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CURO Group Holdings Corp. - Quarter Report: 2022 June (Form 10-Q)



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
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)
Delaware90-0934597
(State or other jurisdiction
Of incorporation or organization)
(I.R.S. Employer Identification No.)
3615 North Ridge Road, Wichita, KS
67205
(Address of principal executive offices)(Zip Code)

Registrant’s telephone number, including area code: (316) 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 classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.001 par value per shareCURONew 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 every Interactive Data File required to be submitted 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 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 filerAccelerated filer
Non-accelerated filer
Smaller reporting companyEmerging 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 ☒
As of August 5, 2022 there were 40,477,403 shares of the registrant’s Common Stock, $0.001 par value per share, outstanding.




CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
FORM 10-Q
SECOND QUARTER ENDED June 30, 2022
INDEX
Page
Item 1.
Financial Statements (unaudited)
June 30, 2022 (unaudited) and December 31, 2021
Three and six months ended June 30, 2022 (unaudited) and 2021
Three and six months ended June 30, 2022 (unaudited) and 2021
Three and six months ended June 30, 2022 (unaudited) and 2021
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2



PART I.     FINANCIAL INFORMATION

GLOSSARY

Terms and abbreviations used throughout this report are defined below.
Term or abbreviationDefinition
2021 Form 10-KAnnual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 7, 2022
7.50% Senior Secured Notes7.50% Senior Secured Notes, issued in July 2021 for $750.0 million, which mature in August 2028
8.25% Senior Secured Notes8.25% Senior Secured Notes, issued in August 2018 for $690.0 million, which we extinguished during the third quarter of 2021
Adjusted EBITDAEBITDA plus or minus certain non-cash and other adjusting items; Refer to "Supplemental Non-GAAP Financial Information" for additional details
ALLAllowance for loan losses
AOCIAccumulated Other Comprehensive Income (Loss)
ASCAccounting Standards Codification
ASUAccounting Standards Update
Average gross loans receivableUtilized to calculate product yield and NCO rates; calculated as average of beginning of quarter and end of quarter gross loans receivable
BNPLBuy-Now-Pay-Later
bpsBasis points
C$Canadian dollar
CABCredit Access Business
Canada SPVA four-year revolving credit facility with capacity up to C$400.0 million
CCFCommunity Choice Financial, a consumer financial services company based in Dublin, Ohio that acquired our U.S. Legacy Direct Lending Business in July 2022
Curo Canada Revolving Credit FacilityC$10.0 million revolving credit facility (formerly known as Cash Money Revolving Credit Facility), maintained by CURO Canada
CDORCanadian Dollar Offered Rate
CFPBConsumer Financial Protection Bureau
CODMChief Operating Decision Maker
Condensed Consolidated Financial StatementsThe condensed consolidated financial statements presented in this Form 10-Q
CSOCredit services organization
CURO CanadaCURO Canada Corp, a wholly-owned Canadian subsidiary of the Company, formerly known as Cash Money Cheque Cashing Inc.
EBITDAEarnings Before Interest, Taxes, Depreciation and Amortization
Exchange ActSecurities Exchange Act of 1934, as amended
FASBFinancial Accounting Standards Board
FinServFinServ Acquisition Corp., a publicly traded special purpose acquisition company (trading symbol FSRV)
FinTechFinancial Technology; the term used to describe any technology that delivers financial services through software, such as online banking, mobile payment apps or cryptocurrency
First HeritageFirst Heritage Credit, a consumer lender that provides near-prime installment loans along with customary opt-in insurance and other financial products, based in Ridgeland, Mississippi we acquired in July 2022
FlexitiFlexiti Financial Inc., a wholly-owned Canadian subsidiary of the Company, which we acquired on March 10, 2021
Flexiti SPEA revolving credit facility, entered into concurrent with the acquisition of Flexiti, with capacity up to C$500.0 million
Form 10-QThis report on Form 10-Q for the quarter June 30, 2022
Gross Combined Loans ReceivableGross loans receivable plus loans originated by third-party lenders which are Guaranteed by the Company
Guaranteed by the CompanyLoans originated by third-party lenders through the CSO program which we guarantee but are not included in the unaudited Condensed Consolidated Financial Statements
Heights FinanceSouthernCo, Inc., a Delaware corporation d/b/a Heights Finance, a wholly-owned U.S. subsidiary of
the Company, which we acquired on December 27, 2021
3



Term or abbreviationDefinition
Heights Finance SPVA non-recourse revolving credit facility, entered into concurrent with the acquisition of Heights Finance, with capacity up to $350.0 million
KatapultKatapult Holdings, Inc. a lease-to-own platform for online platform for online, brick and mortar and omni-channel retailers.
LFLLFL Group, Canada's largest home furnishings retailer.
LIBORLondon Inter-Bank Offered Rate
NCONet charge-off; total charge-offs less total recoveries
POSPoint-of-sale
ROURight of use
RSURestricted Stock Unit
Runoff PortfoliosCollectively, certain loans impacted by (i) regulatory changes, including California, effective January 1, 2020, Virginia effective January 1, 2021 and Illinois, effective March 23, 2021, and (ii) the discontinuation of Verge Credit loans, loans originated and funded by a third-party bank, in April 2021.
SECSecurities and Exchange Commission
Senior RevolverSenior Secured Revolving Loan Facility with borrowing capacity of $50.0 million
SequentialThe change from one quarter to the next quarter
SOFRSecured Overnight Financing Rate
SPACSpecial Purpose Acquisition Company
SPESpecial Purpose Entity
SPVSpecial Purpose Vehicle
TDRTroubled Debt Restructuring. Debt restructuring for which a concession is granted to the borrower as a result of economic or legal reasons related to the borrower's financial difficulties
UDAAPUnfair, deceptive, or abusive acts and practices
U.S.United States of America
U.S. GAAPGenerally Accepted Accounting Principles in the United States
U.S. SPVAn asset-backed revolving credit facility with capacity up to $200.0 million if certain conditions are met
VIEVariable Interest Entity; our wholly-owned, bankruptcy-remote special purpose subsidiaries

4




ITEM 1.         FINANCIAL STATEMENTS

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
June 30, 2022 (unaudited)
December 31,
2021
ASSETS
Cash and cash equivalents$37,394 $63,179 
Restricted cash (includes restricted cash of consolidated VIEs of $54,728 and $57,155 as of June 30, 2022 and December 31, 2021, respectively)
97,465 98,896 
Gross loans receivable (includes loans of consolidated VIEs of $1,445,730 and $1,294,706 as of June 30, 2022 and December 31, 2021, respectively)
1,592,815 1,548,318 
Less: Allowance for loan losses (includes allowance for loan losses of consolidated VIEs of $89,672 and $66,618 as of June 30, 2022 and December 31, 2021, respectively)
(90,286)(87,560)
Loans receivable, net
1,502,529 1,460,758 
Income taxes receivable46,450 31,774 
Prepaid expenses and other (includes prepaid expenses and other of consolidated VIEs of $4,360 and $— as of June 30, 2022 and December 31, 2021, respectively)
25,370 42,038 
Property and equipment, net38,752 54,635 
Investment in Katapult28,157 27,900 
Right of use asset - operating leases64,602 116,300 
Deferred tax assets23,993 15,639 
Goodwill352,990 429,792 
Intangibles, net113,130 109,930 
Other assets8,558 9,755 
Assets held for sale338,779 — 
Total Assets$2,678,169 $2,460,596 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities (includes accounts payable and accrued liabilities of consolidated VIEs of $10,966 and $9,886 as of June 30, 2022 and December 31, 2021, respectively)
$81,423 $121,434 
Deferred revenue23,425 21,649 
Lease liability - operating leases67,339 122,431 
Contingent consideration related to acquisition30,354 26,508 
Income taxes payable680 
Accrued interest (includes accrued interest of consolidated VIEs of $3,701 and $3,279 as of June 30, 2022 and December 31, 2021, respectively)
34,970 34,974 
Liability for losses on CSO lender-owned consumer loans— 6,908 
Debt (includes debt and issuance costs of consolidated VIEs of $1,166,069 and $8,471 as of June 30, 2022 and $979,500 and $14,428 as of December 31, 2021, respectively)
2,189,431 1,945,793 
Other long-term liabilities12,146 13,845 
Deferred tax liabilities12,360 6,044 
Liabilities held for sale111,137 — 
Total Liabilities2,562,589 2,300,266 
Commitments and contingencies (Note 11)
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; 50,155,864 and 49,684,080 shares issued; and 40,457,751 and 40,810,444 shares outstanding at the respective period ends
23 23 
Treasury stock, at cost - 9,698,113 and 8,873,636 shares at the respective period ends
(136,832)(124,302)
Paid-in capital119,156 113,520 
Retained earnings169,498 203,467 
Accumulated other comprehensive loss(36,265)(32,378)
Total Stockholders' Equity115,580 160,330 
Total Liabilities and Stockholders' Equity$2,678,169 $2,460,596 
See accompanying Notes to unaudited Condensed Consolidated Financial Statements.
5



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Revenue
Interest and fees revenue$278,331 $169,403 543,287 348,526 
Insurance premiums and commissions18,653 11,853 36,913 23,422 
Other revenue7,420 6,437 14,400 12,296 
Total revenue304,404 187,693 594,600 384,244 
Provision for losses129,546 45,165 227,077 81,310 
Net revenue174,858 142,528 367,523 302,934 
Operating Expenses
Salaries and benefits82,427 58,320 162,156 113,237 
Occupancy17,507 13,783 34,544 28,130 
Advertising12,707 7,043 23,207 15,127 
Direct operations20,293 13,699 40,567 25,668 
Depreciation and amortization8,672 7,435 18,486 12,400 
Other operating expense22,801 17,218 38,913 30,170 
Total operating expenses164,407 117,498 317,873 224,732 
Other expense (income)
Interest expense42,193 23,440 80,534 42,979 
Loss (income) from equity method investment1,328 (1,712)(256)(2,258)
Gain from equity method investment— (135,387)— (135,387)
Total other expense (income)43,521 (113,659)80,278 (94,666)
(Loss) income before income taxes(33,070)138,689 (30,628)172,868 
(Benefit) provision for income taxes(6,990)34,172 (5,884)42,616 
Net (loss) income$(26,080)$104,517 $(24,744)$130,252 
Earnings per share:
Basic (loss) earnings per share$(0.65)$2.51 $(0.61)$3.13 
Diluted (loss) earnings per share$(0.65)$2.39 $(0.61)$2.99 
Weighted average common shares outstanding:
Basic40,376 41,655 40,372 41,580 
Diluted40,376 43,672 40,372 43,556 

See accompanying Notes to unaudited Condensed Consolidated Financial Statements.
6



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in thousands)
(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Net (loss) income$(26,080)$104,517 $(24,744)$130,252 
Other comprehensive (loss) income:
Foreign currency translation adjustment, net of tax(10,520)4,714 (3,887)8,569 
Other comprehensive (loss) income(10,520)4,714 (3,887)8,569 
Comprehensive (loss) income$(36,600)$109,231 $(28,631)$138,821 

See accompanying Notes to unaudited Condensed Consolidated Financial Statements.


7


CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands, unaudited)
Six Months Ended
June 30,
20222021
Cash flows from operating activities
Net (loss) income$(24,744)$130,252 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization18,487 12,400 
Provision for losses227,077 81,310 
Amortization of debt issuance costs and bond discount4,302 2,954 
Deferred income tax benefit(679)(3,481)
Loss on disposal of property and equipment37 4,322 
Loss from equity method investment(256)(2,258)
Gain from equity method investment— (135,387)
Change in fair value of contingent consideration3,750 — 
Share-based compensation 8,509 6,150 
Changes in operating assets and liabilities:
Accrued interest on loans receivable10,677 30,527 
Prepaid expenses and other assets(16)(2,320)
Accounts payable and accrued liabilities(36,460)4,303 
Deferred revenue6,105 4,999 
Income taxes payable(979)— 
Income taxes receivable(14,739)29,910 
Accrued interest730 271 
Other long-term liabilities(592)(1,057)
Net cash provided by operating activities201,209 162,895 
Cash flows from investing activities
Purchase of property, equipment and software(22,249)(7,169)
Loans receivable originated or acquired
(1,076,961)(563,327)
Loans receivable repaid
613,718 421,123 
Proceeds from Katapult— 146,878 
Acquisition of Flexiti, net of acquiree's cash received— (91,203)
Net cash used in investing activities(485,492)(93,698)
Cash flows from financing activities
Proceeds from SPV and SPE facilities640,931 26,990 
Payments on SPV and SPE facilities(340,903)(9,229)
Debt issuance costs paid(587)— 
Proceeds from credit facilities69,304 20,934 
Payments on credit facilities(69,193)(20,934)
Proceeds from exercise of stock options— 239 
Payments to net share settle equity awards(2,872)(1,711)
Repurchase of common stock(13,531)(1,251)
Dividends paid to stockholders(9,226)(6,950)
Net cash provided by financing activities273,923 8,088 
Effect of exchange rate changes on cash, cash equivalents and restricted cash1,299 273 
Net (decrease) increase in cash, cash equivalents and restricted cash(9,061)77,558 
Cash, cash equivalents and restricted cash at beginning of period162,075 268,108 
Cash, cash equivalents and restricted cash at end of period$153,014 $345,666 

See accompanying Notes to unaudited Condensed Consolidated Financial Statements.

8


CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands, unaudited)
SUPPLEMENTAL CASH FLOW INFORMATION

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited Condensed Consolidated Balance Sheets as of June 30, 2022 and 2021 to the cash, cash equivalents and restricted cash used in the Statement of Cash Flows (in thousands):
June 30,
20222021
Cash and cash equivalents$37,394 $276,367 
Restricted cash (includes restricted cash of consolidated VIEs of $54,728 and $43,553 as of June 30, 2022 and June 30, 2021, respectively)
97,465 69,299 
Cash classified as held for sale ($10,240 cash and cash equivalents and $7,915 restricted cash)
18,155 — 
Total cash, cash equivalents and restricted cash used in the Statement of Cash Flows$153,014 $345,666 

See accompanying Notes to unaudited Condensed Consolidated Financial Statements.


9



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS
Nature of Operations

The terms “CURO" and the “Company” refer to CURO Group Holdings Corp. and its direct and indirect subsidiaries as a combined entity, except where otherwise stated.

The Company is a tech-enabled, omni-channel consumer finance company serving a full spectrum of non-prime and near-prime consumers in the U.S and non-prime and prime consumers in Canada.

Basis of Presentation

The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with U.S. GAAP and the accounting policies described in its 2021 Form 10-K. Interim results of operations are not necessarily indicative of results that might be expected for future interim periods or for the year ending December 31, 2022.

While certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, the Company believes that the disclosures are adequate to enable a reasonable understanding of the information presented. Additionally, the Company qualifies as an Smaller Reporting Company (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, 2022. As such, we made the election and reflected SRC status beginning with our first quarterly report following the determination, as of and for the quarter ended June 30, 2022. We will reevaluate our status as of June 30, 2023.

The unaudited Condensed Consolidated Financial Statements and the accompanying notes reflect adjustments of a normal and recurring nature, which are, in the opinion of management, necessary to present fairly the Company's results of operations, financial position and cash flows for the periods presented. Beginning January 1, 2022, the Company started reporting "Interest and fees revenue," "Insurance premiums and commissions," and "Other revenue" in place of the previously reported "Revenue" line item in the unaudited Condensed Consolidated Statements of Operations. Prior period amounts have been reclassified to conform with current period presentation.

On May 19, 2022, the Company entered into a definitive agreement to sell its U.S. Legacy Direct Lending business to Community Choice Financial for total cash consideration of $345 million, including $35 million payable in monthly installment payments over the subsequent 12 months. The transaction closed on July 8, 2022. Refer to Note 16, "Subsequent Events" for further discussion. As a result, the Company reclassified the assets and liabilities of these entities as held for sale as of June 30, 2022.

Principles of Consolidation

The unaudited Condensed Consolidated Financial Statements reflect the accounts of CURO and its direct and indirect subsidiaries, including Heights Finance, which was acquired on December 27, 2021. Refer to Note 14, "Acquisitions and Divestiture" for further disclosures related to these acquisitions. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of the unaudited Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions, including those impacted 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. Some estimates may also affect the reported amounts of revenues and expenses during the periods presented. Significant estimates that the Company made in the accompanying unaudited Condensed Consolidated Financial Statements include ALL, certain assumptions related to equity investments, goodwill and intangibles, accruals related to self-insurance, CSO liability for losses, estimated tax liabilities and the accounting for the Heights Finance and Flexiti acquisitions. Actual results may differ from those estimates.

10



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Acquisitions

First Heritage Credit

On July 13, 2022, CURO closed the acquisition of First Heritage Credit ("FHC"), a consumer lender that provides near-prime installment loans along with customary opt-in insurance and other financial products, based in Ridgeland, Mississippi, for a total purchase price of $140 million in cash. See Note 16, "Subsequent Events" for more information related to the acquisition.

Heights Finance

On December 27, 2021, CURO closed the acquisition of Heights Finance, a consumer finance company that provides Installment loans and offers customary opt-in insurance and other financial products, based in Greenville, South Carolina for a total purchase price of $360 million ($335 million in cash plus $25 million in stock).

