2016-13 ~~will be~~is effective for ~~public companies for fiscal years~~annual periods beginning after December 15, 2019, and interim periods ~~within those fiscal years,~~therein. Early adoption is permitted for annual periods beginning after December 15, 2018, and itinterim periods therein. The Company is evaluating its alternatives with respect to the available accounting methods under ASU 2016 13, including the fair value option. If the fair value option is not utilized, adoption of ASU 2016-13 will beincrease the allowance for credit losses with a resulting negative adjustment to retained earnings on the date of adoption. The Company does not expect to adopt ASU 2016-13 until at least January 1, 2021 as permitted under ASU 2019-10. The Company is currently assessing the impact the adoption of ASU 2016-13 will have on its Consolidated Financial Statements.

ASU 2020-01

In January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) (ASU 2020-01). ASU 2020-01 clarifies the interaction of the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323, and the accounting for certain forward contracts and purchased options in Topic 815. ASU 2020-01 is effective ~~for us, as an emerging growth company,~~ for fiscal years beginning after December 15, 2020, and interim periods within those fiscal ~~years beginning after December 15, 2021. We are~~years. The Company is currently assessing the impact the adoption of ASU ~~2016-13~~2020-01 will have on ~~our Consolidated Financial Statements.~~

~~In February 2016, the FASB issued~~ its ~~new lease accounting guidance in ASU No. 2016-02,~~ ~~Leases (Topic 842)~~ (“ASU 2016-02”). ASU 2016-02 requires lessees to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payment arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged and lessees will no longer be provided with a source of off-balance sheet financing. ASU 2016-02 will be effective for public companies for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. We are currently assessing the impact ASU 2016-02 will have on our Consolidated Financial Statements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

~~(unaudited)~~

ASU 2020-04

In ~~January 2016,~~March 2020, the FASB issued ASU ~~No. 2016-01,~~ 2020-04, “~~Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~ ~~(“ASU 2016-01”) which requires (i) equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation~~Reference Rate Reform - Facilitation of the ~~investee)~~Effects of Reference Rate Reform on Financial Reporting.” This ASU provides temporary optional expedients and exceptions to ~~be measured~~US GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by this reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at ~~fair value with changes in fair value recognized in net income, (ii) public business entities~~the modification date or reassess a previous accounting determination. Entities can also elect various optional expedients that would allow them to ~~use the exit price notion when measuring the fair value of financial instruments~~continue applying hedge accounting for ~~disclosure purposes and (iii) separate presentation of financial assets and financial liabilities~~hedging relationships affected by measurement category and form of financial asset (i.e., securities or loans and receivables). ASU 2016-01 eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. ASU 2016-01reference rate reform, if certain criteria are met. The guidance is effective upon issuance and generally can be applied through December 31, 2022. The Company is currently assessing the impact the adoption of ASU 2020-04 will have on its Consolidated Financial Statements.

ASU 2019-12

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for ~~public companies~~Income Taxes,” (Topic 740). The ASU intends to simplify various aspects related to accounting for income taxes and removes certain exceptions to the general principles in the standard. Additionally, the ASU clarifies and amends existing guidance to improve consistent application of its requirements. The amendments of the ASU are effective for fiscal years beginning after December 15, ~~2017~~2020, and interim periods within those fiscal years, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. We are currently assessing the impact this ASU will have on our Consolidated Financial Statements.

~~In November 2015, the FASB issued ASU No. 2015-17,~~ ~~Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes~~ (“ASU 2015-17”). ASU 2015-07 eliminates the requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. ASU 2015-17 was effective for public companies for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2017 and interim periods within fiscal years beginning after December 15, 2018. We do not expect thatyears. Early adoption is permitted. The adoption of ~~this amendment will~~ASU 2019-12 is not expected to have a material impact on ~~our Consolidated Financial Statements.~~

~~In August 2015,~~ the ~~FASB issued ASU 2015-14,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ ~~(“ASU 2015-14”), which deferred the effect date of ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ (“ASU 2014-09”), for public companies to fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. If we are no longer an emerging growth company as of December 31, 2018, we will be required to adopt the provision of this standard retroactively as of January 1, 2018. In May 2014, the FASB issued ASU 2014-09 which amended the existing accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. We do not expect that adoption of ASU 2014-09 will have a material impact on ourCompany's Consolidated Financial Statements.

NOTE 2 - VARIABLE INTEREST ENTITIES

~~We hold a credit~~In August 2018, the Company closed the Non-Recourse Canada SPV facility, whereby certain loan receivables ~~are~~were sold to the wholly-owned ~~bankruptcy-remote special purpose subsidiaries (VIEs) and~~VIE to collateralize debt incurred under the facility. See Note 5, "Debt" for additional ~~debt is incurred through~~details on the Non-Recourse ~~U.S.~~Canada SPV ~~facility (See Note 5, "Long-Term Debt," for further discussion) that is collateralized by these underlying loan receivables.~~facility.

~~We have~~The Company has determined that ~~we are~~it is the primary beneficiary of the ~~VIEs~~VIE and ~~are~~is required to consolidate ~~them. We include~~the entity. The Company includes the assets and liabilities related to the ~~VIEs~~VIE in ~~our~~the unaudited Condensed Consolidated ~~Financial Statements and we account for them as secured borrowings. We~~Balance Sheets. As required, CURO parenthetically ~~disclose~~discloses on ~~our~~the unaudited Condensed Consolidated Balance Sheets the ~~VIEs’~~VIE's assets that can only be used to settle the ~~VIEs'~~VIE's obligations and liabilities if the ~~VIEs’~~VIE's creditors have no recourse against ~~our~~the Company's general credit.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

The carrying amounts of consolidated ~~VIEs'~~VIE's assets and liabilities associated with ~~our special purpose subsidiaries~~the VIE subsidiary were as ~~follows:~~

follows (in thousands):


(in thousands)	March 31, 2018		December 31, 2017
					March 31, 2020		December 31, 2019
Assets
Restricted Cash	$	12,268	$	6,871
Restricted cash					$	22,317	$	17,427
Loans receivable less allowance for loan losses	149,873		167,706		203,837		220,067
Total Assets	$	162,141	$	174,577	$	226,154	$	237,494
Liabilities
Accounts payable and accrued liabilities	$	15	$	12	$	13,267	$	13,462
Deferred revenue					39		46
Accrued interest	1,263		1,266		627		871
Long-term debt	111,150		120,402
Intercompany payable					80,240		69,639
Debt					84,874		112,221
Total Liabilities	$	112,428	$	121,680	$	179,047	$	196,239

On April 8, 2020, the Company entered into the Non-Recourse U.S. SPV Facility to provide financing for U.S. Unsecured Installment and Open-End receivables, including those generated under its technology, marketing and servicing relationship with Stride Bank. Refer to Note 19, "Subsequent Events" for additional details.

NOTE 3 – LOANS RECEIVABLE AND REVENUE

The COVID-19 pandemic has impacted customers, which has resulted in past-due gross loans receivable and gross combined loans receivables guaranteed by the Company, as a percentage of total gross combined loans receivable, to increase as of March 31, 2020 compared to December 31, 2019. Additionally, it has created uncertainty regarding the performance of net-charge offs

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

over the loss-development period. The Company has maintained its historical allowance approach, but has adjusted future loss estimates for an increase in past-due gross loans receivable due to adverse market conditions at March 31, 2020 caused by COVID-19. The estimates and assumptions used to determine an appropriate allowance for loan losses and liability for losses on CSO lender-owned consumer loans are those that are available through the filing of this Form 10-Q and which are indicative of conditions occurring as of March 31, 2020. As a result of future loss estimates due to uncertainty caused by COVID-19, and the related impact to past due loans receivable as of March 31, 2020, CURO has determined an additional $12.0 million allowance for loan loss was required.

The following table summarizes revenue by product ~~for the periods indicated:~~(in thousands):


	Three Months Ended March 31,					Three Months Ended March 31,
(in thousands)	2018		2017
						2020		2019
Unsecured Installment	$	132,946	$	109,431		$	122,409	$	135,778
Secured Installment	26,856		23,669			26,286		27,477
Open-End	27,223		17,907			70,982		52,869
Single-Pay	63,705		63,790			45,157		46,761
Ancillary	11,028		9,783			15,972		15,054
Total revenue(1)	$	261,758	$	224,580		$	280,806	$	277,939
(1) Includes revenue from CSO programs of $68.1 million and $71.7 million for the three months ended March 31, 2020 and 2019, respectively.					(1) Includes revenue from CSO programs of $68.1 million and $71.7 million for the three months ended March 31, 2020 and 2019, respectively.

The following tables summarize ~~Loans~~loans receivable by product and the related delinquent loans receivable ~~at March 31, 2018:~~(in thousands):


	March 31, 2018																March 31, 2020
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Total
																	Single-Pay⁽¹⁾			Unsecured Installment			Secured Installment			Open-End			Total
Current loans receivable	$	87,075		$	132,159		$	65,448		$	51,564		$	336,246			$	54,728		$	88,152		$	57,284		$	264,019		$	464,183
Delinquent loans receivable	—			39,273			14,319			—			53,592				—			34,966			15,301			49,987			100,254
Total loans receivable	87,075			171,432			79,767			51,564			389,838				54,728			123,118			72,585			314,006			564,437
Less: allowance for losses	(4,485		)	(37,916		)	(11,639		)	(6,846		)	(60,886		)		(4,693		)	(28,965		)	(9,726		)	(56,458		)	(99,842		)
Loans receivable, net	$	82,590		$	133,516		$	68,128		$	44,718		$	328,952			$	50,035		$	94,153		$	62,859		$	257,548		$	464,595
(1) Of the $54.7 million of Single-Pay receivables, $16.4 million relate to mandated extended payment options for certain Canada Single-Pay loans.																(1) Of the $54.7 million of Single-Pay receivables, $16.4 million relate to mandated extended payment options for certain Canada Single-Pay loans.



	March 31, 2020
	Unsecured Installment		Secured Installment		Open-End		Total
Delinquent loans receivable
0-30 days past due	$	12,511	$	7,168	$	21,381	$	41,060
31-60 days past due	9,566		3,991		12,390		25,947
61 + days past due	12,889		4,142		16,216		33,247
Total delinquent loans receivable	$	34,966	$	15,301	$	49,987	$	100,254

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)



	December 31, 2019
	Single-Pay⁽¹⁾			Unsecured Installment			Secured Installment			Open-End			Total
Current loans receivable	$	81,447		$	117,682		$	70,565		$	285,452		$	555,146
Delinquent loans receivable	—			43,100			17,510			50,072			110,682
Total loans receivable	81,447			160,782			88,075			335,524			665,828
Less: allowance for losses	(5,869		)	(35,587		)	(10,305		)	(55,074		)	(106,835		)
Loans receivable, net	$	75,578		$	125,195		$	77,770		$	280,450		$	558,993
(1) Of the $81.4 million of Single-Pay receivables, $22.4 million relate to mandated extended payment options for certain Canada Single-Pay loans.



	December 31, 2019
	Unsecured Installment		Secured Installment		Open-End		Total
Delinquent loans receivable
0-30 days past due	$	15,369	$	8,039	$	21,823	$	45,231
31-60 days past due	12,403		4,885		13,191		30,479
61 + days past due	15,328		4,586		15,058		34,972
Total delinquent loans receivable	$	43,100	$	17,510	$	50,072	$	110,682

The following tables summarize loans guaranteed by the Company under CSO programs and the related delinquent receivables (in thousands):



	March 31, 2020
	Unsecured Installment			Secured Installment			Total
Current loans receivable guaranteed by the Company	$	44,865		$	1,509		$	46,374
Delinquent loans receivable guaranteed by the Company	9,232			311			9,543
Total loans receivable guaranteed by the Company	54,097			1,820			55,917
Less: Liability for losses on CSO lender-owned consumer loans	(9,142		)	(47		)	(9,189		)
Loans receivable guaranteed by the Company, net	$	44,955		$	1,773		$	46,728



	March 31, 2020
	Unsecured Installment		Secured Installment		Total
Delinquent loans receivable
0-30 days past due	$	7,589	$	255	$	7,844
31-60 days past due	939		32		971
61+ days past due	704		24		728
Total delinquent loans receivable	$	9,232	$	311	$	9,543

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)



	December 31, 2019
	Unsecured Installment			Secured Installment			Total
Current loans receivable guaranteed by the Company	$	61,840		$	1,944		$	63,784
Delinquent loans receivable guaranteed by the Company	12,477			392			12,869
Total loans receivable guaranteed by the Company	74,317			2,336			76,653
Less: Liability for losses on CSO lender-owned consumer loans	(10,553		)	(70		)	(10,623		)
Loans receivable guaranteed by the Company, net	$	63,764		$	2,266		$	66,030



	December 31, 2019
	Unsecured Installment		Secured Installment		Total
Delinquent loans receivable
0-30 days past due	$	10,392	$	326	$	10,718
31-60 days past due	1,256		40		1,296
61 + days past due	829		26		855
Total delinquent loans receivable	$	12,477	$	392	$	12,869

The following table summarizes activity in the allowance for loan losses (in thousands):



	Three Months Ended March 31, 2020
	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	5,869		$	35,587		$	10,305		$	55,074		$	—		$	106,835
Charge-offs	(40,521		)	(38,558		)	(13,110		)	(43,509		)	(1,279		)	(136,977		)
Recoveries	30,004			5,783			2,909			6,411			575			45,682
Net charge-offs	(10,517		)	(32,775		)	(10,201		)	(37,098		)	(704		)	(91,295		)
Provision for losses	9,639			26,182			9,622			40,991			704			87,138
Effect of foreign currency translation	(298		)	(29		)	—			(2,509		)	—			(2,836		)
Balance, end of period	$	4,693		$	28,965		$	9,726		$	56,458		$	—		$	99,842
Allowance for loan losses as a percentage of gross loan receivables	8.6		%	23.5		%	13.4		%	18.0		%	N/A			17.7		%

The following table summarizes activity in the liability for losses on CSO lender-owned consumer loans (in thousands):



	Three Months Ended March 31, 2020
	Unsecured Installment			Secured Installment			Total
Balance, beginning of period	$	10,553		$	70		$	10,623
Charge-offs	(41,511		)	(862		)	(42,373		)
Recoveries	13,762			779			14,541
Net charge-offs	(27,749		)	(83		)	(27,832		)
Provision for losses	26,338			60			26,398
Balance, end of period	$	9,142		$	47		$	9,189

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

~~(unaudited)~~

March 31, 2018
(in thousands) Unsecured Installment Secured Installment Total
Delinquent loans receivable
0-30 days past due $ 13,133
$ 6,274
$ 19,407
31-60 days past due 12,500
4,366
16,866
61-90 days past due 13,640
3,679
17,319
Total delinquent loans receivable $ 39,273
$ 14,319
$ 53,592

~~The following tables summarize Loans receivable by product and the related delinquent loans receivable at December 31, 2017:~~

December 31, 2017
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Total
Current loans receivable $ 99,400
$ 151,343
$ 73,165
$ 47,949
$ 371,857
Delinquent loans receivable —
44,963
16,017
—
60,980
   Total consumer loans receivable 99,400
196,306
89,182
47,949
432,837
   Less: allowance for losses (5,916 ) (43,754 ) (13,472 ) (6,426 ) (69,568 )
   Consumer loans receivable, net $ 93,484
$ 152,552
$ 75,710
$ 41,523
$ 363,269

December 31, 2017
(in thousands) Unsecured Installment Secured Installment Total
Delinquent loans receivable

0-30 days past due $ 18,358
$ 8,116
$ 26,474
31-60 days past due 12,836
3,628
16,464
61-90 days past due 13,769
4,273
18,042
Total delinquent loans receivable $ 44,963
$ 16,017
$ 60,980

~~The following tables summarize loans guaranteed by us under our CSO programs and the related delinquent receivables at March 31, 2018:~~

March 31, 2018
(in thousands) Unsecured Installment Secured Installment Total
Current loans receivable guaranteed by the Company $ 45,922
$ 2,329
$ 48,251
Delinquent loans receivable guaranteed by the Company 8,410
437
8,847
Total loans receivable guaranteed by the Company 54,332
2,766
57,098
Less: CSO guarantee liability (9,886 ) (526 ) (10,412 )
Loans receivable guaranteed by the Company, net $ 44,446
$ 2,240
$ 46,686

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

March 31, 2018
(in thousands) Unsecured Installment Secured Installment Total
Delinquent loans receivable

0-30 days past due $ 6,358
$ 379
$ 6,737
31-60 days past due 1,078
30
1,108
61-90 days past due 974
28
1,002
Total delinquent loans receivable $ 8,410
$ 437
$ 8,847

~~The following tables summarize loans guaranteed by us under our CSO programs and the related delinquent receivables at December 31, 2017:~~

December 31, 2017
(in thousands) Unsecured Installment Secured Installment Total
Current loans receivable guaranteed by the Company $ 62,676
$ 3,098
$ 65,774
Delinquent loans receivable guaranteed by the Company 12,480
537
13,017
Total loans receivable guaranteed by the Company 75,156
3,635
78,791
Less: CSO guarantee liability (17,073 ) (722 ) (17,795 )
Loans receivable guaranteed by the Company, net $ 58,083
$ 2,913
$ 60,996

December 31, 2017
(in thousands) Unsecured Installment Secured Installment Total
Delinquent loans receivable
0-30 days past due $ 10,477
$ 459
$ 10,936
31-60 days past due 1,364
41
1,405
61-90 days past due 639
37
676
Total delinquent loans receivable $ 12,480
$ 537
$ 13,017

~~The following table summarizes activity in the allowance for loan losses during the three months ended March 31, 2018:~~

Three Months Ended March 31, 2018
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Other Total
Balance, beginning of period $ 5,916
$ 43,754
$ 13,472
$ 6,426
$ —
$ 69,568
Charge-offs (47,707 ) (39,377 ) (11,485 ) (20,349 ) (675 ) (119,593 )
Recoveries 35,009
5,967
2,866
9,377
47
53,266
Net charge-offs (12,698 ) (33,410 ) (8,619 ) (10,972 ) (628 ) (66,327 )
Provision for losses 11,302
27,477
6,786
11,428
628
57,621
Effect of foreign currency translation (35 ) 95
—
(36 ) —
24
Balance, end of period $ 4,485
$ 37,916
$ 11,639
$ 6,846
$ —
$ 60,886
Allowance for loan losses as a percentage of gross loan receivables 5.2 % 22.1 % 14.6 % 13.3 % N/A
15.6 %

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~The following table summarizes activity in the CSO guarantee liability during the three months ended March 31, 2018:~~

Three Months Ended
March 31, 2018
(in thousands) Unsecured Installment Secured Installment Total
Balance, beginning of period $ 17,073
$ 722
$ 17,795
Charge-offs (41,719 ) (1,219 ) (42,938 )
Recoveries 10,976
1,169
12,145
Net charge-offs (30,743 ) (50 ) (30,793 )
Provision for losses 23,556
(146 ) 23,410
Balance, end of period $ 9,886
$ 526
$ 10,412

The following table summarizes activity in the allowance for loan losses and the liability for losses on CSO ~~guarantee liability,~~lender-owned consumer loans in total ~~during the three months ended March 31, 2018:~~(in thousands):

Three Months Ended March 31, 2018
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Other Total
Balance, beginning of period $ 5,916
$ 60,827
$ 14,194
$ 6,426
$ —
$ 87,363
Charge-offs (47,707 ) (81,096 ) (12,704 ) (20,349 ) (675 ) (162,531 )
Recoveries 35,009
16,943
4,035
9,377
47
65,411
Net charge-offs (12,698 ) (64,153 ) (8,669 ) (10,972 ) (628 ) (97,120 )
Provision for losses 11,302
51,033
6,640
11,428
628
81,031
Effect of foreign currency translation (35 ) 95
—
(36 ) —
24
Balance, end of period $ 4,485
$ 47,802
$ 12,165
$ 6,846
$ —
$ 71,298

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~



	Three Months Ended March 31, 2020
	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	5,869		$	46,140		$	10,375		$	55,074		$	—		$	117,458
Charge-offs	(40,521		)	(80,069		)	(13,972		)	(43,509		)	(1,279		)	(179,350		)
Recoveries	30,004			19,545			3,688			6,411			575			60,223
Net charge-offs	(10,517		)	(60,524		)	(10,284		)	(37,098		)	(704		)	(119,127		)
Provision for losses	9,639			52,520			9,682			40,991			704			113,536
Effect of foreign currency translation	(298		)	(29		)	—			(2,509		)	—			(2,836		)
Balance, end of period	$	4,693		$	38,107		$	9,773		$	56,458		$	—		$	109,031

The following table summarizes activity in the allowance for loan losses ~~during the three months ended March 31, 2017:~~(in thousands):


	Three Months Ended March 31, 2017																		Three Months Ended March 31, 2019
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
																			Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	5,425		$	17,853		$	10,737		$	5,179		$	—		$	39,194		$	4,189		$	37,716		$	12,191		$	19,901		$	—		$	73,997
Charge-offs	(44,885		)	—			—			(9,229		)	(1,139		)	(55,253		)	(36,521		)	(44,237		)	(12,671		)	(3,638		)	(1,351		)	(98,418		)
Recoveries	33,227			4,840			3,028			5,353			752			47,200			27,911			6,318			3,123			5,159			898			43,409
Net charge-offs	(11,658		)	4,840			3,028			(3,876		)	(387		)	(8,053		)	(8,610		)	(37,919		)	(9,548		)	1,521			(453		)	(55,009		)
Provision for losses	10,894			19,309			6,504			3,265			387			40,359			8,268			33,845			7,153			25,317			453			75,036
Effect of foreign currency translation	58			38			1			4			—			101			50			24			—			224			—			298
Balance, end of period	$	4,719		$	42,040		$	20,270		$	4,572		$	—		$	71,601		$	3,897		$	33,666		$	9,796		$	46,963		$	—		$	94,322
Allowance for loan losses as a percentage of gross loan receivables	5.9		%	32.0		%	30.0		%	17.8		%	N/A			23.5		%	5.6		%	20.8		%	12.1		%	19.5		%	N/A			17.0		%

The following table summarizes activity in the liability for losses on CSO ~~guarantee liability during the three months ended March 31, 2017:~~lender-owned consumer loans (in thousands):


	Three Months Ended March 31, 2017												Three Months Ended March 31, 2019
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Total
													Unsecured Installment			Secured Installment			Total
Balance, beginning of period	$	274		$	15,630		$	1,148		$	17,052		$	11,582		$	425		$	12,007
Charge-offs	(1,821		)	(27,647		)	(3,163		)	(32,631		)	(40,980		)	(1,076		)	(42,056		)
Recoveries	659			10,957			2,371			13,987			10,560			802			11,362
Net charge-offs	(1,162		)	(16,690		)	(792		)	(18,644		)	(30,420		)	(274		)	(30,694		)
Provision for losses	904			19,542			931			21,377			27,422			(73		)	27,349
Balance, end of period	$	16		$	18,482		$	1,287		$	19,785		$	8,584		$	78		$	8,662

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes activity in the allowance for loan losses and the liability for losses on CSO ~~guarantee liability,~~lender-owned consumer loans, a non-GAAP metric, in total ~~during the three months ended March 31, 2017:~~(in thousands):


	Three Months Ended March 31, 2017																		Three Months Ended March 31, 2019
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
																			Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	5,699		$	33,483		$	11,885		$	5,179		$	—		$	56,246		$	4,189		$	49,298		$	12,616		$	19,901		$	—		$	86,004
Charge-offs	(46,706		)	(27,647		)	(3,163		)	(9,229		)	(1,139		)	(87,884		)	(36,521		)	(85,217		)	(13,747		)	(3,638		)	(1,351		)	(140,474		)
Recoveries	33,886			15,797			5,399			5,353			752			61,187			27,911			16,878			3,925			5,159			898			54,771
Net charge-offs	(12,820		)	(11,850		)	2,236			(3,876		)	(387		)	(26,697		)	(8,610		)	(68,339		)	(9,822		)	1,521			(453		)	(85,703		)
Provision for losses	11,798			38,851			7,435			3,265			387			61,736			8,268			61,267			7,080			25,317			453			102,385
Effect of foreign currency translation	58			38			1			4			—			101			50			24			—			224			—			298
Balance, end of period	$	4,735		$	60,522		$	21,557		$	4,572		$	—		$	91,386		$	3,897		$	42,250		$	9,874		$	46,963		$	—		$	102,984

NOTE 4 – CREDIT SERVICES ORGANIZATION

The CSO fee ~~receivable amounts~~receivables under ~~our~~ CSO programs were ~~$9.9~~$6.8 million and ~~$14.5~~$14.7 million at March 31, ~~2018~~2020 and December 31, ~~2017, respectively. As noted, we bear~~2019, respectively, and are reflected in "Prepaid expenses and other" in the unaudited Condensed Consolidated Balance Sheets. The Company bears the risk of loss through ~~our~~its guarantee to purchase ~~any defaulted~~specific customer loans ~~from~~that are in default with the lenders. The terms of these loans range ~~from three~~up to ~~eighteen~~six months. ~~This guarantee represents an obligation to purchase specific loans that go into default.~~ See the 2019 Form 10-K for further details of the Company's accounting policy.

As of March 31, ~~2018~~2020 and December 31, ~~2017,~~2019, the incremental maximum amount payable under all such guarantees was ~~$48.0~~$45.7 million and ~~$65.2~~$62.7 million,

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

respectively. ~~Our guarantee~~If the Company is required to pay any portion of the total amount of the loans it has guaranteed, it will attempt to recover some or the entire amount from the applicable customers. The Company holds no collateral in respect of the guarantees. The Company estimates a liability for losses associated with the guaranty provided to the CSO lenders using assumptions and methodologies similar to the Allowance for loan losses, which it recognizes for its consumer loans. Liability for incurred losses on CSO loans Guaranteed by the Company was ~~$10.4~~$9.2 million and ~~$17.8~~$10.6 million at March 31, ~~2018~~2020 and December 31, ~~2017,~~2019, respectively.

~~We have~~The Company placed ~~$13.3~~$5.7 million and ~~$17.9~~$6.2 million in collateral accounts for the benefit of lenders at March 31, ~~2018~~2020 and December 31, ~~2017,~~2019, respectively, which is reflected in "Prepaid expenses and other" in the unaudited Condensed Consolidated Balance Sheets. The balances required to be maintained in these collateral accounts vary ~~based upon~~by lender, ~~but are~~ typically based on a percentage of the outstanding loan balances held by the lender. The percentage of outstanding loan balances required for collateral is ~~defined within~~negotiated between the ~~terms agreed to between us~~Company and each such lender.

Deferred revenue associated with the CSO program was immaterial as of March 31, 2020 and December 31, 2019 and there were no costs to obtain, or costs to fulfill, capitalized under the program. See Note 3, "Loans Receivable and Revenue" for additional information related to loan balances and the revenue recognized under the program.

NOTE 5 – ~~LONG-TERM~~ DEBT

~~Long-term debt~~Debt consisted of the ~~following:~~following (in thousands):

(in thousands) March 31, 2018 December 31, 2017
2017 Senior secured notes (due 2022) $ 511,493
$ 585,823
Non-Recourse U.S. SPV Facility 111,151
120,402
Senior Revolver —
—
Long-term debt $ 622,644
$ 706,225



	March 31, 2020		December 31, 2019
8.25% Senior Secured Notes (due 2025)	$	678,727	$	678,323
Non-Recourse Canada SPV Facility	84,724		112,221
Senior Revolver	25,000		—
Debt	$	788,451	$	790,544

8.25% Senior Secured Notes

In ~~February and November 2017, CFTC~~August 2018, the Company issued ~~$470.0~~$690.0 million ~~and $135.0 million, respectively,~~ of ~~12.00%~~8.25% Senior Secured Notes ~~due~~which mature on September 1, 2025. Interest on the notes is payable semiannually, in arrears, on March 1 ~~2022 ("Senior Secured Notes"). The February issuance refinanced similar notes that were nearing maturity,~~ and ~~the extinguishment of the existing notes resulted in a pretax loss of $12.5 million in the three months ended March 31, 2017.~~September 1. In connection with ~~these 2017 debt issuances we~~the 8.25% Senior Secured Notes, the balance of capitalized financing costs of ~~approximately $18.3~~$11.3 million, ~~the balance~~net of ~~which~~amortization, is included in the ~~Interim~~unaudited Condensed Consolidated Balance Sheets as a component of ~~“Long-term debt,” and is being~~"Debt." These costs are amortized over the term of the 8.25% Senior Secured Notes ~~and included~~ as a component of interest expense.