Flexiti

On March 10, 2021, CURO closed its acquisition of Flexiti, a POS and BNPL provider based in Toronto, Ontario, in a transaction accounted for as a business combination, for a total purchase price of up to $122.5 million ($86.5 million in cash and up to $36.0 in contingent cash consideration subject to future operating metrics).

Refer to Note 14,"Acquisitions and Divestiture" for further information regarding the acquisitions and Note 13, "Goodwill" for the impact to the Company's goodwill balance as a result of the acquisitions.

Divestiture

U.S. Legacy Direct Lending Business

On July 8, 2022, the Company closed the sale of the U.S. Legacy Direct Lending Business to Community Choice Financial for a sale price of $310 million in cash at closing plus $35 million in cash, payable in monthly installment payments over the subsequent 12 months. See Note 16, "Subsequent Events" for more information related to the divestiture.
Continuing Impacts of COVID-19

The COVID-19 pandemic continues to cause significant uncertainty and impacts. Macroeconomic conditions, in general, and the Company's operations, specifically, have been significantly affected by COVID-19. Government responses to the pandemic, either through the form of mandated lockdowns or a variety of stimulus programs to mitigate the impact of the pandemic, suppressed loan demand in 2020 and into the first half of 2021. During the second half of 2021 and through the second quarter of 2022, the runoff of additional federal stimulus programs in the U.S. returned demand and growth for the Company's loan portfolios and orderly credit normalization with higher NCO and past-due trends. For details regarding the effect COVID-19 had on the Company's operations in 2020 and 2021, the Company's response to mitigate the impact of the pandemic and the U.S. and Canadian federal and local responses to the pandemic, refer to the 2021 Form 10-K.

Recently Issued Accounting Pronouncements Not Yet Adopted
ASU 2016-13 and subsequent amendments

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 2018-19 in November 2018, ASU 2019-04 in April 2019, ASU 2019-05 in May 2019, ASU 2019-10 and -11 in November 2019, ASU 2020-02 in February 2020 and ASU 2022-02 in March 2022. The amended standard 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. 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 receive cash.

ASU 2019-10 amended the mandatory effective date for ASU 2016-13. As a result, ASU 2016-13 and related amendments are effective for fiscal years beginning after December 15, 2022 for entities that qualified as an smaller reporting company as of June 30, 2019, such as the Company. ASU 2016-13 and its amendments should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. Early adoption is permitted. 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 likely increase the allowance for credit losses, with a resulting negative adjustment to retained earnings on the date of adoption. The Company deferred the adoption of ASU 2016-13 as permitted under ASU 2019-10. The Company is currently assessing the impact that adoption of ASU 2016-13 will have on its financial statements.
11



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)


ASU 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, eliminated the accounting guidance on TDRs for creditors and amended the guidance on vintage disclosures for financing receivables to require disclosure of current-period gross write-offs by year of origination. Additionally, the amendments in ASU 2022-02 require enhanced disclosures for creditors with respect to loan refinancing and restructuring for borrowers experiencing financial difficulty. ASU 2022-02 and its amendments should be applied on a prospective basis and are effective upon adoption of ASU 2016-13. The Company is currently assessing the impact that adoption of ASU 2022-02 will have on its financial statements.

ASU 2020-04 and subsequent amendments

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides temporary optional expedients and exceptions to U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the upcoming market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR. Entities can elect to not 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 the modification date or reassess a previous accounting determination. Entities also can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain criteria are met. The guidance is effective upon issuance and generally can be applied through December 31, 2022. The FASB also issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope in January 2021. It clarifies that certain optional expedients and exceptions in Topic 848 apply to derivatives that are affected by the discounting transition. The amendments in this ASU affect the guidance in ASU 2020-04 and are effective in the same timeframe as ASU 2020-04. The Company anticipates transitioning applicable debt facilities from LIBOR to SOFR and currently does not expect the adoption of these ASUs to have a material impact on its financial statements.

ASU 2021-08

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with ASC 606, Revenue from Contracts with Customers. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. While the Company is continuing to assess the timing of adoption and the potential impacts of ASU 2021-08, it does not expect ASU 2021-08 to have a material effect, if any, on its financial statements.

NOTE 2 - VARIABLE INTEREST ENTITIES

As of June 30, 2022, the Company had five credit facilities whereby certain loans receivable were sold to VIEs to collateralize debt incurred under each facility. See Note 5, "Debt" for additional details on each facility.

The Company has determined that it is the primary beneficiary of the VIEs and is required to consolidate them. The Company includes the assets and liabilities related to the VIEs in the unaudited Condensed Consolidated Financial Statements.

12



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The carrying amounts of consolidated VIEs' assets and liabilities were as follows (in thousands):
June 30,
2022
December 31,
2021
Assets
Restricted cash$61,140 $57,155 
Loans receivable, net1,414,715 1,228,088 
Intercompany receivable(1)
446,178 48,333 
Prepaid expenses and other4,360 — 
Deferred tax assets103 — 
Total Assets (2)
$1,926,496 $1,333,576 
Liabilities
Accounts payable and accrued liabilities$10,966 $9,886 
Deferred revenue 189 106 
Deferred tax liability— 269 
Contingent consideration related to acquisition523 — 
Accrued interest4,401 3,279 
Income taxes payable1,330 — 
Debt, net1,203,893 965,072 
Total Liabilities (2)
$1,221,302 $978,612 
(1) Intercompany receivable VIE balances eliminate upon consolidation.
(2) Includes balances classified as Held for Sale, as of June 30, 2022.

NOTE 3 – LOANS RECEIVABLE AND REVENUE

The following table summarizes revenue by product (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Revolving LOC$96,583 $68,036 $187,606 $130,771 
Unsecured Installment126,300 64,783 247,629 141,177 
Secured Installment27,690 12,821 53,997 27,848 
Single-Pay27,758 23,763 54,055 48,730 
Total Installment181,748 101,367 355,681 217,755 
Insurance revenue18,653 11,821 36,913 23,422 
Other7,420 6,469 14,400 12,296 
   Total revenue(1)
$304,404 $187,693 $594,600 $384,244 
(1) Includes revenue from CSO programs of $48.3 million and $34.9 million for the three months ended June 30, 2022 and 2021, respectively and $97.3 and $76.4 for the six months ended June 30, 2022 and 2021, respectively.

13



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following tables summarize loans receivable by product and the related delinquent loans receivable (in thousands):
June 30, 2022
Revolving LOCUnsecured InstallmentSecured Installment
Single-Pay(1)
Total Installment - Company OwnedTotal
Current loans receivable$1,039,678 $364,160 $113,618 $44,892 $522,670 $1,562,348 
Delinquent loans receivable88,694 104,162 25,636 — 129,798 218,492 
   Total loans receivable1,128,372 468,322 139,254 44,892 652,468 1,780,840 
   Less: allowance for losses(75,128)(32,991)(8,827)(3,239)(45,057)(120,185)
Loans receivable, net (2)
$1,053,244 $435,331 $130,427 $41,653 $607,411 $1,660,655 
(1) Of the $44.9 million of Single-Pay receivables, $12.1 million relate to mandated extended payment options for certain Canada Single-Pay loans.
(2) Includes loan balances classified as Held for Sale.

June 30, 2022
Revolving LOCUnsecured InstallmentSecured InstallmentTotal Installment - Company OwnedTotal
Delinquent loans receivable
1-30 days past-due$42,239 $51,317 $15,240 $66,557 $108,796 
31-60 days past-due20,823 17,104 4,649 21,753 42,576 
61-90 days past-due15,242 13,419 3,357 16,776 32,018 
91 + days past-due10,390 22,322 2,390 24,712 35,102 
Total delinquent loans receivable (1)
$88,694 $104,162 $25,636 $129,798 $218,492 
(1) Includes loan balances classified as Held for Sale.

December 31, 2021
Revolving LOCUnsecured InstallmentSecured Installment
Single-Pay(1)
Total Installment - Company OwnedTotal
Current loans receivable$843,379 $359,512 $110,232 $42,463 $512,207 $1,355,586 
Delinquent loans receivable70,734 98,174 23,824 — 121,998 192,732 
   Total loans receivable914,113 457,686 134,056 42,463 634,205 1,548,318 
   Less: allowance for losses(68,140)(13,387)(3,327)(2,706)(19,420)(87,560)
Loans receivable, net$845,973 $444,299 $130,729 $39,757 $614,785 $1,460,758 
(1) Of the $42.5 million of Single-Pay receivables, $11.3 million relate to mandated extended payment options for certain Canada Single-Pay loans.

December 31, 2021
Revolving LOCUnsecured InstallmentSecured InstallmentTotal Installment - Company OwnedTotal
Delinquent loans receivable
1-30 days past-due$35,657 $45,160 $13,213 $58,373 $94,030 
31-60 days past-due15,452 16,646 4,539 21,185 36,637 
61-90 days past-due13,397 13,933 3,213 17,146 30,543 
91 + days past-due6,228 22,435 2,859 25,294 31,522 
Total delinquent loans receivable$70,734 $98,174 $23,824 $121,998 $192,732 

14



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following tables summarize loans Guaranteed by the Company under CSO programs and the related delinquent receivables (in thousands):
June 30, 2022
Unsecured InstallmentSecured InstallmentTotal Installment - Guaranteed by the Company
Current loans receivable Guaranteed by the Company$40,473 $1,120 $41,593 
Delinquent loans receivable Guaranteed by the Company9,397 333 9,730 
Total loans receivable Guaranteed by the Company49,870 1,453 51,323 
Less: Liability for losses on CSO lender-owned consumer loans(8,040)(43)(8,083)
Loans receivable Guaranteed by the Company, net (1)
$41,830 $1,410 $43,240 
(1) The CSO program guarantee liability was classified as Held for Sale.

June 30, 2022
Unsecured InstallmentSecured InstallmentTotal Installment - Guaranteed by the Company
Delinquent loans receivable
1-30 days past-due$8,141 $230 $8,371 
31-60 days past-due864 55 919 
61-90 days past-due266 30 296 
91 + days past-due126 18 144 
Total delinquent loans receivable (1)$9,397 $333 $9,730 
(1) The CSO program guarantee liability was classified as Held for Sale.

December 31, 2021
Unsecured InstallmentSecured InstallmentTotal Installment - Guaranteed by the Company
Current loans receivable Guaranteed by the Company$37,303 $799 $38,102 
Delinquent loans receivable Guaranteed by the Company8,011 204 8,215 
Total loans receivable Guaranteed by the Company45,314 1,003 46,317 
Less: Liability for losses on CSO lender-owned consumer loans(6,869)(39)(6,908)
Loans receivable Guaranteed by the Company, net$38,445 $964 $39,409 

December 31, 2021
Unsecured InstallmentSecured InstallmentTotal Installment - Guaranteed by the Company
Delinquent loans receivable
1-30 days past-due$6,633 $162 $6,795 
31-60 days past-due1,003 28 1,031 
61-90 days past-due277 285 
91 + days past-due98 104 
Total delinquent loans receivable$8,011 $204 $8,215 

15



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following tables summarize activity in the ALL and the liability for losses on CSO lender-owned consumer loans in total (in thousands):
Three Months Ended
June 30, 2022
Revolving LOCUnsecured InstallmentSecured InstallmentSingle-PayTotal InstallmentOtherTotal
Allowance for loan losses: (1)
Balance, beginning of period$71,325 $20,704 $3,363 $2,776 $26,843 $1,390 $99,558 
Charge-offs(42,706)(32,015)(10,195)(25,503)(67,713)(4,498)(114,917)
Recoveries8,761 6,640 2,931 18,252 27,823 480 37,064 
Net charge-offs(33,945)(25,375)(7,264)(7,251)(39,890)(4,018)(77,853)
Provision for losses40,435 37,667 12,728 7,777 58,172 2,628 101,235 
Effect of foreign currency translation(2,687)(5)— (63)(68)— (2,755)
Balance, end of period$75,128 $32,991 $8,827 $3,239 $45,057 $— $120,185 
Liability for losses on CSO lender-owned consumer loans: (2)
Balance, beginning of period$— $7,118 $48 $— $7,166 $— $7,166 
Increase in liability— 922 (5)— 917 — 917 
Balance, end of period$— $8,040 $43 $— $8,083 $— $8,083 
(1) Includes loan balances classified as Held for Sale.
(2) The CSO program guarantee liability was classified as Held for Sale.

Three Months Ended
June 30, 2021
Revolving LOCUnsecured InstallmentSecured InstallmentSingle-PayTotal InstallmentOtherTotal
Allowance for loan losses:
Balance, beginning of period$44,754 $20,394 $5,023 $2,217 $27,634 $— $72,388 
Charge-offs(24,487)(18,812)(4,384)(22,107)(45,303)(802)(70,592)
Recoveries7,280 5,383 2,216 17,574 25,173 378 32,831 
Net charge-offs(17,207)(13,429)(2,168)(4,533)(20,130)(424)(37,761)
Provision for losses16,672 9,734 1,025 4,727 15,486 424 32,582 
Effect of foreign currency translation629 — 21 23 — 652 
Balance, end of period$44,848 $16,701 $3,880 $2,432 $23,013 $— $67,861 
Liability for losses on CSO lender-owned consumer loans:
Balance, beginning of period$— $4,670 $57 $— $4,727 $— $4,727 
Decrease in liability— (564)26 — (538)— (538)
Balance, end of period$— $5,234 $31 $— $5,265 $— $5,265 


16



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Six Months Ended
June 30, 2022
Revolving LOCUnsecured InstallmentSecured InstallmentSingle-PayTotal InstallmentOtherTotal
Allowance for loan losses: (1)
Balance, beginning of period$68,140 $13,387 $3,327 $2,706 $19,420 $— $87,560 
Charge-offs(85,093)(60,328)(16,978)(49,616)(126,922)(6,311)(218,326)
Recoveries16,776 14,663 6,077 37,996 58,736 1,033 76,545 
Net charge-offs(68,317)(45,665)(10,901)(11,620)(68,186)(5,278)(141,781)
Provision for losses77,882 65,271 16,401 12,186 93,858 5,278 177,018 
Effect of foreign currency translation(2,577)(2)— (33)(35)— (2,612)
Balance, end of period$75,128 $32,991 $8,827 $3,239 $45,057 $— $120,185 
Liability for losses on CSO lender-owned consumer loans:
Balance, beginning of period$— $6,869 $39 $— $6,908 $— $6,908 
Decrease in liability— 1,171 — 1,175 — 1,175 
Balance, end of period$— $8,040 $43 $— $8,083 $— $8,083 
(1) Includes loan balances classified as Held for Sale.
(2) The CSO program guarantee liability was classified as Held for Sale.

Six Months Ended
June 30, 2021
Revolving LOCUnsecured InstallmentSecured InstallmentSingle-PayTotal InstallmentOtherTotal
Allowance for loan losses:
Balance, beginning of period$51,958 $24,073 $7,047 $3,084 $34,204 $— $86,162 
Charge-offs(53,201)(39,937)(10,727)(44,040)(94,704)(1,656)(149,561)
Recoveries14,787 12,000 4,760 38,828 55,588 930 71,305 
Net charge-offs(38,414)(27,937)(5,967)(5,212)(39,116)(726)(78,256)
Provision for losses30,474 20,559 2,800 4,520 27,879 726 59,079 
Effect of foreign currency translation830 — 40 46 — 876 
Balance, end of period$44,848 $16,701 $3,880 $2,432 $23,013 $— $67,861 
Liability for losses on CSO lender-owned consumer loans:
Balance, beginning of period$— $7,160 $68 $— $7,228 $— $7,228 
Decrease in liability— 1,926 37 — 1,963 — 1,963 
Balance, end of period$— $5,234 $31 $— $5,265 $— $5,265 

17



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of June 30, 2022, Revolving LOC and Installment loans classified as nonaccrual were $6.5 million and $39.2 million, respectively. As of December 31, 2021, Revolving LOC and Installment loans classified as nonaccrual were $5.9 million and $41.4 million, respectively. The Company inherently considers nonaccrual loans in its estimate of the ALL as delinquencies are a primary input into the Company's roll-rate-based model.

TDR Loans Receivable

The table below presents TDRs that are related to the Customer Care Program implemented in response to COVID-19, included in both gross loans receivable and the impairment included in the ALL (in thousands):

As of
June 30, 2022
As of
December 31, 2021
Current TDR gross receivables$13,686 $11,580 
Delinquent TDR gross receivables5,214 5,066 
Total TDR gross receivables 18,900 16,646 
Less: Impairment included in the allowance for loan losses(4,777)(3,632)
Less: Additional allowance(1,353)(2,212)
Outstanding TDR receivables, net of impairment (1)
$12,770 $10,802 
(1) Includes loan balances classified as Held for Sale.

The tables below present loans modified and classified as TDRs during the periods presented (in thousands):

Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Pre-modification TDR loans receivable$4,390 $3,504 $7,254 $8,367 
Post-modification TDR loans receivable4,046 3,197 6,404 7,472 
Total concessions included in gross charge-offs$344 $307 $850 $895 

There were $3.1 million and $3.3 million of loans classified as TDRs that were charged off and included as a reduction in the ALL during the three months ended June 30, 2022 and 2021, respectively, and $6.7 million and $8.1 million during the six months ended June 30, 2022 and June 30, 2021 respectively. The Company had commitments to lend additional funds of approximately $2.3 million to customers with available and unfunded Revolving LOC loans classified as TDRs as of June 30, 2022.