On February 5, 2018 CFTC issued a notice of redemption for $77.5 million of its Senior Secured Notes (the transaction whereby the Senior Secured Notes were partially redeemed, the “Redemption”) that were issued by CFTC. The Redemption occurred on March 7, 2018 at a price equal to 112.00% of the principal amount of the Notes redeemed, plus accrued and unpaid interest paid thereon, to the date of Redemption. The Redemption price and the amortization of a corresponding portion of the capitalized financing costs resulted in a loss on Redemption of $11.7 million. Following the Redemption, $527.5 million of the original outstanding principal amount of the Senior Secured Notes remain outstanding. CFTC conducted the Redemption pursuant to the Indenture governing the Senior Secured Notes (the “Indenture”), dated as of February 15, 2017, by and among CFTC, the guarantors party thereto and TMI Trust Company, as trustee and collateral agent. Consistent with the terms of the Indenture, CFTC used a portion of the cash proceeds from our IPO, completed in December 2017, to redeem such Senior Secured Notes.

~~As of March 31, 2018, CFTC was in full compliance with the covenants and other provisions of the Senior Secured Notes.~~

~~Non-Recourse U.S. SPV Facility~~

In November 2016, CURO Receivables Finance I, LLC, a Delaware limited liability company (the “SPV Borrower”) and a wholly-owned subsidiary, entered into a five-year revolving credit facility with Victory Park Management, LLC and certain other lenders that provides an $80.0 million term loan and $70.0 million revolving borrowing capacity that can expand over time (“Non-Recourse U.S. SPV Facility”). As of March 31, 2018, the SPV Borrower was in full compliance with the covenants and other provisions of the Non-Recourse U.S. SPV Facility.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company used the proceeds of this issuance (i) to redeem the outstanding 12.00% Senior Secured Notes of CFTC, (ii) to repay a portion of the outstanding indebtedness under the five-year revolving credit facility of CURO Receivables Finance I, LLC, a wholly-owned subsidiary, which consisted of a term loan and revolving borrowing capacity, (iii) for general corporate purposes and (iv) to pay fees, expenses, premiums and accrued interest in connection therewith.

Non-Recourse Canada SPV Facility

On August 2, 2018, CURO Canada Receivables Limited Partnership, a newly created, bankruptcy-remote special purpose vehicle (the "Canada SPV Borrower") and a wholly-owned subsidiary, entered into a four-year revolving credit facility with Waterfall Asset Management, LLC that provided for C$175.0 million of initial borrowing capacity and the ability to expand such capacity up to C$250.0 million ("Non-Recourse Canada SPV Facility"). The loans bear interest at an annual rate of 6.75% plus the three-month CDOR. The Canada SPV Borrower also pays a 0.50% per annum commitment fee on the unused portion of the commitments. In April 2019, the facility's maturity date was extended one year, to September 2, 2023.

~~(unaudited)~~As of March 31, 2020, outstanding borrowings under the Non-Recourse Canada SPV Facility were $84.7 million, net of deferred financing costs of $2.6 million. For further information on the Non-Recourse Canada SPV, refer to

Note 2, "Variable Interest Entities."

Senior Revolver

InOn September 1, 2017, ~~CFTC and CURO Intermediate Holdings Corp.~~the Company entered into ~~a $25.0 million Senior Secured Revolving Loan Facility with BayCoast Bank (the “Senior Revolver”). The terms of~~ the Senior Revolver generally conform to the related provisions in the Indenture dated February 15, 2017 for our Senior Secured Notes and complements our other financing sources, while providing seasonal short-term liquidity.with $25.0 million of capacity. In ~~February~~November 2018, the Senior Revolver capacity was increased to ~~$29.0~~$50.0 million as permitted by the Indenture to the 8.25% Senior Secured ~~Notes based upon consolidated tangible assets.~~Notes. The Senior Revolver is now syndicated with participation by ~~a second bank.~~four banks.

~~There~~Under the Senior Revolver, there is ~~$29.0~~$50.0 million maximum availability, ~~under the Senior Revolver,~~ including up to $5.0 million of standby letters of credit, for a one-year term, renewable for successive terms following annual review. The current term has been extended to June 30, 2021. The Senior Revolver accrues interest at one-month LIBOR plus 5.00% (subject to a 5% overall minimum).

The terms of the Senior Revolver also require that its outstanding balance be zero for at least 30 consecutive days in each calendar year. The Senior Revolver is guaranteed by all subsidiaries that guarantee the 8.25% Senior Secured Notes and is secured by a lien on substantially all assets of CURO and the guarantor subsidiaries that is senior to the lien securing the 8.25% Senior Secured Notes. Additionally, the negative covenants of the Senior Revolver generally conform to the related provisions in the Indenture for the 8.25% Senior Secured Notes. The revolver had an outstanding balance of $25.0 million at March 31, 2020.

The Senior Revolver contains various conditions to borrowing and affirmative, negative and financial maintenance covenants. Certain of the more significant covenants are (i) minimum eligible collateral value, (ii) consolidated interest coverage ratio and (iii) consolidated leverage ratio. The Senior Revolver also contains various events of default, the occurrence of which could result in termination of the lenders’ commitments to lend and the acceleration of all obligations under the Senior Revolver.

Cash Money Revolving Credit Facility

Cash Money Cheque Cashing, Inc., a Canadian subsidiary ("Cash Money"), maintains a C$10.0 million revolving credit facility with Royal Bank of Canada (the "Cash Money Revolving Credit Facility"), which provides short-term liquidity required to meet the working capital needs of the Company's Canadian operations. Aggregate draws under the revolving credit facility are limited to the lesser of: (i) the borrowing base, which is defined as a percentage of cash, deposits in transit and accounts receivable, and (ii) C$10.0 million. As of March 31, 2020, the borrowing capacity under the Cash Money Revolving Credit Facility, which was C$9.9 million, net of C$0.1 million in outstanding stand-by-letters of credit.

The Cash Money Revolving Credit Facility is collateralized by substantially all of Cash Money’s assets and contains various covenants that require, among other things, that the aggregate borrowings outstanding under the facility not exceed the borrowing base, as well as restrictions on the encumbrance of assets and the creation of indebtedness. Borrowings under the Cash Money Revolving Credit Facility bear interest per annum at the prime rate of a Canadian chartered bank plus 1.95%.

The Cash Money Revolving Credit Facility was undrawn at March 31, ~~2018~~2020 and December 31, ~~2017. As of March 31, 2018, CFTC and~~ 2019.

Non-Recourse U.S. SPV Facility

Refer to Note 19, "Subsequent Events" for additional information regarding a new Asset-Backed Revolving Credit Facility entered into on April 8, 2020.

CURO ~~Intermediate Holdings Corp. were in full compliance with the covenants and other provisions of the Senior Revolver.~~GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 6 – SHARE-BASED COMPENSATION

~~On November 8, 2017, the Company’s shareholders approved a new incentive plan (“2017 Incentive Plan”).~~ The Company's stockholder-approved 2017 Incentive Plan provides for the issuance of up to 5.0 million shares, subject to certain adjustment provisions, ~~described~~which may be issued in the ~~2017 Incentive Plan, for the granting~~form of stock options, restricted stock awards, ~~restricted stock units (“RSUs”),~~RSUs, stock appreciation rights, performance awards and other awards that may be settled in or based ~~upon our~~on common stock. Awards may be granted to ~~certain of our~~ officers, employees, consultants and directors. The 2017 Incentive Plan provides that shares of common stock subject to awards granted become available for ~~issuance~~re-issuance if such awards expire, terminate, are canceled for any reason or are forfeited by the recipient.

~~On February 5, 2018, the Company issued additional~~Restricted Stock Units

Grants of time-based RSUs ~~under the 2017 Incentive Plan. RSUs~~ are ~~typically~~ valued at the date of grant based on the ~~value~~closing market price of ~~our~~ common stock and are expensed using the straight-line method over the service period. These RSUs are subject to time-based vesting and typically vest over a three-year period.

Grants of market-based RSUs ~~do not confer full~~are valued using the Monte Carlo simulation pricing model. The market-based RSUs vest after three years if the Company's total stockholder ~~rights such as voting rights and cash dividends, but provide~~return over the three-year performance period meets a specified target relative to other companies in its selected peer group. Expense recognition for ~~additional dividend equivalent RSU~~the market-based awards ~~in lieu of cash dividends.~~ occurs over the service period using the straight-line method.

Unvested shares of ~~restricted stock~~RSUs may be forfeited upon termination of employment ~~with the Company~~ depending on the circumstances of the termination, or failure to achieve the required performance condition, if applicable.

A summary of the ~~status~~activity of ~~non-vested restricted stock~~time-based and market-based unvested RSUs as of March 31, ~~2018,~~2020 and changes during the ~~period, is~~three months ended March 31, 2020 are presented in the following table:


Non-vested Restricted Stock	Shares	Weighted Average Grant Date Fair Value
December 31, 2017	1,516,241	$	14.00
				Number of RSUs
				Time-Based		Market-Based		Weighted Average Grant Date Fair Value per Share
December 31, 2019				1,061,753		394,861		$	11.47
Granted	32,857	$	17.14	571,773		368,539		10.55
Vested	—	—		(197,859	)	—		11.39
Forfeited	—	—		(12,756	)	(2,613	)	12.07
March 31, 2018	1,549,098	$	14.07
March 31, 2020				1,422,911		760,787		$	11.08

Share-based compensation expense for the three months ended March 31, ~~2018~~2020 and ~~2017,~~2019, which includes compensation costs from stock options and RSUs, was ~~$1.8~~$3.2 million and ~~$0.1~~$2.2 million, respectively, and is included in the ~~Interim~~unaudited Condensed Consolidated Statements of ~~Income~~Operations as a component of "Corporate, district and ~~other" expense. The increased expense in the three months ended March 31, 2018 is primarily due to grants of RSUs in 2017, as further disclosed in our 2017 Annual Report on Form 10-K.~~other expenses."

As of March 31, ~~2018,~~2020, there was ~~$20.2~~$19.6 million of total unrecognized compensation cost ~~net of estimated forfeitures,~~ related to ~~share-based awards,~~stock options and RSUs, of which we$13.8 million related to time-based RSUs and $5.6 million related to market-based RSUs. Total unrecognized compensation costs will ~~recognize~~be recognized over a weighted-average period of ~~2.7~~2.1 years.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

NOTE 7 – INCOME TAXES

~~Our~~The Company's effective income tax rate was ~~33.0%~~5.1% and ~~36.2%~~25.9% for the three months ended March 31, ~~2018~~2020 and ~~2017,~~2019, respectively. ~~On December 22, 2017, H.R. 1, commonly referred~~The decrease in effective income tax rate was primarily due to asa tax benefit from the ~~Tax Cuts and Jobs~~CARES Act, ~~of 2017 (“the 2017 Tax Act”)~~which was ~~signed~~enacted by the U.S. ~~President, which enacted various changes~~Federal government on March 27, 2020 in response to the ~~U.S. corporate tax law. Some~~COVID-19 pandemic. The CARES Act, among other things, allows NOLs incurred in 2018, 2019 and 2020 to be carried back to each of the ~~most significant provisions affecting us include~~five preceding taxable years to generate a ~~reduced U.S. corporate~~refund of previously-paid Federal income taxes. In the first quarter of 2020, the Company recorded an income tax ~~rate~~benefit of $9.1 million related to the carry-back NOL from ~~35% to 21% effective in 2018, a one-time “deemed repatriation”~~ tax ~~on unremitted earnings accumulated in non-U.S. jurisdictions and reported on the 2017 corporate income tax return, and a~~years 2018 and ~~forward minimum~~2019, which will offset income earned in years prior to tax ~~on global intangible low-taxed income ("GILTI")~~reform and generate a refund of previously paid taxes at 35%. ~~At 2017 year-end, we recorded an estimated provisional deemed repatriation~~In addition, losses from the Company's equity method investment in Katapult are not tax ~~of $8.1 million. Subsequently, the IRS issued additional guidance regarding the calculation of the deemed repatriation tax and we recorded an additional accrual of $1.2 million~~deductible, thus increasing the March 31, 2020 effective tax rate by 3.5%. In 2018, we recorded an estimated GILTI tax of $0.6 million increasing the effective tax rate by 1.7%. Additionally, we have not recorded a tax benefit for losses in the UK resulting in an increase of 1.6% and 2.3% to the effective tax rate for the three months ended March 31, 2018 and March 31, 2017, respectively.rate.

As of March 31, 2018, we estimated and provided U.S. net tax of $9.9 million on our cumulative undistributed non-US earnings as part of the 2017 repatriation tax provision and the 2018 GILTI tax in the 2017 Tax Act. We intendThe Company intends to reinvest ~~our foreign~~Canada earnings indefinitely in ~~our non-U.S.~~its Canadian operations and therefore ~~have~~has not provided for any non-U.S. withholding tax that would be assessed on dividend distributions. If the earnings of ~~$160.0~~$153.8 million were distributed to the U.S., wethe Company would be subject to ~~estimated~~ Canadian withholding taxes of ~~approximately $8.0~~an estimated $7.7 million. In the event the earnings

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

were distributed to the U.S., wethe Company would adjust ~~our~~the income tax provision for the applicable period and would determine the amount of foreign tax credit that would be available.

NOTE 8 – ~~FINANCIAL INSTRUMENTS~~FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ~~We are~~The Company is required to use valuation techniques that are consistent with the market approach, income approach and/or cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability based on observable market data obtained from independent sources, or unobservable, meaning those that reflect ~~our~~the Company's own estimate about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Accounting standards establish a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The hierarchy requires usthe Company to maximize the use of observable inputs and minimize the use of unobservable inputs.

The three levels of inputs used to measure fair value are listed below.

Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that ~~we have~~the Company has access to at the measurement date.

Level 2 – Inputs include quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 – Unobservable inputs reflecting ~~our~~the Company's own judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. ~~We develop~~The Company develops these inputs based on the best information available, including ~~our~~its own data.

Financial Assets and Liabilities Carried at Fair Value

The table below presents the assets and liabilities that were carried at fair value on the unaudited Condensed Consolidated Balance Sheets at March 31, 2020 (in thousands):



			Estimated Fair Value
	Carrying Value March 31, 2020		Level 1		Level 2		Level 3		Total
Financial assets:
Cash Surrender Value of Life Insurance	$	5,696	$	5,696	$	—	$	—	$	5,696
Financial liabilities:
Non-qualified deferred compensation plan	$	3,818	$	3,818	$	—	$	—	$	3,818

The table below presents the assets and liabilities that were carried at fair value on the unaudited Condensed Consolidated Balance Sheets at December 31, 2019 (in thousands):



			Estimated Fair Value
	Carrying Value December 31, 2019		Level 1		Level 2		Level 3		Total
Financial assets:
Cash Surrender Value of Life Insurance	$	6,171	$	6,171	$	—	$	—	$	6,171
Financial liabilities:
Non-qualified deferred compensation plan	$	4,666	$	4,666	$	—	$	—	$	4,666

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

~~(unaudited)~~

Financial Assets and Liabilities Not ~~Measured~~Carried at Fair Value

The table below presents the assets and liabilities that were not ~~measured~~carried at fair value on the unaudited Condensed Consolidated Balance Sheets at March 31, ~~2018.~~2020 (in thousands):


			Estimated Fair Value										Estimated Fair Value
(dollars in thousands)	Carrying Value March 31, 2018		Level 1		Level 2		Level 3		March 31, 2018
											Carrying Value March 31, 2020		Level 1		Level 2		Level 3		Total
Financial assets:
Cash	$	130,739	$	130,739	$	—	$	—	$	130,739	$	138,714	$	138,714	$	—	$	—	$	138,714
Restricted cash	17,656		17,656		—		—		17,656		41,527		41,527		—		—		41,527
Loans receivable, net	328,952		—		—		328,952		328,952		464,595		—		—		464,595		464,595
Investment	6,600		—		—		6,600		6,600
Equity method investment											8,450		—		—		8,450		8,450
Financial liabilities:
Credit services organization guarantee liability	$	10,412	$	—	$	—	$	10,412	$	10,412
Senior secured notes	511,493		—		—		583,406		583,406
Non-Recourse U.S. SPV facility	111,151		—		—		115,071		115,071
Liability for losses on CSO lender-owned consumer loans											$	9,189	$	—	$	—	$	9,189	$	9,189
8.25% Senior Secured Notes											678,727		—		478,503		—		478,503
Non-Recourse Canada SPV facility											84,724		—		—		87,365		87,365
Senior Revolver	—		—		—		—		—		25,000		—		—		25,000		25,000

The table below presents the assets and liabilities that were not ~~measured~~carried at fair value on the unaudited Condensed Consolidated Balance Sheets at December 31, ~~2017.~~2019 (in thousands):


			Estimated Fair Value										Estimated Fair Value
(dollars in thousands)	Carrying Value December 31, 2017		Level 1		Level 2		Level 3		December 31, 2017
											Carrying Value December 31, 2019		Level 1		Level 2		Level 3		Total
Financial assets:
Cash	$	162,374	$	162,374	$	—	$	—	$	162,374	$	75,242	$	75,242	$	—	$	—	$	75,242
Restricted cash	12,117		12,117		—		—		12,117		34,779		34,779		—		—		34,779
Loans receivable, net	363,269		—		—		363,269		363,269		558,993		—		—		558,993		558,993
Investment	5,600		—		—		5,600		5,600
Equity method investment											10,068		—		—		10,068		10,068
Financial liabilities:
Credit services organization guarantee liability	17,795		—		—		17,795		17,795
2017 Senior Secured notes	585,823		—		—		663,472		663,472
Non-Recourse U.S. SPV facility	120,402		—		—		124,590		124,590
Liability for losses on CSO lender-owned consumer loans											$	10,623	$	—	$	—	$	10,623	$	10,623
8.25% Senior Secured Notes											678,323		—		596,924		—		596,924
Non-Recourse Canada SPV facility											112,221		—		—		115,243		115,243

Loans receivable are carried on the ~~Interim~~unaudited Condensed Consolidated Balance Sheets net of the ~~allowance~~Allowance for ~~estimated~~ loan ~~losses, which we calculate primarily based upon models that back-test subsequent collections history for each type of loan product.~~losses. The unobservable inputs used to calculate the carrying ~~value~~values include ~~additional~~ quantitative factors, such as current default ~~trends and changes to the portfolio mix are also~~trends. Also considered in evaluating the accuracy of the models ~~as well as additional qualitative factors such as~~are changes to the loan portfolio mix, the impact of new loan products, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. ~~Loans have terms ranging up to 60 months.~~ The carrying value of loans receivable approximates ~~the~~their fair value. Refer to Note 3, "Loans Receivable and Revenue" for additional information.

During 2019, Katapult completed an incremental equity round at a value per share less than the value per share raised in prior raises. This round included additional investments from existing shareholders and investments by new investors, and was considered indicative of the fair value of shares in Katapult. Accordingly, the Company recognized a $3.7 million loss on its investment to adjust it to market value. As of March 31, 2020, the Company owned approximately 42.5% of the outstanding shares of Katapult.

In connection with ~~our~~ CSO programs, ~~we guarantee~~the Company guarantees consumer loan payment obligations to unrelated third-party lenders for loans that ~~we arrange~~the Company arranges for consumers on the third-party lenders’ behalf. ~~We are~~The Company is required to purchase from the lender defaulted loans ~~we have~~that it has guaranteed. ~~The estimated fair value of the guarantee liability related~~Refer to ~~CSO loans we have guaranteed was $10.4 million~~Note 3, "Loans Receivable and $17.8 million as of March 31, 2018 and December 31, 2017, respectively. We record the initial measurement of this guarantee liability at fair value using Level 3 inputs with subsequent measurement of the liability measured as a contingent loss. The unobservable inputs used to calculateRevenue" for additional information.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

~~(unaudited)~~

fair value include the nature of the loan products, the creditworthiness of the borrowers in the customer base, our historical loan default history for similar loans, industry loan default history, historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions.

The ~~fair value of our~~8.25% Senior Secured Notes fair value disclosure was based on broker quotations. The fair ~~value~~values of the Non-Recourse ~~U.S.~~Canada SPV facility ~~was~~and the Senior Revolver were based on the cash needed for their respective final ~~settlement.~~

~~Derivative Financial Instrument~~

The Company seeks to minimize risks from foreign currency rate fluctuations on anticipated transactions in the ordinary course of business through the use of cash flow hedges. As of March 31, 2018, we entered into a series of cash flow hedges in which the hedging instruments were forwards to purchase GBP £6.4 million. These contracts will complete in the third quarter of 2018.

We performed an assessment that determined all critical terms of the hedging instrument and the hedged transaction match and, as such, have qualitatively concluded that changes in the hedge instrument’s intrinsic value will completely offset the change in the expected cash flows based on changes in the spot rate. Since the effectiveness of this hedge is assessed based on changes in the hedge instrument’s intrinsic value, the change in the time value of the contract would be excluded from the assessment of hedge effectiveness. We recorded changes in the hedge instrument’s intrinsic value, to the extent that they were effective as a hedge, in "Other comprehensive income." As of March 31, 2018 we have recorded an unrealized gain of $0.1 million in "Other comprehensive income" associated with this hedge.

~~Purchase of Cognical Holdings Inc. Preferred Shares~~

During the first quarter of 2018, we purchased 560,872 additional preferred shares of Cognical Holdings, Inc. ("Cognical") for $1.0 million. As a result of this transaction, along with share purchases during 2017, we currently own 10.4% of the equity of Cognical. We record these purchases in "Other assets' on our Consolidated Balance Sheets.settlements.

NOTE 9 – ~~STOCKHOLDERS~~STOCKHOLDERS' EQUITY

~~In connection with our IPO~~The following table summarizes the changes in ~~December 2017,~~stockholders' equity for the ~~underwriters had~~three months ended March 31, 2020 and 2019 (in thousands):



	Common Stock				Treasury Stock			Paid-in capital			Retained Earnings (Deficit)				AOCI ⁽¹⁾			Total Stockholders' Equity
	Shares Outstanding		Par Value		Treasury Stock			Paid-in capital			Retained Earnings (Deficit)				AOCI ⁽¹⁾			Total Stockholders' Equity
Balances at December 31, 2019	41,156,224		$	9	$	(72,343	)	$	68,087		$	93,423			$	(38,663	)	$	50,513
Net income from continuing operations	—		—		—			—			36,013				—			36,013
Net income from discontinued operations	—		—		—			—			292				—			292
Foreign currency translation adjustment	—		—		—			—			—				(22,193		)	(22,193		)
Dividends	—		—		—			—			(2,256		)	—	—			(2,256		)
Share based compensation expense	—		—		—			3,194			—				—			3,194
Proceeds from exercise of stock options	42,094		—		—			126			—				—			126
Repurchase of common stock	(540,762	)	—		(5,509		)	—			—				—			(5,509		)
Common stock issued for RSU's vesting, net of shares withheld and withholding paid for employee taxes	121,891		—		—			(609		)	—				—			(609		)
Balances at March 31, 2020	40,779,447		$	9	$	(77,852	)	$	70,798		$	127,472			$	(60,856	)	$	59,571
⁽¹⁾Accumulated other comprehensive income (loss)



	Common Stock			Treasury Stock		Paid-in capital			Retained Earnings (Deficit)			AOCI ⁽¹⁾			Total Stockholders' Equity (Deficit)
	Shares Outstanding	Par Value		Treasury Stock		Paid-in capital			Retained Earnings (Deficit)			AOCI ⁽¹⁾			Total Stockholders' Equity (Deficit)
Balances at December 31, 2018	46,412,231	$	9	$	—	$	60,015		$	(18,065	)	$	(61,060	)	$	(19,101	)
Net income from continuing operations	—	—		—		—			28,673			—			28,673
Net income from discontinued operations	—	—		—		—			8,375			—			8,375
Foreign currency translation adjustment	—	—		—		—			—			16,695			16,695
Share based compensation expense	—	—		—		2,172			—			—			2,172
Proceeds from exercise of stock options	7,888	—		—		40			—			—			40
Common stock issued for RSU's vesting, net of shares withheld and withholding paid for employee taxes	11,170	—		—		(110		)	—			—			(110		)
Balances at March 31, 2019	46,431,289	$	9	$	—	$	62,117		$	18,983		$	(44,365	)	$	36,744
⁽¹⁾ Accumulated other comprehensive income (loss)

Dividend

On February 5, 2020, the Company's Board of Directors announced the initiation of a ~~30-day option~~dividend program and declared its first cash dividend of $0.055 per share. A dividend of $2.2 million was paid on March 2, 2020 to ~~purchase up to an additional 1.0 million shares at~~stockholders of record as of the ~~initial public offering prices, less~~close of

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

business on February 18, 2020. Subsequently, on April 30, 2020, the ~~underwriting discount to over-allotments, if any. The underwriters exercised this option and purchased 1.0 million shares on January 5, 2018. The exercise~~Company's Board of ~~this option provided additional proceeds to us of $13.1 million.~~Directors declared a dividend. See Note 19, "Subsequent Events" for more information.

NOTE 10 – EARNINGS PER SHARE

The following table presents the computation of basic and diluted earnings per share (in thousands, except per share amounts):

Three Months Ended
March 31,
2018 2017
Basic: ⁽¹⁾

Net income $ 23,292
$ 16,638
Weight average common shares 45,506
37,895
Basic earnings per share $ 0.51

$ 0.44
(1) The share and per share information have been adjusted to reflect the 36-to-1 stock split of our common stock, which occurred during the fourth quarter of 2017.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~The following computation reconciles the differences between the basic and diluted earnings per share presentations (in thousands, except per share amounts):~~


	Three Months Ended March 31,				Three Months Ended March 31,
	2018		2017		2020		2019
Diluted: ⁽¹⁾
Net income from continuing operations					$	36,013	$	28,673
Net income from discontinued operations, net of tax					292		8,375
Net income	$	23,292	$	16,638	$	36,305	$	37,048

Weighted average common shares - basic	45,506		37,895		40,817		46,424
Dilutive effect of stock options and restricted stock units	1,910		1,064		1,075		895
Weighted average common shares - diluted	47,416		38,959		41,892		47,319

Basic earnings per share:
Continuing operations					$	0.88	$	0.62
Discontinued operations					0.01		0.18
Basic earnings per share					$	0.89	$	0.80

Diluted earnings per share:
Continuing operations					$	0.86	$	0.61
Discontinued operations					0.01		0.18
Diluted earnings per share	$	0.49	$	0.43	$	0.87	$	0.79
(1) The share and per share information have been adjusted to reflect the 36-to-1 stock split of our common stock, which occurred during the fourth quarter of 2017.

Potential shares of common ~~shares~~stock that would have the effect of increasing diluted earnings per share or decreasing diluted loss per share are considered to be anti-dilutive and as such, ~~we do~~these shares are not ~~include these shares~~included in calculating "Diluted earnings per share." For the three months ended March 31, ~~2018~~2020 and ~~2017,~~ March 31, 2019, there were no1.3 million and 1.4 million, respectively, of potential shares of common ~~shares~~stock excluded from the calculation of ~~diluted~~Diluted earnings per share because their effect was anti-dilutive.

The Company utilizes the "control number" concept in the computation of Diluted earnings per share to determine whether potential common stock instruments are dilutive. The control number used is income from continuing operations. The control number concept requires that the same number of potentially dilutive securities applied in computing Diluted earnings per share from continuing operations be applied to all other categories of income or loss, regardless of their anti-dilutive effect on such categories.

NOTE 11 – SUPPLEMENTAL CASH FLOW INFORMATION

The following table provides supplemental cash flow ~~information:~~

Three Months Ended
March 31,
(dollars in thousands) 2018 2017
Cash paid for:
Interest $ 40,225
$ 22,824
Income taxes 4,431
7,700
Non-cash investing activities:
Property and equipment accrued in accounts payable $ 317
$ 126
information (in thousands):



	Three Months Ended March 31,
	2020		2019
Cash paid for:
Interest	$	31,184	$	32,195
Income taxes, net of refunds	1,065		1,456
Non-cash investing activities:
Property and equipment accrued in accounts payable	$	869	$	349

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 12 – SEGMENT REPORTING

~~We prepare segment~~Segment information is prepared on the same basis that ~~our chief operating decision maker~~the Company's Chief Operating Decision Maker ("CODM") reviews financial information for operational decision making ~~purposes. We have~~purposes, including revenues, net revenue, gross margin, segment operating income and other items.

U.S. As of March 31, 2020, the Company operated a total of 214 U.S. retail locations and has an online presence in 27 states. The Company provides Single-Pay loans, Installment loans and Open-End loans, vehicle title loans, check cashing, money transfer services, reloadable prepaid debit cards and a number of other ancillary financial products and services to its customers in the U.S. As disclosed in Note 17, "Acquisition," the acquisition of Ad Astra closed during the three ~~reportable operating segments:~~months ended March 31, 2020. The results of Ad Astra are included within the U.S.~~, Canada~~ reporting segment.

Canada. As of March 31, 2020, the Company operated a total of 202 stores across seven Canadian provinces and ~~the U.K.~~territories and has an online presence in five provinces. The Company provides Single-Pay loans, Installment loans and Open-End loans, check cashing, money transfer services, foreign currency exchange, reloadable prepaid debit cards and a number of other ancillary financial products and services to its customers in Canada.