The table below presents the Company's average outstanding TDR loans receivable, interest income recognized on TDR loans and number of TDR loans for the periods presented (dollars in thousands):

Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Average outstanding TDR loans receivable$17,773 $16,967 $17,397 $17,936 
Interest income recognized3,991 4,604 8,026 10,122 
Number of TDR loans2,773 2,468 6,197 6,248 

NOTE 4 – CREDIT SERVICES ORGANIZATION
The CSO fee receivables were $6.3 million and $5.2 million at June 30, 2022 and December 31, 2021, respectively, and are reflected in "Prepaid expenses and other" in the unaudited Condensed Consolidated Balance Sheets. The Company bears the risk of loss through its guarantee to purchase customer loans that are charged-off. The terms of these loans range up to six months. See Note 1, "Summary of Significant Accounting Policies and Nature of Operations" of the 2021 Form 10-K for further details of the Company's accounting policy.

As of June 30, 2022 and December 31, 2021, the incremental maximum amount payable under all such guarantees was $42.2 million and $38.4 million, respectively. This liability is not included in the Company's unaudited Condensed Consolidated Balance Sheets. If the Company is required to pay any portion of the total amount of the loans it has guaranteed, it will attempt to recover the entire amount or a portion 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, which was $8.1 million and $6.9 million at June 30, 2022 and December 31, 2021, respectively. This liability is reflected in "Liability for losses on CSO lender-owned consumer loans" in the unaudited Condensed Consolidated Balance Sheets.
18



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)


The Company placed $5.8 million and $5.5 million in collateral accounts for the benefit of lenders at June 30, 2022 and December 31, 2021, 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 by lender, typically based on a percentage of the outstanding loan balances held by the lender. The percentage of outstanding loan balances required for collateral is negotiated between the Company and each lender.

Deferred revenue associated with the CSO program was immaterial as of June 30, 2022 and December 31, 2021, and there were no costs to obtain, or costs to fulfill, capitalized under the program.

The "Liability for losses on CSO lender-owned consumer loans" and other related assets were classified as Held for Sale as of June 30, 2022. See Note 3, "Loans Receivable and Revenue" for additional information related to loan balances and the revenue recognized under the program.

NOTE 5 – DEBT
LIBOR is expected to no longer be available after June 30, 2023. Certain of the Company's debt facilities, including the U.S. SPV, Senior Revolver and Heights Finance SPV, contain customary provisions to provide for replacement of LIBOR with an alternative benchmark rate when LIBOR ceases to be available. Refer to Note 1, "Summary of Significant Accounting Policies and Nature of Operations" for additional details on the transition from LIBOR.

The Company's debt instruments and balances outstanding as of June 30, 2022 and December 31, 2021, including maturity date, effective interest rate and borrowing capacity were as follows (dollars in thousands):
Effective interest rateOutstanding as of
Maturity DateBorrowing CapacityJune 30, 2022December 31, 2021
Corporate Debt:
7.50% Senior Secured Notes
August 1, 20287.50 %$1,000,000 $1,000,000 
Total corporate debt1,000,000 1,000,000 
Funding Debt:
U.S. SPV (2)
April 8, 2024
1-Mo LIBOR + 6.25%
$200.0 million
$49,456 $49,456 
Canada SPV (1)
August 2, 2026
3-Mo CDOR + 6.00%
C$400.0 million
304,776 160,533 
Curo Canada Revolving Credit Facility (1)
On-demand
Canada Prime Rate + 1.95%
C$10.0 million
108 — 
Flexiti SPE (1)
March 10, 2024
3-Mo CDOR + 4.40%
C$500.0 million
162,074 176,625 
Flexiti Securitization (1)
December 9, 2025
1-Mo CDOR + 3.59%
C$526.5 million
406,910 242,886 
Heights Finance SPVDecember 31, 2024
1-Mo LIBOR + 5.25%
$350.0 million
292,309 350,000 
Senior RevolverJuly 31, 2022
1-Mo LIBOR + 5.00%
$50.0 million
50,000 — 
Total funding debt1,265,633 979,500 
Less: debt issuance costs(29,907)(33,707)
Total Debt2,235,726 1,945,793 
(1) Capacity amounts are denominated in Canadian dollars, while outstanding balances as of June 30, 2022 and December 31, 2021 are denominated in U.S. dollars.
(2) Classified as Held for Sale, as of June 30, 2022.

7.50% Senior Secured Notes

In July 2021, the Company issued $750.0 million of 7.50% Senior Secured Notes which mature on August 1, 2028. Interest on the notes is payable semiannually, in arrears, on February 1 and August 1. In December 2021, the Company issued an additional $250.0 million of 7.50% Senior Secured Notes to fund the acquisition of Heights Finance. Refer to Note 14,"Acquisitions and Divestiture" for additional details. In connection with the 7.50% Senior Secured Notes, financing costs of $19.3 million were capitalized, net of amortization, and included in the unaudited Condensed Consolidated Balance Sheets as a component of "Debt." These costs are amortized over the term of the 7.50% Senior Secured Notes as a component of interest expense.
19



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)


8.25% Senior Secured Notes

In August 2018, the Company issued $690.0 million of 8.25% Senior Secured Notes maturing on September 1, 2025. In connection with the 8.25% Senior Secured Notes, the Company capitalized financing costs of $13.9 million, which were being amortized as a component of interest expense over its term.

During the third quarter of 2021, the 8.25% Senior Secured Notes were extinguished using proceeds from the 7.50% Senior Secured Notes described above. The early extinguishment of the 8.25% Senior Secured Notes resulted in a loss of $40.2 million.

As of June 30, 2022, the Company had five credit facilities whereby certain loans receivable were sold to wholly-owned VIEs to collateralize debt incurred under each facility. These facilities are the (i) U.S. SPV, (ii) Canada SPV, (iii) Flexiti SPE, (iv) Flexiti Securitization and (v) Heights Finance SPV. For further information on these facilities, refer to Note 2, "Variable Interest Entities".

U.S. SPV

In April 2020, CURO Receivables Finance II, LLC, a wholly-owned subsidiary of the Company, entered into the U.S. SPV. As of June 30, 2022, the U.S. SPV Facility provided for $200.0 million of borrowing capacity.

As of June 30, 2022, the effective interest rate on the Company's borrowings was one-month LIBOR plus 6.25%. The borrower pays the lenders a monthly commitment fee at an annual rate of 0.50% on the unused portion of the commitments. The U.S. SPV matures on April 8, 2024. The collateralized debt associated with this facility was classified as Held for Sale as of June 30, 2022.

Canada SPV

In August 2018, CURO Canada Receivables Limited Partnership, a wholly-owned subsidiary of the Company, entered into the Canada SPV. During the fourth quarter of 2021 and first quarter of 2022, the Company amended the existing credit facility in order to, among other things, (i) increase the borrowing capacity from C$175.0 million to C$400.0 million, (ii) reduce borrowing costs, and (iii) extend the initial maturity date by three years to August 2026. As of June 30, 2022, the effective interest rate was three-month CDOR plus 6.00%. The borrower also pays a 0.50% per annum commitment fee on the unused portion of the commitments. The Canada SPV matures on August 2, 2026.

Flexiti SPE

In March 2021, concurrently with the acquisition of Flexiti, Flexiti Financing SPE Corp., a wholly-owned Canadian subsidiary of the Company, refinanced and increased its Flexiti SPE to C$500.0 million, with a maturity on March 10, 2024. As of June 30, 2022, the effective interest rate was three-month CDOR plus 4.40%. The borrower also pays a 0.50% to 1.00% per annum commitment fee on the unused portion of the commitments.

Flexiti Securitization

In December 2021, Flexiti Securitization Limited Partnership, a wholly-owned Canadian subsidiary of the Company, entered into the Flexiti Securitization. The facility provides for C$526.5 million, with a maturity on December 9, 2025. As of June 30, 2022, the effective interest was one-month CDOR plus 3.59%. The borrower also pays a 0.45% per annum commitment fee on the unused portion of the commitments.

Heights Finance SPV

In December 2021, the Company acquired Heights Finance, including the Heights Finance SPV. Heights Finance entered into the Heights Finance SPV in December 2019 with a total revolving commitment of $350.0 million. The interest rate on the facility is one-month LIBOR plus 5.25%. On July 15, 2022, we entered into a new $425 million non-recourse revolving warehouse facility to replace the incumbent lender and finance future loans originated by Heights Finance, as referenced in Note 16, "Subsequent Events."

Senior Revolver

The Company maintains the Senior Revolver that provides $50.0 million of borrowing capacity, 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 expires July 31, 2022. On July 29, 2022 we extended the term of the Senior Revolver through August 31, 2022 and decreased the borrowing capacity to $45.0 million. See Note 16 - Subsequent Events for further information. The Senior Revolver accrues interest at one-month LIBOR plus 5.00%. The Senior Revolver is syndicated among four banks.

20



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Senior Revolver is guaranteed by all subsidiaries that guarantee the 7.50% Senior Secured Notes, and is secured by a lien on substantially all assets of CURO and the guarantor subsidiaries that are senior to the lien securing the 7.50% Senior Secured Notes.

CURO Canada Revolving Credit Facility

CURO Canada maintains the Curo Canada Revolving Credit Facility, formerly known as the Cash Money Revolving Credit Facility, a C$10.0 million revolving credit facility, which provides short-term liquidity for the Company's Canadian direct lending operations. As of June 30, 2022, the borrowing capacity under the Curo Canada Revolving Credit Facility was C$9.9 million, net of C$0.1 million in outstanding stand-by letters of credit.

The Curo Canada Revolving Credit Facility is collateralized by substantially all of CURO Canada’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 Curo Canada Revolving Credit Facility bear interest per annum at the prime rate of a Canadian chartered bank plus 1.95%.

NOTE 6 – INCOME TAXES

The Company's effective income tax rate was 19.2% and 24.7% for the six months ended June 30, 2022 and 2021, respectively.

The effective income tax rate for the six months ended June 30, 2022, was lower compared to the blended federal and state/provincial statutory rate of approximately 26%, primarily as a result of proportionally more loss in lower rate jurisdictions combined with lost tax benefits related to share-based compensation of $0.8 million, officers’ compensation of $0.7 million, non-deductible transaction costs of $0.3 million and change in fair value of contingent consideration of $1.0 million.

The effective income tax rate for the six months ended June 30, 2021, was lower compared to the blended federal and state/provincial statutory rate primarily as a result of proportionally more income in lower rate jurisdictions, driven by the gain on the Katapult transaction of $146.9 million. Additionally, in the second quarter of 2021, the effective tax rate also includes the release of a valuation allowance of $0.4 million against the income from its investment in Katapult, excess tax benefits related to share-based compensation of $0.4 million, $0.3 million tax expense related to the non-deductible transaction costs and $0.3 million tax expense of additional Texas accrual for 2020 due to the settlement of 2013 to 2019 Texas returns.

The Company intends to reinvest Canada earnings indefinitely in its Canadian operations and therefore has not provided for any non-U.S. withholding tax that would be assessed on dividend distributions. If the accumulated earnings in Canada of $247.6 million were distributed to the U.S. legal entities, the Company would be subject to Canadian withholding taxes of an estimated $12.4 million. The determination of the U.S. state income taxes upon a potential foreign earnings distribution is impractical. In the event the earnings are distributed to the U.S. legal entities, the Company will adjust the income tax provision for the applicable period and determine the amount of foreign tax credit that would be available.

NOTE 7 – 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. 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 the Company's own judgment about the assumptions market participants would use in pricing the asset or liability based on the best information available for the specific circumstances. Accounting standards establish a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The hierarchy requires the 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 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 the Company's own judgments about the assumptions market participants would use in pricing the asset or liability as a result of limited market data. The Company develops these inputs based on the best information available, including its own data.
21



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)


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 June 30, 2022 (in thousands):

Estimated Fair Value
Carrying Value June 30,
2022
Level 1Level 2Level 3Total
Financial assets:
Cash Surrender Value of Life Insurance$7,560 $7,560 $— $— $7,560 
Financial liabilities:
Non-qualified deferred compensation plan$5,159 $5,159 $— $— $5,159 
Contingent consideration related to acquisition30,354 — — 30,354 30,354 

Contingent consideration related to acquisition

In connection with the acquisition of Flexiti during the first quarter of 2021, the Company recorded a liability for contingent consideration based on the achievement of revenue less NCOs and loan origination targets over the two years following closing of the acquisition that could result in additional cash consideration up to $32.8 million to Flexiti's former stockholders. The fair value of the liability is estimated using the option-based income approach using a Monte Carlo simulation model discounted back to the reporting date. The significant unobservable inputs (Level 3) used to estimate the fair value included the expected future tax benefits associated with the acquisition, the probability that the risk adjusted-revenue and origination targets will be achieved and discount rates. The contingent consideration measured at fair value using unobservable inputs increased from the initial measurement of $20.6 million as of March 31, 2021 to $30.4 million as of June 30, 2022. The first payment of $1.0 million was made in July 2022. For additional information on Flexiti and the related contingent consideration, refer to Note 14, "Acquisitions and Divestiture."

Cash Surrender Value of Life Insurance and Non-qualified deferred compensation plan

The cash surrender value of life insurance is included in “Other assets” in the Company’s Consolidated Balance Sheets. The non-qualified deferred compensation plan offsetting liability is included in “Accounts payable and accrued liabilities” in the Company’s Consolidated Balance Sheets.

The table below presents the assets and liabilities that were carried at fair value on the unaudited Condensed Consolidated Balance Sheets at December 31, 2021 (in thousands):
Estimated Fair Value
Carrying Value December 31,
2021
Level 1Level 2Level 3Total
Financial assets:
Cash Surrender Value of Life Insurance$8,242 $8,242 $— $— $8,242 
Financial liabilities:
Non-qualified deferred compensation plan$5,109 $5,109 $— $— $5,109 
Contingent consideration related to acquisition$26,508 $— $— $26,508 $26,508 
22



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)


Financial Assets and Liabilities Not Carried at Fair Value

The table below presents the assets and liabilities that were not carried at fair value on the unaudited Condensed Consolidated Balance Sheets at June 30, 2022 (in thousands):
Estimated Fair Value
Carrying Value June 30,
2022
Level 1Level 2Level 3Total
Financial assets:
Cash and cash equivalents (2)
$47,634 $47,634 $— $— $47,634 
Restricted cash (2)
105,380 105,380 — — 105,380 
Loans receivable, net (1)
1,660,654 — — 1,660,654 1,660,654 
Financial liabilities:
Liability for losses on CSO lender-owned consumer loans (2)
$8,083 $— $— $8,083 $8,083 
7.50% Senior Secured Notes
981,735 — 627,100 — 627,100 
U.S. SPV (2)
46,295 — — 49,456 49,456 
Canada SPV302,619 — — 304,776 304,776 
Flexiti SPE159,045 — — 162,074 162,074 
Flexiti Securitization403,625 — — 406,910 406,910 
Heights Finance SPV
292,309 — — 292,309 292,309 
Senior Revolver50,000 — — 50,000 50,000 
CURO Canada Revolving Credit Facility98 — — 108 108 
(1) Includes loan balances classified as Held for Sale.
(2) Includes balances classified as Held for Sale.

The table below presents the assets and liabilities that were not carried at fair value on the unaudited Condensed Consolidated Balance Sheets at December 31, 2021 (in thousands):
Estimated Fair Value
Carrying Value December 31,
2021
Level 1Level 2Level 3Total
Financial assets:
Cash and cash equivalents$63,179 $63,179 $— $— $63,179 
Restricted cash98,896 98,896 — — 98,896 
Loans receivable, net1,460,758 — — 1,460,758 1,460,758 
Financial liabilities:
Liability for losses on CSO lender-owned consumer loans$6,908 $— $— $6,908 $6,908 
7.50% Senior Secured Notes
980,721 — 1,005,700 — 1,005,700 
U.S. SPV45,392 — — 49,456 49,456 
Canada SPV157,813 — — 160,533 160,533 
Flexiti SPE172,739 — — 176,625 176,625 
Flexiti Securitization239,128 — — 242,886 242,886 
Heights Finance SPV
350,000 — — 350,000 350,000 

23



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Loans Receivable, Net

Loans receivable are carried on the unaudited Condensed Consolidated Balance Sheets net of the ALL. The unobservable inputs used to calculate the carrying values include quantitative factors, such as current default trends. Also considered in evaluating the accuracy of the models 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. The carrying value of loans receivable approximates their fair value. Refer to Note 3, "Loans Receivable and Revenue" for additional information.

CSO Program

In connection with CSO programs, the Company guarantees consumer loan payment obligations to unrelated third-party lenders for loans that the Company arranges for consumers on the third-party lenders’ behalf. The Company is required to purchase from the lender charged-off loans that it has guaranteed. Refer to Note 3, "Loans Receivable and Revenue" and Note 4, Credit Services Organization" for additional information. All balances in connection with the CSO programs were classified as held Held for Sale, as of June 30, 2022.

7.50% Senior Secured Notes, U.S. SPV, Canada SPV, Flexiti SPE, Flexiti Securitization, Heights Finance SPV and Senior Revolver

The fair value disclosure for the 7.50% Senior Secured Notes as of June 30, 2022 and December 31, 2021 were based on observable market trading data. The fair values of the U.S. SPV, Canada SPV, Flexiti SPE, Flexiti Securitization, Heights Finance SPV and Senior Revolver were based on the cash needed for their respective final settlements.

Investment in Katapult

The table below presents the Company's investment in Katapult (in thousands):
Equity Method Investment
Measurement Alternative (1)
Total Investment in Katapult
Balance at December 31, 2020$7,762 $19,609 $27,371 
Equity method income - Q1 2021546 — 546 
Balance at March 31, 20218,308 19,609 27,917 
Equity method income - Q2 20211,712 — 1,712 
Conversion of investment(2)
6,481 (19,609)(13,128)
Balance at June 30, 202116,501 — 16,501 
Equity method loss - Q3 2021(1,582)— (1,582)
Balance at September 30, 202114,919 — 14,919 
Equity method income - Q4 20212,982 — 2,982 
Purchases of common stock9,999 — 9,999 
Balance at December 31, 202127,900 — 27,900 
Equity method income - Q1 20221,584 — 1,584 
Balance at March 31, 202229,484 — 29,484 
Equity method loss - Q2 2022(1,327)(1,327)
Balance at June 30, 2022$28,157 $— $28,157 
Classification as of December 31, 2021Level 3, not carried at fair valueN/A
Classification as of March 31, 2022Level 3, not carried at fair valueN/A
(1) The Company elected to measure this equity security without a readily determinable fair value equal to its cost minus impairment. If the Company identifies an observable price change in orderly transactions for same or similar investment in Katapult, it will measure the equity security at fair value as of the date that the observable transaction occurred.
(2) On June 9, 2021, Katapult completed its merger with FinServ. Immediately prior to the merger, the Company first converted all of its preferred stock and exercised all common stock warrants, and then exchanged all shares of Katapult common stock for $146.9 million in cash and 18.9 million shares of common stock in the resulting public company, Katapult (NASDAQ: KPLT). The Company's entire investment in Katapult is now accounted for under the equity method of accounting. The Company recorded a related net gain of $135.4 million on its equity method investment in Katapult, based on the pro rata cost basis of the investment and the discharge of the guarantee provided during the second quarter of 2021.
24



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)


The Company began investing in Katapult in 2017 and increased its investment through multiple private placement acquisitions. During the first quarter of 2021, the Company changed the two-month reporting lag to a one-quarter reporting lag, as discussed in Note 1, "Summary of Significant Accounting Policies and Nature of Operations." The Company recorded a loss of $1.3 million for the three months ended June 30, 2022 based on its share of Katapult’s earnings.

During the fourth quarter of 2021, the Company purchased an additional 2.6 million shares of common stock of Katapult for an aggregate purchase price of $10.0 million.

On June 9, 2021, Katapult completed its merger with FinServ. As a result, the Company received $146.9 million in cash and 18.9 million shares of common stock of the resulting public company, Katapult (NASDAQ: KPLT). The Company recorded a related net gain of $135.4 million on its equity method investment in Katapult during the second quarter of 2021. Additionally, as part of the merger, CURO received 3.0 million earn-out warrants and holds two of the eight board of director seats for Katapult.

Both the equity method investment and the previously recognized investment measured at cost minus impairment are presented within "Investment in Katapult" on the unaudited Condensed Consolidated Balance Sheets.

The Company's fully diluted ownership of Katapult, which assumes full pay-out of earn-out shares, was 19.6% as of June 30, 2022.

NOTE 8 – STOCKHOLDERS' EQUITY

The following table summarizes the changes in stockholders' equity for the six months ended June 30, 2022 and 2021 (in thousands, except Common Stock data):

Common StockTreasury Stock, at costPaid-in capitalRetained Earnings
AOCI (1)
Total Stockholders' Equity
Shares OutstandingPar Value
Balance at December 31, 2021
40,810,444 $23 $(124,302)$113,520 $203,467 $(32,378)$160,330 
Net income— — — — 1,336 — 1,336 
Foreign currency translation adjustment— — — — — 6,633 6,633 
Dividends— — — — (4,791)— (4,791)
Share-based compensation expense— — — 4,093 — — 4,093 
Repurchase of common stock(824,477)— (12,530)— — — (12,530)
Net settlement of share-based awards362,815 — — (2,284)— — (2,284)
Balance at March 31, 202240,348,782 $23 $(136,832)$115,329 $200,012 $(25,745)$152,787 
Net loss— — — — (26,080)— (26,080)
Foreign currency translation adjustment— — — — — (10,520)(10,520)
Dividends— — — — (4,434)— (4,434)
Share based compensation expense— — — 4,415 — — 4,415 
Common stock issued for RSUs vesting, net of shares withheld and withholding paid for employee taxes108,969 — — (588)— — (588)
Balance at June 30, 202240,457,751 $23 $(136,832)$119,156 $169,498 $(36,265)$115,580 
(1) Accumulated other comprehensive income (loss)
25



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)


Common StockTreasury Stock, at costPaid-in capitalRetained Earnings
AOCI (1)
Total Stockholders' Equity
Shares OutstandingPar Value
Balance at December 31, 2020
41,370,504 $$(77,852)$79,812 $160,068 $(30,132)$131,905 
Net income— — — — 25,735 — 25,735 
Foreign currency translation adjustment— — — — — 3,855 3,855 
Dividends— — — — (2,368)— (2,368)
Share-based compensation expense— — — 2,683 — — 2,683 
Proceeds from exercise of stock options15,852 — — 48 — — 48 
Common stock issued for RSUs vesting, net of shares withheld and withholding paid for employee taxes237,423 — — (1,668)— — (1,668)
Balance at March 31, 202141,623,779 $$(77,852)$80,875 $183,435 $(26,277)$160,190 
Net income— — — — 104,517 — 104,517 
Foreign currency translation adjustment— — — — — 4,714 4,714 
Dividends— — — — (4,582)— (4,582)
Share-based compensation expense— — — 3,467 — — 3,467 
Proceeds from exercise of stock options43,920 — — 191 — — 191 
Repurchase of common stock(104,487)— (1,752)— — — (1,752)
Common stock issued for RSUs vesting, net of shares withheld and withholding paid for employee taxes116,329 — — (43)— — (43)
Balances at June 30, 202141,679,541 $$(79,604)$84,490 $283,370 $(21,563)$266,702 

Dividends

The table below summarizes the Company's quarterly dividends for 2022.
Dividends Paid
Date of declarationStockholders of recordDate paidDividend per share(in thousands)
Q1 2022February 4, 2022February 18, 2022March 1, 2022$0.11 $4,517 
Q2 2022April 28, 2022May 10, 2022May 23, 2022$0.11 $4,440 

The table below summarizes the Company's quarterly dividends for 2021.
Dividends Paid
Date of declarationStockholders of recordDate paidDividend per share(in thousands)
Q1 2021January 29, 2021February 16, 2021March 2, 2021$0.055 $2,284 
Q2 2021May 3, 2021May 14, 2021May 27, 2021$0.11 $4,580 

In July 2022, the Company's Board of Directors declared a dividend of $0.11 per share. See Note 16, "Subsequent Events" for additional information.

26



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 9 – 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
June 30,
Six Months Ended
June 30,
2022202120222021
Net income$(26,080)$104,517 $(24,744)$130,252 
Weighted average common shares - basic40,376 41,655 40,372 41,580 
Dilutive effect of stock options and restricted stock units— 2,017 — 1,976 
Weighted average common shares - diluted40,376 43,672 40,372 43,556 
Earnings per share:
Basic earnings per share$(0.65)$2.51 $(0.61)$3.13 
Diluted earnings per share$(0.65)$2.39 $(0.61)$2.99 

Potential shares of common stock that would have the effect of increasing diluted earnings per share or decreasing diluted loss per share are considered to be anti-dilutive; therefore, these shares are not included in calculating diluted earnings per share. For the three and six months ended June 30, 2022, there were 3.1 million and 2.2 million, respectively, and for the three and six months ended June 30, 2021, there were 0.1 million and 0.1 million, respectively, of potential shares of common stock excluded from the calculation of 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. The control number concept requires that the same number of potentially dilutive securities applied in computing diluted earnings per share is applied to all other categories of income or loss, regardless of their anti-dilutive effect on such categories.

NOTE 10 – SEGMENT REPORTING
Segment information is prepared on the same basis that the Company's CODM reviews financial information for operational decision making purposes, including revenues, net revenue, gross margin, segment operating income and other items.
U.S. As of June 30, 2022, the Company operated a total of 575 U.S. retail locations and had an online presence in 27 states. The Company provides Revolving LOC loans and Installment loans, which include Single-Pay and vehicle title loans, customary opt-in insurance products, 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.
Canada Direct Lending. As of June 30, 2022, the Company operated a total of 209 stores across eight Canadian provinces and had an online presence in eight provinces and one territory. The Company provides Revolving LOC and Installment loans, which include Single-Pay loans, optional credit protection insurance products to Revolving LOC and Installment loan customers, 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.

Canada POS Lending. As of June 30, 2022, the Company served Canadian customers through POS financing available at nearly 8,000 retail locations and over 3,400 merchant partners across 10 provinces and two territories. The Company provides Revolving LOC loans and a number of other ancillary financial products to its customers in Canada. Results of operations for the six months ended June 30, 2021 from Canada POS Lending represent results from the date of Flexiti's acquisition, March 10, 2021, through June 30, 2021.

27



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table illustrates summarized financial information concerning reportable segments (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Revenues by segment: (1)
U.S.$205,711 $118,794 $404,110 $255,286 
Canada Direct Lending75,540 61,880 147,028 120,320 
Canada POS Lending23,153 7,019 43,462 8,638 
Consolidated revenue$304,404 $187,693 $594,600 $384,244 
Net revenues by segment:
U.S. $108,148 $85,172 $239,722 $195,608 
Canada Direct Lending49,519 53,324 99,015 102,530 
Canada POS Lending17,191 4,032 28,786 4,796 
Consolidated net revenue$174,858 $142,528 $367,523 $302,934 
Segment operating (loss) income:
U.S.$(36,636)$123,277 $(42,104)$138,008 
Canada Direct Lending15,040 25,343 33,485 47,590 
Canada POS Lending(11,474)(9,931)(22,009)(12,730)
Consolidated operating (loss) income$(33,070)$138,689 $(30,628)$172,868 
Expenditures for long-lived assets by segment:
U.S.$3,439 $2,162 $7,521 $4,824 
Canada Direct Lending1,231 361 4,464 510 
Canada POS Lending6,040 2,112 10,264 2,531 
Consolidated expenditures for long-lived assets$10,710 $4,635 $22,249 $7,865 
(1) For revenue by product, see Note 3, "Loans Receivable and Revenue."
The following table provides the proportion of gross loans receivable by segment (in thousands):
June 30,
2022
December 31,
2021
U.S. (1)
$686,122 $661,945 
Canada Direct Lending467,555 427,197 
Canada POS Lending627,163 459,176 
Total gross loans receivable$1,780,840 $1,548,318 
(1) Includes loan balances classified as Held for Sale, as of June 30, 2022.

The following table represents the Company's net long-lived assets, comprised of property and equipment, by segment. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the asset is physically located (in thousands):
June 30,
2022
December 31,
2021
U.S. (1)
$28,996 $32,753 
Canada Direct Lending21,885 21,072 
Canada POS Lending2,326 810 
Total net long-lived assets$53,207 $54,635 
(1) Includes net long-lived assets classified as Held for Sale, as of June 30, 2022.

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.

28



CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 11 – COMMITMENTS AND CONTINGENCIES
Securities Litigation and Enforcement

In 2018, a putative securities fraud class action lawsuit was filed against the Company and certain of its officers and directors and other related parties in the United States District Court for the District of Kansas, captioned Yellowdog Partners, LP v. CURO Group Holdings Corp., Donald F. Gayhardt, William Baker and Roger W. Dean, Civil Action No. 18-2662 (the "Yellowdog Action"). The suit alleged the Company made misleading statements and omitted material information regarding the Company's efforts to transition the Canadian inventory of products from Installment loans to Revolving LOC loans.

In December 2020, the Court granted final approval of the $9.0 million settlement and dismissed the case with prejudice. The Company's directors' and officers' insurance policy required the Company to pay the first $2.5 million in fees and settlement and the insurance carriers paid the remaining amounts. For the six months ended June 30, 2022, there was no further expense related to the litigation.

In June and July 2020, three shareholder derivative lawsuits were filed in the United States District Court for the District of Delaware against the Company, certain of its directors and officers, and in two of the three lawsuits, a large stockholder. Plaintiffs generally allege the same underlying facts of the Yellowdog Action. In July 2021, the derivative lawsuits were voluntarily dismissed and Plaintiffs refiled two cases in the United States District Court for the District of Kansas. In April 2022, the Company reached an agreement in principle with the plaintiffs to settle these actions. The settlement, which will include no admission of liability or wrongdoing by the Company, was preliminarily approved by the Court on July 19, 2022. A hearing to consider final approval of the settlement is scheduled to be held on October 27, 2022. All amounts payable by the Company under the settlement will be paid by the Company's insurers. The section of the Company's website entitled "Investors—Corporate Governance," will include up-to-date information.

City of Austin

The Company was cited in July 2016 by the City of Austin, Texas for alleged violations of an Austin ordinance addressing products offered by CSOs, which regulates aspects of products offered under the Company's CAB program. The Company believes that: (i) the Austin ordinance (similar to its counterparts elsewhere in Texas) conflicts with Texas state law and (ii) in any event, the Company's product complies with this ordinance, when the ordinance is properly construed. In 2017, the Austin Municipal Court agreed with the Company's position that this ordinance conflicts with Texas law and, accordingly, did not address the second argument. In September 2017, the Travis County Court reversed the Municipal Court’s decision and remanded the case for further proceedings.

In May 2020, the City of Austin proposed a second ordinance that became effective June 1, 2020 and implemented restrictions on CSO transactions and revised certain definitions included in the original Austin ordinance. These revisions potentially affect the foundation upon which the Company's previous arguments in municipal court were based.

In June 2021, the Company launched a new product in the City of Austin to better adhere to the updated ordinance. The City commenced audits of the new product in January 2022. Based on a fully compliant audit conducted in Q1 of 2022, all suits against the Company, alleging violations of the city’s CSO ordinance, were dismissed on March 24, 2022.

Given the change the Company has made in its products in response to these ordinances, successful audits and the cases being dismissed, the Company does not anticipate that the CAB program’s past operations will result in material monetary liability in Austin or elsewhere in Texas at this time.

Other Legal Matters
The Company is a defendant in certain other litigation matters encountered from time-to-time in the ordinary course of business, some of which may be covered to an extent by insurance. While it is difficult to predict the outcome of any particular proceeding, the Company does not believe the result of any of these matters will have a material adverse effect on the Company's business, results of operations or financial condition.

NOTE 12 – LEASES

Leases entered into by the Company are primarily for retail stores in certain U.S. states and Canadian provinces.

Leases classified as finance leases were immaterial to the Company as of June 30, 2022. Operating leases expire at various times through 2033. Operating leases are included in "Right of use asset - operating leases" and "Lease liability - operating leases" in the unaudited Condensed Consolidated Balance Sheets. Operating lease costs are included in "Occupancy" in the unaudited Condensed Consolidated Statement of Operations. The majority of leases have an original term up to five years plus renewal options for additional similar terms.
29


CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

The following table summarizes the operating lease costs and other information for the three months ended June 30, 2022 and June 30, 2021 (dollars in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Operating lease costs:
Third-Party
$9,574 $7,959 $19,053 $15,962 
Related-Party
827 849 1,654 1,696 
Total operating lease costs$10,401 $8,808 $20,707 $17,658 
Cash paid for amounts included in the measurement of operating lease liabilities$21,581 $18,303 
ROU assets obtained$6,398 $4,964 
Weighted average remaining lease term - Operating leases4.7 years5.4 years
Weighted average discount rate - Operating leases7.8 %9.4 %

The following table summarizes the aggregate operating lease payments that the Company was contractually obligated to make under operating leases as of June 30, 2022 (in thousands):
Third-PartyRelated-PartyTotal
Remainder of 2022$14,305 $839 $15,144 
202322,999 780 23,779 
202416,431 796 17,227 
202510,530 813 11,343 
20265,730 831 6,561 
20274,036 358 4,394 
Thereafter7,696 1,152 8,848 
Total81,727 5,569 87,296 
Less: Imputed interest24,261 298 24,559 
Operating lease liabilities$105,988 $5,867 $111,855 
(1) Includes leases classified as Held for Sale.

There were no material leases entered into subsequent to the balance sheet date.

NOTE 13 – GOODWILL

The change in the carrying amount of goodwill by operating segment for the six months ended June 30, 2022 was as follows (in thousands):
U.S. (1)
Canada Direct LendingCanada POS LendingTotal
Goodwill at December 31, 2021$359,779 $30,105 $39,908 $429,792 
Foreign currency translation — (452)(598)(1,050)
Measurement period adjustment15,379 — 015,379 
Goodwill at June 30, 2022$375,158 $29,653 $39,310 $444,121 
(1) Includes balances classified as Held for Sale, as of June 30, 2022.

The Company tests goodwill at least annually for potential impairment, as of 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 2021 Form 10-K for additional information on the Company's policy for assessing goodwill for impairment.

30


CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
In the second quarter of 2022, the Company performed an interim review of triggering events for each reporting unit, which would indicate whether a quantitative or qualitative assessment of goodwill impairment was necessary. As a result of the interim triggering event review, the Company concluded an additional assessment was not necessary and did not record an impairment loss during the three months ended June 30, 2022.