The segment performance measure below is based on gross margin. In management’s evaluation of performance, certain costs, such as corporate expenses, district expenses and interest expense, are not allocated by segment, and accordingly the following reporting segment results do not include such allocated costs. There are no intersegment revenues, and we determined the amounts below in accordance with the same accounting principles used in our Consolidated Financial Statements.table illustrates summarized financial information concerning reportable segments (in thousands):



	Three Months Ended March 31,
	2020		2019
Revenues by segment: ⁽¹⁾
U.S.	$	221,768	$	226,119
Canada	59,038		51,820
Consolidated revenue	$	280,806	$	277,939
Net revenues by segment:
U.S.	$	135,727	$	141,139
Canada	31,543		34,415
Consolidated net revenue	$	167,270	$	175,554
Gross margin by segment:
U.S.	$	87,540	$	89,803
Canada	12,159		15,694
Consolidated gross margin	$	99,699	$	105,497
Segment operating income (loss):
U.S.	$	33,426	$	31,195
Canada	4,524		7,524
Consolidated operating profit	$	37,950	$	38,719
Expenditures for long-lived assets by segment:
U.S.	$	4,280	$	2,430
Canada	553		689
Consolidated expenditures for long-lived assets	$	4,833	$	3,119
(1) For revenue by product, see Note 3, "Loans Receivable and Revenue."

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

~~(unaudited)~~

~~The following table illustrates summarized financial information concerning our reportable segments.~~

Three Months Ended March 31,
(dollars in thousands) 2018 2017
Revenues by segment:
U.S. $ 204,593
$ 174,322
Canada 46,250
41,566
U.K. 10,915
8,692
Consolidated revenue $ 261,758
$ 224,580
Gross margin by segment:
U.S. $ 91,344
$ 77,133
Canada 14,502
14,300
U.K. 3,399
3,472
Consolidated gross margin $ 109,245
$ 94,905
Expenditures for long-lived assets by segment:
U.S. $ 788
$ 1,672
Canada 754
1,291
U.K. 67
130
Consolidated expenditures for long-lived assets $ 1,609
$ 3,093

The following table provides the proportion of gross loans receivable by ~~segment:~~segment (in thousands):


(dollars in thousands)	March 31, 2018		December 31, 2017
					March 31, 2020		December 31, 2019
U.S.	$	266,731	$	308,696	$	288,127	$	363,453
Canada	102,597		104,551		276,310		302,375
U.K.	20,510		19,590
Total gross loans receivable	$	389,838	$	432,837	$	564,437	$	665,828

The following table ~~illustrates our~~represents the Company's net long-lived assets, comprised of property and equipment, by ~~geographic region.~~segment. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the asset is physically ~~located:~~located (in thousands):


(dollars in thousands)	March 31, 2018		December 31, 2017
					March 31, 2020		December 31, 2019
U.S.	$	50,614	$	52,627	$	42,536	$	43,618
Canada	31,390		32,924		24,251		27,193
U.K.	1,518		1,535
Total net long-lived assets	$	83,522	$	87,086	$	66,787	$	70,811

~~Our chief operating decision maker~~The Company's CODM does not review assets by segment for purposes of allocating resources or

decision-making purposes; therefore, total assets by segment are not disclosed.

NOTE 13 – ~~CONTINGENT LIABILITIES~~COMMITMENTS AND CONTENGENCIES

~~Harrison, et al~~Securities Litigation

On December 5, 2018, a putative securities fraud class action lawsuit was filed against the Company and its chief executive officer, chief financial officer and chief operating officer in the United States District Court for the District of Kansas, captioned Yellowdog Partners, LP v. ~~Principal Investments, Inc. et al~~CURO Group Holdings Corp., Donald F. Gayhardt, William Baker and Roger W. Dean, Civil Action No. 18-2662. On May 31, 2019, plaintiffs filed a consolidated complaint naming Doug Rippel, Chad Faulkner, Mike McKnight, Friedman Fleischer & Lowe Capital Partners II, L.P., FFL Executive Partners II, L.P., and FFL Parallel Fund II, L.P. as additional defendants. The complaint alleges that the Company and the individual defendants violated Section 10(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and that certain defendants also violated Section 20(a) of the Exchange Act as "control persons" of CURO. Plaintiffs purport to bring these claims on behalf of a class of investors who purchased Company common stock between April 27, 2018 and October 24, 2018.

Plaintiffs allege generally that, during the putative class period, the Company made misleading statements and omitted material information regarding its efforts to transition the Canadian inventory of products from Single-Pay loans to Open-End loans. Plaintiffs assert that the Company and the individual defendants made these misstatements and omissions to keep the stock price high. Plaintiffs seek unspecified damages and other relief.

While the Company is vigorously contesting this lawsuit, it cannot determine the final resolution or when it might be resolved. In addition to the expenses incurred in defending this litigation and any damages that may be awarded in the event of an adverse ruling, management’s efforts and attention may be diverted from the ordinary business operations to address these claims. Regardless of the outcome, this litigation may have a material adverse impact on results because of defense costs, including costs related to indemnification obligations, diversion of resources and other factors.

During the ~~period relevant~~first quarter of 2019, the Company received an inquiry from the SEC regarding the Company's public disclosures surrounding its efforts to ~~this class action litigation, we pursued in excess~~transition the Canadian inventory of ~~16,000 claims in the limited actions and jurisdiction court in Clark County, Nevada, seeking payment of~~products from Single-Pay loans ~~on which customers had defaulted. We utilized outside counsel~~ to file these debt collection lawsuits. On Scene Mediations, a process serving company, was employed to serve the summons and petitions in the majority of these cases. In an unrelated matter, the principal of On Scene Mediations was convicted of multiple accounts of perjury and filing false affidavits to obtain judgments

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

on behalf of a Las Vegas collection agency. In September 2010, we were sued by four former customers in a proposed class action suit filed in the District Court in Clark County, Nevada. The plaintiffs in this case claimed that they, and others in the proposed class, were not properly served notice of the debt collection lawsuits by the Company.

On June 7, 2017, the parties reached a settlement in this matter and we accrued approximately $2.3 million as a result of this settlement. At a July 24, 2017 hearing before the District Court in Clark County, Nevada, the court granted preliminary approval of the settlement, and on October 30, 2017, the court issued final approval of the class settlement. We paid the approved settlement amount and released the related liability.

~~Reimbursement Offer; Possible Changes in Payment Practices~~

During 2017, it was determined that a limited universe of borrowers may have incurred bank overdraft or non-sufficient funds fees because of possible confusion about certain electronic payments we initiated on theirOpen-End loans. As a result, we decided to reimburse such fees through payments or credits against outstanding loan balances, subject to per-customer dollar limitations, upon receipt of (1) claims from potentially affected borrowers stating that they were in fact confused by our practices and (2) bank statements from such borrowers showing that fees for which reimbursement is sought were incurred at a time that such borrowers might reasonably have been confused about our practices. We recorded a $2.0 million liability for this matter.

Additionally, we also decided that, in June 2018, we will discontinue the use of secondary payment cards for affected borrowers who do not explicitly reauthorize the use of secondary payment cards. For these borrowers, in the event we cannot obtain payment through the bank account or payment card listed on the borrower’s application, we will need to rely exclusively on other collection methods such as delinquency notices and/or collection calls. The discontinuation for affected borrowers of our current use of secondary cards will increase collections costs and reduce collections effectiveness.

City of Austin

~~We were~~The Company was cited onin July 5, 2016 by the City of Austin, Texas for alleged violations of the Austin ordinance addressing products offered by CSOs. The Austin ordinance regulates aspects of products offered under ~~our Credit Access Business programs,~~the Company's CAB program, including loan sizes and repayment terms. ~~We believe~~The Company believes that: (i) the Austin ordinance ~~(like~~(similar to its counterparts elsewhere in ~~the state)~~Texas) conflicts with Texas state law and (ii) ~~our product~~ in any event, the Company's product complies with the ordinance, when the ordinance is properly construed. The Austin Municipal Court agreed with ~~our~~the Company's position that the ordinance conflicts with Texas law and, accordingly, did not address ~~our~~the second argument. In September 2017, the Travis County Court reversed the Municipal Court’s decision and remanded the case for further proceedings. ~~Subsequent to~~To date, a hearing and trial on the ~~denial of our appeal of the County Court's decision in October 2017, we were notified during the quarter ended March 31, 2018 that the case could potentially go to trial in the summer of 2018. We do~~merits have not been scheduled. The Company does not anticipate having a final determination of the lawfulness of ~~our~~its CAB program under the Austin ordinance (and similar ordinances in other Texas cities) in the near future. A final adverse decision could ~~potentially~~ result in material monetary liability

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

in Austin and elsewhere in Texas, and would force usthe Company to restructure the loans ~~we originate~~it originates in Austin and elsewhere in Texas.

Other Legal Matters

~~We are also~~The Company is a defendant in certain ~~routine~~ litigation matters encountered from time-to-time in the ordinary course of ~~our~~ business. Certain of these matters may be covered to an extent by insurance. InWhile it is difficult to predict the ~~opinion of management, based upon the advice of legal counsel, the likelihood is remote that the impact~~outcome of any ~~pending legal proceedings and claims, either individually or in~~particular proceeding, the ~~aggregate, would~~Company does not believe the result of any of these matters will have a material adverse effect on ~~our Consolidated Financial Statements.~~the Company's business, results of operations or financial condition.

NOTE 14 – LEASES

Operating leases entered into by the Company are primarily for retail stores in certain U.S. states and Canadian provinces. Leases classified as finance are immaterial to the Company as of March 31, 2020. Operating leases expire at various times through 2032. The Company determines if an arrangement is a lease at inception. Operating leases are included in "Right of use asset - operating leases" and "Lease liability - operating leases" on the Consolidated Balance Sheets.

Typically, a contract is or contains a lease if it conveys the right to control the use of an identified property, plant or equipment (an identified asset) for a period of time in exchange for consideration. To determine whether a contract conveys the right to control the use of an identified asset for a period of time, an entity shall assess whether, throughout the period of use, the customer has both (i) the right to obtain substantially all of the economic benefits from use of the identified asset and (ii) the right to direct the use of the identified asset. If the customer has the right to control the use of an identified asset for only a portion of the term of the contract, the contract contains a lease for that portion of the term.

The Company recognizes ROU assets and lease liabilities based on the present value of lease payments over the lease term at commencement date. The rate implicit in the Company's leases typically are not readily determinable. As a result, the Company uses its estimated incremental borrowing rate, as allowed by ASC 842, in determining the present value of lease payments. The incremental borrowing rate is based on internal and external information available at the lease commencement date and is determined using a portfolio approach (i.e. using the weighted average terms of all leases in the Company's portfolio). This rate is the theoretical rate the Company would pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term as that of the portfolio.

The Company uses quoted interest rates obtained from financial institutions as an input, adjusted for Company specific factors, to derive the incremental borrowing rate as the discount rate for the leases. As new leases are added each period, the Company evaluates whether the incremental borrowing rate has changed. If the incremental borrowing rate has changed, the Company will apply the rate to new leases if not doing so would result in a material difference to the ROU asset and lease liability presented on the balance sheet.

The majority of the leases have an original term of five years with two five-year renewal options. The consumer price index is used in determining future lease payments and for purposes of calculating operating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Most of the leases have escalation clauses and certain leases also require payment of period costs, including maintenance, insurance and property taxes. Some of the leases are with related parties and have terms similar to the non-related party leases. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~NOTE 14 – CONDENSED CONSOLIDATING FINANCIAL INFORMATION~~

~~In February 2017, CFTC issued $470.0 million aggregate principal amount Senior Secured Notes,~~The following table summarizes the ~~proceeds of which~~ ~~were used together with available cash, to (i) redeem~~operating lease costs and other information for the ~~outstanding 10.75% Senior Secured Notes due 2018 of our wholly owned subsidiary, CURO Intermediate, (ii) redeem the outstanding 12.00% Senior Cash Pay Notes due 2017~~three months ended March 31, 2020 and (iii) pay fees, expenses, premiums and accrued interest in connection with the offering. CFTC sold the Senior Secured Notes to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”); or outside the U.S. to non-U.S. persons in compliance with Regulation S of the Securities Act.March 31,2019 (in thousands):

In November 2017, CFTC issued $135.0 million aggregate principal amount of additional Senior Secured Notes in a private offering exempt from the registration requirements of the Securities Act (the "Additional Notes Offering"). CFTC used the proceeds from the Additional Notes Offering, together with available cash, to (i) pay a cash dividend, in an amount of $140.0 million to us, CFTC’s sole stockholder, and ultimately our stockholders and (ii) pay fees, expenses, premiums and accrued interest in connection with the Additional Notes Offering. CFTC received the consent of the holders holding a majority in the outstanding principal amount outstanding of the current Senior Secured Notes to a one-time waiver with respect to the restrictions contained in Section 5.07(a) of the indenture governing the Senior Secured Notes to permit the dividend.

On March 7, 2018, CFTC redeemed $77.5 million of the Senior Secured Notes at a price equal to 112.00% of the principal amount plus accrued and unpaid interest to the date of redemption. Following the redemption, $527.5 million of the original outstanding principal amount of the Senior Secured Notes remain outstanding. The redemption was conducted pursuant to the indenture governing the Senior Secured Notes, dated as of February 15, 2017, by and among CFTC, the guarantors party thereto and TMI Trust Company, as trustee and collateral agent. Consistent with the terms of the indenture, CFTC used a portion of the cash proceeds from our IPO, completed in December 2017, to redeem such Senior Secured Notes. See Note 5, "Long-Term Debt," for additional details.



	Three Months Ended March 31,
	2020			2019
Operating lease costs:
Third-Party	$	7,626		$	7,621
Related-Party	864			847
Total operating lease costs	$	8,490		$	8,468

Operating cash flow - Operating leases	$	8,433		$	8,615
New ROU assets - Operating leases	$	5,647		$	—
Weighted average remaining lease term - Operating leases	6.3 years			6.1 years
Weighted average discount rate - Operating leases	10.3		%	10.3		%

The following ~~condensed consolidating financing information, which has been prepared~~table summarizes the aggregate operating lease maturities that the Company is contractually obligated to make under operating leases as of March 31, 2020 (in thousands):



	Third-Party			Related-Party			Total
Remainder of 2020	$	22,437		$	2,809		$	25,246
2021	27,464			3,767			31,231
2022	24,640			3,661			28,301
2023	19,995			1,316			21,311
2024	15,343			962			16,305
2025	11,178			861			12,039
Thereafter	30,416			2,655			33,071
Total	151,473			16,031			167,504
Less: Imputed interest	(41,963		)	(3,826		)	(45,789		)
Operating lease liabilities	$	109,510		$	12,205		$	121,715

As a result of the COVID-19 pandemic that began during the three months ended March 31, 2020, CURO reviewed ROU assets for indicators of impairment. Under US GAAP, the model used to review ROU assets for impairment is consistent to that used for other long-lived assets, such as fixed assets. In applying the appropriate guidance, the Company noted there was no indicators of impairment as of March 31, 2020 related to its ROU assets.

NOTE 15 – DISCONTINUED OPERATIONS

On February 25, 2019, in accordance with the ~~requirements~~provisions of the U.K. Insolvency Act 1986 and as approved by the Boards of Directors of the U.K. Subsidiaries, insolvency practitioners from KPMG were appointed as Administrators for ~~presentation~~the U.K. Subsidiaries. The effect of ~~Rule 3-10(d)~~the U.K. Subsidiaries’ entry into administration was to place their management, affairs, business and property of ~~Regulation S-X promulgated~~the U.K. Subsidiaries under the ~~Securities Act, presents~~direct control of the ~~condensed consolidating financial information separately for:~~Administrators. Accordingly, the Company deconsolidated the U.K. Subsidiaries, which comprised the U.K. reportable operating segment, as of February 25, 2019 and classified them as Discontinued Operations for all periods presented.


~~(i)~~	~~CFTC as the issuer of the Senior Secured Notes;~~


~~(ii)~~	~~CURO Intermediate as the issuer of the 10.75% senior secured notes that were redeemed in February 2017;~~


~~(iii)~~	Our subsidiary guarantors, which are comprised of our domestic subsidiaries, excluding CFTC and CURO Intermediate (the “Subsidiary Guarantors”), on a consolidated basis, which are 100% owned by CURO, and which are guarantors of the Senior Secured Notes issued in February 2017 and the 10.75% senior secured notes redeemed in February 2017;


~~(iv)~~	~~Our other subsidiaries on a consolidated basis, which are not guarantors of the Senior Secured Notes (the “Subsidiary Non-Guarantors”)~~


~~(v)~~	~~Consolidating and eliminating entries representing adjustments to:~~


a.	~~eliminate intercompany transactions between or among us, the Subsidiary Guarantors and the Subsidiary Non-Guarantors; and~~


b.	~~eliminate the investments in our subsidiaries;~~


~~(vi)~~	~~Us and our subsidiaries on a consolidated basis.~~

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table presents the results of operations of the U.K. Subsidiaries, which meet the criteria of Discontinued Operations and, therefore, are excluded from the Company's results of continuing operations (in thousands):



	Three Months Ended March 31,
	2020			2019⁽¹⁾
Revenue	$	—		$	6,957
Provision for losses	��			1,703
Net revenue	—			5,254

Cost of providing services
Office	—			246
Other costs of providing services	—			61
Advertising	—			775
Total cost of providing services	—			1,082
Gross margin	—			4,172
Operating (income) expense
Corporate, district and other expenses	—			3,810
Interest income	—			(4		)
(Gain) loss on disposition	(390		)	39,414
Total operating (income) expense	(390		)	43,220
Pre-tax income (loss) from operations of discontinued operations	390			(39,048		)
Income tax expense (benefit) related to disposition	98			(47,423		)
Net income from discontinued operations	$	292		$	8,375
(1) Includes U.K. Subsidiaries financial results from January 1, 2019 to February 25, 2019.

Revenue and expenses related to discontinued operations included activity prior to the deconsolidation of the U.K. subsidiaries effective February 25, 2019. For the three months ended March 31, 2019, "(Gain) loss on disposition" of $39.4 million included the non-cash effect of eliminating assets and liabilities of the U.K. Subsidiaries as of the date of deconsolidation, as well as the effect of cumulative currency exchange rate differences on the U.S. investment in the U.K.

In connection with the disposition of the U.K. Subsidiaries, the U.S. entity that owned the Company's interests in the U.K. Subsidiaries recognized a loss on investment. This loss resulted in an estimated U.S. Federal and state income tax benefit of $47.4 million as of March 31, 2019, to be applied against future income tax obligations. Subsequently, in 2019, the Company revised the estimated U.S. Federal and state income tax benefit to $46.6 million. During the three months ended March 31, 2020, the Company received $0.4 million of disbursements from the Administrator related to the wind-down of the U.K. Subsidiaries.

As of March 31, 2020 and December 31, 2019, the unaudited Condensed Consolidated Balance Sheets were not impacted by the U.K. Subsidiaries as all balances were written off when the U.K. segment entered into administration during the first quarter of 2019.

The following table presents cash flows of the U.K. Subsidiaries (in thousands):



	Three Months Ended March 31,
	2020		2019⁽¹⁾
Net cash provided by (used in) discontinued operating activities	$	390	$	(504	)
Net cash used in discontinued investing activities	—		(14,213		)
Net cash used in discontinued financing activities	—		—
(1) Includes U.K. Subsidiaries financial results from January 1, 2019 to February 25, 2019.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

~~Condensed Consolidating Balance Sheets~~NOTE 16 – GOODWILL

The change in the carrying amount of Goodwill by operating segment for the three months ended March 31, 2020 was as follows (in thousands):

March 31, 2018
(dollars in thousands) CFTC CURO Intermediate
Subsidiary
Guarantors
Subsidiary
Non-Guarantors
SPV Subs Eliminations Consolidated CURO Eliminations CURO
Consolidated
Assets:
Cash $ —
$ —
$ 82,358
$ 48,381
$ —
$ —
$ 130,739
$ —
$ —
$ 130,739
Restricted cash —
—
1,678
3,710
12,268
—
17,656
—
—
17,656
Loans receivable, net —
—
68,304
110,775
149,873
—
328,952
—
—
328,952
Deferred income taxes —
1,002
(3,313 ) 4,128
—
—
1,817
—
—
1,817
Prepaid expenses and other —
—
29,304
3,449
—
—
32,753
—
—
32,753
Property and equipment, net —
—
50,613
32,909
—
—
83,522
—
—
83,522
Goodwill —
—
91,130
54,634
—
—
145,764
—
—
145,764
Other intangibles, net 16
—
5,024
26,921
—
—
31,961
—
—
31,961
Intercompany receivable —
37,877
19,236
(17,249 ) —
(39,864 ) —
—
—
—
Investment in subsidiaries 31,067
981,468
—
—
—
(1,012,535 ) —
(62,855 ) 62,855
—
Other 6,668
—
4,499
1,050
—
—
12,217
—
—
12,217
Total assets $ 37,751
$ 1,020,347
$ 348,833
$ 268,708
$ 162,141
$ (1,052,399 ) $ 785,381
$ (62,855 ) $ 62,855
$ 785,381
Liabilities and Stockholder's equity:
Accounts payable and accrued liabilities $ 2,346
$ 16
$ 33,274
$ 17,176
$ 15
$ —
$ 52,827
$ 33
$ —
$ 52,860
Deferred revenue —
—
5,031
5,145
(24 ) —
10,152
—
—
10,152
Income taxes payable (56,738 ) 87,519
(18,566 ) 269
—
—
12,484
(3,750 ) —
8,734
Accrued interest 5,121
—
—
—
1,263
—
6,384
—
—
6,384
Payable to CURO Holdings Corp. 38,848
—
62,839
—
—
—
101,687
(101,687 ) —
—
CSO guarantee liability —
—
10,412
—
—
—
10,412
—
—
10,412
Deferred rent —
—
9,837
1,895
—
—
11,732
—
—
11,732
Long-term debt (excluding current maturities) 511,494
—
—
—
111,150
—
622,644
—
—
622,644
Subordinated shareholder debt —
—
—
2,322
—
—
2,322
—
—
2,322
Intercompany payable (398,033 ) 894,896
(370,086 ) 39,864
(126,777 ) (39,864 ) —
—
—
—
Other long-term liabilities —
—
4,539
1,660
—
—
6,199
—
—
6,199
Deferred tax liabilities (2,432 ) 6,849
(276 ) 7,252
—
—
11,393
—
—
11,393
Total liabilities 100,606
989,280
(262,996 ) 75,583
(14,373 ) (39,864 ) 848,236
(105,404 ) —
742,832
Stockholder’s equity (62,855 ) 31,067
611,829
193,125
176,514
(1,012,535 ) (62,855 ) 42,549
62,855
42,549
Total liabilities and stockholder’s equity $ 37,751
$ 1,020,347
$ 348,833
$ 268,708
$ 162,141
$ (1,052,399 ) $ 785,381
$ (62,855 ) $ 62,855
$ 785,381



	U.S.		Canada			Total
Goodwill at December 31, 2019	$	91,131	$	29,478		$	120,609
Acquisition (Note 17)	14,791		—			14,791
Foreign currency translation	—		(2,575		)	(2,575		)
Goodwill at March 31, 2020	105,922		26,903			132,825

The Company tests goodwill at least annually for impairment (the Company has elected to annually test for potential impairment of goodwill on October 1) and more frequently if indicators are present or changes in circumstances suggest that impairment may exist. The indicators include, among others, declines in sales, earning or cash flows or the development of a material adverse change in business climate. The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a reporting unit. See Note 1, "Summary of Significant Accounting Policies and Nature of Operations" of the 2019 Form 10-K filed with the SEC on March 9, 2020, for additional information on the Company's policy for assessing goodwill for impairment.

U.S. and Canada Reporting Units

During the three months ended March 31, 2020, the Company determined a triggering event had occurred for the U.S. and Canada reporting units as a result of COVID-19. The global crisis caused by the pandemic drove significant declines in macroeconomic market conditions and altered the assumptions used in the Company's forecast for both reporting units. After performing an interim review, the Company concluded that the fair value of each reporting unit was in excess of its respective carrying value.

Ad Astra Acquisition

The Company completed the acquisition of Ad Astra on January 3, 2020. Goodwill of $14.8 million was recorded on the U.S. reporting unit during the three months ended March 31, 2020, based on the excess of the purchase price of the business combination over the fair value of the acquired net assets. See Note 17, "Acquisition" for more information related to the business combination.

NOTE 17 – ACQUISITION

The Company began consolidating the financial results of this acquisition in the unaudited Condensed Consolidated Financial Statements on January 3, 2020. For the three months ended March 31, 2019, prior to the acquisition, $4.7 million of costs related to Ad Astra were included in "Other costs of providing services." Subsequent to the acquisition, operating costs for Ad Astra are included within "Corporate, district and other expenses," consistent with presentation of other internal collection costs. Ad Astra incurred $3.5 million of operating expense during the three months ended March 31, 2020.

The transaction has been accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The Company was the acquirer for purposes of accounting for the business combination. The values assigned to the assets acquired and liabilities assumed are based on their estimates of fair value available as of March 31, 2020. As of March 31, 2020, the Company completed the determination of the fair values of the acquired identifiable assets and liabilities based on the information available.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table summarizes the allocation of the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

December 31, 2017
(dollars in thousands) CFTC CURO Intermediate Subsidiary
Guarantors Subsidiary
Non-Guarantors SPV Subs Eliminations Consolidated CURO Eliminations CURO
Consolidated
Assets:
Cash $ —
$ —
$ 117,379
$ 44,915
$ —
$ —
$ 162,294
$ 80
$ —
$ 162,374
Restricted cash —
—
1,677
3,569
6,871
—
12,117
—
—
12,117
Loans receivable, net —
—
84,912
110,651
167,706
—
363,269
—
—
363,269
Deferred income taxes —
2,154
(4,646 ) 3,502
—
—
1,010
(238 ) —
772
Income taxes receivable —
—
—
—
—
—
—
3,455
—
3,455
Prepaid expenses and other —
—
38,277
3,353
—
—
41,630
882
—
42,512
Property and equipment, net —
—
52,627
34,459
—
—
87,086
—
—
87,086
Goodwill —
—
91,131
54,476
—
—
145,607
—
—
145,607
Other intangibles, net 16
—
5,418
27,335
—
—
32,769
—
—
32,769
Intercompany receivable —
37,877
33,062
(30,588 ) —
(40,351 ) —
—
—
—
Investment in subsidiaries (14,504 ) 899,371
—
—
—
(884,867 ) —
(84,889 ) 84,889
—
Other 5,713
—
3,017
1,040
—
—
9,770
—
—
9,770
Total assets $ (8,775 ) $ 939,402
$ 422,854
$ 252,712
$ 174,577
$ (925,218 ) $ 855,552
$ (80,710 ) $ 84,889
$ 859,731
Liabilities and Stockholder's equity:
Accounts payable and accrued liabilities $ 2,606
$ 13
$ 35,753
$ 15,954
$ 12
$ —
$ 54,338
$ 1,454
$ —
$ 55,792
Deferred revenue —
—
6,529
5,455
—
—
11,984
—
—
11,984
Income taxes payable (49,738 ) 70,231
(18,450 ) 2,077
—
—
4,120
—
—
4,120
Accrued interest 24,201
—
—
—
1,266
—
25,467
—
—
25,467
Payable to CURO Holdings Corp. 184,348
—
(95,048 ) —
—
—
89,300
(89,300 ) —
—
CSO guarantee liability —
—
17,795
—
—
—
17,795
—
—
17,795
Deferred rent —
—
9,896
1,681
—
—
11,577
—
—
11,577
Long-term debt 585,823
—
—
—
120,402
—
706,225
—
—
706,225
Subordinated shareholder debt —
—
—
2,381
—
—
2,381
—
—
2,381
Intercompany payable (668,536 ) 876,869
(124,332 ) 40,351
(84,001 ) (40,351 ) —
—
—
—
Other long-term liabilities —
—
3,969
1,799
—
—
5,768
—
—
5,768
Deferred tax liabilities (2,590 ) 6,793
(143 ) 7,426
—
—
11,486
—
—
11,486
Total liabilities 76,114
953,906
(164,031 ) 77,124
37,679
(40,351 ) 940,441
(87,846 ) —
852,595
Stockholder’s equity (84,889 ) (14,504 ) 586,885
175,588
136,898
(884,867 ) (84,889 ) 7,136
84,889
7,136
Total liabilities and stockholder’s equity $ (8,775 ) $ 939,402
$ 422,854
$ 252,712
$ 174,577
$ (925,218 ) $ 855,552
$ (80,710 ) $ 84,889
$ 859,731

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~Condensed Consolidating Statements of Income~~

Three Months Ended March 31, 2018
(dollars in thousands) CFTC CURO Intermediate Subsidiary
Guarantors Subsidiary
Non-Guarantors SPV Subs Eliminations Consolidated CURO Eliminations CURO
Consolidated
Revenue $ —
$ —
$ 128,408
$ 57,165
$ 76,185
$ —
$ 261,758
$ —
$ —
$ 261,758
Provision for losses —
—
35,769
16,698
28,564
—
81,031
—
—
81,031
Net revenue —
—
92,639
40,467
47,621
—
180,727
—
—
180,727
Cost of providing services:

Salaries and benefits —
—
18,018
8,900
—
—
26,918
—
—
26,918
Occupancy —
—
7,646
5,781
—
—
13,427
—
—
13,427
Office —
—
5,582
1,399
—
—
6,981
—
—
6,981
Other costs of providing services —
—
12,030
1,889
481
—
14,400
—
—
14,400
Advertising —
—
5,159
4,597
—
—
9,756
—
—
9,756
Total cost of providing services —
—
48,435
22,566
481
—
71,482
—
—
71,482
Gross margin —
—
44,204
17,901
47,140
—
109,245
—
—
109,245
Operating (income) expense:

Corporate, district and other 448
7
27,992
9,922
30
—
38,399
2,055
—
40,454
Intercompany management fee —
—
(6,902 ) 3,494
3,408
—
—
—
—
—
Interest expense 18,322
—
(112 ) 52
4,087
—
22,349
—
—
22,349
Loss on extinguishment of debt 11,683
—
—
—
—
—
11,683
—
—
11,683
Intercompany interest (income) expense —
(880 ) (79 ) 959
—
—
—
—
—
—
Total operating expense 30,453
(873 ) 20,899
14,427
7,525
—
72,431
2,055
—
74,486
Net income (loss) before income taxes (30,453 ) 873
23,305
3,474
39,615
—
36,814
(2,055 ) —
34,759
Provision for income tax expense (benefit) (6,841 ) 18,497
(1,585 ) 1,929
—
—
12,000
(533 ) —
11,467
Net income (loss) (23,612 ) (17,624 ) 24,890
1,545
39,615
—
24,814
(1,522 ) —
23,292
Equity in net income (loss) of subsidiaries:

CFTC —
—
—
—
—
—
—
24,814
(24,814 ) —
CURO Intermediate (17,624 ) —
—
—
—
17,624
—
—
—
—
Guarantor Subsidiaries 24,890
—
—
—
—
(24,890 ) —
—
—
—
Non-Guarantor Subsidiaries 1,545
—
—
—
—
(1,545 ) —
—
—
—
SPV Subs 39,615
—
—
—
—
(39,615 ) —
—
—
—
Net income (loss) attributable to CURO $ 24,814
$ (17,624 ) $ 24,890
$ 1,545
$ 39,615
$ (48,426 ) $ 24,814
$ 23,292
$ (24,814 ) $ 23,292



(in thousands)	Amounts acquired on January 3, 2020
Cash consideration transferred:	$	17,811

Cash and cash equivalents	3,360
Accounts receivable	465
Property and equipment	358
Intangible assets	1,101
Goodwill	14,791
Operating lease asset	235
Accounts payable and accrued liabilities	(2,264		)
Operating lease liabilities	(235		)
Total	$	17,811

Goodwill of $14.8 million represents the excess over the fair value of the net tangible and intangible assets acquired. Goodwill is not deductible for income tax purposes.