Flexiti Acquisition

The Company completed the acquisition of Flexiti on March 10, 2021, resulting in $39.9 million of goodwill as of December 31, 2021, based on the excess of the purchase price of the business combination over the fair value of the acquired net assets. Goodwill of $39.9 million was net of $4.5 million of adjustments upon the conclusion of the measurement period, and $0.5 million of foreign currency translation impact as of December 31, 2021. See Note 14,"Acquisitions and Divestiture" for more information related to the business combination.

Heights Finance Acquisition

The Company completed the acquisition of Heights Finance on December 27, 2021. Provisional goodwill was estimated at $253.9 million, based on the preliminary valuation. The Company recorded a $15.4 million of adjustments during the second quarter of 2022 resulting in a provisional goodwill balance of $269.2 million, as of June 30, 2022. See Note 14,"Acquisitions and Divestiture" for more information related to the business combination.

NOTE 14 – ACQUISITIONS AND DIVESTITURE

ACQUISITIONS
First Heritage Credit

On May 18, 2022, the Company entered into a definitive agreement to acquire First Heritage Credit, a consumer lender that provides near-prime installment loans along with customary opt-in insurance and other financial products, based in Ridgeland, Mississippi. The total purchase price is $140.0 million in cash. The transaction closed July 13, 2022. See Note 16, "Subsequent Events" for more information related to the acquisition.

Heights Finance

On December 27, 2021, the Company acquired 100% of the outstanding stock of Heights Finance for $360.0 million, consisting of $335.0 million in cash and $25.0 million of our common stock. Heights Finance is a consumer finance company that provides secured and unsecured Installment loans to near-prime and non-prime consumers, and offers customary opt-in insurance and other financial products across 390 branches in 11 U.S. states.

The Company began consolidating the financial results of Heights Finance in the Consolidated Financial Statements on December 27, 2021 within the U.S. operating segment. For additional information, see Note 15, "Acquisitions" of the 2021 Form 10-K.

We are in the process of reviewing the valuation of acquired assets and liabilities, including goodwill, and expect to finalize the
purchase price allocation prior to December 31, 2022. During the three months ended June 30, 2022, the Company recorded a
measurement period adjustment that increased goodwill by $15.4 million. The measurement period adjustment related to the fair value of the loan portfolio and would have resulted in $7.7 million of incremental interest and fee revenue during the three months ended March 31, 2022. The Company made these measurement period adjustments to reflect facts and circumstances that existed as of the acquisition date and did not result from events subsequent to such date. As of June 30, 2022, the Company completed the determination of the fair values of the acquired loans receivable and the primary areas that remain preliminary relate to the valuation of intangible assets and certain tax-related balances.

31


CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table presents the preliminary purchase price allocation recorded in the Company’s Consolidated Balance Sheet as of the date of acquisition of Heights Finance (in thousands):

Amounts acquired on December 27, 2021Measurement period adjustmentsAmounts acquired on December 27, 2021 (as adjusted)
Assets
Cash and cash equivalents
$13,564 $— $13,564 
Restricted cash33,630 — 33,630 
Gross loans receivable(1)
471,630 (15,379)456,251 
Income tax receivable3,526 — 3,526 
Prepaid expenses and other7,410 — 7,410 
Property and equipment4,748 — 4,748 
Right-of-use assets
16,111 — 16,111 
Intangibles, net11,900 — 11,900 
Other assets98 — 98 
Total assets$562,617 $(15,379)$547,238 
Liabilities
Accounts payable and accrued liabilities $19,186 $— $19,186 
Lease liabilities 16,315 — 16,315 
Deferred tax liability 1,077 — 1,077 
Accrued interest on debt1,781 — 1,781 
Debt350,000 — 350,000 
Total liabilities$388,359 $— $388,359 
Net assets acquired$174,258 $(15,379)$158,879 
Total consideration paid428,115 428,115 
Goodwill $253,857 $269,236 
(1) The gross contractual loans receivables as of December 27, 2021 were $485.4 million of which the Company estimates $29.2 million will not be collected.

Flexiti

On March 10, 2021, the Company acquired 100% of the outstanding stock of Flexiti. The fair value of total consideration paid was $86.5 million in cash, $6.3 million in debt costs and $20.6 million in contingent cash consideration subject to future operating metrics, including revenue less NCOs and loan originations. Flexiti provides POS financing solutions to retailers across Canada.

The Company began consolidating the financial results of Flexiti in the unaudited Condensed Consolidated Financial Statements on March 10, 2021. For additional information, see Note 15, "Acquisitions" of the 2021 Form 10-K.

32


CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
DIVESTITURE

Legacy U.S. Direct Lending Business

In May 2022, the Company entered into a definitive agreement to sell its U.S. Legacy Direct Lending Business, pursuant to the Equity and Asset Purchase Agreement, dated May 18, 2022, to Community Choice Financial for a purchase price of $310 million in cash, subject to customary working capital and certain other adjustments and an additional $35 million in cash payable in monthly installment payments over the subsequent 12 months. The transaction closed July 8, 2022. The Company expects to recognize a gain on sale during the three and nine month periods ended September 30, 2022. See Note 16, "Subsequent Events" for more information related to the divestiture close date.

As a result of entering into the definitive agreement, the related assets and liabilities of the U.S. Legacy Direct Lending Business were classified as held-for-sale on the unaudited Condensed Consolidated Balance Sheet, as of June 30, 2022. The table below summarizes the carrying amounts of the major assets and liabilities held-for-sale, as of June 30, 2022 (in thousands):


June 30, 2022
Assets
Cash, cash equivalents, and restricted cash (includes restricted cash of consolidated VIEs of $6,412 as of June 30, 2022)
$18,155 
Loans receivable (1) (includes gross loans receivable and allowance for loans receivable of consolidated VIEs of $76,134 and $17,477 respectively as of June 30, 2022)
158,124 
Prepaid expenses and other16,433 
Right-of-use assets
41,280 
Goodwill91,130 
Other assets held-for-sale (2)
13,657 
Total assets held-for-sale$338,779 
Liabilities
Accounts payable and accrued liabilities $7,093 
Right-of-use liability44,516 
Liability for losses on CSO lender-owned consumer loans8,083 
Debt includes debt and issuance costs of consolidated VIEs of $49,456 and $3,161 respectively as of June 30, 2022)
46,295 
Other liabilities held-for-sale (3) (includes accrued interest and deferred revenue of consolidated VIEs of $700 and $172 respectively as of June 30, 2022)
5,150 
Total liabilities held-for-sale$111,137 
(1) The Company recorded a $29.9 million fair value less cost to sell adjustment to the loans receivable.
(2) Includes income tax receivable, property and equipment, intangibles, deferred tax assets, and other assets.
(3) Includes deferred revenue, income taxes payable, deferred tax liability, accrued interest on debt, and other long-term liabilities

The U.S. Legacy Direct Lending Business had pre-tax net income of $57.1 million and $21.3 million for the six months and three months ended June 30, 2022, respectively. The U.S. Legacy Direct Lending Business had pre-tax net income of $90.5 million and $29.4 million for the six months and three months ended June 30, 2021, respectively. Pre-tax net income is comprised of net revenue and expenses directly related to the U.S. Legacy Direct Lending Business, which does not include certain costs recorded in the U.S. operating segment that are not classified as held for sale, such as interest expense on the 7.50% Senior Secured Notes and certain corporate expenses.

NOTE 15 – SHARE REPURCHASE PROGRAM

In February 2022, the Company's Board of Directors authorized a new share repurchase program for the repurchase of up to $25.0 million of CURO common stock. There were no repurchases under this program as of June 30, 2022. The repurchases will commence at the Company's discretion and continue until completed or terminated. The Company expects the repurchases to be
33


CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
made from time-to-time in the open market and/or in privately negotiated transactions at the Company's discretion, subject to market conditions and other factors. Any repurchased shares will be available for use in connection with equity plans and for other corporate purposes.

In May 2021, the Company's Board of Directors authorized a share repurchase program for up to $50.0 million of its common stock. The program commenced in June 2021 and was completed in February 2022.

The table below summarizes share repurchase activity in the $50.0 million repurchase program during the three and six months ended June 30, 2022 (in thousands, except for per share amounts and number of share amounts):

Three Months Ended June 30, 2022Six Months Ended June 30, 2022
Total number of shares repurchased— 824,777 
Average price paid per share$— $15.20 
Total value of shares repurchased$— $12,530 

We repurchased 104,487 shares of our common stock at an average price of $16.77 for a total cost of $1.8 million during the three and six months ended June 30, 2021.

NOTE 16 – SUBSEQUENT EVENTS

Acquisition

On July 13, 2022, we completed the previously announced acquisition of First Heritage Credit ("FHC"), a consumer lender that provides near-prime installment loans along with customary opt-in insurance and other financial products, based in Ridgeland, Mississippi, for a total purchase price of $140 million in cash.

Divestiture
On July 8, 2022 we completed the divestiture of our Legacy U.S. Direct Lending business to Community Choice Financial, a consumer financial services company based in Dublin, Ohio, for total cash consideration of $345 million. The consideration includes $310 million in cash paid at closing and $35 million payable in monthly installment payments over the subsequent 12 months.
Dividend

The Company's Board of Directors declared a quarterly dividend of $0.11 per share, payable on August 26, 2022, to stockholders of record as of August 15, 2022.

First Heritage Credit Revolving Credit Facility
On July 13, 2022, concurrently with the closing of the First Heritage Credit acquisition, we entered into a new $225 million non-recourse revolving warehouse facility to replace FHC's incumbent lender's facility and finance future loans originated by FHC. The effective interest rate was 1-month SOFR plus 4.25%. The advance rate is 91%. The warehouse revolving period matures on July 13, 2024.

Heights Finance Revolving Credit Facility

On July 15, 2022, we entered into a new $425 million non-recourse revolving warehouse facility to replace the incumbent lender's facility and finance future loans originated by Heights Finance. The effective interest rate was 1-month SOFR plus 4.25%. The advance rate is 91%. The warehouse revolving period matures on July 15, 2024.

Senior Revolver
On July 29, 2022 we extended the term of the Senior Revolver through August 31, 2022 and decreased the borrowing capacity to $45.0 million.
34



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

Forward-Looking Statements

The following discussion of financial condition, results of operations, liquidity and capital resources, our regulatory environment 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 “Risk Factors” in our 2021 Form 10-K for a discussion of the uncertainties, risks and assumptions associated with these statements.

Overview

We are a tech-enabled, omni-channel consumer finance company serving a full spectrum of non-prime and prime consumers in the U.S. and Canada.

History

CURO was founded in 1997 to meet the growing needs of consumers looking for alternative access to credit. With 25 years of experience, we offer a variety of convenient, accessible financial and loan services across all of our markets. The terms “CURO," "we,” “our,” “us” and the “Company” refer to CURO Group Holdings Corp. and its directly and indirectly owned subsidiaries as a combined entity, except where otherwise stated.

In the U.S., we operate under several principal brands, including "Covington Credit," "Heights Finance," "Quick Credit", "Southern Finance" and "First Heritage." Until July 2022 we also operated under brands that included "Speedy Cash", "Rapid Cash" and "Avio Credit". We also offer demand deposit accounts in the U.S. under the Revolve Finance brand, and credit card programs under the First Phase brand, which we launched in the fourth quarter of 2021. As of June 30, 2022, our store network consisted of 575 locations across 20 U.S. states and we offered our online services in 27 U.S. states.

In Canada, we operate under “Cash Money” and “LendDirect” direct lending brands and the "Flexiti" point-of-sale brand. As of June 30, 2022, we operated our direct lending and online services in eight Canadian provinces and offered our online services in one Canadian territory. Our point-of-sale operations are available at nearly 8,000 retail locations and over 3,400 merchant partners across 10 provinces and two territories.

In July 2022 we sold our U.S. Legacy Direct Lending Business, which operated under the "Speedy Cash", "Rapid Cash" and "Avio Credit" brands. Also in July 2022 we purchased a U.S. based near-prime installment lender, First Heritage Credit, which operates under the "First Heritage Credit" brand, furthering our strategic shift to broaden our position in the near-prime consumer lending market in the U.S. Refer to Note 14, "Acquisitions and Divestiture" and Note 16, "Subsequent Events" for additional details regarding the divestiture of our legacy U.S. direct lending business and the acquisition of First Heritage Credit.

On December 27, 2021, we acquired Heights Finance, a consumer finance company that provides Installment loans and offers customary opt-in insurance and other financial products in the U.S. The acquisition of Heights Finance accelerated our strategic transition in the U.S. toward longer term, higher balance and lower credit risk products, and provided us with access to what we believe to be a larger addressable market while mitigating regulatory risk. On March 10, 2021, we acquired Flexiti, an emerging growth Canadian POS/BNPL provider, which provided us instant capability and scale opportunity in Canada's credit card and POS financing markets. Refer to "Item 1—Business—Company Overview" of our 2021 Form 10-K and Note 14,"Acquisitions and Divestiture" for additional details regarding the Heights Finance and Flexiti acquisitions. Both acquisitions were accounted for under the purchase method and thus their results of operations are included in our financial statements commencing as of their respective acquisition dates.

In 2017, we made our first investment in Katapult, an e-commerce focused FinTech company offering an innovative lease financing solution to consumers and enabling essential transactions at the merchant POS. In June 2021, Katapult merged with FinServ, resulting in a new publicly traded company (NASDAQ: KPLT). Refer to "Item 1—Business—Company Overview" of our 2021 Form 10-K for additional information about the merger and its benefits to us. In the fourth quarter of 2021, we acquired an additional 2.6 million shares of common stock of Katapult for an aggregate purchase price of $10.0 million. Our fully diluted ownership of Katapult as of June 30, 2022 was 19.6%, assuming full pay-out of earn-out shares, and 18.3% excluding pay-out of earn-out shares.

Consolidated Results of Operations

35



Comparison of Consolidated Results of Operations for the Three and Six Months Ended June 30, 2022 and 2021

Beginning January 1, 2022, we began reporting "Interest and fees revenue," "Insurance premiums and commissions" and "Other revenue" in place of our previously reported "Revenue" on our Condensed Statements of Operations. Prior period presentations have been revised to conform to the current period presentation.

The table below presents our consolidated results of operations. A further discussion of the results of our operating segments is provided under "--Segment Analysis" below.

(in thousands, unaudited)Three Months Ended June 30,Six Months Ended June 30,
20222021Change $Change %20222021Change $Change %
Revenue
Interest and fees revenue$278,331 $169,403 $108,928 64.3 %543,287 348,526 194,761 55.9 %
Insurance premiums and commissions18,653 11,853 6,800 57.4 %36,913 23,422 13,491 57.6 %
Other revenue7,420 6,437 983 15.3 %14,400 12,296 2,104 17.1 %
Total revenue304,404 187,693 116,711 62.2 %594,600 384,244 $ 210,356 54.7 %
Provision for losses129,546 45,165 84,381 186.8 %227,077 81,310 145,767 179.3 %
Net revenue174,858 142,528 32,330 22.7 %367,523 302,934 64,589 21.3 %
Operating Expenses
Salaries and benefits82,427 58,320 24,107 41.3 %162,156 113,237 48,919 43.2 %
Occupancy17,507 13,783 3,724 27.0 %34,544 28,130 6,414 22.8 %
Advertising12,707 7,043 5,664 80.4 %23,207 15,127 8,080 53.4 %
Direct operations20,293 13,699 6,594 48.1 %40,567 25,668 14,899 58.0 %
Depreciation and amortization8,672 7,435 1,237 16.6 %18,486 12,400 6,086 49.1 %
Other operating expense22,801 17,218 5,583 32.4 %38,913 30,170 8,743 29.0 %
Total operating expense164,407 117,498 46,909 39.9 %317,873 224,732 93,141 41.4 %
Other expense (income)
Interest expense42,193 23,440 18,753 80.0 %80,534 42,979 37,555 87.4 %
Loss (income) from equity method investment1,328 (1,712)3,040 #(256)(2,258)2,002 (88.7)
Gain from equity method investment— (135,387)135,387 #— (135,387)135,387 #
Total other expense (income)43,521 (113,659)157,180 #80,278 (94,666)174,944 #
(Loss) income before income taxes(33,070)138,689 (171,759)#(30,628)172,868 (203,496)#
(Benefit) provision for income taxes(6,990)34,172 (41,162)#(5,884)42,616 (48,500)#
Net (loss) income(26,080)104,517 (130,597)#($ 24,744)$ 130,252 ($ 154,996)#
# - Variance greater than 100% or not meaningful

For the Three Months Ended June 30, 2022 and 2021

The decline in Net income for the three months ended June 30, 2022 was primarily driven by (i) year-over-year comparisons for the provision for loan losses which continued to be affected by COVID-19 impacts during the second quarter of 2021, (ii) higher interest expense, (iii) our investment in Katapult Holdings, Inc., and (iv) our acquisition of Heights Finance in December 2021. During the second quarter of 2021, Katapult became a public company via a SPAC merger, generating a pretax gain of $135.4 million. Government stimulus in March 2021 and lingering pandemic-related consumer behavior reduced demand, increased payment rates and lowered loss rates in the second quarter of 2021, resulting in a provision for loan losses that was $4.6 million less than net charge-offs ("NCOs"). Credit normalization and strong sequential loan growth in the second quarter of 2022 resulted in a provision for loan losses that exceeded NCOs by $24.3 million, (including the impact of purchase accounting for the Heights Finance portfolio acquired in December 2021). Interest expense increased because of the additional 7.50% Senior Secured Notes issued to finance, in part, (i) the Heights Finance acquisition, (ii) the expansion of non-recourse asset-backed facilities to support loan growth, and (iii) increase in benchmark interest rates. Finally, we acquired Heights Finance during December 2021, which contributed to revenue and expenses during the three month period ended June 30, 2022.
For the Six Months Ended June 30, 2022 and 2021
36



The decline in Net income for the six months ended June 30, 2022 was primarily driven by (i) year-over-year comparisons for the provision for loan losses which continued to be affected by COVID-19 impacts during the first half of 2021, (ii) higher interest expense, (iii) our investment in Katapult Holdings, Inc., and (iv) our acquisition of Heights Finance in December 2021. During the second quarter of 2021 Katapult became a public company via a SPAC merger, generating a pretax gain of $135.4 million. Government stimulus in March 2021 and pandemic-related consumer behavior reduced demand, increased payment rates and lowered loss rates in the first half of 2021, resulting in a provision for loan losses that was $22.9 million less than NCOs for the first six months of 2021. Credit normalization and strong sequential loan growth in the first half of 2022 resulted in a provision for loan losses that exceeded NCOs by $36.4 million, (including the impact of purchase accounting for the Heights Finance portfolio acquired in December 2021). Interest expense increased because of the additional 7.50% Senior Secured Notes issued to finance, in part, (i) the Heights Finance acquisition and (ii) the expansion of non-recourse asset-backed facilities to support loan growth, (iii) increase in the benchmark interest rates. Finally, we acquired Heights Finance during December 2021, which contributed to revenue and expenses during the six month period ended June 30, 2022.
Revenue
For the Three Months Ended June 30, 2022 and 2021
During the three months ended June 30, 2022, total revenue increased $116.7 million, or 62.2%, to $304.4 million, compared to the prior-year period driven primarily by our acquisitions of Flexiti and Heights Finance, and secondarily by growth in Canada POS Lending and Canada Direct Lending. The main components were:
U.S. revenue increase of $86.9 million, or 73.2%, as a result of our Heights Finance acquisition, which accounted for $74.3 million of total revenue for the second quarter of 2022. Excluding Heights Finance, U.S. revenue increased $12.6 million, or 10.6%.
Canada Direct Lending revenue increase of $13.7 million, or 22.1%; and
Canada POS Lending revenue of $23.2 million, an increase of $16.1 million, or 230%, compared to the three months ended June 30, 2021.
For the Six Months Ended June 30, 2022 and 2021
During the six months ended June 30, 2022, total revenue increased $210.4 million, or 54.7%, to $594.6 million, compared to the prior-year period driven primarily by our acquisitions of Flexiti and Heights Finance, and by growth in Canada Direct Lending. The main components were:
U.S. revenue increase of $148.8 million, or 58.3%, as a result of our Heights Finance acquisition, which accounted for $140.0 million of total revenue for the first half of 2022. Excluding Heights Finance, U.S. revenue increased $8.8 million or 3.5%,
Canada Direct Lending revenue increase of $26.7 million, or 22.2%; and
Canada POS Lending revenue of $43.5 million, an increase of $34.8 million, or 403%, compared to the six months ended June 30, 2021, which only included Flexiti's results after its acquisition on March 10, 2021.
The following table summarizes revenue by product, including CSO fees, for the period indicated:
Three Months Ended
June 30, 2022June 30, 2021
(in thousands, unaudited)U.S.Canada Direct LendingCanada POS LendingTotal% of TotalU.S.Canada Direct LendingCanada POS LendingTotal% of Total
Revolving LOC28,145 47,591 20,847 96,583 31.7 %24,091 37,450 6,495 68,036 36.2 %
Installment169,879 11,869 — 181,748 59.7 %90,826 10,541 — 101,367 54.0 %
Total interest and fees198,024 59,460 20,847 278,331 91.4 %114,917 47,991 6,495 169,403 90.3 %
Insurance premiums and commissions4,323 13,921 409 18,653 6.1 %— 11,678 143 11,821 6.3 %
Other revenue3,363 2,161 1,896 7,420 2.4 %3,877 2,211 381 6,469 3.4 %
   Total revenue205,710 75,542 23,152 304,404 100.0 %118,794 61,880 7,019 187,693 100.0 %

Product Revenue for the Three Months Ended June 30, 2022 and 2021

Revolving LOC
Revolving LOC revenue for the three months ended June 30, 2022 increased $28.5 million, or 42.0%, compared to the prior-year period, driven by growth in Canada Direct Lending revenue of $10.1 million, or 27.1%, and
37



Canada POS lending of $14.4 million.

Installment
Installment revenue for the three months ended June 30, 2022 increased $80.4 million, or 79.3%, compared to the prior-year period. The increase was a result of our acquisition of Heights Finance in the fourth quarter of 2021, which accounted for $69.7 million of Installment revenue in the second quarter of 2022.

Insurance premiums and commissions
Insurance premiums and commissions for the three months ended June 30, 2022 increased $6.8 million, or 57.8%, compared to the prior-year period, primarily driven by our acquisition of Heights Finance, which offers customary opt-in insurance and accounted for $4.3 million of insurance premiums and commissions revenue in the second quarter of 2022. Canada Direct Lending grew $2.2 million, or 19.2%, year over year from the sale of insurance products to Revolving LOC and Installment loan customers in Canada.

Six Months Ended
June 30, 2022June 30, 2021
(in thousands, unaudited)U.S.Canada Direct LendingCanada POS LendingTotal% of TotalU.S.Canada Direct LendingCanada POS LendingTotal% of Total
Revolving LOC55,059 93,045 39,502 187,606 31.6 %51,014 71,818 7,939 130,771 34.0 %
Installment332,703 22,978 — 355,681 59.8 %196,767 20,988 — 217,755 56.7 %
Total interest and fees387,762 116,023 39,502 543,287 91.4 %247,781 92,806 7,939 348,526 90.7 %
Insurance premiums and commissions9,324 26,943 646 36,913 6.2 %— 23,247 175 23,422 6.1 %
Other revenue7,024 4,062 3,314 14,400 2.4 %7,505 4,267 524 12,296 3.2 %
   Total revenue404,110 147,028 43,462 594,600 100.0 %255,286 120,320 8,638 384,244 100.0 %

Product Revenue for the Six Months Ended June 30, 2022 and 2021

Revolving LOC
Revolving LOC revenue for the six months ended June 30, 2022 increased $56.8 million, or 43.5%, compared to the prior-year period, driven by growth in Canada Direct Lending revenue of $21.2 million, or 29.6%, and Canada POS lending of $31.6 million.

Installment
Installment revenue for the six months ended June 30, 2022 increased $137.9 million, or 63.3%, compared to the prior-year period. The increase was a result of our acquisition of Heights Finance in the fourth quarter of 2021, which accounted for $130.1 million of Installment revenue in the first half of 2022.

Insurance premiums and commissions
Insurance premiums and commissions for the six months ended June 30, 2022 increased $13.5 million, or 57.6%, compared to the prior-year period, primarily driven by our acquisition of Heights Finance, which offers customary opt-in insurance and accounted for $9.3 million of insurance premiums and commissions revenue in the first half of 2022. Canada Direct Lending grew $3.7 million, or 15.9%, year over year due to growth in the sale of insurance products to Revolving LOC and Installment loan customers in Canada.

Other revenue
Other revenue for the six months ended June 30, 2022 increased $2.1 million, or 17.1%, versus the prior-year period as Canada POS Lending included a full quarter of revenue in 2022.

Provision for Losses for the Three Months Ended June 30, 2022 and 2021

Provision for losses increased by $84.4 million, or 186.8%, for the three months ended June 30, 2022 compared to the prior-year period, primarily driven by:
Sequential loan growth, driven by strong consumer demand, across all loan portfolios compared to the same period in the prior year;
Continued orderly credit normalization associated with loan growth as customers return to pre-COVID-19 payment behaviors as compared to the prior year, when customers received government stimulus payments;
Full quarter of provision for losses for our Heights Finance acquisition of $38.1 million;
38



Full quarter of provision for loan losses for Canada POS Lending of $6.0 million, an increase of $3.0 million compared to the prior-year period; and
Higher NCO and past-due rates, as COVID-19 Impacts lessened compared to the same period in the prior year. Refer to "Segment Analysis" sections below for additional details.

Provision for Losses for the Six Months Ended June 30, 2022 and 2021

Provision for losses increased by $145.8 million, or 179.3%, for the six months ended June 30, 2022 compared to the prior-year period, primarily driven by:
Sequential loan growth, driven by strong consumer demand, across all loan portfolios compared to the same period in the prior year;
Continued orderly credit normalization associated with loan growth as customers return to pre-COVID-19 payment behaviors as compared to the prior year, when customers received government stimulus payments;
Full two quarters of provision for losses for our Heights Finance acquisition of $58.7 million;
Full two quarters of provision for loan losses for Canada POS Lending of $14.7 million, an increase of $10.8 million compared to the prior-year period; and
Higher NCO and past-due rates, as COVID-19 Impacts lessened compared to the same period in the prior year. Refer to "Segment Analysis" sections below for additional details.

Operating Expenses

The following table summarizes operating expenses for the period indicated:
(in thousands, unaudited)Three Months Ended June 30,Six Months Ended June 30,
20222021Change $Change %20222021Change $Change %
Operating Expenses
Salaries and benefits$82,427 $58,320 $24,107 41.3 %$162,156 $113,237 $48,919 43.2 %
Occupancy17,507 13,783 3,724 27.0 %34,544 28,130 6,414 22.8 %
Advertising12,707 7,043 5,664 80.4 %23,207 15,127 8,080 53.4 %
Direct operations20,293 13,699 6,594 48.1 %40,567 25,668 14,899 58.0 %
Depreciation and amortization8,672 7,435 1,237 16.6 %18,486 12,400 6,086 49.1 %
Other operating expense22,801 17,218 5,583 32.4 %38,913 30,170 8,743 29.0 %
Total operating expense$164,407 $117,498 $46,909 39.9 %$317,873 $224,732 $93,141 41.4 %

Operating expenses for the three months ended June 30, 2022 increased $46.9 million, or 39.9%, primarily driven by:
Salaries and benefits were $82.4 million for the three months ended June 30, 2022, an increase of $24.1 million, or 41.3%, compared to the prior-year period. The increase is primarily related to costs associated with Heights Finance, which was acquired in December 2021, and an increase of $5.4 million in Canada POS Lending during the period;

Occupancy costs were $17.5 million for the three months ended June 30, 2022, an increase of $3.7 million, or 27.0%, compared to the prior-year period. This increase was almost entirely related to occupancy costs related to the Heights Finance acquisition being included in the three months ended June 30, 2022 occupancy costs and not being included in the three months ended June 30, 2021 occupancy costs;

Advertising costs increased $5.7 million, or 80.4%, year over year on more normalized spend compared to the second quarter of 2021 (which continued to be affected by COVID-19 Impacts) and the Heights Finance acquisition;

Direct operations were $20.3 million for the three months ended June 30, 2022, an increase of $6.6 million, or 48.1%, compared to the prior-year period. Excluding costs associated with Heights Finance, the direct operations increase was primarily due to higher volume, resulting in higher collection and variable processing costs, as well as a full quarter of Canada POS Lending direct operations of $3.7 million for the second quarter of 2022;

Depreciation and amortization expense for the three months ended June 30, 2022 increased $1.2 million, or 16.6%, compared to the prior-year period, primarily due to the depreciation and amortization of Heights Finance related long-lived assets, partially offset by store closures in the U.S. during the second and third quarters of 2021; and

Other operating expenses were $22.8 million for the three months ended June 30, 2022, an increase of $5.6 million, or 32.4%, compared to the prior-year period, primarily driven by our acquired Heights Finance business. Refer to the "Segment Analysis" sections below for additional details.
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Operating expenses for the six months ended June 30, 2022 increased $93.1 million, or 41.4%, primarily driven by:
Salaries and benefits were $162.2 million for the six months ended June 30, 2022, an increase of $48.9 million, or 43.2%, compared to the prior-year period. Excluding costs associated with Heights Finance, salaries and benefits increased $7.5 million, or 6.6%, primarily due to two full quarters of Canada POS Lending salaries and benefits expense;

Occupancy costs were $34.5 million for the six months ended June 30, 2022, an increase of $6.4 million, or 22.8%, compared to the prior-year period. Excluding costs associated with Heights Finance, occupancy costs decreased $1.7 million, or 6.2%, primarily due to store closures in the U.S. during the second and third quarters of 2021;

Advertising costs increased $8.1 million, or 53.4%, year over year on more normalized spend compared to the first half of 2021 (which continued to be affected by COVID-19 Impacts);

Direct operations were $40.6 million for the six months ended June 30, 2022, an increase of $14.9 million, or 58.0%, compared to the prior-year period. Excluding costs associated with Heights Finance, the direct operations increase primarily due to higher volume, resulting in higher collection and variable processing costs, as well as a full two quarters of Canada POS Lending direct operations of $7.4 million for the first half of 2022;

Depreciation and amortization expense for the six months ended June 30, 2022 increased $6.1 million, or 49.1%, compared to the prior-year period, primarily due a full two quarters of Canada POS Lending expense associated with the amortization of capitalized software development costs, partially offset by store closures in the U.S. during the second and third quarters of 2021; and

Other operating expenses were $38.9 million for the six months ended June 30, 2022, an increase of $8.7 million, or 29.0%, compared to the prior-year period, primarily driven by our acquired Heights Finance business. Refer to "Segment Analysis" sections below for additional details.
Other Expense (Income)

The following table summarizes other expenses (income) for the period indicated:
(in thousands, unaudited)Three Months Ended June 30,Six Months Ended June 30,
20222021Change $Change %20222021Change $Change %
Other expense (income)
Interest expense$42,193 $23,440 $18,753 80.0 %80,534 42,979 37,555 87.4 %
Loss (income) from equity method investment1,328 (1,712)3,040 #(256)(2,258)2,002 (88.7)
Gain from equity method investment— (135,387)135,387 #— (135,387)135,387 #
Total other expense (income)$43,521 $(113,659)$157,180 #80,278 (94,666)174,944 #
# - Variance greater than 100% or not meaningful

Other expenses for the three months ended June 30, 2022 increased $157.2 million, primarily driven by:

During the second quarter of 2021 Katapult became a public company via a SPAC merger, generating a pretax gain of $135.4 million; and

Interest expense for the three months ended June 30, 2022 increased $18.8 million, or 80.0%, primarily related to (i) interest on non-recourse debt assumed with the acquisition of Heights Finance, (ii) interest expense on the additional $250.0 million issuance of 7.50% Senior Secured Notes in the fourth quarter of 2021, (iii) interest on Flexiti's warehouse and securitization facilities, and (iv) higher utilization of the Canada SPV facility,

Other expenses for the six months ended June 30, 2022 increased $174.9 million primarily driven by:

During the second quarter of 2021 Katapult became a public company via a SPAC merger, generating a pretax gain of $135.4 million; and
Interest expense for the six months ended June 30, 2022 increased $37.6 million, or 87.4%, primarily related to (i) interest on non-recourse debt assumed with the acquisition of Heights Finance, (ii) interest expense on the additional $250.0 million issuance of 7.50% Senior Secured Notes in the fourth quarter of 2021, (iii) interest on Flexiti's warehouse and securitization facilities, and (iv) higher utilization of the Canada SPV facility,

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Provision for Income Taxes

Three Months Ended June 30, 2022 and 2021

The effective income tax rate for the three months ended June 30, 2022 was 21.1%. The effective income tax rate for the three months ended June 30, 2021 was lower than the blended federal and state/provincial statutory rate of approximately 26%, primarily as a result of proportionally more loss in lower rate jurisdictions combined with lost tax benefits related to share-based compensation of $0.4 million, officers' compensation of $0.4 million and non-deductible transaction costs of $0.3 million. The effective income tax rate of adjusted tax expense included in Adjusted Net Income for the three months ended June 30, 2022 was 22.1%.

Six Months Ended June 30, 2022 and 2021

The effective income tax rate for the six months ended June 30, 2022 was 19.2%. The effective income tax rate for the six months ended June 30, 2021 was lower compared to the blended federal and state/provincial statutory rate of approximately 26%, primarily as a result of proportionally more loss in lower rate jurisdictions combined with lost tax benefits related to share based compensation of $0.8 million, officers' compensation of $0.7 million and non-deductible transaction costs of $0.3 million. The effective income tax rate of adjusted tax expense included in Adjusted Net Income for the six months ended June 30, 2022 was 5.1%.

Loan Volume and Portfolio Performance Analysis

The following table reconciles Company Owned gross loans receivable, a GAAP-basis balance sheet measure, to Gross combined loans receivable, a non-GAAP measure(1). 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 by providing a guarantee to the unaffiliated lender:

As of
(in thousands, unaudited)June 30,
2022
March 31,
2022
December 31,
2021
September 30,
2021
June 30,
2021
U.S.
Revolving LOC58,471 49,077 52,532 51,196 47,277 
Installment - Company Owned627,651 589,652 609,413 137,987 139,234 
Canada Direct Lending
Revolving LOC442,738 424,485 402,405 366,509 337,700 
Installment24,817 23,578 24,792 24,315 23,564 
Canada POS Lending
Revolving LOC627,163 541,776 459,176 302,349 221,453 
Company Owned gross loans receivable1,780,840 1,628,568 1,548,318 882,356 769,228 
Gross loans receivable Guaranteed by the Company51,323 44,420 46,317 43,422 37,093 
Gross combined loans receivable (1) (2)
1,832,163 1,672,988 1,594,635 925,778 806,321 
(1) See a description of non-GAAP Financial Measures in "Supplemental Non-GAAP Financial Information."
(2) Includes loan balances classified as Held for Sale, as of June 30, 2022.