NOTE 18 – SHARE REPURCHASE PROGRAM

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

In February 2020, the Company's Board of Directors authorized a new share repurchase program for up to $25.0 million of its common stock. Under the program, shares were repurchased in the open market or in privately negotiated transactions at times and amounts considered appropriate by CURO. Due to uncertainty caused by COVID-19, the Board suspended the program on March 15, 2020. There were no material purchases in the program during the three months ended March 31, 2020.

Three Months Ended March 31, 2017
(dollars in thousands) CFTC CURO Intermediate Subsidiary Guarantors Subsidiary Non-Guarantors SPV Subs Eliminations
CFTC
Consolidated
CURO Eliminations CURO Consolidated
Revenue $ —
$ —
$ 112,123
$ 50,258
$ 62,199
$ —
$ 224,580
$ —
$ —
$ 224,580
Provision for losses —
—
28,056
12,542
21,138
—
61,736
—
—
61,736
Net revenue —
—
84,067
37,716
41,061
—
162,844
—
—
162,844
Cost of providing services:

Salaries and benefits —
—
17,853
8,580
—
—
26,433
—
—
26,433
Occupancy —
—
8,145
5,950
—
—
14,095
—
—
14,095
Office —
—
3,764
1,104
—
—
4,868
—
—
4,868
Other store operating expenses —
—
13,504
1,316
35
—
14,855
—
—
14,855
Advertising —
—
4,694
2,994
—
—
7,688
—
—
7,688
Total cost of providing services —
—
47,960
19,944
35
—
67,939
—
—
67,939
Gross Margin —
—
36,107
17,772
41,026
—
94,905
—
—
94,905
Operating (income) expense:

Corporate, district and other 530
8
19,358
10,888
115
—
30,899
2,094
—
32,993
Interest expense 7,282
9,613
1
21
3,139
—
20,056
3,310
—
23,366
Intercompany interest (income) expense —
(1,148 ) (2,022 ) 1,314
1,856
—
—
—
—
—
Loss on extinguishment of debt —
11,884
—
—
—
—
11,884
574
—
12,458
Total operating expense 7,812
20,357
17,337
12,223
5,110
—
62,839
5,978
—
68,817
Net (loss) income before income taxes (7,812 ) (20,357 ) 18,770
5,549
35,916
—
32,066
(5,978 ) —
26,088
Provision for income tax (benefit) expense (3,960 ) 16,611
(2,975 ) 2,044
—
—
11,720
(2,270 ) —
9,450
Net income (loss) (3,852 ) (36,968 ) 21,745
3,505
35,916
—
20,346
(3,708 ) —
16,638
Equity in net income (loss) of subsidiaries:

CFTC —
—
—
—
—
—
—
20,346
(20,346 ) —
CURO Intermediate (36,968 ) —
—
—
—
36,968
—
—
—
—
Guarantor Subsidiaries 21,745
—
—
—
—
(21,745 ) —
—
—
—
Non-Guarantor Subsidiaries 3,505
—
—
—
—
(3,505 ) —
—
—
—
SPV Subs 35,916
—
—
—
—
(35,916 ) —
—
—
—
Net income (loss) attributable to CURO $ (15,570 ) $ (36,968 ) $ 21,745
$ 3,505
$ 35,916
$ 11,718
$ 20,346
$ 16,638
$ (20,346 ) $ 16,638
In April 2019, the Company's Board of Directors authorized a share repurchase program providing for the repurchase of up to $50.0 million of its common stock. The repurchase program, which commenced June 2019, was completed in February 2020. Under this program, the Company repurchased 455,255 shares of its common stock at an average price of $10.45 per share for total consideration of $4.8 million during the three months ended March 31, 2020. Purchases under the program were made from time-to-time in the open market, in privately negotiated transactions, or both, at the Company's discretion and subject to market conditions and other factors. Any repurchased shares are available for use in connection with equity plans or other corporate purposes.

Separately, in August 2019, the Company entered into a Share Repurchase Agreement (the “Share Repurchase Agreement”) with FFL, a related party. Pursuant to the Share Repurchase Agreement, the Company repurchased 2,000,000 shares of its common stock, par value $0.001 per share, owned by FFL, in a private transaction at a purchase price equal to $13.55 per share of Common Stock. The purchase price was determined by using the Company's closing common stock price on August 29, 2019 of $13.97, less a discount of 3.0%. This transaction occurred outside of the share repurchase program authorized in April 2019.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~Condensed Consolidating Statements of Cash Flows~~

Three Months Ended March 31, 2018
(dollars in thousands) CFTC CURO Intermediate Subsidiary Guarantors
Subsidiary
Non-Guarantors
SPV Subs Eliminations CFTC
Consolidated CURO Eliminations CURO Consolidated
Cash flows from operating activities

Net cash provided (used) $ 78,529
$ —
$ (34,233 ) $ 4,868
$ 14,916
$ 3,922
$ 68,002
$ (13,215 ) $ —
$ 54,787
Cash flows from investing activities:

Purchase of property, equipment and software —
—
(788 ) (821 ) —
—
(1,609 ) —
—
(1,609 )
Cash paid for Cognical Holdings preferred shares (958 ) —
—
—
—
—
(958 ) —
—
(958 )
Change in restricted cash —
—
—
(6 ) (5,397 ) —
(5,403 ) —
—
(5,403 )
Net cash provided (used) (958 ) —
(788 ) (827 ) (5,397 ) —
(7,970 ) —
—
(7,970 )
Cash flows from financing activities:

Proceeds from Non-Recourse U.S. SPV facility —
—
—
—
3,000
—
3,000
—
—
3,000
Payments on Non-Recourse U.S. SPV facility —
—
—
—
(12,519 ) —
(12,519 ) —
—
(12,519 )
Proceeds from revolving credit facilities 10,000
—
—
—
—
—
10,000
—
—
10,000
Payments on revolving credit facilities (10,000 ) —
—
—
—
—
(10,000 ) —
—
(10,000 )
Proceeds from issuance of common stock —
—
—
—
—
—
—
13,135
—
13,135
Payments on 12.00% Senior Secured Notes (77,500 ) —
—
—
—
—
(77,500 ) —
—
(77,500 )
Debt issuance costs paid (71 ) —
—
—
—
—
(71 ) —
—
(71 )
Net cash provided (used) (77,571 ) —
—
—
(9,519 ) —
(87,090 ) 13,135
—
(73,955 )
Effect of exchange rate changes on cash —
—
—
(575 ) —
(3,922 ) (4,497 ) —
—
(4,497 )
Net increase (decrease) in cash —
—
(35,021 ) 3,466
—
—
(31,555 ) (80 ) —
(31,635 )
Cash at beginning of period —
—
117,379
44,915
—
—
162,294
80
162,374
Cash at end of period $ —
$ —
$ 82,358
$ 48,381
$ —
$ —
$ 130,739
$ —
$ —
$ 130,739

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

Three Months Ended March 31, 2017
(dollars in thousands) CFTC CURO Intermediate Subsidiary Guarantors
Subsidiary
Non-Guarantors
SPV Subs Eliminations
CFTC
Consolidated
CURO Eliminations CURO
Consolidated
Cash flows from operating activities
Net cash (used) provided $ (317,556 ) $ 427,790
$ (33,328 ) $ (13,996 ) $ (891 ) $ (11 ) $ 62,008
$ (5,083 ) $ —
$ 56,925
Cash flows from investing activities:
Purchase of property, equipment and software —
—
(1,672 ) (1,421 ) —
—
(3,093 ) —
—
(3,093 )
Change in restricted cash —
—
—
121
(7,114 ) —
(6,993 ) —
—
(6,993 )
Net cash used —
—
(1,672 ) (1,300 ) (7,114 ) —
(10,086 ) —
—
(10,086 )
Cash flows from financing activities:
Proceeds from Non-Recourse U.S. SPV facility and ABL facility —
—
—
—
19,802
—
19,802
—
—
19,802
Payments on Non-Recourse U.S. SPV facility and ABL facility —
—
—
—
(11,797 ) —
(11,797 ) —
—
(11,797 )
Proceeds from issuance of 12.00% Senior Secured Notes 461,329
—
—
—
—
—
461,329
—
—
461,329
Payments on 10.75% Senior Secured Notes —
(426,034 ) —
—
—
—
(426,034 ) —
—
(426,034 )
Payments on 12.00% Senior Cash Pay Notes —
—
—
—
—
—
—
(125,000 ) —
(125,000 )
Dividends (paid) received (130,083 ) —
—
—
—
—
(130,083 ) 130,083
—
—
Debt issuance costs paid (13,690 ) —
—
—
—
—
(13,690 ) —
—
(13,690 )
Net cash provided (used) 317,556
(426,034 ) —
—
8,005
—
(100,473 ) 5,083
—
(95,390 )
Effect of exchange rate changes on cash —
—
—
818
—
11
829
—
—
829
Net increase (decrease) in cash —
1,756
(35,000 ) (14,478 ) —
—
(47,722 ) —
—
(47,722 )
Cash at beginning of period —
1,954
127,712
63,779
—
—
193,445
80
—
193,525
Cash at end of period $ —
$ 3,710
$ 92,712
$ 49,301
$ —
$ —
$ 145,723
$ 80
$ —
$ 145,803

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

NOTE ~~15 -~~19 – SUBSEQUENT EVENTS

~~Excess Cash Flow Offer~~

Subject to the provisions of its Senior Secured Notes, CFTC is required to make an offer to purchase the maximum principal amount of Senior Secured Notes that may be redeemed with 50% of its Excess Cash Flow (as defined in the agreement) within 125 days after the end of each fiscal year commencing with the fiscal year ended December 31, 2017. CFTC is not required to make an offer unless its Excess Cash Flow exceeds $5.0 million (with lesser amounts being carried forward for purposes of determining whether the $5.0 million threshold has been met for any future period). Upon completion of each Excess Cash Flow offer, the Excess Cash Flow amount will be reset at zero.New Non-Recourse U.S. SPV Facility

On April ~~5, 2018, CFTC initiated an offer~~8, 2020, the Company entered into a Non-Recourse U.S. SPV Facility to ~~purchase up to $37.7~~provide financing for U.S. Unsecured Installment and Open-End receivables, including those generated under its technology, marketing and servicing relationship with Stride Bank. The Non-Recourse U.S. SPV Facility provides for $100.0 million of borrowing capacity, subject to the borrowing base of eligible collateral and certain other conditions. Concurrent with the closing, the Company drew $35.2 million on the facility.

Dividend

On April 30, 2020, the Company's Board of Directors declared a dividend under its ~~Senior Secured Notes at par, which represented 50%~~previously announced dividend program, of ~~its Excess Cash Flow for the fiscal year ended December 31, 2017. The offer expired~~$0.055 per share to be paid on May ~~2, 2018 and did not result in the tender~~27, 2020 to stockholders of ~~any Notes. According to the terms~~record as of the ~~Indenture, the Excess Cash Flow amount has been reset at zero.~~

close of business on May 13, 2020.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Forward Looking~~Forward-Looking Statements

The following discussion of financial condition, results of operations, liquidity and capital resources and certain factors that may affect future results, including company-specific, economic and industry-wide factors, should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and accompanying notes included herein. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risk, uncertainties and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. Except as required by applicable law and regulations, we undertake no obligation to update any forward-looking statements or other statements we may make in the following discussion or elsewhere in this document even though these statements may be affected by events or circumstances occurring after the forward-looking statements or other statements were made. Please see ~~the sections titled "Cautionary Statement Regarding Forward-Looking Statements” and~~ “Risk Factors” in our ~~2017 Annual~~2019 Form 10-K for the year ended December 31, 2019 filed with the SEC on March 9, 2020 and our Current Report on Form ~~10-K~~8-K, filed with the SEC on April 8, 2020, for a discussion of the uncertainties, risks and assumptions associated with these statements.

Overview

We are a growth-oriented, technology-enabled, highly-diversified, multi-channel and multi-product consumer finance company serving a wide range of underbanked consumers in the ~~United States, Canada~~U.S. and ~~the United Kingdom and are a market leader in our industry based on revenues.~~Canada.

History

~~The~~ CURO ~~business~~ was founded in 1997 to meet the growing needs of underbanked consumers looking for access to credit. ~~The Company set out~~With more than 20 years of experience, we seek to offer a variety of convenient, easily-accessible financial and loan services ~~and over its 20 years~~in all of ~~operations, expanded across the United States, Canada and the United Kingdom.~~our markets.

CURO Financial Technologies Corp. ~~("CFTC") (then~~, previously known as Speedy Cash Holdings Corp. ("CFTC"), was incorporated in Delaware onin July ~~16,~~ 2008. On September 10, 2008, our founders sold or otherwise contributed all of the outstanding equity of the various operating entities that comprised the CURO business to a wholly-owned subsidiary of CFTC in connection with an investment in CFTC by Friedman Fleischer & Lowe Capital Partners II, L.P. and its affiliated funds, or FFL Partners. CURO Group Holdings Corp. ~~(then~~, previously known as Speedy Group Holdings Corp.), was incorporated in Delaware ~~on February 7,~~in 2013 as the parent company of CFTC. ~~On May 11, 2016, we changed~~The terms “CURO," "we,” “our,” “us” and the ~~name of Speedy Group Holdings Corp.~~“Company” refer to CURO Group Holdings Corp. ~~We similarly changed the names of some of~~and its ~~subsidiaries.~~directly and indirectly owned subsidiaries as a combined entity, except where otherwise stated.

~~Our growth has been fueled by acquisitions in~~In the U.S., ~~Canada~~our stores operate under "Speedy Cash" and "Rapid Cash." In the ~~United Kingdom, as well as organically, including the launch~~second quarter of ~~new brands. Recent brand launches include the March 2016 launch of LendDirect, an online installment loan brand in Alberta, Canada, that is now offered in four provinces, and the June~~ 2017, ~~launch of Avio~~we launched "Avio Credit," an online Installment ~~Loan brand~~and Open-End brand. In February 2019, we launched Revolve Finance, a checking account solution, with FDIC-insured deposits, that combines a Visa-branded debit card, a number of technology-enabled tools and optional overdraft protection. In Canada, our stores are branded "Cash Money" and we offer "LendDirect" Installment and Open-End loans online and at certain stores. As of March 31, 2020, our network consisted of 416 locations across 14 U.S. states and seven Canadian provinces and we offered our online services in ~~the~~27 U.S. ~~market that is currently available in four states.~~states and five Canadian provinces.

Recent Developments

~~On April 30, 2018, we announced that we expect~~COVID-19. A novel strain of coronavirus, known as COVID-19, surfaced in late 2019 and has spread around the world, including to ~~begin offering consumers within~~the U.S. and Canada. In March 2020, the World Health Organization categorized COVID-19 as a pandemic, and the President of the United States declared the COVID-19 outbreak a ~~new line~~national emergency. In response to the COVID-19 pandemic, various governmental bodies have issued decrees prohibiting certain businesses from continuing to operate and certain classes of ~~credit product through~~workers from reporting to work. However, CURO's operations have been designated as essential financial services by federal guidelines and local regulations. As a ~~relationship with MetaBank® ("Meta"); a wholly-owned subsidiary~~provider of ~~Meta Financial Group, Inc. CURO~~an essential service, we remain focused on protecting the health and ~~Meta expect~~wellbeing of our employees, customers, and the communities in which we operate while assuring the continuity of our business operations. In response to ~~finalize supporting agreements~~the pandemic, we have taken the following steps to ensure our financial stability while maintaining the health and ~~diligence in the second quarter~~wellbeing of ~~2018~~our employees and ~~then structure a pilot launch. Under the program partnership agreement, Meta may hold up to $350 million of product receivables on its balance sheet for the first three years~~customers:

Full-year 2020 earnings guidance was withdrawn.

Cancellation of the ~~relationship, although there can be no assurance~~2020 Short-Term Incentive Plan.

Suspension of our $25 million share repurchase program, previously announced in February 2020.

Establishment of an enhanced Customer Care Program to better serve our customers as they face unprecedented economic challenges and uncertainties. The program enables our team members to ~~the level of success~~provide relief to customers in ~~selling this credit product. Successful launch of the program is conditioned upon execution of supporting agreements and completion of diligence.~~ various ways, ranging from due date extensions, interest or fee forgiveness, payment waivers or extended payment plans, depending on a customer’s individual circumstances. We also temporarily suspended all returned item fees.

Designation of most stores across both the U.S. and Canada as an essential service, allowing stores to remain open during local governments' lock down orders.

Adjustment of our credit underwriting models to tighten approval rates and enhance our employment and income verification practices for both the store and on-line lending platforms.

Implementation of work-from-home for virtually all 1,100 of the Company’s contact center and corporate support personnel in Wichita, Toronto and Chicago.

Ad Astra Acquisition. On January 3, 2020, we acquired Ad Astra, previously our exclusive provider of third-party collection services for the U.S. business. The acquisition allows us to bring all U.S. servicing and recovery in-house, drive operational and financial synergies to ensure all aspects of the recovery portfolio are coordinated, reduce operational redundancy and increase peak volume management, improve compliance synergies, and facilitate integrated and personalized CRM strategies and campaign management across the servicing and recovery lifecycle. See Note 17, "Acquisition" of the Notes to the unaudited Condensed Consolidated Financial Statements for additional information.

Credit Facilities. On April 8, 2020, we entered into incremental asset-backed revolving credit facility to provide financing for U.S. Installment and Open-End receivables, including those generated under our technology, marketing and servicing relationship with Stride Bank. The credit facility provides for an initial borrowing capacity of $100.0 million, dependent upon the borrowing base of eligible collateral and certain other conditions, as described in Note 19, "Subsequent Events." For recent developments related to our Senior Secured Notes, Non-Recourse Canada SPV facility and other capital resources, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

California Assembly Bill 539. On September 13, 2019, the California legislature passed Assembly Bill 539, which imposes an interest rate cap on all consumer loans between $2,500 and $10,000 of 36%, plus the Federal Funds Rate. The bill became effective on January 1, 2020. Revenue from California Unsecured and Secured Installment loans amounted to 8.8% of total revenue for the three months ended March 31, 2020. See "Regulatory Environment and Compliance" in our 2019 10-K for additional details.

Revenue by Product and Segment and Related Loan Portfolio Performance

Revenue by Product

We exclude financial results of our former U.K. operations for all periods presented, as they were discontinued for accounting and reporting purposes in February 2019. See Note 15, "Discontinued Operations" for additional details.

The following ~~table summarizes~~tables summarize revenue by product, including CSO fees, for the periods ~~indicated:~~indicated (in thousands, unaudited):


	Three Months Ended								Three Months Ended								For the Three Months Ended
	March 31, 2018								March 31, 2017								March 31, 2020						March 31, 2019
(in thousands)	U.S.		Canada		U.K.		Total		U.S.		Canada		U.K.		Total
																	U.S.		Canada		Total		U.S.		Canada		Total
Unsecured Installment	$	120,476	$	4,903	$	7,567	$	132,946	$	100,754	$	3,420	$	5,257	$	109,431	$	120,829	$	1,580	$	122,409	$	134,003	$	1,775	$	135,778
Secured Installment	26,856		—		—		26,856		23,669		—		—		23,669		26,286		—		26,286		27,477		—		27,477
Open-End	25,834		1,389		—		27,223		17,907		—		—		17,907		41,990		28,992		70,982		32,593		20,276		52,869
Single-Pay	26,065		34,292		3,348		63,705		26,327		34,179		3,284		63,790		28,154		17,003		45,157		27,168		19,593		46,761
Ancillary	5,362		5,666		—		11,028		5,665		3,967		151		9,783		4,509		11,463		15,972		4,878		10,176		15,054
Total revenue	$	204,593	$	46,250	$	10,915	$	261,758	$	174,322	$	41,566	$	8,692	$	224,580	$	221,768	$	59,038	$	280,806	$	226,119	$	51,820	$	277,939

During the three months ended March 31, ~~2018,~~2020, total ~~lending~~ revenue ~~(excluding revenues from ancillary products)~~ grew ~~$35.9~~$2.9 million, or ~~16.7%~~1.0%, to ~~$250.7~~$280.8 million, compared to the ~~prior year period, predominantly driven~~prior-year period. Geographically, the 1.9% decline in U.S. revenues was offset by ~~growth~~a 13.9% increase in ~~Installment loan revenue in all three countries.~~Canada revenues. From a product perspective, Unsecured Installment ~~loan revenues rose 21.5%~~ and Secured Installment revenues ~~rose 13.5% because of loan growth. Single-Pay revenues were flat year-over-year. The effect of Single-Pay receivables growth was offset by~~decreased 9.8% and 4.3%, respectively, due to regulatory changes in ~~Ontario, Canada.~~California, effective January 1, 2020, and regulatory changes for CSOs in Ohio, effective May 1, 2019. Single-Pay revenue declined $1.6 million, or 3.4%, for the three months ended March 31, 2020 compared to the prior-year period, primarily due to lower volume during the last two weeks of the first quarter of 2020 attributable primarily to the impact of COVID-19. Open-End ~~revenues~~loans in Canada grew $56.2 million, or 30.5%, from March 31, 2019, with related revenue growth of $8.7 million, or 43.0%. U.S. Open-End revenue rose ~~52.0%~~28.8% on ~~organic~~related loan growth ~~in the U.S. and the introduction~~ of ~~Open-End products in Virginia and Canada.~~ $17.0 million, or 30.0%.

Ancillary revenues increased ~~12.7%~~6.1% versus the ~~same quarter a year ago~~prior-year period, primarily due to ~~non-lending~~the sale of insurance products to Open-End and Installment loan customers in Canada. Ancillary revenue in ~~Canada.~~Canada for the first quarter of 2020 included $9.1 million of revenue related to the sale of insurance products. The $9.1 million of revenue is comprised of $5.8 million of commissions earned from the sale of third-party insurance premiums at the time of sale and $3.3 million from a profit-sharing arrangement with this third-party. The amount we earn under the profit-sharing arrangement is dependent upon the level of claims adjudicated, which are related to our customers. We maintain no guarantees as to the level of profit earned by the third party and do not have any

obligations under the terms of the agreement with the third-party. Recoveries under the insurance program are recognized as they are approved by the insurance provider.

The following charts ~~present~~depict the revenue ~~composition,~~contribution, including CSO fees, of the products and services that we currently ~~offer:~~offer for the periods indicated:

For the three months ended March 31, ~~2018~~2020 and ~~2017,~~2019, revenue generated through our online channel was ~~43%~~47% and ~~36%~~46%, respectively, of consolidated revenue.

Gross Combined Loans Receivable

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



	As of
	March 31, 2020		December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019
Company Owned gross loans receivable	$	564.4	$	665.8	$	657.6	$	609.6	$	553.2
Gross loans receivable Guaranteed by the Company	55.9		76.7		73.1		67.3		61.9
Gross combined loans receivable ⁽¹⁾	$	620.3	$	742.5	$	730.7	$	676.9	$	615.1
(1) See "Non-GAAP Financial Measures" below for definition and additional information.

Gross combined loans receivable by product is presented below:

Gross combined loans receivable increased $5.3 million, or 0.9%, to $620.4 million as of March 31, 2020 from $615.1 million as of March 31, 2019, as growth in Open-End loans of 30.0% and 30.5% in the U.S. and Canada, respectively, offset the decline in Installment CSO and Single-Pay loans and any decrease in volume in the last two weeks of March 2020 as a result of COVID-19. Gross combined loans receivable performance by product is explained further in the following sections.

Loan Volume and Portfolio Performance Analysis

Unsecured Installment Loans

Unsecured Installment revenue and related gross combined loans receivable ~~increased~~decreased $13.4 million, or 9.8%, and $44.2 million, or 20.0%, respectively, from the ~~prior year quarter~~prior-year period, primarily due to ~~growth~~regulatory changes in ~~the United States, primarily in California; growth in Canada, primarily in Alberta; and growth in the United~~

~~Kingdom. Gross combined Unsecured Installment Loan balances grew$40.4 million, or 21.8%, compared to March 31, 2017.~~

Loss provision rates as a percentage of originations for Company Owned loans increased sequentially from 22.1% to 27.6% to maintain allowance coverage. Loss provision rates for loans Guaranteed by the Company remained consistent sequentially from the fourth quarter of 2017. Net charge offs for Company Owned loans and loans Guaranteed by the Company were consistent and improved, respectively, versus the fourth quarter of 2017.California, effective January 1, 2020.

Unsecured Installment ~~Allowance for loan losses as a percentage~~loans in California represented $51.5 million, or 41.8%, of total Company Owned Unsecured Installment ~~gross~~loans as of March 31, 2020, a decrease of $38.1 million from $89.6 million, or 55.4%, as of March 31, 2019. Excluding California, Company Owned Unsecured Installment loans receivable ~~was consistent sequentially~~decreased $0.5 million, or 0.7%, from the ~~fourth quarter of 2017.~~ prior-year period, while revenues increased $0.1 million, or 0.3%, year-over-year.

Unsecured Installment ~~CSO guarantee liability as a percentage of Unsecured Installment gross~~ loans Guaranteed by the Company declined ~~from~~$5.6 million year-over-year due to regulatory changes in Ohio, effective May 1, 2019. As a result, we no longer operate as a CSO in Ohio, which accounted for $5.1 million of Unsecured Installment loans Guaranteed by the ~~end~~Company as of ~~2017 because~~March 31, 2019. Unsecured Installment loan balances Guaranteed by the Company declined in the last two weeks of ~~improved net charge offs and delinquencies.~~ the first quarter of 2020 due primarily to the impacts of COVID-19.

The ~~delinquency~~NCO rate for Company Owned Unsecured Installment gross loans ~~was flat~~receivable in the first quarter of 2020 increased approximately 155 basis points ("bps") year-over-year, primarily due to a mix shift away from California as a result of regulatory changes. California NCO rates for Unsecured Installment loans are historically lower than our other major states. California comprised 46.4% of total U.S. Company Owned Unsecured Installment loans as of March 31, 2020 compared to 60.7% as of March 31, 2019.