Gross combined loans receivable increased $1,025.8 million, or 127.2%, to $1,832.2 million as of June 30, 2022, from $806.3 million as of June 30, 2021. The increase was driven by:

$491.6 million of gross loans receivable from Heights Finance;
Canada POS Lending growth of $405.7 million, or 183.2%
Canada Direct Lending growth of $106.3 million, or 29.4%; and
U.S. gross combined loans receivable growth of $22.3 million, or 10.0%, excluding Heights Finance.

Sequentially, gross combined loans receivable increased $159.2 million, or 9.5%, primarily driven by Canada POS Lending growth of $85.4 million, or 15.8%, and Canada Direct Lending Revolving LOC growth of $18.3 million, or 4.3%. Gross combined loans receivable performance by product is described further in the following sections.

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Segment Analysis

The following is a summary of portfolio performance and results of operations for the segment and period indicated (all periods unaudited except for Q4 2021). We report financial results for three reportable segments: U.S., Canada Direct Lending and Canada POS Lending.


U.S. Portfolio Performance
(in thousands, except percentages)
Q2 2022(6)
Q1 2022
Q4 2021(1)
Q3 2021Q2 2021
Gross combined loans receivable (2)
Revolving LOC58,47149,07752,53251,19647,277
Installment loans - Company Owned627,651589,652137,782137,987139,234
Total U.S. Company Owned gross loans receivable686,122638,729190,314189,183186,511
Installment loans - Guaranteed by the Company (3)
51,32344,42046,31743,42237,093
Total U.S. gross combined loans receivable (2)
737,445683,149236,631232,605223,604
Lending Revenue:
Revolving LOC28,14526,91327,91127,37724,091
Installment loans - Company Owned121,595113,83356,82057,65955,918
Installment loans - Guaranteed by the Company (3)
48,28348,99147,34843,37734,908
Total U.S. lending revenue198,023189,737132,079128,413114,917
Lending Provision:
Revolving LOC11,8319,57711,5928,1406,621
Installment loans - Company Owned54,86832,96218,61816,79214,048
Installment loans - Guaranteed by the Company (3)
28,31321,74925,96723,14612,583
Total U.S. lending provision95,01264,28856,17748,07833,252
NCOs (7)
Revolving LOC$ 10,248$ 10,055$ 11,481$ 8,329$ 7,271
Installment loans - Company Owned40,75736,24719,66419,54818,617
Installment loans - Guaranteed by the Company (3)
27,39521,49226,06521,40412,044
Total U.S. NCOs$ 78,400$ 67,794$ 57,210$ 49,281$ 37,932
NCO rate (4) (7)
Revolving LOC19.1%19.8%22.1%16.9%16.0%
Installment loans - Company Owned6.7%6.0%14.3%14.1%13.2%
Total U.S. Company Owned NCO rate7.7%7.1%16.4%14.8%13.9%
Installment loans - Guaranteed by the Company (3)
57.2%47.4%58.1%53.2%34.6%
Total U.S. NCO rate11.0%14.7%24.4%21.6%17.2%
ALL and CSO Liability for Losses rate (5)
Revolving LOC25.1 %26.7 %25.9%26.3%28.9%
Installment loans - Company Owned6.8 %4.2 %12.7%13.4%15.3%
Total U.S. Company Owned ALL rate8.4 %5.9 %16.3%16.9%18.7%
Installment loans - Guaranteed by the Company (3)
15.7 %16.1 %14.9%16.1%14.2%
Total ALL and CSO Liability for Losses rate8.9 %6.6 %16.0%16.8%18.0%
Past-due rate (5)
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(in thousands, except percentages)
Q2 2022(6)
Q1 2022
Q4 2021(1)
Q3 2021Q2 2021
Revolving LOC29.3 %29.7 %30.5%30.5%26.6%
Installment loans - Company Owned20.6 %19.1 %19.4%20.1%18.7%
Total U.S. Company Owned past-due rate21.3 %19.9 %22.5%22.9%20.7%
Installment loans - Guaranteed by the Company (3)
19.0 %18.5 %17.7%19.8%17.4%
(1) On December 27, 2021, we acquired Heights Finance, which accounted for approximately $472 million of U.S. Installment loans as of December 31, 2021. As the period between December 27, 2021 and December 31, 2021 did not result in material loan performance, we have excluded Heights Finance from the table for the fourth quarter of 2021.
(2) Non-GAAP measure. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures."
(3) Includes loans originated by third-party lenders through CSO programs. Installment gross loans receivable Guaranteed by the Company are not included in the Consolidated Financial Statements.
(4) We calculate NCO rate as total NCOs divided by Average gross loans receivable.
(4) We report ALL as a contra-asset reducing gross loans receivable and the CSO Liability for Losses as a liability on the Consolidated Balance Sheets.
(5) We calculate (i) Allowance for loan losses (ALL) and CSO Liability for losses rate and (ii) past-due rate as the respective totals divided by gross loans receivable at each respective quarter end.
(6) Includes loan balances and activity classified as Held for Sale.
(7) For the first and second quarters of 2022, NCOs presented above include $5.0 million and $10.3 million, respectively, of NCO's related to the fair value discount, which are excluded from provision.

U.S. Loan Net Revenue

U.S. lending revenues increased by $83.1 million, or 72.3%, to $198.0 million, for the three months ended June 30, 2022, compared to the prior-year period as a result of our acquisition of Heights Finance.

The provision for losses increased $61.8 million, or 185.7%, year over year, primarily driven by (i) normalized provisioning on loan growth as customer behavior returns to pre-COVID-19 levels, (ii) full quarter provision for our Heights Finance acquisition, and (iii) higher NCO and past-due rates as COVID-19 Impacts lessened compared to the same period in the prior year.

U.S. Revolving LOC loan performance

U.S. Revolving LOC loan balances as of June 30, 2022 increased $11.2 million, or 23.7%, compared to the prior year. NCO rates rose 306 bps year over year but improved 69 bps sequentially. Past-due rates rose 267 bps year over year from COVID-19 Impacts in the prior year but decreased 36bps sequentially.

U.S. Installment loan performance - Company Owned

U.S. Installment loan balances as of June 30, 2022 increased $488.4 million, or 350.8%, and revenue increased $65.7 million, or 117.5%, compared to the prior year, primarily as a result of our acquisition of Heights Finance. NCO rates improved 652 bps year over year and rose 65 bps sequentially primarily as a result of Heights Finance. Excluding Heights Finance, the U.S. Q2 2022 NCO rate was 13.0%, 630 bps higher than the U.S. segment rate. Past-due rates increased 187 bps year over year from COVID-19 Impacts in the prior year and 154 bps sequentially.

U.S. Installment loan performance - Guaranteed by the Company

U.S. Installment loans Guaranteed by the Company increased $14.2 million, or 38.4%, year over year. For the three months ended June 30, 2022, NCO rates increased from 34.6% to 57.2% year over year primarily due to credit normalization, loan growth, and a shift to more new borrowers versus seasoned borrowers and more online originations versus store-based, both of which carry higher risk in their early stages. Past-due rates rose 47 bps year over year from COVID-19 Impacts in the prior year and 160 bps sequentially.

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Following is a summary of results of operations for the U.S. segment for the periods indicated.

Three Months Ended June 30,Six Months Ended June 30,
(dollars in thousands, unaudited)20222021Change $Change %20222021Change $Change %
Revenue
Interest and fees revenue$198,025 $114,917 $83,108 72.3 %387,762 247,781 139,981 56.5 %
Insurance premiums and commissions4,323 — 4,323 #9,324 — 9,324 #
Other revenue3,363 3,877 (514)(13.3)%7,024 7,505 (481)(6.4)%
Total revenue205,711 118,794 86,917 73.2 %404,110 255,286 $ 148,824 58.3 %
Provision for losses97,563 33,622 63,941 #164,388 59,678 104,710 #
Net revenue108,148 85,172 22,976 27.0 %239,722 195,608 44,114 22.6 %
Operating expenses
Salaries and benefits59,219 41,913 17,306 41.3 %118,880 83,423 35,457 42.5 %
Occupancy11,462 8,197 3,265 39.8 %22,396 16,732 5,664 33.9 %
Advertising11,167 6,089 5,078 83.4 %20,429 13,230 7,199 54.4 %
Direct operations13,580 8,272 5,308 64.2 %27,254 17,395 9,859 56.7 %
Depreciation and amortization4,602 3,008 1,594 53.0 %9,161 6,134 3,027 49.3 %
Other operating expense15,603 14,177 1,426 10.1 %28,454 24,635 3,819 15.5 %
Total operating expenses115,633 81,656 33,977 41.6 %226,574 161,549 65,025 40.3 %
Other expense (income)
Interest expense27,823 17,338 10,485 60.5 %55,508 33,696 21,812 64.7 %
Loss (income) from equity method investment1,328 (1,712)3,040 #(256)(2,258)2,002 (88.7)%
Gain from equity method investment— (135,387)135,387 #(135,387)135,387 #
Total other expense29,151 (119,761)148,912 #55,252 (103,949)159,201 #
Segment operating (loss) income(36,636)123,277 (159,913)#(42,104)138,008 (180,112)#
Interest expense27,823 17,338 10,485 60.5 %55,508 33,696 21,812 64.7 %
Depreciation and amortization4,602 3,008 1,594 53.0 %9,161 6,134 3,027 49.3 %
EBITDA (1)
(4,211)143,623 (147,834)#22,565 177,838 (155,273)(87.3)%
Restructuring costs1,146 5,763 (4,617)2,215 5,763 (3,548)
Loss (income) from equity method investment1,328 (1,712)3,040 (256)(2,258)2,002 
Gain from equity method investment— (135,387)135,387 — (135,387)135,387 
Transaction costs(168)3,181 (3,349)— 6,341 (6,341)
Share-based compensation3,259 3,467 (208)6,762 6,150 612 
Other adjustments(395)(159)(236)(640)(405)(235)
Adjusted EBITDA (1)
5,273 18,776 (13,503)(71.9)%$ 35,050 $ 58,042 ($ 22,992)(39.6)%
# - Variance greater than 100% or not meaningful.
(1) These are non-GAAP metrics. For a description of each non-GAAP addback, see the applicable reconciliations contained under "Consolidated Results of Operations." For a description of each non-GAAP metric, see "Non-GAAP Financial Measures."

U.S. Segment Results - For the Three Months Ended June 30, 2022 and 2021

For a discussion of revenue, provision for losses and related gross combined loans receivables for the three months ended June 30, 2022 and 2021, see "U.S. Portfolio Performance," above.

Operating expenses for the three months ended June 30, 2022 were $115.6 million, an increase of $34.0 million, or 41.6%, compared to $81.7 million for the three months ended June 30, 2021, primarily driven by the operating expenses associated with Heights Finance, which was not included in prior year amounts.

U.S. interest expense for the three months ended June 30, 2022 increased $10.5 million, or 60.5%, primarily driven by (i) interest on debt assumed in the acquisition of Heights Finance, (ii) interest expense on the additional $250.0 million issuance of 7.50% Senior Secured Notes, and (iii) higher interest expense on the U.S. SPV facility.
44




As previously described, we recognize our share of Katapult’s income or loss on a one-quarter lag. We recorded a loss of $1.3 million for the three months ended June 30, 2022. We own 19.6% of Katapult on a fully diluted basis assuming full pay-out of earn-out shares as of June 30, 2022.

U.S. Segment Results - For the Six Months Ended June 30, 2022 and 2021

Operating expenses for the six months ended June 30, 2022 were $226.6 million, an increase of $65.0 million, or 40.3%, compared to $161.5 million for the six months ended June 30, 2021, primarily driven by the operating expenses associated with Heights Finance.

U.S. interest expense for the six months ended June 30, 2022 increased $21.8 million, or 64.7%, primarily driven by interest on debt assumed in the acquisition of Heights Finance, (ii) interest expense on the additional $250.0 million issuance of 7.50% Senior Secured Notes, and (iii) higher interest expense on the U.S. SPV facility.

As previously described, we recognize our share of Katapult’s income or loss on a one-quarter lag. We recorded income of $0.3 million for the six months ended June 30, 2022. We own 19.6% of Katapult on a fully diluted basis assuming full pay-out of earn-out shares as of June 30, 2022, and 18.3% excluding pay-out of earn-out shares.
Canada Direct Lending Portfolio Performance
(in thousands, except percentages)Q2 2022Q1 2022Q4 2021Q3 2021Q2 2021
Gross loans receivable
Revolving LOC442,738424,485402,405366,509337,700
Installment loans 24,81723,57824,79224,31523,564
Total gross loans receivable467,555448,063427,197390,824361,264
Lending Revenue:
Revolving LOC47,59145,45543,94340,23937,450
Installment loans 11,86811,10911,41611,33110,541
Total lending revenue59,45956,56455,35951,57047,991
Lending Provision:
Revolving LOC$22,641$19,15620,08011,3757,066
Installment loans3,3032,7232,9452,5121,438
Total lending provision25,94421,87923,02513,8878,504
NCO rate (1)
Revolving LOC4.6%5.2%3.9%2.8%3.3%
Installment loans12.0%10.9%11.2%10.2%6.3%
Total NCO rate5.0%5.5%4.4%3.3%3.5%
ALL rate (2)
Revolving LOC7.2 %7.2 %8.0 %7.5 %7.9 %
Installment loans9.7 %8.8 %8.0 %7.4 %7.5 %
Total ALL rate7.4 %7.3 %8.0 %7.5 %7.9 %
Past-due rate (2)
Revolving LOC8.7 %8.0 %8.9 %6.8 %5.8 %
Installment loans1.8 %2.0 %2.2 %2.0 %2.3 %
Total past-due rate8.3 %7.7 %8.5 %6.5 %5.5 %
(1) We calculate NCO rate as total NCOs divided by Average gross loans receivable.
(2) We calculate ALL rate and past-due rate as the respective totals divided by gross loans receivable at each respective quarter end.

45




Canada Direct Loan Net Revenue

Canada Direct Lending revenue increased year over year by 11,468, or 23.9%, (increased $13.6 million, or 28.3%, on a constant currency basis), for the three months ended June 30, 2022, due to the growth of Revolving LOC loans in Canada.

The provision for losses increased $17.4 million, or 205.1%, ($18.4 million, or 216.0%, on a constant currency basis), to $25.9 million for the three months ended June 30, 2022, compared to $8.5 million in the prior-year period. The provision for losses increased $4.1 million, or 18.6%, ($18.4 million, or 216.0% on a constant currency basis), sequentially.The increase in provision for losses was primarily driven by (i) normalized provisioning on strong sequential loan growth as customer behavior returns to pre-COVID-19 levels, and (ii) orderly credit normalization to higher NCO and past-due rates as COVID-19 Impacts lessened compared to the same period in the prior year.

Canada Direct Lending Revolving LOC loan performance

Canada Direct Lending Revolving LOC gross loans receivable increased $106.3 million, or 29.4%, ($123.0 million, or 36.4%, on a constant currency basis) year over year and $19.5 million, or 4.4% ($36.2 million, or 8.5%, on a constant currency basis) sequentially. Revolving LOC revenue increased $10.1 million, or 27.1%, year over year and $2.1 million, or 4.7%, sequentially $11.9 million, or 31.6%, and $11.9 million, or 31.6%, respectively, on a constant currency basis). The quarterly NCO rate increased year over year from 3.3% to 4.6% as of June 30, 2022 and improved sequentially from 5.2% to 4.6% as of June 30, 2022 as COVID-19 Impacts lessened compared to the same period in the prior year. Past-due rates rose 293 bps year over year and 65 bps sequentially.

Canada Direct Lending Installment loan performance

Canada Direct Lending Installment revenue increased $1.3 million, or 12.6%, ($1.8 million, or 16.6%, on a constant currency basis) year over year. Installment gross loans receivable increased $1.3 million, or 5.3% ($2.3 million, or 9.6%, on a constant currency basis) year over year. The NCO rate increased year over year from 6.3% to 12.0% and sequentially from 10.9% to 12.0% as of June 30, 2022 as COVID-19 Impacts lessened compared to the same period in the prior year.