The Unsecured Installment Company Owned allowance coverage increased year-over-year, from 20.8% as of March 31, 2019 to 23.5% as of March 31, 2020, primarily as a result of the previously mentioned increase in U.S. NCO rates and Allowance Build. Sequentially (described within this release as the change from the fourth quarter of ~~2017~~2019 to the first quarter of 2020), allowance coverage and ~~up slightly versus the same quarter a year ago, while the delinquency rate~~past-due balances increased from 22.1% to 23.5% and from 26.8% to 28.4%, respectively, as of March 31, 2020.

NCO rates for Unsecured Installment ~~gross~~ loans Guaranteed by the Company improved ~~sequentially~~115 bps compared to the prior-year period. The CSO liability for losses increased year-over-year, from 14.4% for the first quarter of 2019 to 16.9% for the first quarter of 2020, due primarily to Allowance Build. Sequentially, allowance coverage and ~~year-over-year.~~

past-due balances increased from 14.2% to 16.9% and from 16.8% to 17.1%, respectively, for the three months ended March 31, 2020.


	2018			2017												2020			2019
(dollars in thousands, except average loan amount, unaudited)	First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
(dollars in thousands, unaudited)																First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
Unsecured Installment loans:
Revenue - Company Owned	$	66,004		$	67,800		$	61,653		$	52,550		$	51,206		$	55,569		$	63,428		$	65,809		$	59,814		$	65,542
Provision for losses - Company Owned	27,477			29,917			29,079			17,845			19,309			26,182			33,183			31,891			33,514			33,845
Net revenue - Company Owned	$	38,527		$	37,883		$	32,574		$	34,705		$	31,897		$	29,387		$	30,245		$	33,918		$	26,300		$	31,697
Net charge-offs - Company Owned	$	33,410		$	32,894		$	23,858		$	18,858		$	(4,918	)	$	32,775		$	35,729		$	28,973		$	31,970		$	37,919
Revenue - Guaranteed by the Company	$	66,942		$	69,078		$	67,132		$	52,599		$	58,225		$	66,840		$	72,183		$	71,424		$	62,298		$	70,236
Provision for losses - Guaranteed by the Company	23,556			32,915			36,212			23,575			19,940			26,338			34,858			36,664			28,336			27,422
Net revenue - Guaranteed by the Company	$	43,386		$	36,163		$	30,920		$	29,024		$	38,285		$	40,502		$	37,325		$	34,760		$	33,962		$	42,814
Net charge-offs - Guaranteed by the Company	$	30,743		$	31,898		$	34,904		$	27,309		$	17,088		$	27,749		$	34,486		$	35,916		$	27,486		$	30,421
Unsecured Installment gross combined loans receivable:
Company owned	$	171,432		$	196,306		$	181,831		$	156,075		$	131,386
Guaranteed by the Company ^{(1) (2)}	54,332			75,156			67,438			58,289			53,978
Company Owned																$	123,118		$	160,782		$	174,489		$	164,722		$	161,716
Guaranteed by the Company ⁽¹⁾⁽²⁾																54,097			74,317			70,704			65,055			59,740
Unsecured Installment gross combined loans receivable ⁽¹⁾⁽²⁾	$	225,764		$	271,462		$	249,269		$	214,364		$	185,364		$	177,215		$	235,099		$	245,193		$	229,777		$	221,456

Average gross loans receivable:
Average Unsecured Installment gross loans receivable - Company Owned ⁽³⁾																$	141,950		$	167,636		$	169,606		$	163,219		$	176,060
Average Unsecured Installment gross loans receivable - Guaranteed by the Company ⁽³⁾																$	64,207		$	72,511		$	67,880		$	62,398		$	68,596
Allowance for loan losses and CSO liability for losses:
Unsecured Installment Allowance for loan losses ⁽³⁾	$	37,916		$	43,755		$	46,938		$	41,406		$	42,040		$	28,965		$	35,587		$	38,127		$	35,223		$	33,666
Unsecured Installment CSO guarantee liability ⁽³⁾	$	9,886		$	17,072		$	16,056		$	14,748		$	18,482
Unsecured Installment CSO liability for losses ⁽³⁾																$	9,142		$	10,553		$	10,181		$	9,433		$	8,583
Unsecured Installment Allowance for loan losses as a percentage of Unsecured Installment gross loans receivable	22.1		%	22.3		%	25.8		%	26.5		%	32.0		%	23.5		%	22.1		%	21.9		%	21.4		%	20.8		%
Unsecured Installment CSO guarantee liability as a percentage of Unsecured Installment gross loans guaranteed by the Company	18.2		%	22.7		%	23.8		%	25.3		%	34.2		%
Unsecured Installment CSO liability for losses as a percentage of Unsecured Installment gross loans guaranteed by the Company																16.9		%	14.2		%	14.4		%	14.5		%	14.4		%
Unsecured Installment past-due balances:
Unsecured Installment gross loans receivable	$	39,273		$	44,963		$	41,353		$	33,534		$	28,913		$	34,966		$	43,100		$	46,537		$	38,037		$	40,801
Unsecured Installment gross loans guaranteed by the Company	$	8,410		$	12,480		$	10,462		$	8,204		$	11,196		$	9,232		$	12,477		$	11,842		$	10,087		$	7,967
Past-due Unsecured Installment gross loans receivable -- percentage ⁽²⁾	22.9		%	22.9		%	22.7		%	21.5		%	22.0		%	28.4		%	26.8		%	26.7		%	23.1		%	25.2		%
Past-due Unsecured Installment gross loans guaranteed by the Company -- percentage ⁽²⁾	15.5		%	16.6		%	15.5		%	14.1		%	20.7		%	17.1		%	16.8		%	16.7		%	15.5		%	13.3		%
Unsecured Installment other information:
Originations-Company owned⁽⁴⁾	$	99,418		$	135,284		$	137,618		$	119,636		$	98,691
Average loan amount - Company owned	$	666		$	714		$	730		$	697		$	687
Originations - Guaranteed by the Company ^{(1) (4)}	$	60,593		$	82,326		$	83,680		$	68,338		$	55,112
Average loan amount - Guaranteed by the Company	$	523		$	526		$	526		$	485		$	482
Originations - Company Owned																$	55,941		$	87,080		$	107,275		$	102,792		$	78,515
Originations - Guaranteed by the Company ⁽¹⁾																$	64,836		$	91,004		$	89,644		$	80,445		$	68,899
Unsecured Installment ratios:
Provision as a percentage of originations - Company Owned	27.6		%	22.1		%	21.1		%	14.9		%	19.6		%
Provision as a percentage of gross loans receivable - Company Owned	16.0		%	15.2		%	16.0		%	11.4		%	14.7		%	21.3		%	20.6		%	18.3		%	20.3		%	20.9		%
Provision as a percentage of originations - Guaranteed by the Company	38.9		%	40.0		%	43.3		%	34.5		%	36.2		%
Provision as a percentage of gross loans receivable - Guaranteed by the Company	43.4		%	43.8		%	53.7		%	40.4		%	36.9		%	48.7		%	46.9		%	51.9		%	43.6		%	45.9		%
(1) Includes loans originated by third-party lenders through CSO programs, which are not included in our consolidated financial statements.
(2) Non-GAAP measure.
(3) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO guarantee liability is reported as a liability on our Condensed Consolidated Balance Sheets.
(4) We have revised previously-reported origination statistics to conform to current year methodology.
(1) Includes loans originated by third-party lenders through CSO programs, which are not included in our unaudited Condensed Consolidated Financial Statements.																(1) Includes loans originated by third-party lenders through CSO programs, which are not included in our unaudited Condensed Consolidated Financial Statements.
(2) Non-GAAP measure. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures."																(2) Non-GAAP measure. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures."
(3) We calculate Average gross loans receivable, which we utilize to calculate product yield and NCO rates, as average of beginning of quarter and end of quarter gross loans receivable.																(3) We calculate Average gross loans receivable, which we utilize to calculate product yield and NCO rates, as average of beginning of quarter and end of quarter gross loans receivable.
(4) We report Allowance for loan losses as a contra-asset reducing gross loans receivable and the CSO liability for losses as a liability on our unaudited Condensed Consolidated Balance Sheets.																(4) We report Allowance for loan losses as a contra-asset reducing gross loans receivable and the CSO liability for losses as a liability on our unaudited Condensed Consolidated Balance Sheets.

Secured Installment Loans

Secured Installment revenue and the related gross combined loans receivable ~~balances increased by $11.3~~for the three months ended March 31, 2020 decreased 4.3% and 10.4%, respectively, compared to the prior-year period, primarily as a result of regulatory changes in California, effective January 1, 2020. California accounted for $28.6 million, or ~~15.9%~~38.5%, ~~compared to~~of total Secured Installment gross combined loans receivable as of March 31, ~~2017 primarily due to growth in California and Arizona.~~2020, a decrease of $14.8 million from $43.5 million, or 52.3%, as of March 31, 2019. Secured Installment Allowance for loan losses and CSO ~~guarantee~~ liability for losses as a percentage of Secured Installment gross combined loans receivable ~~settled at a more normalized range in~~increased year-over-year from 11.9%, and sequentially from 11.5% to 13.1% for the ~~fourth quarter of 2017 and remained consistent sequentially through the first quarter of 2018. Delinquency rates were stable and net charge offs improved versus the fourth quarter of 2017.~~

three months ended March 31, 2020, due to Allowance Build.

2018 2017
(dollars in thousands, except average loan amount, unaudited)
First
Quarter

Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Secured Installment loans:
Revenue $ 26,856
$ 27,732
$ 26,407
$ 23,173
$ 23,669
Provision for losses 6,640
10,051
6,512
4,955
7,436
Net revenue $ 20,216
$ 17,681
$ 19,895
$ 18,218
$ 16,233
Net charge-offs $ 8,669
$ 10,802
$ 11,597
$ 6,481
$ (2,235 )
Secured Installment gross combined loan balances:
Secured Installment gross combined loans receivable⁽¹⁾⁽²⁾
$ 82,534
$ 92,817
$ 88,730
$ 80,077
$ 71,213
Secured Installment Allowance for loan losses and CSO guarantee liability ⁽³⁾
$ 12,165
$ 14,194
$ 14,945
$ 20,030
$ 21,557
Secured Installment Allowance for loan losses and CSO guarantee liability as a percentage of Secured Installment gross combined loans receivable 14.7 % 15.3 % 16.8 % 25.0 % 30.3 %
Secured Installment past-due balances:
Secured Installment past-due gross loans receivable and gross loans guaranteed by the Company $ 14,756
$ 16,554
$ 15,265
$ 12,630
$ 10,186
Past-due Secured Installment gross loans receivable and gross loans guaranteed by the Company -- percentage ⁽²⁾
17.9 % 17.8 % 17.2 % 15.8 % 14.3 %
Secured Installment other information:
Originations ⁽¹⁾⁽⁴⁾
$ 34,750
$ 48,577
$ 52,526
$ 45,596
$ 37,641
Average loan amount ⁽¹⁾⁽⁴⁾
$ 1,222
$ 1,303
$ 1,299
$ 1,231
$ 1,326
Secured Installment ratios:
Provision as a percentage of originations 19.1 % 20.7 % 12.4 % 10.9 % 19.8 %
Provision as a percentage of gross combined loans receivable 8.0 % 10.8 % 7.3 % 6.2 % 10.4 %
(1) Includes loans originated by third-party lenders through CSO programs, which are not included in our consolidated financial statements.
(2) Non-GAAP measure.
(3) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO guarantee liability is reported as a liability on our Condensed Consolidated Balance Sheets.
(4) We have revised previously-reported origination statistics to conform to current year methodology.



	2020			2019
(dollars in thousands, unaudited)	First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
Secured Installment loans:
Revenue	$	26,286		$	28,690		$	28,270		$	26,076		$	27,477
Provision for losses	9,682			11,492			8,819			7,821			7,080
Net revenue	$	16,604		$	17,198		$	19,451		$	18,255		$	20,397
Net charge-offs	$	10,284		$	11,548		$	8,455		$	7,630		$	9,822
Secured Installment gross combined loan balances:
Secured Installment gross combined loans receivable ⁽¹⁾⁽²⁾	$	74,405		$	90,411		$	92,478		$	87,718		$	83,087
Average Secured Installment gross combined loans receivable ⁽³⁾	$	82,408		$	91,445		$	90,098		$	85,403		$	89,505
Secured Installment Allowance for loan losses and CSO liability for losses ⁽⁴⁾	$	9,773		$	10,375		$	10,431		$	10,067		$	9,874
Secured Installment Allowance for loan losses and CSO liability for losses as a percentage of Secured Installment gross combined loans receivable	13.1		%	11.5		%	11.3		%	11.5		%	11.9		%
Secured Installment past-due balances:
Secured Installment past-due gross loans receivable and gross loans guaranteed by the Company	$	15,612		$	17,902		$	17,645		$	14,570		$	13,866
Past-due Secured Installment gross loans receivable and gross loans guaranteed by the Company -- percentage ⁽¹⁾⁽²⁾	21.0		%	19.8		%	19.1		%	16.6		%	16.7		%
Secured Installment other information:
Originations⁽²⁾	$	20,990		$	40,961		$	45,990		$	49,051		$	33,490
Secured Installment ratios:
Provision as a percentage of gross combined loans receivable	13.0		%	12.7		%	9.5		%	8.9		%	8.5		%
(1) Non-GAAP measure. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures."
(2) Includes loans originated by third-party lenders through CSO programs, which are not included in our unaudited Condensed Consolidated Financial Statements.
(3) We calculate Average gross loans receivable, which we utilize to calculate product yield and NCO rates, as beginning of quarter and end of quarter gross loans receivable.
(4) We report Allowance for loan losses as a contra-asset reducing gross loans receivable and the CSO liability for losses as a liability on our unaudited Condensed Consolidated Balance Sheets.

Open-End Loans

Open-End loan balances as of March 31, 2020 increased ~~by $25.9~~$73.2 million, or 30.4% ($89.7 million, or 37.2%, on a constant-currency basis), compared to March 31, ~~2017 from year-over-year~~2019, on 30.5% (39.5% on a constant-currency basis) growth in ~~Kansas~~Canada and ~~Tennessee of 12.2% and 8.6%, respectively, the 2017 launch of Open-End in Virginia and conversion~~30.0% growth in the ~~fourth quarter~~U.S.

Consolidated Open-End NCO rate during the three months ended March 31, 2020 improved 160 bps versus the prior-year period, primarily as a result of ~~2017~~seasoning of the Canada portfolio, which improved 165 bps year-over-year on a ~~portion of Canada Unsecured Installment loans to Open-End loans.~~pro forma basis as described below. The ~~provision for losses and~~ Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable ~~remained consistent with~~increased sequentially from 16.4% to 18.0% for the ~~previous quarter.~~ three months ended March 31, 2020 because of Allowance Build.

Q1 2019 Open-End Loss Recognition Change

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

Prospectively from January 1, 2019, past-due, unpaid balances plus related accrued interest charge-off on day 91.

The ~~decline year-over-year in Allowance~~aforementioned change was treated as a ~~percentage~~change in accounting estimate for accounting purposes and applied prospectively beginning January 1, 2019.

The following table reports 2019 Open-End loan performance including the effect of the Q1 2019 Open-End ~~gross receivables compared~~Loss Recognition Change:



	2020			2019
(dollars in thousands, unaudited)	First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
Open-End loans:
Revenue	$	70,982		$	71,295		$	66,120		$	54,972		$	52,869
Provision for losses	40,991			37,816			31,220			29,373			25,317
Net revenue	$	29,991		$	33,479		$	34,900		$	25,599		$	27,552
Net charge-offs ⁽¹⁾	$	37,098		$	37,426		$	28,202		$	25,151		$	(1,521	)
Open-End gross loan balances:
Open-End gross loans receivable	$	314,006		$	335,524		$	314,971		$	283,311		$	240,790
Average Open-End gross loans receivable ⁽¹⁾	$	324,765		$	325,248		$	299,141		$	262,051		$	224,062
Open-End allowance for loan losses:
Allowance for loan losses	$	56,458		$	55,074		$	54,233		$	51,717		$	46,963
Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable	18.0		%	16.4		%	17.2		%	18.3		%	19.5		%
Open-End past-due balances:
Open-End past-due gross loans receivable	$	49,987		$	50,072		$	46,053		$	35,395		$	32,444
Past-due Open-End gross loans receivable - percentage	15.9		%	14.9		%	14.6		%	12.5		%	13.5		%
(1) We calculate Average gross loans receivable, which we utilize to calculate product yield and NCO rates, as average of beginning of quarter and end of quarter gross loans receivable.

The following table illustrates, on a non-GAAP pro forma basis, the 2019 quarterly results as if the Q1 2019 Open-End Loss Recognition Change had been applied to ~~March~~our outstanding Open-End loan portfolio as of December 31, ~~2017~~2018. This table is ~~primarily due~~illustrative of retrospective application to ~~geographic mix and seasoning~~determine the NCOs that would have been incurred in each quarter of 2019 from the ~~U.S.~~December 31, 2018 loan book. The primary purpose of this pro forma illustration is to provide a representative level of NCO rates from applying the Q1 2019 Open-End Loss Recognition Change.

2018 2017
(dollars in thousands, except average loan amount, unaudited)
First
Quarter

Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Open-End loans:
Revenue $ 27,223
$ 21,154
$ 18,630
$ 15,805
$ 17,907
Provision for losses 11,428
8,334
6,348
4,298
3,265
Net revenue $ 15,795
$ 12,820
$ 12,282
$ 11,507
$ 14,642
Net charge-offs $ 10,972
$ 6,799
$ 5,991
$ 4,343
$ 3,876
Open-End gross combined loan balances:
Open-End gross loans receivable $ 51,564
$ 47,949
$ 32,133
$ 26,771
$ 25,626
Allowance for loan losses $ 6,846
$ 6,426
$ 4,880
$ 4,523
$ 4,572
Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable 13.3 % 13.4 % 15.2 % 16.9 % 17.8 %
Open-End other information:
Average loan amount ⁽¹⁾
$ 702
$ 579
$ 463
$ 451
$ 454
Open-End ratios:
Provision as a percentage of gross combined loans receivable 22.2 % 17.4 % 19.8 % 16.1 % 12.7 %
(1) We have revised previously-reported origination statistics to conform to current year methodology.



Pro Forma	2019
(dollars in thousands, unaudited)	Fourth Quarter			Third Quarter			Second Quarter			First Quarter
Open-End loans:
Pro Forma Net charge-offs	$	38,748		$	29,762		$	29,648		$	31,788
Open-End gross loan balances:
Open-End gross loans receivable	$	335,524		$	314,971		$	283,311		$	240,790
Pro Forma Average Open-End gross loans receivable ⁽¹⁾	$	325,248		$	299,141		$	262,051		$	245,096
Pro Forma Net-charge offs as a percentage of average gross loans receivable	11.9		%	9.9		%	11.3		%	13.0		%
(1) We calculate Average gross loans receivable, which we utilize to calculate product yield and NCO rates, as average of beginning of quarter and end of quarter gross loans receivable.

Single-Pay

Single-Pay revenue ~~and combined loans receivable during~~declined $1.6 million, or 3.4%, for the three months ended March 31, ~~2018 were affected~~2020 compared to the prior-year period, primarily ~~by regulatory changes in Canada (rate changes in Ontario and British Columbia) and continued product shift~~due to lower volume during the last two weeks of the first quarter of 2020, attributable primarily to the impact of COVID-19. The Single-Pay Allowance for loan losses as a percentage of Single-Pay gross loans receivable increased sequentially from ~~Single-Pay~~7.2% to ~~Installment and Open-End loans in all countries. Single-Pay loan balances grew 8.3% (primarily in Canada) but revenue was flat versus the same quarter a year ago~~8.6% because of ~~lower yields in Canada. Credit quality and metrics for Single-Pay remain stable.~~

Allowance Build.

2018 2017
(dollars in thousands, unaudited)
First
Quarter

Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Single-pay loans:
Revenue $ 63,705
$ 70,868
$ 70,895
$ 63,241
$ 63,790
Provision for losses 11,302
17,952
20,632
14,289
11,399
Net revenue $ 52,403
$ 52,916
$ 50,263
$ 48,952
$ 52,391
Net charge-offs $ 12,698
$ 17,362
$ 20,515
$ 13,849
$ 12,499
Single-Pay gross combined loan balances:
Single-Pay gross combined loans receivable ^{(1) (2)}
$ 87,075
$ 99,400
$ 94,476
$ 91,230
$ 80,423
Single-Pay Allowance for loan losses and CSO guarantee liability ⁽³⁾
$ 4,485
$ 5,915
$ 5,342
$ 5,313
$ 4,736
Single-Pay Allowance for loan losses and CSO guarantee liability as a percentage of Single-Pay gross combined loans receivable 5.2 % 6.0 % 5.7 % 5.8 % 5.9 %
(1) Includes loans originated by third-party lenders through CSO programs, which are not included in our consolidated financial statements.
(2) Non-GAAP measure.
(3) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO guarantee liability is reported as a liability on our Condensed Consolidated Balance Sheets.



	2020			2019
(dollars in thousands, unaudited)	First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
Single-pay loans:
Revenue	$	45,157		$	49,844		$	49,312		$	45,528		$	46,761
Provision for losses	9,639			12,289			14,736			12,446			8,268
Net revenue	$	35,518		$	37,555		$	34,576		$	33,082		$	38,493
Net charge-offs	$	10,517		$	12,145		$	13,913		$	11,458		$	8,610
Single-Pay gross loan balances:
Single-Pay gross loans receivable	$	54,728		$	81,447		$	78,039		$	76,126		$	69,753
Average Single-Pay gross loans receivable ⁽¹⁾	$	68,088		$	78,787		$	77,083		$	72,940		$	75,288
Single-Pay Allowance for loan losses	$	4,693		$	5,869		$	5,662		$	4,941		$	3,897
Single-Pay Allowance for loan losses as a percentage of Single-Pay gross loans receivable	8.6		%	7.2		%	7.3		%	6.5		%	5.6		%
(1) We calculate Average gross loans receivable, which we utilize to calculate product yield and NCO rates, as average of beginning of quarter and end of quarter gross loans receivable.

~~Gross Combined Loans Receivable~~

The following table summarizes Company Owned gross loans receivable, a GAAP balance sheet measure, and reconciles it to gross combined loans receivable, a non-GAAP measure including loans originated by third-party lenders through CSO programs, which are not included in our Condensed Consolidated Financial Statements but from which we earn revenue and for which we provide a guarantee to the lender. Management believes this analysis provides investors with important information needed to evaluate overall lending performance.

Three Months Ended
(in millions) March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017
Company-owned gross loans receivable $ 389.8
$ 432.8
$ 393.4
$ 350.3
$ 304.8
Gross loans receivable guaranteed by the Company 57.1
78.8
71.2
62.1
57.8
Gross combined loans receivable $ 446.9
$ 511.6
$ 464.6
$ 412.4
$ 362.6

Consolidated Results of Operations

~~Gross combined loans receivable by product are presented below:~~Condensed Consolidated Statements of Operations

(in thousands, unaudited)



	Three Months Ended March 31,
	2020		2019		Change $			Change %
Revenue	$	280,806	$	277,939	$	2,867		1.0	%
Provision for losses	113,536		102,385		11,151			10.9	%
Net revenue	167,270		175,554		(8,284		)	(4.7	)%
Advertising costs	12,219		7,786		4,433			56.9	%
Non-advertising costs of providing services	55,352		62,271		(6,919		)	(11.1	)%
Total cost of providing services	67,571		70,057		(2,486		)	(3.5	)%
Gross margin	99,699		105,497		(5,798		)	(5.5	)%

Operating expense
Corporate, district and other expenses	42,807		49,088		(6,281		)	(12.8	)%
Interest expense	17,324		17,690		(366		)	(2.1	)%
Loss from equity method investment	1,618		—		1,618			#
Total operating expense	61,749		66,778		(5,029		)	(7.5	)%
Income from continuing operations before income taxes	37,950		38,719		(769		)	(2.0	)%
Provision for income taxes	1,937		10,046		(8,109		)	(80.7	)%
Net income from continuing operations	36,013		28,673		7,340			25.6	%
Net income from discontinued operations, net of tax	292		8,375		(8,083		)	(96.5	)%
Net income	$	36,305	$	37,048	$	(743	)	(2.0	)%
# - Variance greater than 100% or not meaningful

~~Gross combined loans receivable~~For the three months ended March 31, 2020 and 2019

Revenue and Net Revenue

Revenue increased ~~$84.3~~$2.9 million, or ~~23.2%~~1.0%, to ~~$446.9~~$280.8 million for the three months ended March 31, ~~2018 compared to $362.6~~2020, from $277.9 million for the three months ended March 31, ~~2017 with solid~~2019. U.S. revenue decreased 1.9% primarily due to regulatory changes in California. Excluding California, U.S. revenue increased 4.6%, primarily driven by Open-End growth. Canadian revenue increased 13.9% primarily due to growth in ~~all categories~~Open-End loans and the sale of ~~Company Owned loans. Gross combined loans receivable decreased sequentially from December 31, 2017 because of seasonality as the Company's customers use tax refunds~~payment protection insurance to ~~repay balances.~~

Canadian Installment and Open-End customers.

~~Results of Operations~~

Three Months Ended
March 31, Change
(dollars in thousands, unaudited) 2018 2017 $ %
Condensed Consolidated Statements of Income:
Revenue $ 261,758
$ 224,580
$ 37,178
16.6 %
Provision for losses 81,031
61,736
19,295
31.3 %
Net revenue 180,727
162,844
17,883
11.0 %
Advertising costs 9,756
7,688
2,068
26.9 %
Non-advertising costs of providing services 61,726
60,251
1,475
2.4 %
Total cost of providing services 71,482
67,939
3,543
5.2 %
Gross Margin 109,245
94,905
14,340
15.1 %
Operating expense

Corporate, district and other 40,454
32,993
7,461
22.6 %
Interest expense 22,349
23,366
(1,017 ) (4.4 )%
Loss on extinguishment of debt 11,683
12,458
(775 ) (6.2 )%
Total operating expense 74,486
68,817
5,669
8.2 %
Net income before taxes 34,759
26,088
8,671
33.2 %
Provision for income taxes 11,467
9,450
2,017
21.3 %
Net income $ 23,292
$ 16,638
$ 6,654
40.0 %

~~Revenue and Net Revenue~~

~~Revenue~~Provision for losses increased ~~$37.2~~by $11.2 million, or ~~16.6%~~10.9%, ~~to $261.8 million~~ for the three months ended March 31, ~~2018~~2020 compared to the prior-year period. The increase in provision for loan losses was primarily from ~~$224.6~~$12.0 million ~~for the three months ended March 31, 2017. U.S. revenue increased 17.4% on volume growth, U.K. revenue~~ ~~increased~~ ~~by 25.6%, and revenue~~of Allowance Build, as discussed in ~~Canada increased 11.3% where volume growth offset regulatory impacts on rates and product mix.~~

~~Provision for losses increased $19.3 million, or 31.3%, to $81.0 million for the three months ended March 31, 2018 from $61.7 million for the three months ended March 31, 2017. This is explained~~ more ~~fully~~detail in the ~~segment analysis that follows.~~"—Loan Volume and Portfolio Performance Analysis" above and "—Segment Analysis" below.

Cost of Providing Services

~~The total cost~~Non-advertising costs of providing services ~~increased $3.5~~decreased $6.9 million, or ~~5.2%~~11.1%, to ~~$71.5~~$55.4 million in the three months ended March 31, ~~2018,~~2020, compared to ~~$67.9~~$62.3 million in the three months ended March 31, ~~2017 primarily~~2019. Of the $6.9 million decrease, $4.7 million is related to third-party collection costs, incurred in 2019 related to Ad Astra, which were included in Non-advertising costs of providing services. Following our acquisition of Ad Astra on January 3, 2020, its operating costs are included within "Corporate, district and other expenses," consistent with presentation of our other internal collection costs. The remaining decrease year-over-year in Non-advertising costs of providing services is from headcount reductions in the three months ended March 31, 2019 and discretionary variable compensation comparisons.

Advertising costs increased $4.4 million, or 56.9%, year-over-year. We historically reduced advertising and customer acquisition costs seasonally in the first quarter of the year (concentrated in February) because of ~~higher customer acquisition spend.~~the impact on customers of U.S. federal income tax refunds. In the three months ended March 31, 2020, based on improved underwriting and evaluation of the seasonal opportunity, we increased advertising costs through the traditional tax refund season. We subsequently reduced advertising costs in the last three weeks of March 2020 because of COVID-19-related considerations.

Operating Expenses

Corporate, district and other ~~expense increased $7.5~~expenses were $42.8 million for the three months ended March 31, 2020, a decrease of $6.3 million, or ~~22.6%~~12.8%, compared to the three months ended March 31, 2019. Corporate, district and other expenses in the three months ended March 31, 2020 include $3.5 million of collection costs related to Ad Astra, which were included in Non-advertising costs of providing services prior to its acquisition. For the three months ended March 31, 2020, corporate, district and other expenses include (i) $1.1 million of legal and other costs described in our reconciliation to Adjusted Net Income in "—Supplemental Non-GAAP Financial Information" below, and (ii) $3.2 million of share-based compensation costs. For the three months ended March 31, 2019, corporate district and other expenses include (i) U.K. related costs of $7.8 million and severance costs of $1.8 million as described in our reconciliation to Adjusted Net Income in "—Supplemental Non-GAAP Financial Information" below, and (ii) share-based compensation costs of $2.2 million.

Excluding Ad Astra costs, share-based compensation expense and other costs described above, comparable corporate, district and other expenses decreased $2.4 million year-over-year, primarily due to ~~$4.1 additional~~the timing and extent of variable compensation in the three months ended March 31, 2019 and market-based changes in deferred compensation plan assets and liabilities.

We account for our investment in Katapult under the equity method. We record our pro rata share of Katapult's income or losses in the unaudited Condensed Consolidated Statement of Operations with a corresponding adjustment to the carrying value of our investment in "Other assets" on the unaudited Condensed Consolidated Balance Sheet. For the three months ended March 31, 2020, our share of Katapult's loss was $1.6 million.

Interest Expense

Interest expense ~~from increased marketing, collections and technology headcount and $1.7 million of additional share-based compensation expense.~~for the three months ended March 31, 2020 remained consistent with the prior-year period on flat year-over-year average borrowing.

Provision for Income Taxes

The effective income tax rate for the three months ended March 31, ~~2018~~2020 was ~~33.0%~~5.1%, compared to ~~36.2%~~a tax rate of 25.9% for the three months ended March 31, ~~2017. As a result of the Tax Cuts and Jobs Act of 2017 ("2017 Tax Act"), the corporate~~2019. The decrease in effective income tax rate ~~for U.S. decreased~~was primarily due to a tax benefit from ~~35%~~the CARES Act, which was enacted on March 27, 2020 in response to ~~21%, effective~~the COVID-19 pandemic. The CARES Act, among other things, allows NOLs incurred in ~~2018. The provision for income tax as of March 31,~~ 2018, ~~includes an additional accrual of $1.2 million for adjustments~~2019 and 2020 to ~~estimates~~be carried back to each of the ~~tax on prior years' foreign repatriation and an estimated GILTI ("Global Intangible Low-Taxed Income") tax~~five preceding taxable years to generate a refund of ~~$0.6 million. The $1.2 million additional provision on prior years' foreign repatriation was the result of additional interpretative guidance from the IRS issued during~~previously paid Federal income taxes. In the first quarter of 2020, we recorded an income tax benefit of $9.1 million related to the carry-back of NOL from tax years 2018 ~~while the GILTI provision is~~and 2019, which will offset pre-tax reform years and generate a ~~new, continuous requirement under the 2017 Tax Act. These items~~

~~increased the effective~~refund of previously paid taxes at 35%. In addition, losses from our equity method investment in Katapult are not tax ~~rate by 5.2%.~~deductible. Excluding the impact of ~~these items,~~ the CARES Act and Katapult, our adjusted effective income tax rate for the three months ended March 31, ~~2018~~2020 was ~~27.8%~~27.9%.

~~Three Months Ended March 31, 2018 Compared with Three Months Ended March 31, 2017 -~~

Segment Analysis

We report financial results for ~~three~~two reportable segments: the ~~United States, Canada~~U.S. and ~~the United Kingdom.~~Canada. Following ~~are~~is a ~~recap~~summary of results of operations for the segment and period ~~indicated:~~indicated (in thousands, unaudited):


U.S. Segment Results											Three Months Ended March 31,
	Three Months Ended March 31,					Change					2020			2019			Change $			Change %
(dollars in thousands, unaudited)	2018			2017		$			%
Revenue	$	204,593		$	174,322	$	30,271		17.4	%	$	221,768		$	226,119		$	(4,351	)	(1.9	)%
Provision for losses	64,333			49,194		15,139			30.8	%	86,041			84,980			1,061			1.2	%
Net revenue	140,260			125,128		15,132			12.1	%	135,727			141,139			(5,412		)	(3.8	)%
Advertising costs	5,159			4,694		465			9.9	%	10,945			6,354			4,591			72.3	%
Non-advertising costs of providing services	43,757			43,301		456			1.1	%	37,242			44,982			(7,740		)	(17.2	)%
Total cost of providing services	48,916			47,995		921			1.9	%	48,187			51,336			(3,149		)	(6.1	)%
Gross margin	91,344			77,133		14,211			18.4	%	87,540			89,803			(2,263		)	(2.5	)%
Corporate, district and other	30,532			25,049		5,483			21.9	%
Corporate, district and other expenses											37,650			43,880			(6,230		)	(14.2	)%
Interest expense	22,297			23,345		(1,048		)	(4.5	)%	14,846			14,728			118			0.8	%
Loss on extinguishment of debt	11,683			12,458		(775		)	(6.2	)%
Loss from equity method investment											1,618			—			1,618			#
Total operating expense	64,512			60,852		3,660			6.0	%	54,114			58,608			(4,494		)	(7.7	)%
Segment operating income	26,832			16,281		10,551			64.8	%	33,426			31,195			2,231			7.2	%
Interest expense	22,297			23,345		(1,048		)	(4.5	)%	14,846			14,728			118			0.8	%
Depreciation and amortization	3,407			3,360		47			1.4	%	3,377			3,726			(349		)	(9.4	)%
EBITDA	52,536			42,986		9,550			22.2	%	51,649			49,649			2,000			4.0	%
Loss on extinguishment of debt	11,683			12,458		(775		)	(6.2	)%
Legal and other costs											1,149			1,617			(468		)
Other adjustments	(59		)	6		(65		)	#		(141		)	(105		)	(36		)
Share-based cash and non-cash compensation	1,842			126		1,716			#
Transaction related costs	—			2,254		(2,254		)	#
U.K. related costs											—			7,817			(7,817		)
Share-based compensation											3,194			2,172			1,022
Loss from equity method investment											1,618			—			1,618
Adjusted EBITDA	$	66,002		$	57,830	$	8,172		14.1	%	$	57,469		$	61,150		$	(3,681	)	(6.0	)%
# - Variance greater than 100% or not meaningful.											# - Variance greater than 100% or not meaningful.

~~First quarter~~ U.S. ~~revenues grew by $30.3 million or 17.4% to $204.6 million.~~Segment Results - For the three months ended March 31, 2020 and 2019

~~U.S revenue growth was~~U.S. revenues decreased by $4.4 million, or 1.9%, to $221.8 million, compared to the prior-year period for the three months ended March 31, 2020, primarily due to regulatory changes in California. Excluding California, U.S. revenues increased by $7.8 million, or 4.6%, driven by a ~~$51.3~~$17.0 million, or ~~18.8%~~30.0%, increase in Open-End loan growth.

The provision for losses decreased $1.1 million, or 1.2%, as a result of the decline in total gross combined loans receivable, ~~to $323.8~~because of California regulatory changes, offset by changes in NCO rates and $5.3 million atAllowance Build. For the three months ended March 31, ~~2018~~2020, quarterly NCO rates increased approximately 140 bps compared to ~~$272.5~~the pro-forma prior-year period due to the Installment portfolio mix shift to higher loss states, as well as loan balance declines late in March 2020 from COVID-19 impacts, which affected simple-average NCO rate calculations.

Non-advertising costs of providing services for the three months ended March 31, 2020 of $37.2 million, decreased of $7.7 million, or 17.2%, compared to $45.0 million for the three months ended March 31, 2019. The decrease was primarily driven by the aforementioned $4.7 million of Ad Astra costs subsequent to our acquisition of it. The remaining decrease year-over-year in Non-advertising costs of providing services was from headcount reductions in the three months ended March 31, 2019 and discretionary variable compensation comparisons.

Advertising costs increased $4.6 million, or 72.3%, year-over-year. We historically reduced advertising costs and customer acquisition costs seasonally in the first quarter of the year (concentrated in February) because of the impact on customers of U.S. Federal income tax refunds. In the three months ended March 31, 2020, based on improved underwriting and evaluation of the seasonal opportunity, we increased advertising costs through the traditional tax refund season. We subsequently reduced advertising costs in the last three weeks of March 2020 because of COVID-19-related considerations.

Corporate, district and other expenses were $37.7 million for the three months ended March 31, 2020, a decrease of $6.2 million, or 14.2%, compared to the three months ended March 31, 2019. Corporate, district and other expenses for the three months ended March 31, 2020 include $3.5 million of collection costs related to Ad Astra, which were historically included in Non-advertising costs of providing services. For the three months ended March 31, 2020, corporate, district and other expenses include (i) $1.1 million of legal and other costs described in our reconciliation to Adjusted Net Income in "—Supplemental Non-GAAP Financial Information" below and (ii) $3.2 million of share-based compensation costs. For the three months ended March 31, 2019, corporate, district and other expenses include (i) U.K. related costs of $7.8 million and severance costs of $1.4 million as described in our reconciliation to Adjusted Net Income in "—Supplemental Non-GAAP Financial Information" below, and (ii) share-based compensation costs of $2.2 million.

Excluding these aforementioned items, comparable corporate district and other expenses decreased $2.6 million year-over-year, primarily due to the timing and extent of variable compensation for the three months ended March 31, 2019 and market-based changes in deferred compensation plan assets and liabilities.

U.S. interest expense for the three months ended March 31, 2020 remained consistent with the prior-year period.



Canada Segment Results	Three Months Ended March 31,
	2020		2019			Change $			Change %
Revenue	$	59,038	$	51,820		$	7,218		13.9	%
Provision for losses	27,495		17,405			10,090			58.0	%
Net revenue	31,543		34,415			(2,872		)	(8.3	)%
Advertising costs	1,274		1,432			(158		)	(11.0	)%
Non-advertising costs of providing services	18,110		17,289			821			4.7	%
Total cost of providing services	19,384		18,721			663			3.5	%
Gross margin	12,159		15,694			(3,535		)	(22.5	)%
Corporate, district and other expenses	5,157		5,208			(51		)	(1.0	)%
Interest expense	2,478		2,962			(484		)	(16.3	)%
Total operating expense	7,635		8,170			(535		)	(6.5	)%
Segment operating income (loss)	4,524		7,524			(3,000		)	(39.9	)%
Interest expense	2,478		2,962			(484		)	(16.3	)%
Depreciation and amortization	1,160		1,194			(34		)	(2.8	)%
EBITDA	8,162		11,680			(3,518		)	(30.1	)%
Legal and other costs	—		135			(135		)
Other adjustments	156		(111		)	267
Adjusted EBITDA	$	8,318	$	11,704		$	(3,386	)	(28.9	)%
# - Change greater than 100% or not meaningful.

Canada Segment Results - For the three months ended March 31, 2020 and 2019

Canada revenue increased $7.2 million, or 13.9% ($7.7 million, or 14.9%, on a constant-currency basis), to $59.0 million for the three months ended March 31, 2020, from $51.8 million in the prior year ~~period. We experienced volume growth primarily from Unsecured Installment receivables, which~~due to loan growth.

Canada non-Single-Pay revenue increased ~~year-over-year $30.3~~$9.8 million, or ~~21.2%. Secured Installment receivables increased from the prior year period by $11.3~~30.4% ($10.2 million, or ~~15.9%~~31.7%, ~~and Open-End receivables increased $8.9~~on a constant-currency basis), to $42.0 million, compared to $32.2 million in the prior-year period, on growth of $54.2 million, or 27.3% ($71.5 million, or ~~34.8% compared to the prior year period. Open-end growth~~36.1%, on a constant-currency basis), in related loan balances. The increase was driven by ~~year-over-year expansion in Kansas and Tennessee of 12.2% and 8.6%, respectively, and the 2017 launch~~continued significant growth of Open-End ~~in Virginia.~~

~~The increase of $15.1~~loans. Additionally, with increased Open-End loan volume and customer acquisition, ancillary revenue increased $1.3 million ~~or 30.8% in provision for losses was~~versus the prior-year period, primarily driven by ~~the~~an increase in ~~combined loans receivable as previously discussed.~~sales of insurance to Open-End loan customers.

~~U.S. cost of providing services remained consistent with~~Single-Pay revenue decreased $2.6 million, or 13.2% ($2.5 million, or 12.6%, on a constant-currency basis), to $17.0 million for the ~~same period~~three months ended March 31, 2020, and Single-Pay receivables decreased $9.6 million, or 28.7% ($8.0 million, or 23.8% on a constant-currency basis), to $23.8 million from $33.4 million, in the prior year. The ~~total~~decreases in Single-Pay revenue and receivables were due to product mix shift in Canada from Single-Pay loans to Open-End loans, a significant decline in demand over the last two weeks of March attributable to COVID-19, and changes in Canada's currency exchange rate.

The provision for losses increased $10.1 million, or 58.0% ($10.5 million, or 60.4%, on a constant-currency basis), to $27.5 million for the three months ended March 31, 2020, compared to $17.4 million in the prior-year period. The increase in provision for loan losses was primarily a result of $6.7 million of Allowance Build. On a quarterly basis, despite the impact of lower demand over the last two weeks of March 2020 and unfavorable currency exchange rates on ending receivable balances, loss rates improved approximately 100 bps year over year. Excluding the aforementioned incremental provision expense as a result of changes in the Allowance for Loan Losses, due to lower loss rates, provision expense increased $3.3 million compared to the $7.2 million increase in revenue.

Canada cost of providing services for the three months ended March 31, ~~2018~~2020 were ~~$48.9~~$19.4 million, ~~a slight~~an increase of ~~$0.9~~$0.7 million, or ~~1.9%~~3.5% ($0.8 million, or 4.4%, on a constant-currency basis), compared to ~~$48.0~~$18.7 million for the three months ended March 31, ~~2017.~~2019.

~~The $5.5 million increase of corporate, district and other~~Canada operating expenses ~~includes $3.0 million of additional compensation expense, primarily due to increased marketing, collections and technology headcount and $1.7 million of additional share-based compensation expense.~~

Canada Segment Results
Three Months Ended
March 31, Change
(dollars in thousands, unaudited) 2018 2017 $ %
Revenue $ 46,250
$ 41,566
$ 4,684
11.3 %
Provision for losses 12,550
10,228
2,322
22.7 %
Net revenue 33,700
31,338
2,362
7.5 %
Advertising costs 2,726
1,781
945
53.1 %
Non-advertising costs of providing services 16,472
15,257
1,215
8.0 %
Total cost of providing services 19,198
17,038
2,160
12.7 %
Gross margin 14,502
14,300
202
1.4 %
Corporate, district and other 4,897
3,375
1,522
45.1 %
Interest expense 57
29
28
96.6 %
Total operating expense 4,954
3,404
1,550
45.5 %
Segment operating income 9,548
10,896
(1,348 ) (12.4 )%
Interest expense 57
29
28
96.6 %
Depreciation and amortization 1,128
1,119
9
0.8 %
EBITDA 10,733
12,044
(1,311 ) (10.9 )%
Other adjustments 16
(314 ) 330
#
Adjusted EBITDA $ 10,749
$ 11,730
$ (981 ) (8.4 )%
# - Variance greater than 100% or not meaningful.

Revenue in Canada was impacted by the product transition in Alberta from Single-Pay to Unsecured Installment and Open-End loans and the impact of regulatory rate changes in Ontario and British Columbia. Canada revenue improved $4.7 million, or 11.3% to $46.3 million for the three months ended March 31, ~~2018 from $41.6~~2020 were $7.6 million, a decrease of $0.5 million, or 6.5%, compared to $8.2 million in the ~~prior year period. On a constant currency basis, revenue was up $2.6 million, or 6.3%.~~

Single-Pay revenue increased $0.1 million, or 0.3% to $34.3 million for the three months ended March 31, 2018 due to 17.9% higher origination volumes compared to the same period in the prior year. Single-Pay ending receivables increased $5.7 million, or 13.1%, to $48.7 million from $43.1 million in the prior year period.

~~Canadian non-Single-Pay revenue grew $4.6 million, or 61.9% compared to the same quarter a year ago on $22.0 million, or 68.8% growth in related loan balances.~~

~~The provision for losses increased $2.3 million, or 22.7% to $12.6 million in the three months ended March 31, 2018 from $10.2 million in the prior year~~prior-year period, primarily ~~due~~related to ~~relative loan volumes and the mix shift from Single-Pay loans to Unsecured Installment and Open-End loans. On a constant currency basis, provision for losses increased $1.8 million, or 17.2%.~~

~~The cost of providing services in Canada increased $2.2 million, or 12.7%, to $19.2 million for the three months ended March 31, 2018, compared to $17.0 million in the prior year period. The increase~~lower interest expense. There was due primarily to $0.9 million, or 53.1%, higher advertising costs compared to the prior year period and an increase in occupancy expense from higher store counts. We have opened five LendDirect stores since the first quarter of 2017. On a constant currency basis, cost of providing services increased $1.3 million, or 7.6%.

Operating expenses increased $1.6 million, or 45.5%, to $5.0 million in the three months ended March 31, 2018, from $3.4 million in the prior year period, due to increased collections and customer support payroll expenses from seasonality, increased volumes, expansion of the LendDirect business, and product shifts from Single-Pay loans to Unsecured Installment and Open-End loans. On a constant currency basis, operating expenses increased $1.3 million, or 39.2%.

U.K. Segment Results
Three Months Ended
March 31, Change
(dollars in thousands, unaudited) 2018 2017 $ %
Revenue $ 10,915
$ 8,692
$ 2,223
25.6 %
Provision for losses 4,148
2,314
1,834
79.3 %
Net revenue 6,767
6,378
389
6.1 %
Advertising costs 1,871
1,213
658
54.2 %
Non-advertising costs of providing services 1,497
1,693
(196 ) (11.6 )%
Total cost of providing services 3,368
2,906
462
15.9 %
Gross margin 3,399
3,472
(73 ) (2.1 )%
Corporate, district and other 5,025
4,569
456
10.0 %
Interest income (5 ) (8 ) 3
(37.5 )%
Total operating expense 5,020
4,561
459
10.1 %
Segment operating loss (1,621 ) (1,089 ) (532 ) 48.9 %
Interest income (5 ) (8 ) 3
(37.5 )%
Depreciation and amortization 126
175
(49 ) (28.0 )%
EBITDA (1,500 ) (922 ) (578 ) 62.7 %
Other adjustments (36 ) (6 ) (30 ) #
Adjusted EBITDA $ (1,536 ) $ (928 ) $ (608 ) (65.5 )%
# - Variance greater than 100% not meaningful.

U.K. revenue improved $2.2 million, or 25.6%, to $10.9 million, for the three months ended March 31, 2018 from $8.7 million in the prior year period. On a constant currency basis, revenue was up $1.0 million, or 11.8%. Provision for losses increased $1.8 million, and increased $1.4 million, or 59.6%,no material impact on a ~~constant currency basis, due to growth in Installment Loan receivables.~~

The cost of providing services in the U.K. increased $0.5 million or 15.9% during the three months ended March 31, 2018 as compared to prior year period due to additional customer acquisition spend. On a constant currency basis the cost of providing services increased $0.1 million, or 3.2%.

Corporate, district and other expenses increased $0.5 million, or 10.1%, to $5.0 million for the three months ended March 31, 2018 as compared to the prior year period. On a constant currency basis, corporate, district and other expenses increased $0.1 million, or 2.0%, and is consistent with quarterly run rates for the full year 2017 and represent normal baseline costs for the U.K.constant-currency basis.

Supplemental Non-GAAP Financial Information

Non-GAAP Financial Measures

In addition to the financial information prepared in conformity with ~~U.S.~~US GAAP, we provide certain “non-GAAP financial ~~measures” as defined under SEC rules,~~measures,” including:

Adjusted Net Income and Adjusted Earnings Per Share, or the Adjusted Earnings Measures (net income from continuing operations plus or minus ~~gain (loss) on extinguishment of debt,~~ restructuring and other costs, certain legal and related costs, loss from equity method investment, goodwill and intangible asset impairments, certain costs related to the disposition of U.K., transaction-related costs, share-based compensation, intangible asset amortization and cumulative tax effect of applicable adjustments, on a total and per share basis);

EBITDA ~~(earnings~~(net income from continuing operations before interest, income taxes, depreciation and amortization);

Adjusted EBITDA (EBITDA plus or minus certain non-cash and other adjusting items);

Adjusted effective income tax rate (effective tax rate plus or minus certain non-cash and other adjusting items); and

Gross Combined Loans Receivable (includes loans originated by third-party lenders through CSO programs which are not included in our ~~consolidated financial statements)~~unaudited Condensed Consolidated Financial Statements).

We believe that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of ~~our~~the Company's operations. We believe that these non-GAAP financial measures ~~reflect an additional~~offer another way ~~of viewing~~to view aspects of our business that, when viewed with ~~its~~our US GAAP results, provide a more complete understanding of factors and trends affecting our business.

We believe that investors regularly rely on non-GAAP financial measures, such as Adjusted Net Income, Adjusted Earnings per Share, EBITDA and Adjusted EBITDA, to assess operating performance and that such measures may highlight trends in ~~our~~the business that may not otherwise be apparent when relying on financial measures calculated in accordance with US GAAP. WeIn addition, we believe that the adjustments shown below are useful to investors in order to allow them to compare our financial results during the periods shown without the effect of each of these income or expense items. In addition, we believe that Adjusted Net Income, Adjusted Earnings per Share, EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of public companies in our industry, many of which present Adjusted Net Income, Adjusted Earnings per Share, EBITDA and/or Adjusted EBITDA when reporting their results.

In addition to reporting loans receivable information in accordance with US GAAP, we provide Gross Combined Loans Receivable consisting of Company-Owned loans receivable plus loans originated by third-party lenders through the CSO programs, which we guarantee but do not include in the unaudited Condensed Consolidated Financial Statements ("Guaranteed by the Company"). Management believes this analysis provides investors with important information needed to evaluate overall lending performance.

We provide non-GAAP financial information for informational purposes and to enhance understanding of our US GAAP ~~consolidated financial statements.~~Condensed Consolidated Financial Statements. Adjusted Net Income, Adjusted Earnings per Share, EBITDA, Adjusted EBITDA and Gross Combined Loans Receivable should not be considered as alternatives to income from continuing operations, segment operating income or any other performance measure derived in accordance with ~~U.S.~~US GAAP, or as an alternative to cash flows from operating activities or any other liquidity measure derived in accordance with ~~U.S.~~US GAAP. ~~Rather, these measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for, or superior to, U.S. GAAP results.~~ Readers should consider the information in addition to, but not instead of or superior to, ~~our~~the financial statements prepared in accordance with US GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.

Description and Reconciliations of Non-GAAP Financial Measures

Adjusted Net Income, Adjusted Earnings ~~Measures,~~per Share, EBITDA and Adjusted EBITDA measures have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our income or cash flows as reported under ~~U.S.~~US GAAP. Some of these limitations are:

they do not include ~~our~~ cash expenditures or future requirements for capital expenditures or contractual commitments;

they do not include changes in, or cash requirements for, ~~our~~ working capital needs;

they do not include the interest expense, or the cash requirements necessary to service interest or principal payments on ~~our~~ debt;

depreciation and amortization are non-cash expense items reported in ~~our~~the statements of cash flows; and

other companies in our industry may calculate these measures differently, limiting their usefulness as comparative measures.

We ~~evaluate our stores based on~~calculate Adjusted Earnings per Share utilizing diluted shares outstanding at year-end. If we record a loss from continuing operations under US GAAP, shares outstanding utilized to calculate Diluted Earnings per Share from continuing operations are equivalent to basic shares outstanding. Shares outstanding utilized to calculate Adjusted Earnings per Share from continuing operations reflect the number of diluted shares we would have reported if reporting net income from continuing operations under US GAAP.

As noted above, Gross Combined Loans Receivable includes loans originated by third-party lenders through CSO programs which are not included in the unaudited Condensed Consolidated Financial Statements but from which we earn revenue ~~per store, net charge-offs at each store~~ and ~~EBITDA per store, with consideration given~~for which we provide a guarantee to the ~~length of time a store has been open and its geographic location. We monitor newer stores for their progress~~lender. Management believes this analysis provides investors with important information needed to ~~profitability and their rate of revenue growth.~~evaluate overall lending performance.

We believe Adjusted Net Income, Adjusted Earnings ~~Measures,~~per Share, EBITDA and Adjusted EBITDA are used by investors to analyze operating performance and evaluate our ability to incur and service debt and ~~our~~the capacity for making capital expenditures. Adjusted EBITDA is also useful to investors to help assess our estimated enterprise value. The computation of Adjusted EBITDA as presented ~~below~~in this Form 10-Q may differ from the computation of similarly-titled measures provided by other companies.

Reconciliation of Net ~~Income~~income from continuing operations and Diluted Earnings per Share to Adjusted Net ~~Income~~income and Adjusted Diluted Earnings per Share, non-GAAP measures

(in thousands, except per share data, unaudited)

Three Months Ended
March 31, Change
(in thousands except per share data) 2018 2017 $ %
Net income $ 23,292
$ 16,638
$ 6,654
40.0 %
Adjustments:
Loss on extinguishment of debt ⁽¹⁾
11,683
12,458

Transaction related costs ⁽²⁾
—
2,254

Share-based compensation ⁽³⁾
1,842
126

Intangible asset amortization 676
583

Impact of tax law changes⁽⁶⁾
1,800
—

Cumulative tax effect of adjustments (3,692 ) (5,582 )
Adjusted Net Income $ 35,601
$ 26,477
$ 9,124
34.5 %

Net income $ 23,292
$ 16,638

Diluted Weighted Average Shares Outstanding⁽⁴⁾
47,416
38,959

Diluted Earnings per Share ⁽⁴⁾
$ 0.49
$ 0.43
$ 0.06
14.0 %
Per Share impact of adjustments to Net Income ⁽⁴⁾
0.26
0.25

Adjusted Diluted Earnings per Share ⁽⁴⁾
$ 0.75
$ 0.68
$ 0.07
10.3 %



	Three Months Ended March 31,
	2020			2019			Change $			Change %
Net income from continuing operations	$	36,013		$	28,673		$	7,340		25.6	%
Adjustments:
Legal and related costs ⁽¹⁾	1,149			1,752
U.K. related costs ⁽²⁾	—			7,817
Loss from equity method investment ⁽³⁾	1,618			—
Share-based compensation ⁽⁴⁾	3,194			2,172
Intangible asset amortization	737			796
Impact of tax law changes ⁽⁵⁾	(9,114		)	—
Cumulative tax effect of adjustments ⁽⁶⁾	(1,321		)	(3,260		)
Adjusted Net Income	$	32,276		$	37,950		$	(5,674	)	(15.0	)%

Net income from continuing operations	$	36,013		$	28,673
Diluted Weighted Average Shares Outstanding	41,892			47,319
Diluted Earnings per Share from continuing operations	$	0.86		$	0.61		$	0.25		41.0	%
Per Share impact of adjustments to Net income	(0.09		)	0.19
Adjusted Diluted Earnings per Share	$	0.77		$	0.80		$	(0.03	)	(3.8	)%
Note: Footnotes follow Reconciliation of Adjusted EBITDA table immediately below.

Reconciliation of Net income from continuing operations to EBITDA and Adjusted EBITDA, non-GAAP measures (in thousands, except per share data, unaudited)

Three Months Ended
March 31, Change
(dollars in thousands) 2018 2017 $ %
Net income $ 23,292
$ 16,638
$ 6,654
40.0 %
Provision for income taxes 11,467
9,450
2,017
21.3 %
Interest expense 22,349
23,366
(1,017 ) (4.4 )%
Depreciation and amortization 4,661
4,654
7
0.2 %
EBITDA 61,769
54,108
$ 7,661
14.2 %
Loss on extinguishment of debt ⁽¹⁾
11,683
12,458

Transaction related costs ⁽²⁾
—
2,254

Share-based compensation ⁽³⁾
1,842
126

Other adjustments ⁽⁵⁾
(79 ) (314 )
Adjusted EBITDA 75,215
68,632
6,583
9.6 %
Adjusted EBITDA Margin 28.7 % 30.6 %
⁽¹⁾ For the three months ended March 31, 2017, the $12.5 million loss from extinguishment of debt was due to the redemption of CURO Intermediate Holding Corp's 10.75% Senior Secured Notes due 2018 and the 12.00% Senior Cash Pay Notes due 2017. For the three months ended March 31, 2018, the $11.7 million loss from the extinguishment of debt was due to the redemption of CFTC's 12.00% Senior Secured Notes due 2022.
⁽²⁾Transaction-related costs include professional fees paid in connection with potential transactions and the original issuance of $470.0 million of Senior Secured Notes due 2022 in the first quarter of 2017.
⁽³⁾ The Company approved the adoption of a share-based compensation plans during 2010 and 2017 for key members of its senior management team. The estimated fair value of share-based awards is recognized as non-cash compensation expense on a straight-line basis over the vesting period.
⁽⁴⁾ The share and per share information have been adjusted to give effect to the 36-to-1 stock split of the Company's common stock that occurred during the fourth quarter of 2017.
⁽⁵⁾ Other adjustments include deferred rent and the intercompany foreign exchange impact. Deferred rent represents the non-cash component of rent expense. Rent expense is recognized ratably on a straight-line basis over the lease term.
(6) As a result of the 2017 Tax Act, which was signed into law on December 22, 2017, the Company provided an estimate of the new repatriation tax as of December 31, 2017. Subsequent to further guidance published in the first quarter of 2018, the Company has booked an additional tax expense of $1.2 million for the 2017 repatriation tax. Additionally, the Tax Act provided for a new GILTI (Global Intangible Low-Taxed Income) tax starting in 2018 and the Company has estimated and provided tax expense of $0.6 million as of March 31, 2018.



	Three Months Ended March 31,
	2020			2019			Change $			Change %
Net income from continuing operations	$	36,013		$	28,673		$	7,340		25.6	%
Provision for income taxes	1,937			10,046			(8,109		)	(80.7	)%
Interest expense	17,324			17,690			(366		)	(2.1	)%
Depreciation and amortization	4,537			4,920			(383		)	(7.8	)%
EBITDA	59,811			61,329			(1,518		)	(2.5	)%
Legal and related costs ⁽¹⁾	1,149			1,752
U.K. related costs ⁽²⁾	—			7,817
Loss from equity method investment ⁽³⁾	1,618			—
Share-based compensation ⁽⁴⁾	3,194			2,172
Other adjustments ⁽⁷⁾	15			(216		)
Adjusted EBITDA	$	65,787		$	72,854		$	(7,067	)	(9.7	)%
Adjusted EBITDA Margin	23.4		%	26.2		%



(1)	Legal and other costs for the three months ended March 31, 2020 include (i) costs related to certain securities litigation and related matter, (ii) severance costs for certain corporate employees and (iii) legal and advisory costs related to the purchase of Ad Astra. Legal and other costs of $1.8 million for the three months ended March 31, 2019 were due to eliminating 121 positions in North America. The store employee reductions helped better align store staffing with in-store customer traffic and volume patterns, as more of our growth comes from online channels and as store customers require less time in stores as they conduct more of the follow-up activities online. The elimination of certain corporate positions related to efficiency initiatives and has allowed the Company to reallocate investment to strategic growth activities.
(2)	U.K. related costs of $7.8 million for the three months ended March 31, 2019 relate to placing the U.K. subsidiaries into administration on February 25, 2019, which included $7.6 million to obtain consent from the holders of the 8.25% Senior Secured Notes to deconsolidate the U.K. Segment and $0.2 million for other costs.
(3)	The Loss from equity method investment for the three months ended March 31, 2020 of $1.6 million includes our share of the estimated GAAP net loss of Katapult. As of March 31, 2020, we owned 42.5% of the outstanding shares of Katapult.
(4)	We approved the adoption of share-based compensation plans during 2010 and 2017 for key members of senior management. The estimated fair value of share-based awards is recognized as non-cash compensation expense on a straight-line basis over the vesting period.
(5)	On March 27, 2020, the CARES Act was enacted by the U.S. Federal government in response to the COVID-19 pandemic. The CARES Act, among other things, allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. We recorded an income tax benefit of $9.1 million related to the carryback of NOL from tax years 2018 and 2019.
(6)	Cumulative tax effect of adjustments included in Reconciliation of Net income from continuing operations to EBITDA and Adjusted EBITDA table is calculated using the estimated incremental tax rate by country.
(7)	Other adjustments primarily include the intercompany foreign exchange impact.

Currency Information

We operate in the ~~United States,~~U.S. and Canada and ~~the U.K. and report~~ our consolidated results are reported in U.S. dollars.

Changes in our reported revenues and net income include the effect of changes in currency exchange rates. ~~All~~We translate all balance sheet accounts ~~are translated~~ into U.S. dollars at the currency exchange rate in effect at the end of each period. ~~The income~~We translate the statement ~~is translated~~of operations at the average rates of exchange for the period. ~~Currency~~We record currency translation adjustments ~~are recorded~~ as a component of Accumulated Other Comprehensive Income in ~~stockholders’ equity.~~Stockholders’ Equity.

Constant Currency Analysis

We have operations in the U.S.~~, Canada,~~ and ~~the U.K.~~Canada. In the three months ended March 31, ~~2018~~2020 and ~~2017, approximately 21.8%~~2019, 21.0% and ~~22.4%~~18.6%, respectively, of our revenues from continuing operations were originated in ~~currencies other than the U.S. Dollar.~~Canadian Dollars. As a result, changes in our reported results include the impacts of changes in foreign currency exchange rates for the Canadian ~~Dollar~~Dollar.

Income Statement - Three Months Ended March 31, 2020 and ~~the British Pound Sterling.~~2019

Average Exchange Rates
Three Months Ended March 31, Change
2018 2017 $ %
Canadian Dollar $ 0.7912
$ 0.7557

$0.0355
4.7 %
British Pound Sterling $ 1.3916
$ 1.2390

$0.1526
12.3 %



	Average Exchange Rates
	Three Months Ended March 31,				Change
	2020		2019		$			%
Canadian Dollar	$	0.7456	$	0.7525		($0.0069	)	(0.9	)%

Balance Sheet - Exchange rate as of March 31, 2020 and December 31, 2019



	Exchange Rate as of
	March 31,		December 31,		Change
	2020		2019		$			%
Canadian Dollar	$	0.7012	$	0.7683		($0.0671	)	(8.7	)%

The following constant currency analysis removes the impact of the fluctuation in foreign exchange rates and utilizes constant currency results in our analysis of segment performance. Our constant currency assessment assumes foreign

exchange rates in the current fiscal periods remained the same as in the prior fiscal periods. All conversion rates below are based on the U.S. Dollar equivalent to ~~one of~~ the ~~applicable foreign currencies.~~Canadian Dollar. We believe that the constant currency assessment below is a useful measure in assessing the comparable growth and profitability of our operations.

~~The~~We calculated the revenues and gross margin below ~~for~~during the three months ended March 31, ~~2018 were calculated~~2020 using the actual average exchange rate ~~for~~during the three months ended March 31, ~~2017.~~2019.

Three Months Ended
March 31, Change
(dollars in thousands) 2018 2017 $ %
Revenues – constant currency basis:
Canada $ 44,183
$ 41,566
$ 2,617
6.3 %
United Kingdom 9,720
8,692
1,028
11.8 %
Gross margin - constant currency basis:
Canada 13,860
14,300
(440 ) (3.1 )%
United Kingdom 3,029
3,472
(443 ) (12.8 )%



	Three Months Ended March 31,				Change
(in thousands, unaudited)	2020		2019		$			%
Canada – constant currency basis:
Revenues	$	59,563	$	51,820	$	7,743		14.9	%
Gross Margin	12,090		15,694		(3,604		)	(23.0	)%

We calculated gross loans receivable below as of March 31, 2020 using the actual exchange rate as of December 31, 2019.



	March 31,		December 31,		Change
(in thousands, unaudited)	2020		2019		$		%
Canada – constant currency basis:
Gross loans receivable	$	302,762	$	302,376	$	386	0.1	%

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity to fund the loans we make to our customers are cash provided by operations, our Senior Revolver, our Cash Money Revolving Credit Facility, funds from ~~third party~~third-party lenders under our CSO programs, and our Non-Recourse ~~U.S.~~Canada SPV ~~Facility, which finances the originations of eligible U.S. Unsecured and Secured Installment Loans at an advance rate of 80%. In 2017,~~Facility. During August 2018, we issued ~~our~~$690.0 million 8.25% Senior Secured Notes due September 2025 (i) to redeem the outstanding 12.00% Senior Secured Notes due ~~March 1,~~ 2022 ~~("Senior Secured Notes")~~of CFTC, (ii) to ~~refinance similar notes that were nearing maturity~~repay a portion of the outstanding indebtedness under the five-year revolving credit facility of CURO Receivables Finance I, LLC, our wholly-owned subsidiary, which consists of a term loan and revolving borrowing capacity, (iii) for general corporate purposes and (iv) to pay ~~dividends to our stockholders.~~ fees, expenses, premiums and accrued interest in connection with the foregoing.

As of March 31, ~~2018,~~2020, we were in compliance with all financial ratios, covenants and other requirements set forth in our debt agreements. We anticipate that our primary use of cash will be to fund growth in our working capital, finance capital expenditures, and meet our debt obligations. As we did for our share repurchase programs announced in April 2019 and February 2020 (which we have suspended as previously disclosed), we may also use cash to fund a return on capital for our stockholders through share repurchase programs, or as we announced in February 2020, in the form of dividends.

Our level of cash flow provided by operating activities typically experiences some seasonal fluctuation related to our levels of net income and changes in working capital levels, particularly loans receivable.

Unexpected changes in our financial condition or other unforeseen factors may result in our inability to obtain third-party financing or could increase our borrowing costs in the future. We have the ability to adjust our volume of lending to consumers which would reduce cash outflow requirements while increasing cash inflows through loan repayments to the extent we experience any short-term or long-term funding shortfalls. We may also sell or securitize our assets, draw on our available revolving credit facility or line of credit, enter into additional refinancing agreements and reduce our capital spending in order to generate additional liquidity. We believe our cash on hand and available borrowings provide us with sufficient liquidity for at least the next ~~twelve~~12 months.

Borrowings

Our ~~long-term~~ debt consisted of the following as of March 31, ~~2018 and December 31, 2017~~ 2020 (net of deferred financing costs) (in thousands):

March 31, December 31,
(dollars in thousands) 2018 2017
2017 Senior secured notes (due 2022) $ 511,493
$ 585,823
Non-Recourse U.S. SPV Facility 111,151
120,402
Senior Revolver —
—
Long-term debt $ 622,644

$ 706,225



	Capacity	Interest Rate	Maturity	Counter-parties	Balance as of March 31, 2020
Non-Recourse Canada SPV Facility ⁽¹⁾	C$175.0 million	3-Mo CDOR + 6.75%	September 2, 2023	Waterfall Asset Management	$	84,724
Senior Secured Revolving Credit Facility	$50.0 million	1-Mo LIBOR + 5.00%	June 30, 2021	BayCoast Bank; Stride Bank; Hancock-Whitney Bank; Metropolitan Commercial Bank	25,000
Non-Recourse U.S. SPV Facility ⁽²⁾	$100.0 million	1-Mo LIBOR + 5.75% or 9.75%⁽³⁾	April 8, 2024	Atalaya Capital Management	—
Cash Money Revolving Credit Facility ⁽¹⁾	C$10.0 million	Canada Prime Rate +1.95%	On-demand	Royal Bank of Canada	—
8.25% Senior Secured Notes (due 2025)	$690.0 million	8.25%	September 1, 2025		$	678,727
(1) Capacity amounts are denominated in Canadian dollars, while outstanding balances as of March 31, 2020 are denominated in U.S. dollars.
(2) We entered into the Non-Recourse U.S. SPV Facility on April 8, 2020, and drew $35.2 million on the facility at such time.
(3) The Non-Recourse U.S. SPV Facility provides for $100.0 million of borrowing capacity and, subject to obtaining additional commitments thereunder, the ability to expand such capacity up to $200.0 million. Prior to the increase in commitments, interest accrues at an annual rate of one-month LIBOR plus 9.75% and after the increase in commitments, one-month LIBOR plus 5.75%.

Refer to Note 5, "Debt," for details on each of our credit facilities and resources. Refer to Note 19, "Subsequent Events" for additional details on the Non-Recourse U.S. SPV Facility that we closed on April 8, 2020.

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The following condensed consolidating financial information is presented separately for:


(i)	CURO as the issuer of the 8.25% Senior Secured Notes;

(ii)

The Company's subsidiary guarantors, which are comprised of certain of its domestic subsidiaries, including (x) CFTC, as the issuer of the 12.00% Senior Secured Notes that were redeemed in August 2018, (y) CURO Intermediate and (z) U.S. SPV as the issuer of the Non-Recourse U.S. SPV Facility that was extinguished in October 2018, but excluding Canada SPV (the “Subsidiary Guarantors”), on a consolidated basis, which are 100% owned by CURO, and which are guarantors of the 8.25% Senior Secured Notes issued in August 2018;


(iii)	The Non-Recourse Canada SPV facility, a wholly-owned, bankruptcy-remote special purpose subsidiary;


(iv)	The Company's other subsidiaries on a consolidated basis, which are not guarantors of the 8.25% Senior Secured Notes (the “Subsidiary Non-Guarantors”);


(v)	Consolidating and eliminating entries representing adjustments to:


a.	eliminate intercompany transactions between or among us, the Subsidiary Guarantors, the Non-Recourse Canada SPV facility and the Subsidiary Non-Guarantors; and


b.	eliminate the investments in subsidiaries; and


(vi)	The Company and its subsidiaries on a consolidated basis.

For additional details, see Note 5, "Debt."

~~Available Credit Facilities and Other Resources~~Condensed Consolidating Balance Sheets



	March 31, 2020
(dollars in thousands)	CURO			Subsidiary Guarantors			Canada SPV		Subsidiary Non-Guarantors			Eliminations			CURO Consolidated
Assets:
Cash	$	—		$	107,208		$	—	$	31,506		$	—		$	138,714
Restricted cash	—			17,069			22,317		2,141			—			41,527
Loans receivable, net	—			221,408			203,837		39,350			—			464,595
Right of use asset - operating leases	—			76,528			—		37,744			—			114,272
Deferred income taxes	13,190			(13,190		)	—		—			—			—
Income taxes receivable	47,236			(24,444		)	—		1,643			—			24,435
Prepaid expenses and other	—			26,008			—		8,112			—			34,120
Property and equipment, net	—			42,536			—		24,251			—			66,787
Goodwill	—			105,922			—		26,903			—			132,825
Other intangibles, net	—			13,540			—		20,404			—			33,944
Intercompany receivable	—			135,608			—		—			(135,608		)	—
Investment in subsidiaries	91,206			—			—		—			(91,206		)	—
Other assets	—			14,910			—		637			—			15,547
Total assets	$	151,632		$	723,103		$	226,154	$	192,691		$	(226,814	)	$	1,066,766
Liabilities and Stockholders' equity (deficit):
Accounts payable and accrued liabilities	$	(2	)	$	43,133		$	13,267	$	(2,795	)	$	—		$	53,603
Deferred revenue	—			4,427			39		2,189			—			6,655
Lease liability - operating leases	—			84,135			—		37,580			—			121,715
Accrued interest	4,744			21			627		—			—			5,392
Payable to CURO Holdings Corp.	(600,336		)	600,336			—		—			—			—
CSO liability for losses	—			9,189			—		—			—			9,189
Debt	678,727			24,850			84,874		—			—			788,451
Intercompany payable	—			—			80,240		55,368			(135,608		)	—
Other liabilities	—			8,932			—		163			—			9,095
Deferred tax liabilities	8,928			—			—		4,167			—			13,095
Total liabilities	92,061			775,023			179,047		96,672			(135,608		)	1,007,195
Stockholders' equity (deficit)	59,571			(51,920		)	47,107		96,019			(91,206		)	59,571
Total liabilities and stockholders' equity	$	151,632		$	723,103		$	226,154	$	192,691		$	(226,814	)	$	1,066,766

~~12.00% Senior Secured Notes~~

In February and November 2017, CFTC issued $470.0 million and $135.0 million, respectively, Senior Secured Notes. Interest on the Senior Secured Notes is payable semiannually, in arrears, on March 1 and September 1 of each year, beginning on September 1, 2017. The February issuance refinanced similar notes that were nearing maturity. The extinguishment of the existing notes resulted in a pretax loss of $12.5 million in the three months ended March 31, 2017. In connection with these 2017 debt issuances we capitalized financing costs of approximately $18.3 million, the balance of which is included in the Interim Consolidated Balance Sheets as a component of “Long-Term Debt,” and is being amortized over the term of the Senior Secured Notes and included as a component of interest expense.

On March 7, 2018, CFTC redeemed $77.5 million of its Senior Secured Notes (the transaction whereby the Senior Secured Notes were partially redeemed, the “Redemption”) at a price equal to 112.00% of the principal amount of the Senior Secured Notes redeemed, plus accrued and unpaid interest paid thereon to the date of Redemption. Following the Redemption, $527.5 million of the original outstanding principal amount of the Senior Secured Notes remain outstanding. The Redemption was conducted pursuant to the Indenture governing the Senior Secured Notes (the “Indenture”), dated as of February 15, 2017, by and among CFTC, the guarantors party thereto and TMI Trust Company, as trustee and collateral agent. Consistent with the terms of the Indenture, CFTC used a portion of the cash proceeds from our initial public offering, completed in December 2017, to redeem such Senior Secured Notes.

~~Non-Recourse U.S. SPV Facility~~

In November 2016, CURO Receivables Finance I, LLC, a Delaware limited liability company (the “SPV Borrower”) and a wholly-owned subsidiary, entered into a five-year revolving credit facility with Victory Park Management, LLC and certain other lenders that provides an $80.0 million term loan and $70.0 million of revolving borrowing capacity that can expand time (“Non-Recourse U.S. SPV Facility”).

~~Senior Revolver~~

In September 2017, we closed a $25.0 million Senior Secured Revolving Loan Facility, or the Senior Revolver. In February 2018, the Senior Revolver capacity was increased to $29.0 million as permitted by the Indenture to the Senior Secured Notes based upon consolidated tangible assets. The Senior Revolver is now syndicated with participation by a second bank. The negative covenants of the Senior Revolver generally conform to the related provisions in the Indenture for our 12.00% Senior Secured Notes. We believe this facility complements our other financing sources, while providing seasonal short-term liquidity. Under the Senior Revolver, there is $29.0 million maximum availability, including up to $5.0 million of standby letters of credit, for a one-year term, renewable for successive terms following annual review. The Senior Revolver accrues interest at the one-month LIBOR (which may not be negative) plus 5.00% per annum and is repayable on demand. The terms of the Senior Revolver require that the outstanding balance be reduced to $0 for at least 30 consecutive days in each calendar year. The Senior Revolver is guaranteed by all subsidiaries of CURO that guarantee our 12.00% Senior Secured Notes and is secured by a lien on substantially all assets of CURO and the guarantor subsidiaries that is senior to the lien securing our 12.00% Senior Secured Notes. The Senior Revolver was undrawn at March 31, 2018.

~~Cash Money Revolving Credit Facility~~

Cash Money Cheque Cashing, Inc., one of our Canadian subsidiaries, maintains a C$7.3 million revolving credit facility with Royal Bank of Canada. The Cash Money Revolving Credit Facility provides short-term liquidity required to meet the working capital needs of our Canadian operations. Aggregate draws under the revolving credit facility are limited to the lesser of: (i) the borrowing base, which is defined as a percentage of cash, deposits in transit and accounts receivable, and (ii) C$7.3 million. As of December 31, 2017, the borrowing capacity under our revolving credit facility was reduced by C$0.3 million in stand-by-letters of credit.



	December 31, 2019
(dollars in thousands)	CURO			Subsidiary Guarantors			Canada SPV		Subsidiary Non-Guarantors			Eliminations			CURO Consolidated
Assets:
Cash	$	—		$	44,727		$	—	$	30,515		$	—		$	75,242
Restricted cash	—			14,958			17,427		2,394			—			34,779
Loans receivable, net	—			286,881			220,067		52,045			—			558,993
Right of use asset - operating leases	—			74,845			—		42,608			—			117,453
Deferred tax asset	8,561			(3,506		)	—		—			—			5,055
Income taxes receivable	19,690			(8,987		)	—		723			—			11,426
Prepaid expenses and other	—			26,623			—		9,267			—			35,890
Property and equipment, net	—			43,618			—		27,193			—			70,811
Goodwill	—			91,131			—		29,478			—			120,609
Other intangibles, net	—			11,569			—		22,358			—			33,927
Intercompany receivable	—			113,599			—		—			(113,599		)	—
Investment in subsidiaries	84,514			—			—		—			(84,514		)	—
Other assets	—			17,006			—		704			—			17,710
Total assets	$	112,765		$	712,464		$	237,494	$	217,285		$	(198,113	)	$	1,081,895
Liabilities and Stockholder's equity:
Accounts payable and accrued liabilities	$	465		$	48,333		$	13,462	$	(2,177	)	$	—		$	60,083
Deferred revenue	—			6,828			46		3,296			—			10,170
Lease liability - operating leases	—			82,593			—		42,406			—			124,999
Accrued interest	18,975			1			871		—			—			19,847
Payable to CURO Holdings Corp.	(635,511		)	635,511			—		—			—			—
CSO liability for losses	—			10,623			—		—			—			10,623
Debt	678,323			—			112,221		—			—			790,544
Intercompany payable	—			—			69,639		43,960			(113,599		)	—
Other liabilities	—			10,285			—		379			—			10,664
Liabilities from discontinued operations	—			—			—		4,452			—			4,452
Total liabilities	(73,013		)	794,174			196,239		142,668			(113,599		)	1,031,382
Stockholders' equity	50,513			(81,710		)	41,255		$	124,969		(84,514		)	50,513
Total liabilities and stockholders' equity	$	(92,114	)	$	712,464		$	237,494	$	267,637		$	(198,113	)	$	1,081,895

~~The Cash Money Revolving Credit Facility is collateralized by substantially all~~Condensed Consolidating Statements of Operations



	Three Months Ended March 31, 2020
(dollars in thousands)	CURO			Subsidiary Guarantors			Canada SPV		Subsidiary Non-Guarantors			Eliminations			CURO Consolidated
Revenue	$	—		$	221,768		$	34,026	$	25,012		$	—		$	280,806
Provision for losses	—			86,041			19,732		7,763			—			113,536
Net revenue	—			135,727			14,294		17,249			—			167,270
Cost of providing services:
Salaries and benefits	—			16,912			—		9,095			—			26,007
Occupancy	—			7,825			—		6,191			—			14,016
Office	—			4,301			—		1,373			—			5,674
Other costs of providing services	—			8,204			—		1,451			—			9,655
Advertising	—			10,945			—		1,274			—			12,219
Total cost of providing services	—			48,187			—		19,384			—			67,571
Gross margin	—			87,540			14,294		(2,135		)	—			99,699
Operating expense (income):
Corporate, district and other expenses	3,395			34,255			174		4,983			—			42,807
Intercompany management fee	—			(3,800		)	730		3,070			—			—
Interest expense	14,636			210			2,620		(142		)	—			17,324
Loss from equity method investment	—			1,618			—		—			—			1,618
Intercompany interest (income) expense	—			(1,441		)	550		891			—			—
Total operating expense	18,031			30,842			4,074		8,802			—			61,749
Income (loss) from continuing operations before income taxes	(18,031		)	56,698			10,220		(10,937		)	—			37,950
Provision (benefit) for income tax expense	(23,247		)	24,998			—		186			—			1,937
Net income (loss) from continuing operations	5,216			31,700			10,220		(11,123		)	—			36,013
Discontinued operations:
Net income on discontinued operations	—			—			—		292			—			292
Net income (loss)	5,216			31,700			10,220		(10,831		)	—			36,305
Equity in net income (loss) of subsidiaries:
CFTC	31,089			—			—		—			(31,089		)	—
Guarantor Subsidiaries	—			31,700			—		—			(31,700		)	—
Non-Guarantor Subsidiaries	—			(10,831		)	—		—			10,831			—
SPV Subs				10,220			—		—			(10,220		)	—
Net income (loss) attributable to CURO	$	36,305		$	62,789		$	10,220	$	(10,831	)	$	(62,178	)	$	36,305



	Three Months Ended March 31, 2019
(dollars in thousands)	CURO			Subsidiary Guarantors			Canada SPV		Subsidiary Non-Guarantors			Eliminations			CURO Consolidated
Revenue	$	—		$	226,119		$	25,046	$	26,774		$	—		$	277,939
Provision for losses	—			84,980			13,306		4,099			—			102,385
Net revenue	—			141,139			11,740		22,675			—			175,554
Cost of providing services:
Salaries and benefits	—			19,951			—		8,750			—			28,701
Occupancy	—			8,010			—		6,227			—			14,237
Office	—			3,889			—		1,224			—			5,113
Other costs of providing services	—			13,132			—		1,088			—			14,220
Advertising	—			6,354			—		1,432			—			7,786
Total cost of providing services	—			51,336			—		18,721			—			70,057
Gross margin	—			89,803			11,740		3,954			—			105,497
Operating expense (income):
Corporate, district and other expenses	2,342			41,538			25		5,183			—			49,088
Intercompany management fee	—			(3,403		)	8		3,395			—			—
Interest expense	14,438			290			2,891		71			—			17,690
Intercompany interest (income) expense	—			(1,071		)	—		1,071			—			—
Total operating expense	16,780			37,354			2,924		9,720			—			66,778
Income (loss) from continuing operations before income taxes	(16,780		)	52,449			8,816		(5,766		)	—			38,719
Provision (benefit) for income tax expense	(5,008		)	14,020			—		1,034			—			10,046
Net (loss) income from continuing operations	(11,772		)	38,429			8,816		(6,800		)	—			28,673
Discontinued operations:
Net loss on discontinued operations	—			—			—		8,375			—			8,375
Net (loss) income	(11,772		)	38,429			8,816		1,575			—			37,048
Equity in net income (loss) of subsidiaries:
CFTC	48,820			—			—		—			(48,820		)	—
Guarantor Subsidiaries	—			38,429			—		—			(38,429		)	—
Non-Guarantor Subsidiaries	—			1,575			—		—			(1,575		)	—
SPV Subs	—			8,816			—					(8,816		)	—
Net income (loss) attributable to CURO	$	37,048		$	87,249		$	8,816	$	1,575		$	(97,640	)	$	37,048

Condensed Consolidating Statements of Cash Money’s assets and contains various covenants that include, among other things, that the aggregate borrowings outstanding under the facility not exceed the borrowing base, restrictions on the encumbrance of assets and the creation of indebtedness. Borrowings under the Cash Money Revolving Credit Facility bear interest (per annum) at the prime rate of a Canadian chartered bank plus 1.95%. The Cash Money Revolving Credit Facility was undrawn at March 31, 2018 and December 31, 2017.Flows



	Three months ended March 31, 2020
(dollars in thousands)	CURO			Subsidiary Guarantors			Canada SPV			Subsidiary Non-Guarantors			Eliminations			CURO Consolidated
Cash flows from operating activities:
Net cash provided by continuing operating activities	$	6,517		$	89,412		$	48,035		$	12,102		$	(4,197	)	$	151,869
Net cash used in discontinued operating activities	—			—			—			390			—			390
Cash flows from investing activities:
Purchase of property, equipment and software	—			(3,237		)	—			(421		)	—			(3,658		)
Originations of loans, net	—			(29,894		)	(22,280		)	(8,227		)	—			(60,401		)
Acquisition of Ad Astra, net of acquiree's cash received	—			(14,418		)	—			—			—			(14,418		)
Net cash used in continuing investing activities	—			(47,549		)	(22,280		)	(8,648		)	—			(78,477		)
Cash flows from financing activities:
Proceeds from Non-Recourse Canada SPV facility	—			—			23,560			—			—			23,560
Payments on Non-Recourse Canada SPV facility	—			—			(42,497		)	—			—			(42,497		)
Proceeds from credit facilities	—			60,000			—			9,938			—			69,938
Payments on credit facilities	—			(35,000		)	—			(9,938		)	—			(44,938		)
Payments to net share settle RSUs	(609		)	—			—			—			—			(609		)
Proceeds from exercise of stock options	—			126			—			—			—			126
Debt issuance costs paid	—			(150		)	—			—			—			(150		)
Repurchase of common stock	(5,908		)	—			—			—			—			(5,908		)
Dividends paid to CURO Group Holdings Corp.	2,247			(2,247		)	—			—			—			—
Dividends paid to stockholders	(2,247		)	—			—			—			—			(2,247		)
Net cash (used in) provided by financing activities ⁽¹⁾	(6,517		)	22,729			(18,937		)	—			—			(2,725		)

Effect of exchange rate changes on cash and restricted cash	—			—			(1,928		)	(3,106		)	4,197			(837		)
Net increase in cash and restricted cash	—			64,592			4,890			738			—			70,220
Cash and restricted cash at beginning of period	—			59,685			17,427			32,909			—			110,021
Cash at end of period	$	—		$	124,277		$	22,317		$	33,647		$	—		$	180,241



	Three months ended March 31, 2019
(dollars in thousands)	CURO			Subsidiary Guarantors			Canada SPV			Subsidiary Non-Guarantors			Eliminations			CURO Consolidated
Cash flows from operating activities:
Net cash provided by continuing operating activities	$	67		$	88,291		$	53,969		$	(1,574	)	$	246		$	140,999
Net cash used in discontinued operating activities	—			—			—			(504		)	—			(504		)
Cash flows from investing activities:
Purchase of property, equipment and software	—			(2,430		)	—			(689		)	—			(3,119		)
Originations of loans, net	—			(38,226		)	(30,373		)	3,652			—			(64,947		)
Cash paid for Katapult investment	—			(1,568		)	—			—			—			(1,568		)
Net cash used in continuing investing activities	—			(42,224		)	(30,373		)	2,963			—			(69,634		)
Net cash used in discontinued investing activities	—			—			—			(14,213		)	—			(14,213		)
Cash flows from financing activities:
Proceeds from Non-Recourse Canada SPV facility	—			—			3,762			—			—			3,762
Payments on Non-Recourse Canada SPV facility	—			—			(24,831		)	—			—			(24,831		)
Proceeds from credit facilities	—			15,000			—			15,478			—			30,478
Payments on credit facilities	—			(35,000		)	—			(15,478		)	—			(50,478		)
Payments to net share settle RSUs	(37		)	—			—			—			—			(37		)
Proceeds from exercise of stock options	—			40			—			—			—			40
Debt issuance costs paid	(30		)	—			(169		)	—			—			(199		)
Net cash used in provided by financing activities ⁽¹⁾	(67		)	(19,960		)	(21,238		)	—			—			(41,265		)

Effect of exchange rate changes on cash and restricted cash	—			—			262			1,922			(246		)	1,938
Net increase (decrease) in cash and restricted cash	—			26,107			2,620			(11,406		)	—			17,321
Cash and restricted cash at beginning of period	—			52,397			12,840			34,620			—			99,857
Cash at end of period	$	—		$	78,504		$	15,460		$	23,214		$	—		$	117,178
(1) Financing activities include continuing operations only and were not impacted by discontinued operations.

Cash Flows

The following highlights our cash flow activity and the sources and uses of funding during the periods ~~indicated:~~indicated (in thousands):

Three Months Ended
(dollars in thousands) March 31, 2018 March 31, 2017
Net cash provided by operating activities $ 54,787
$ 56,925
Net cash used in investing activities (7,970 ) (10,086 )
Net cash used in financing activities (73,955 ) (95,390 )



	Three Months Ended March 31,
	2020			2019
Net cash provided by continuing operating activities	$	151,869		$	140,999
Net cash used in continuing investing activities	(78,477		)	(69,634		)
Net cash used in continuing financing activities	(2,725		)	(41,265		)

Continuing Operating ~~activities~~Activities

Net cash provided by continuing operating activities for the three months ended March 31, ~~2018~~2020 was ~~$54.8~~$151.9 million, primarily attributable to the effect of non-cash reconciling items of $137.7 million, which includes provision for loan losses of $113.5 million, offset by changes in our operating assets and liabilities which provided $21.9 million. ~~Contributing to current year net~~

Net cash provided by continuing operating activities ~~were~~for the three months ended March 31, 2019 was $141.0 million, primarily attributable to net income of ~~$23.3~~$28.7 million, provision for loan losses of $102.4 million and changes in our operating assets and liabilities of $12.1 million, partially offset by other non-cash expenses of ~~$88.9~~$2.1 million. Major components of non-cash expenses include depreciation and amortization, provision for loan losses and loss on debt extinguishment. Contributions from net income and non-cash expenses were partially offset by changes in our operating assets and liabilities of $57.5 million. Our loans receivable change represented $56.0 million of the total change in operating assets and liabilities.share-based compensation expense.

Continuing Investing Activities

Net cash ~~provided by operating~~used in continuing investing activities for the three months ended March 31, ~~2017~~2020 was ~~$56.9 million. Contributing to~~$78.5 million, primarily reflecting the net ~~cash provided by operating activities were net income~~origination of ~~$16.6~~loans of $60.4 million and ~~non-cash expenses, such as depreciation and amortization,~~ the ~~provision~~acquisition of Ad Astra for ~~loan losses, and a loss on debt extinguishment for a total of $78.8~~$14.4 million, partially offset by changes in our operating assets and liabilities of $38.4 million. The most significant change within operating assets and liabilities was a $34.8 million increase in loans receivable, net of ~~provision~~cash received. Net origination of loans includes $30.1 million of cash inflows for ~~losses.~~California Unsecured and Secured Installment loans from December 31, 2019 to March 31, 2020 due to regulatory changes, effective January 1, 2020.

~~Loans receivable~~Net cash used in continuing investing activities for the three months ended March 31, 2019 was $69.6 million, primarily reflecting the net origination of loans of $64.9 million. In addition, we used cash to purchase approximately $3.1 million of property and equipment, including software licenses.

Origination of loans will fluctuate from ~~period to period~~period-to-period, depending on the timing of loan issuances and collections. A seasonal decline in consumer loans receivable typically ~~takes place~~occurs during the first quarter of the year and is driven by income tax refunds in the ~~United States.~~U.S. Typically, customers will use the proceeds from income tax refunds to pay outstanding loan balances, resulting in an increase ofin our net cash balances and a decrease ofin our consumer loans receivable balances. ~~Consumer loans receivable balances typically reflect growth during the remainder of the year.~~

~~Investing activities~~Continuing Financing Activities

Net cash used in investing activities for the three months ended March 31, 2018 was $8.0 million. We used cash to purchase approximately $1.6 million of property and equipment, including software licenses, and to purchase $1.0 million of Cognical Holdings preferred shares. Additionally, the increase in restricted cash of $5.4 million was primarily attributable to our Non-Recourse U.S. SPV Facility.

Net cash used in investing activities for the three months ended March 31, 2017 was $10.1 million. Restricted cash increased by approximately $7.0 million primarily attributable to our Non-Recouse U.S. SPV Facility. Additionally, we purchased approximately $3.1 million of property and equipment, including software licenses.

~~Financing activities~~

~~Net cash used in~~continuing financing activities for the three months ended March 31, ~~2018~~2020 was ~~$74.0 million. We redeemed $77.5~~$2.7 million, primarily due to $6.1 million of net proceeds on our 12.00% Senior Secured Notes for $86.8 million (which included $9.3 million of call premium). The underwriters from our 2017 initial public offering exercised their option on January 5, 2018 and acquired one million shares of ourdebt facilities, offset by common stock ~~providing net proceeds~~repurchases of ~~$13.1~~$5.9 million and cash dividends of $2.2 million. ~~We also had net borrowings of $9.5 million from our U.S. SPV Facility and our ABL Facility.~~

Net cash ~~used in~~provided by continuing financing activities for the three months ended March 31, ~~2017~~2019 was ~~$95.4~~$41.3 million. During ~~2017, CFTC extinguished its 10.75%~~the quarter, we made a $20.0 million payment on the Senior ~~Secured Notes for $426.0~~Revolver to reduce the outstanding balance to zero and made net repayments of $20.9 million (which included $8.9 million of call premium) and extinguished our Senior Cash Pay Notes for $125.0 million. These payments were partially financed by proceeds of $447.6 million (net of $13.7 million of debt issuance costs and $8.5 million of discount on ~~notes issued) from~~ the ~~issuance of our 12.00% Senior Secured Notes. We also had net borrowings of $8.0 million from our U.S.~~Non-Recourse Canada SPV ~~Facility and our ABL~~ Facility.

Contractual Obligations

There have been no significant developments with respect to our contractual obligations since December 31, ~~2017,~~2019, as ~~disclosed~~described in our ~~Annual Report~~2019 Form 10-K.

Critical Accounting Policies and Estimates

Goodwill. We exercise judgment in evaluating assets for impairment. Goodwill is tested for impairment annually, or when circumstances arise which could more likely than not reduce the fair value of a reporting unit below its carrying value. These tests require comparing carrying values to estimated fair values of the reporting unit under review.

The U.S. and Canada operations are our two reporting units, as defined by FASB’s ASC 280 - Segment Reporting, for which we assess goodwill for impairment. As of the most recent annual goodwill impairment testing date (October 1, 2019), both reporting units' estimated fair valued exceeded its carrying value. As described in our 2019 Form 10-K, an impairment would occur if the carrying amount of a reporting unit exceeded the fair value of that reporting unit. Events or circumstances that could indicate an impairment include a significant change in the business climate, a change in strategic direction, legal factors, operating performance

indicators, a change in the competitive environment, the sale or disposition of a significant portion of a reporting unit or economic outlook. These and other macroeconomic factors, in general, were considered when performing the annual test on ~~Form 10-K.~~October 1, 2019.

In the first quarter of 2020, we performed an interim assessment of goodwill on both reporting units to consider whether current events or circumstances, attributable to uncertainty caused by COVID-19, resulted in a more likely than not reduction in the fair value of the reporting units below their respective carrying values.

Canada Reporting Unit

As part of our quantitative testing process for goodwill of the Canada reporting unit, we estimated fair values using a discounted cash flow approach from the perspective of a market participant. Significant assumptions used in the discounted cash flow approach are revenue growth rates, gross margin, EBITDA margins, discount rate and long-term revenue growth rate. The cash flow forecasts of the reporting unit, which we updated to reflect the uncertainty caused by COVID-19, are based on management’s long-term view of our markets and are the forecasts that senior management and the Board of Directors use to evaluate the Company's overall and individual reporting unit operating performance. The discount rate utilized is management’s estimate of what the market’s weighted average cost of capital is for a company with a similar debt rating and stock volatility, as measured by beta. The terminal business value is determined by applying the long-term growth rate to the latest year for which a forecast exists. As part of our goodwill quantitative testing process, we evaluate whether there are reasonably likely changes to management’s estimates that would have a material impact on the results of the goodwill impairment testing.

As of March 31, 2020, no impairment of goodwill existed for the Canada reporting unit. Testing did indicate that the fair value of the Canada reporting unit exceeded its carrying value by less than 5%. This reduction in fair value of the Canada reporting unit, which was previously greater than 10% at the time of the October 1, 2019 annual impairment test, was primarily driven by significant uncertainty surrounding the effect that the COVID-19 pandemic will have on the reporting unit’s near-term cash flows, triggering a decrease in the reporting unit's forecasted near-term cash flows. The length of time and extent to which the pandemic will impact our customers remains unclear, and assumptions used in the discounted cash flow approach reflect management's estimates as of the date of this filing.

U.S. Reporting Unit

After performing a similar interim impairment test for the U.S. reporting unit as that for the Canada reporting unit utilizing a discounted cash flow method, which was adjusted for considerations related to COVID-19, we concluded that the fair value continues to be significantly in excess of the carrying value.

The following table summarizes the segment allocation of recorded goodwill on our unaudited Condensed Consolidated Balance Sheets as of March 31, 2020:



(in thousands)	March 31, 2020		Percent of Total		December 31, 2019		Percent of Total
U.S.	$	105,922	79.7	%	$	91,131	75.6	%
Canada	26,903		20.3	%	29,478		24.4	%
Total Goodwill	$	132,825			$	120,609

There continues to be uncertainty surrounding the macroeconomic factors for the Canada reporting unit. Changes in the expected length of the current downturn, timing of recovery, or long-term revenue growth or profitability for this reporting unit could increase the likelihood of a future impairment. Additionally, changes in market participant assumptions such as an increased discount rate or further share price reductions could increase the likelihood of a future impairment.

Regulatory Environment and Compliance

There have been no significant developments with respect to our regulatory environment and compliance since December 31, ~~2017,~~2019, as described in our ~~Annual Report on~~2019 Form ~~10-K, other than the following:~~10-K.

~~Recent developments regarding the CFPB Rule~~

The CFPB adopted a new rule applicable to payday vehicle title, and certain high-cost installment loans in November 2017, which we refer to in our 10-K as the CFPB Rule, with most provisions currently scheduled to become effective in August 2019. In January 2018, the CFPB announced that it intends to engage in a rulemaking process to reconsider the CFPB Rule pursuant to the Administrative Procedure Act (APA). Since the release of our 2017 Annual Report on Form 10-K, on April 9, 2018, the Community Financial Services Association of America (CFSA) and the Consumer Service Alliance of Texas filed a lawsuit against the CFPB in the U.S. District Court for the Western District of Texas, Austin Division, seeking to invalidate the CFPB Rule. The lawsuit alleges that the rule violates the APA because it exceeds the Bureau’s statutory authority and is arbitrary, capricious, and unsupported by substantial evidence. The lawsuit also argues that the CFPB’s structure is unconstitutional under the Constitution’s separation of powers because the agency’s powers are concentrated in a single, unchecked Director who is improperly insulated from both presidential supervision and congressional appropriation, and hence unaccountable to the American people. Additionally, as of the date of this Report, the CFPB Rule remains subject to potential override by disapproval under the Congressional Review Act. It is impossible to predict whether and when the CFPB Rule will go into effect and, if so, whether and how it might be modified.

~~California legislative activity~~

Three bills have been introduced in the California Assembly which would directly impact the products currently offered by us. Assembly Bill 2500 would impose a 36% APR cap on all consumer loans between $2,500 and $5,000 and, a 24% APR cap on all consumer loans between $5,000 and $10,000. Assembly Bill 2953 would impose a 36% APR cap on auto title loans $2,500 or more. Assembly Bill 3010 would limit borrowers to one outstanding payday loan at a time across all lenders using a common database to enforce the one loan restriction.

Assembly Bills 2500, 2953, and 3010 have passed out of the Assembly Committee on Banking and Finance and Assembly Bill 3010 has also passed out of the Assembly Committee on Privacy and Consumer Protection. All three bills have been referred to the Assembly Committee on Appropriations and may be called for a vote by the entire Assembly on or before June 1, 2018. June 1, 2018 is the deadline for bills originating in the Assembly to cross over

to the Senate with a majority vote on the Assembly floor. Should any of these bills receive a majority vote in the Assembly and move to the Senate, they will be initially assigned to the Senate Rules Committee.

These bills are still in the early stages of the legislative process. It is impossible to predict if any of these bills will ultimately pass both chambers by the August 31, 2018 deadline, either in their original form or an amended form. Until the legislative process has concluded, we cannot estimate the impact to our business or results of operations, if any. For the quarter ending March 31, 2018, California represented 22.7% of our total US revenues.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures about our market risks, see "Quantitative and Qualitative Disclosures about Market Risk" in our ~~2017 Annual Report on~~2019 Form ~~10-K.~~10-K for the year ended December 31, 2019. There have been no material changes to the amounts presented ~~therein except for the following:~~therein.

~~Foreign Currency Exchange Rate Risk~~

As foreign currency exchange rates change, translation of the financial results of the United Kingdom and Canadian operations into U.S. Dollars will be impacted. Our operations in Canada and the United Kingdom representLIBOR is used as a ~~significant portion~~reference rate for certain of our total operations, and as a result, a material change in foreign currency exchange rates in either country could have a significant impact on our consolidated financial position, results of operations or cash flows. From time to time, we may elect to purchase financial instruments, such as ~~hedges against foreign exchange rate risks with~~our revolving credit facilities. LIBOR is set to be phased out at the ~~objective~~end of ~~protecting our results of operations in~~2021. We are currently reviewing how the ~~United Kingdom and/or Canada against foreign currency fluctuations. We typically hedge anticipated cash flows between our foreign subsidiaries and domestic subsidiaries.~~

~~As of March 31, 2018,~~LIBOR phase-out will affect the Company, but we ~~entered into a series of cash flow hedges in which~~do not expect the ~~hedging instruments were forwards~~impact to ~~purchase GBP 6.4 million. These contracts will complete in the third quarter of 2018.~~

ITEM 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including without limitation, controls and procedures designed to ensure that information required to be disclosed in reports ~~that it files~~we file under the Exchange Act is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on an evaluation of our disclosure controls and procedures as of the end of the period covered by this report conducted by our management, with the participation of the Chief Executive Officer and Chief Financial Officer, the Chief Executive Officer and Chief Financial Officer concluded that these controls and procedures were effective as of March 31, ~~2018.~~ 2020.

Limitation on the effectiveness of controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. A control system also can be circumvented by collusion or improper management override. Because of such limitations, disclosure controls and internal control over financial reporting cannot prevent or detect all misstatements, whether unintentional errors or fraud. However, these inherent limitations are known features of the financial reporting process, therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Internal control over financial reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) during the ~~quarter~~three months ended March 31, ~~2018,~~2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART 2.II. OTHER INFORMATION

~~ITEM~~Item 1. ~~LEGAL PROCEEDINGS~~Legal Proceedings

The information required by this item is included in Note 13, ~~“Contingent Liabilities”~~"Contingent Liabilities" of the Notes to the unaudited Condensed Consolidated Financial Statements in this ~~Quarterly Report~~Form 10-Q and is incorporated herein by reference.

~~ITEM~~Item 1A. ~~RISK FACTORS~~Risk Factors

There were no material changes to our risk factors as described in our ~~Annual Report on~~2019 Form 10-K for the year ended December 31, ~~2017 other than~~2019 or in our Current Report on Form 8-K filed on April 8, 2020, except for the following:

~~The CFPB promulgated new rules applicable~~We have covenants in our debt agreements which may restrict our flexibility to operate our ~~loans that~~business. If we do not comply with these covenants, our failure could have a material adverse effect on our ~~business and~~ results of ~~operations.~~operations or financial condition.

~~First,~~Our debt agreements contain customary restrictive covenants, including limitations on consolidated indebtedness, liens, investments, subsidiary investments and asset dispositions, and require us to maintain certain leverage and interest coverage ratios. Failure to comply with these covenants could result in ~~January 2018,~~an event of default that, if not cured or waived, could result in reduced liquidity and could have a material adverse effect on our operating results and financial condition. In addition, an event of default under one of our debt agreements may result in our then-outstanding debt to become immediately due and payable.

In addition, Our Non-Recourse Canada SPV Facility and Non-Recourse U.S. SPV Facility contain default, delinquency and net spread ratio limits and our Non-Recourse U.S. SPV Facility also contains a cash collection percentage limit on the ~~CFPB announced~~receivables pledged to each facility. If these limits were exceeded, it would potentially impact our ability to draw under the terms of these agreements. Further, in certain instances, if ratios are exceeded, we may be required to redirect all excess cash to the credit providers. These limits are calculated based on the portfolio collateralizing the respective credit line.

Failure to comply with our debt covenants could have a material adverse effect on our liquidity, results of operation or financial condition if we are either unable to access capital at such time that it ~~intends~~is critical to ~~engage in a rulemaking process~~our business or if we are required to reconsider the CFPB Rule pursuant to the Administrative Procedure Act (APA). Second, on April 9 2018, the Community Financial Services Association of America (CFSA) and the Consumer Service Alliance of Texas filed a lawsuit against the CFPB in the U.S. District Court for the Western District of Texas, Austin Division, seeking to invalidate the CFPB Rule. The lawsuit alleges that the rule violates the APA because it exceeds the Bureau’s statutory authority and is arbitrary, capricious, and unsupported by substantial evidence. The lawsuit also argues that the CFPB’s structure is unconstitutional under the Constitution’s separation of powers because the agency’s powers are concentrated in a single, unchecked Director who is improperly insulated from both presidential supervision and congressional appropriation, and hence unaccountable to the American people.reduce our outstanding indebtedness.

~~ITEM~~Item 2. ~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~Unregistered Sales of Equity Securities and Use of Proceeds

~~None.~~Issuer Purchases of Equity Securities

The 2017 Incentive Plan permits the netting of common stock upon vesting of restricted stock units to satisfy individual tax withholding requirements. See Note 6, "Share-Based Compensation" for additional information regarding the 2017 Incentive Plan. During the quarter ended March 31, 2020, we reacquired 75,968 shares of common stock related to such tax withholdings. See Note 18, "Share Repurchase Program" for additional information regarding share repurchases during the first quarter of 2020.

The following table provides information with respect to purchases we made of our common stock during the quarter ended March 31, 2020.



Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Dollar Value of Shares that may yet be Purchased under the Plans or Programs⁽¹⁾ (In millions)
January 2020	408,059	$	10.53	397,500	$	0.6
February 2020	85,695	10.11		81,544	24.8
March 2020	122,976	6.87		61,718	—
Total	616,730	$	9.74	540,762	$	—
(1) Includes shares withheld from employees as tax payments for shares issued under our stock-based compensation plans. See Note 6, "Share-Based Compensation" of the Notes to unaudited Consolidated Financial Statements for additional details on our stock-based compensation plans.
(2) As of the end of the period.

~~ITEM~~Item 3. ~~DEFAULTS UPON SENIOR SECURITIES~~Defaults Upon Senior Securities

None.

~~ITEM~~Item 4. ~~MINE SAFETY DISCLOSURES~~Mine Safety Disclosures

None.

~~ITEM~~Item 5. ~~OTHER INFORMATION~~Other Information

(a) Disclosure of Unreported 8-K Information

~~None.~~On March 25, 2020, the Company and two of its wholly owned subsidiaries (CURO Canada Receivables GP Inc. and CURO Canada Receivables Limited Partnership, by its General Partner, CURO Canada Receivables GP Inc.) entered into an Amendment Agreement to Credit Agreement and Guaranty (the “Amendment”), which amended the (i) Credit Agreement, dated as of August 2, 2018, among CURO Canada Receivables Limited Partnership, by its General partner, CURO Canada Receivables GP Inc., WF Marlie 2018-1, Ltd., as Lender, Waterfall Asset Management, LLC, as Administrative Agent and the other Lenders party thereto and the (ii) Guaranty, dated as of August 2, 2018, among CURO Group Holdings Corp., LendDirect Corp., Cash Money Cheque Cashing Inc., CURO Canada Receivables Limited Partnership, CURO Canada Receivables GP Inc., WF Marlie 2018-1, Ltd. and Waterfall Asset Management, LLC (the “Guaranty”). The Amendment aligns the measurement of the net worth covenant to the Company’s reporting of GAAP Stockholders’ Equity and establishes the minimum that the Company is required to maintain, which will be tested as of the end of each fiscal quarter beginning with the quarter ended March 31, 2020. The Amendment also includes immaterial administrative amendments to the Guaranty.

(b) Material Changes to Director Nominee Procedures

None.

~~ITEM~~Item 6. ~~EXHIBITS~~Exhibits



Exhibit no.		Exhibit Description
~~3.1~~10.1		~~Amended~~Loan and ~~Restated Certificate~~Security Agreement by and among CURO Receivables Finance II, LLC; Atalaya Asset Income Fund VI LP; and Midtown Madison Management LLC, as administrative agent, dated as of ~~Incorporation of the Registrant #~~April 8, 2020.*+
~~3.2~~10.2		~~Form~~Indemnity Guaranty by CURO Financial Technologies Corp.; CURO Group Holdings Corp.; CURO Intermediate Holdings Corp.; CURO Receivables Holdings II, LLC; and CURO Management LLC for the benefit of ~~Amended and Restated Bylaws~~Midtown Madison Management, LLC, dated as of ~~the Registrant #~~April 8, 2020.*
~~10.69~~10.3		~~First~~ Servicing Agreement between CURO Receivables Finance II, LLC and CURO Management, LLC, dated as of April 8, 2020.*
10.4		Loan Purchase Agreement (Tier I) by and between CURO Receivables Holdings II, LLC and certain wholly-owned subsidiaries of CURO Group Holdings Corp., dated as of April 8, 2020.*
10.5		Loan Purchase Agreement (Tier II) by and between CURO Receivables Finance II, LLC and CURO Receivables Holdings II, LLC, dated as of April 8, 2020.*
10.6		Amendment Agreement to ~~Revolving Loan~~Credit Agreement and Guaranty by and among CURO Canada Receivables Limited Partnership, by its general partner, CURO Canada Receivables GP Inc.; CURO Canada Receivables, Inc.; CURO Group Holdings Corp.; WF Marlie 2018-1, LTD; Waterfall Asset Management, LLC; LendDirect Corp.; and Cash Money Cheque Cashing Inc., dated as of March 25, 2020.* +
31.1		Certifications of Chief Executive Officer of the Company under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
31.2		Certifications of Chief Financial Officer of the Company under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
32.1		Certifications of the Chief Executive Officer ~~pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This certification accompanies this report~~ and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of §18 of the Securities Exchange Act of 1934, as amended **
~~32.2~~		~~Certifications of the~~ Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This certification accompanies this report and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of §18 of the Securities Exchange Act of 1934, as amended **
101		The following unaudited financial information from ~~CGHC's~~the Company's Quarterly Report on Form 10-Q for the period ended March 31, ~~2018,~~2020, filed with the SEC on May ~~3, 2018,~~4, 2020, formatted in Extensible Business Reporting Language (“XBRL”) includes: (i) Condensed Consolidated Balance Sheets at March 31, ~~2018~~2020 and December 31, ~~2017,~~2019, (ii) Condensed Consolidated Statements of ~~Income~~Operations for the ~~three months~~quarter ended March 31, ~~2018~~2020 and ~~2017,~~2019, (iii) Condensed Consolidated Statements of Comprehensive Income for the ~~three months~~quarter ended March 31, ~~2018~~2020 and ~~2017,~~2019, (iv) Condensed Consolidated Statements of Cash Flows for the ~~three months~~quarter ended March 31, ~~2018~~2020 and ~~2017,~~2019, and (v) Notes to Condensed Consolidated Financial Statements*

*		~~Filed herewith.~~
**		~~Furnished herewith.~~
#		~~Previously filed.~~

* Filed herewith.

+ Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K because they are not material and would likely cause competitive harm to the Company if publicly disclosed.

~~SIGNATURE~~Signature

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May ~~3, 2018~~4, 2020 CURO Group Holdings Corp.



	By:	/s/ ~~ROGER DEAN~~Roger Dean
		Roger Dean
		Executive ~~Vice-President &~~Vice President and Chief Financial Officer

5360



	Three Months Ended March 31, 2018
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	5,916		$	43,754		$	13,472		$	6,426		$	—		$	69,568
Charge-offs	(47,707		)	(39,377		)	(11,485		)	(20,349		)	(675		)	(119,593		)
Recoveries	35,009			5,967			2,866			9,377			47			53,266
Net charge-offs	(12,698		)	(33,410		)	(8,619		)	(10,972		)	(628		)	(66,327		)
Provision for losses	11,302			27,477			6,786			11,428			628			57,621
Effect of foreign currency translation	(35		)	95			—			(36		)	—			24
Balance, end of period	$	4,485		$	37,916		$	11,639		$	6,846		$	—		$	60,886
Allowance for loan losses as a percentage of gross loan receivables	5.2		%	22.1		%	14.6		%	13.3		%	N/A			15.6		%



	Three Months Ended March 31, 2018
(in thousands)	Unsecured Installment			Secured Installment			Total
Balance, beginning of period	$	17,073		$	722		$	17,795
Charge-offs	(41,719		)	(1,219		)	(42,938		)
Recoveries	10,976			1,169			12,145
Net charge-offs	(30,743		)	(50		)	(30,793		)
Provision for losses	23,556			(146		)	23,410
Balance, end of period	$	9,886		$	526		$	10,412



	Three Months Ended
(in millions)	March 31, 2018		December 31, 2017		September 30, 2017		June 30, 2017		March 31, 2017
Company-owned gross loans receivable	$	389.8	$	432.8	$	393.4	$	350.3	$	304.8
Gross loans receivable guaranteed by the Company	57.1		78.8		71.2		62.1		57.8
Gross combined loans receivable	$	446.9	$	511.6	$	464.6	$	412.4	$	362.6



U.K. Segment Results
	Three Months Ended March 31,						Change
(dollars in thousands, unaudited)	2018			2017			$			%
Revenue	$	10,915		$	8,692		$	2,223		25.6	%
Provision for losses	4,148			2,314			1,834			79.3	%
Net revenue	6,767			6,378			389			6.1	%
Advertising costs	1,871			1,213			658			54.2	%
Non-advertising costs of providing services	1,497			1,693			(196		)	(11.6	)%
Total cost of providing services	3,368			2,906			462			15.9	%
Gross margin	3,399			3,472			(73		)	(2.1	)%
Corporate, district and other	5,025			4,569			456			10.0	%
Interest income	(5		)	(8		)	3			(37.5	)%
Total operating expense	5,020			4,561			459			10.1	%
Segment operating loss	(1,621		)	(1,089		)	(532		)	48.9	%
Interest income	(5		)	(8		)	3			(37.5	)%
Depreciation and amortization	126			175			(49		)	(28.0	)%
EBITDA	(1,500		)	(922		)	(578		)	62.7	%
Other adjustments	(36		)	(6		)	(30		)	#
Adjusted EBITDA	$	(1,536	)	$	(928	)	$	(608	)	(65.5	)%
# - Variance greater than 100% not meaningful.



	Three Months Ended March 31,						Change
(in thousands except per share data)	2018			2017			$		%
Net income	$	23,292		$	16,638		$	6,654	40.0	%
Adjustments:
Loss on extinguishment of debt ⁽¹⁾	11,683			12,458
Transaction related costs ⁽²⁾	—			2,254
Share-based compensation ⁽³⁾	1,842			126
Intangible asset amortization	676			583
Impact of tax law changes⁽⁶⁾	1,800			—
Cumulative tax effect of adjustments	(3,692		)	(5,582		)
Adjusted Net Income	$	35,601		$	26,477		$	9,124	34.5	%

Net income	$	23,292		$	16,638
Diluted Weighted Average Shares Outstanding⁽⁴⁾	47,416			38,959
Diluted Earnings per Share ⁽⁴⁾	$	0.49		$	0.43		$	0.06	14.0	%
Per Share impact of adjustments to Net Income ⁽⁴⁾	0.26			0.25
Adjusted Diluted Earnings per Share ⁽⁴⁾	$	0.75		$	0.68		$	0.07	10.3	%