46



Canada Direct Lending Results of Operations

Three Months Ended June 30,Six Months Ended June 30,
(dollars in thousands, unaudited)20222021Change $Change %20222021Change $Change %
Revenue
Interest and fees revenue$59,459 $47,991 $11,468 23.9 %116,023 92,806 23,217 25.0 %
Insurance premiums and commissions13,920 11,678 2,242 19.2 %26,943 23,247 3,696 15.9 %
Other revenue2,161 2,211 (50)(2.3)%4,062 4,267 (205)(4.8)%
Total revenue75,540 61,880 13,660 22.1 %147,028 120,320 $ 26,708 22.2 %
Provision for losses26,021 8,556 17,465 #48,013 17,790 30,223 #
Net revenue49,519 53,324 (3,805)(7.1)%99,015 102,530 (3,515)(3.4)%
Operating expenses
Salaries and benefits14,665 13,224 1,441 10.9 %28,063 25,511 2,552 10.0 %
Occupancy5,750 5,545 205 3.7 %11,627 11,347 280 2.5 %
Advertising1,298 778 520 66.8 %2,236 1,682 554 32.9 %
Direct operations3,044 2,332 712 30.5 %5,897 4,450 1,447 32.5 %
Depreciation and amortization1,103 1,144 (41)(3.6)%2,226 2,270 (44)(1.9)%
Other operating expense2,472 2,460 12 0.5 %5,304 4,827 477 9.9 %
Total operating expenses28,332 25,483 2,849 11.2 %55,353 50,087 5,266 10.5 %
Other expense
Interest expense6,147 2,498 3,649 #10,177 4,853 5,324 #
Total other expense6,147 2,498 3,649 #10,177 4,853 5,324 #
Segment operating income15,040 25,343 (10,303)(40.7)%33,485 47,590 (14,105)(29.6)%
Interest expense6,147 2,498 3,649 #10,177 4,853 5,324 #
Depreciation and amortization1,103 1,144 (41)(3.6)%2,226 2,270 (44)(1.9)%
EBITDA (1)
22,290 28,985 (6,695)(23.1)%45,888 54,713 (8,825)(16.1)%
Share-based compensation129 — 129 #244 — 244 
Other adjustments(71)107 (178)16 148 (132)
Adjusted EBITDA (1)
22,355 29,092 (6,737)(23.2)%$ 46,155 $ 54,861 ($ 8,706)(15.9)%
# - Variance greater than 100% or not meaningful.
(1) These are non-GAAP metrics. For a description of each non-GAAP addback, see the applicable reconciliations contained under "Results of Consolidated Operations." For a description of each non-GAAP metric, see "Non-GAAP Financial Measures."

Canada Direct Lending Segment Results - For the Three Months Ended June 30, 2022 and 2021
For a discussion of revenue, provision for losses and related gross combined loans receivables for the three months ended June 30, 2022 and 2021, see "Canada Direct Lending Portfolio Performance" above.

Canada Direct Lending operating expenses were $28.3 million for the three months ended June 30, 2022, an increase of $2.8 million, or 11.2%, ($4.0 million, or 15.6%, on a constant currency basis), compared to the prior year, primarily due to higher variable costs, primarily collection and financial service fees, on higher volume year over year.

Interest expense for the three months ended June 30, 2022 was $6.1 million compared to $2.5 million for the three months ended June 30, 2021 due to higher utilization of the Canada SPV facility.

Canada Direct Lending Segment Results - For the Six Months Ended June 30, 2022 and 2021

Canada Direct Lending operating expenses were $55.4 million for the six months ended June 30, 2022, an increase of $5.3 million, or 10.5%, ($4.0 million, or 15.6%, on a constant currency basis), compared to the prior year, primarily due to higher variable costs, primarily collection and financial service fees, on higher volume year over year.

Interest expense for the six months ended June 30, 2022 was $10.2 million compared to $4.9 million for the six months ended June 30, 2021 due to higher utilization of the Canada SPV facility.
47



Canada POS Lending Portfolio Performance

(in thousands, except percentages)Q2 2022Q1 2022Q4 2021Q3 2021Q2 2021
Revolving LOC
Total gross loans receivable627,163541,776459,176302,349221,453
Total lending revenue20,84618,65513,70410,6466,495
Total lending provision5,9638,71412,5118,2852,986
Canada POS Lending NCOs (1)
3,5372,7271,7311,8271,509
NCO rate (1)(2)
0.6 %0.5 %0.5 %0.7 %0.7 %
ALL rate (3)
4.5 %5.1 %4.8 %3.8 %2.1 %
Past-due rate (3)(4)
5.3 %4.2 %4.1 %4.8 %5.4 %
(1) For the second, third and fourth quarters of 2021, NCOs presented above include $2.4 million, $0.6 million and $0.8 million, respectively, of NCO's related to the fair value discount, which are excluded from provision.
(2) We calculate NCO rate as total NCOs divided by Average gross loans receivable.
(3) We calculate ALL rate and past-due rate as the respective totals divided by gross loans receivable (excluding the fair value discount on acquired loans) at each respective quarter end.
(4) The past-due rate for Canada POS Lending for loans 31+ days past-due were 2.8%, 2.2%, 1.9%, 2.1%, and 2.6% for the three months ended June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021, and June 30, 2021, respectively.

Canada POS Lending Revolving LOC loan performance

Canada POS Lending revenue increased year over year by $14.4 million driven by year-over-year loan growth of $405.7 million, or 183.2%. The increase in gross loans receivable was driven by new merchant partners throughout 2021, the most notable being LFL, Canada's largest home furnishings retailer. Revolving LOC gross loans receivable generally charge-off at 180 days past due. The NCO and past-due rates for the quarter were 0.5% and 4.2%, respectively, and remained consistent sequentially. Past-due rates improved year over year by 5 bps.

Originations for the three months ended June 30, 2022 were C$314.0 million, an increase of C$210.0 million, or 202.0%, from the prior-year period of C$103.9 million. Originations for the six months ended June 30, 2022 were C$569.3 million, an increase of C$380.3 million, or 201.2%, from the prior-year period of C$189.0 million. Sequentially, Canada POS Revolving LOC gross loans receivable increased $85.4 million, or 15.8%.

48



Canada POS Lending Results of Operations
Three Months Ended June 30,Six Months Ended June 30,
(dollars in thousands, unaudited)2022
2021 (1)
Change $Change %20222021Change $Change %
Revenue
Interest and fees revenue$20,847 $6,495 14,352 #$39,502 $7,939 31,563 #
Insurance premiums and commissions410 175 235 #646 175 471 #
Other revenue1,896 349 1,547 #3,314 524 2,790 #
Total revenue23,153 7,019 16,134 #43,462 8,638 34,824 #
Provision for losses5,962 2,987 2,975 #14,676 3,842 10,834 #
Net revenue17,191 4,032 13,159 #28,786 4,796 23,990 #
Operating expenses
Salaries and benefits8,543 3,183 5,360 #15,213 4,303 10,910 #
Occupancy295 41 254 #521 51 470 #
Advertising242 176 66 38 %542 215 327 #
Direct operations3,669 3,095 574 19 %7,416 3,823 3,593 94.0 %
Depreciation and amortization2,967 3,283 (316)(10)%7,099 3,996 3,103 77.7 %
Other operating expense4,726 581 4,145 #5,155 708 4,447 #
Total operation expenses20,442 10,359 10,083 97 %35,946 13,096 22,850 #
Other expense
Interest expense8,223 3,604 4,619 #14,849 4,430 10,419 #
Total other expense8,223 3,604 4,619 #14,849 4,430 10,419 #
Segment operating loss(11,474)(9,931)(1,543)16 %(22,009)(12,730)(9,279)72.9 %
Interest expense8,223 3,604 4,619 #14,849 4,430 10,419 #
Depreciation and amortization2,967 3,283 (316)(10)%7,099 3,996 3,103 77.7 %
EBITDA (2)
(284)(3,044)2,760 (91)%(61)(4,304)4,243 (98.6)%
Acquisition-related adjustments— 5,495 (5,495)218 5,495 (5,277)
Change in fair value of contingent consideration4,014 — 4,014 3,750 — 3,750 
Share-based compensation1,029 — 1,029 1,504 — 1,504 
Other adjustments(27)(17)(10)43 (17)60 
Adjusted EBITDA (2)
4,732 2,434 $ 2,298 94 %$ 5,454 $ 1,174 $ 4,280 #
# - Variance greater than 100% or not meaningful.
(1) The totals reported for the six months ended June 30, 2021 include results from the date of acquisition, March 10, 2021, through June 30, 2021.
(2) These are non-GAAP metrics. For a description of each non-GAAP addback, see the applicable reconciliations contained under "Consolidated Results of Operations." For a description of each non-GAAP metric, see "Non-GAAP Financial Measures."

Canada POS Lending Segment Results - For the Three Months Ended June 30, 2022 and 2021
For a discussion of revenue, provision for losses and related gross loans receivable, see the "Canada POS Lending Portfolio Performance," above for the three months ended June 30, 2022.

Canada POS Lending operating expenses were $20.4 million for the three months ended June 30, 2022, an increase of $10.1 million, or 97%, ($4.0 million, or 15.6%, on a constant currency basis), compared to the prior year, primarily due to cost increases to support higher loan volume year over year.

Interest expense for the three months ended June 30, 2022 was $8.2 million compared to $3.6 million for the three months ended June 30, 2021 due to higher utilization of the Canada SPV facility and increased interest rates to support loan growth.

Canada POS Lending Segment Results - For the Six Months Ended June 30, 2022 and 2021

A comparison of the year-over-year results for the six months ended June 30, 2022 compared to June 30, 2021 are not meaningful as we acquired Flexiti as of March 10, 2021.
49





Supplemental Non-GAAP Financial Information

Non-GAAP Financial Measures

In addition to the financial information prepared in conformity with U.S. GAAP, we provide certain “non-GAAP financial measures,” including:

Adjusted Net Income and Adjusted Earnings Per Share, or the Adjusted Earnings Measures (net income plus or minus certain legal and other costs, income or loss from equity method investment, goodwill and intangible asset impairments, transaction-related costs, restructuring costs, adjustments related to acquisition accounting, share-based compensation, intangible asset amortization and cumulative tax effect of applicable adjustments, on a total and per share basis);
EBITDA (earnings before interest, income taxes, depreciation and amortization);
Adjusted EBITDA (EBITDA 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 the Consolidated Financial Statements).

We believe that the presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of the Company's operations. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of the business that, when viewed with the Company's U.S. GAAP results, provide a more complete understanding of factors and trends affecting the 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 the business that may not otherwise be apparent when relying on financial measures calculated in accordance with U.S. GAAP. In addition, we believe that the adjustments shown above 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 U.S. GAAP, we provide Gross Combined Loans Receivable consisting of owned loans receivable plus loans originated by third-party lenders through the CSO programs, which we guarantee but do not include in the Condensed Consolidated Financial Statements. 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 the U.S. GAAP 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, segment operating income, or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flows from operating activities or any other liquidity measure derived in accordance with U.S. GAAP. Readers should consider the information in addition to, but not instead of or superior to, the financial statements prepared in accordance with U.S. 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 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. GAAP. Some of these limitations are:

they do not include cash expenditures or future requirements for capital expenditures or contractual commitments;
they do not include changes in, or cash requirements for, working capital needs;
they do not include the interest expense, or the cash requirements necessary to service interest or principal payments on debt;
depreciation and amortization are non-cash expense items reported in the statements of cash flows; and
other companies in our industry may calculate these measures differently, limiting their usefulness as comparative measures.

We calculate Adjusted Earnings per Share utilizing diluted shares outstanding at year-end. If the Company records a loss under U.S. GAAP, shares outstanding utilized to calculate Diluted Earnings per Share are equivalent to basic shares outstanding. Shares
50



outstanding utilized to calculate Adjusted Earnings per Share reflect the number of diluted shares the Company would have reported if reporting net income under U.S. GAAP.

As noted above, Gross Combined Loans Receivable includes loans originated by third-party lenders through CSO programs which are not included in the 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.

We believe Adjusted Net Income, Adjusted Earnings per Share, EBITDA and Adjusted EBITDA are used by investors to analyze operating performance and to evaluate our ability to incur and service debt and 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 in this Form 10-Q may differ from the computation of similarly-titled measures provided by other companies.
Reconciliation of Net Income and Diluted Earnings per Share to Adjusted Net Income and Adjusted Diluted Earnings per Share, non-GAAP measures (in thousands, except per share data, unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
20222021Change $Change %20222021Change $Change %
Net (loss) income(26,080)104,517 (130,597)#($ 24,744)$ 130,252 ($ 154,996)#
Adjustments:
Restructuring costs (1)
1,146 5,763 2,215 5,763 
Legal and other costs (2)
950 — 1,037 — 
Loss (income) from equity method investment (3)
1,328 (1,712)(256)(2,258)
Gain from equity method investment (4)
— (135,387)— (135,387)
Transaction costs (4)
(168)3,181 — 6,341 
Acquisition-related adjustments (5)
3,371 5,495 3,592 5,495 
Change in fair value of contingent consideration (6)
4,014 — 3,750 — 
Share-based compensation (7)
4,417 3,467 8,510 6,150 
Intangible asset amortization (8)
3,524 1,866 6,501 2,697 
Cumulative tax effect of adjustments (9)
(3,788)30,204 (5,616)28,469 
Adjusted net (loss) income(11,286)17,394 (28,680)#(5,011)$ 47,522 (52,533)#
Net (loss) income($ 26,080)$ 104,517 ($ 24,744)$ 130,252 
Diluted weighted average shares outstanding40,376 43,672 40,372 43,556 
Adjusted diluted average shares outstanding40,376 43,672 40,372 43,556 
Diluted (loss) earnings per share(0.65)2.39 (3.04)#(0.61)2.99 (3.60)#
Per share impact of adjustments to net (loss) income0.37 (1.99)0.49 (1.90)
Adjusted diluted (loss) earnings per share(0.28)0.40 (0.68)(170.0)%($ 0.12)$ 1.09 (1.21)(111.0)%
Note: Footnotes follow Reconciliation of Net income table on the next page

51



Reconciliation of Net Income to EBITDA and Adjusted EBITDA, non-GAAP measures (in thousands, except per share data, unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
20222021Change $Change %20222021Change $Change %
Net (loss) income(26,080)104,517 (130,597)#($ 24,744)$ 130,252 (154,996)#
(Benefit) provision for income taxes(6,990)34,172 (41,162)#(5,884)42,616 (48,500)#
Interest expense42,193 23,440 18,753 80.0 %80,534 42,979 37,555 87.4 %
Depreciation and amortization8,672 7,435 1,237 16.6 %18,486 12,400 6,086 49.1 %
EBITDA17,795 169,564 (151,769)(89.5)%68,392 228,247 (159,855)(70.0)%
Restructuring costs (1)
1,146 5,763 2,215 5,763 
Legal and other costs (2)
950 — 1,037 — 
Loss (income) from equity method investment (3)
1,328 (1,712)(256)(2,258)
Gain from equity method investment (11)
— (135,387)— (135,387)
Transaction costs (4)
(168)3,181 — 6,341 
Acquisition-related adjustments (5)
3,371 5,495 3,592 5,495 
Change in fair value of contingent consideration (6)
4,014 — 3,750 — 
Share-based compensation (7)
4,417 3,467 8,510 6,150 
Other adjustments (10)
(493)(69)(581)(274)
Adjusted EBITDA32,360 50,302 (17,942)(35.7)%$ 86,659 $ 114,077 (27,418)(24.0)%
Adjusted EBITDA Margin10.6 %26.8 %14.6 %29.7 %
# - Change greater than 100% or not meaningful

(1)Restructuring costs for the three and six months ended June 30, 2022 resulted from U.S. store closures and related costs and certain severance payments to eliminate duplicate roles.
(2)Legal and other costs for the three and six months ended June 30, 2022 primarily related to settlement costs related to certain legal matters.
(3)The amount reported is our share of Katapult's U.S. GAAP net income or loss, recognized on a one quarter lag.
(4)Transaction costs for the three and six months ended June 30, 2022 relate to the acquisition of Heights Finance in December 2021, the sale of the Legacy U.S. Direct Lending business, and the acquisition of First Heritage Credit, both of which closed in July 2022.

Transaction costs for the three and six months ended June 30, 2021 relate to the acquisition of Flexiti in March 2021.
(5)During the three months and six months ended June 30, 2022, acquisition-related adjustments related to the acquired Heights loan portfolio as of December 27, 2021.

During the three months and six months ended June 30, 2022, acquisition-related adjustments related to the acquired Flexiti loan portfolio as of March 10, 2021.
(6)
In connection with our acquisition of Flexiti, we recorded a $4.0 million and $3.8 million adjustment related to the fair value of the contingent consideration for the three and six months ended June 30, 2022, respectively.
(7)The estimated fair value of share-based awards was recognized as non-cash compensation expense on a straight-line basis over the vesting period.
(8)Intangible asset amortization in determining ANI for the three and six months ended June 30, 2022 primarily included amortization of identifiable intangible assets established in connection with the acquisitions of Flexiti and Heights Finance.
(9)Cumulative tax effect of adjustments included in Reconciliation of Net income to Adjusted Net Income table is calculated using the estimated incremental tax rate by country.
(10)Other adjustments primarily reflect the intercompany foreign-currency exchange impact.
(11)Gain on investment in Katapult of $135.4 million recorded during the three and six months ended June 30, 2021 as a result of its reverse merger with FinServ.

Currency Information

We operate in the U.S. and Canada and 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. We translate all balance sheet accounts into U.S. dollars at the currency exchange rate in effect at the end of each period. We translate the statement of operations at the average rates of exchange for the period. We record currency translation adjustments as a component of Accumulated Other Comprehensive Income in Stockholders’ Equity.

52



Constant Currency Analysis

We have operations in the U.S. and Canada. In the three months ended June 30, 2022 and 2021, 32.4% and 36.7%, respectively, of our revenues were originated in Canadian Dollars. For the six months ended June 30, 2022 and 2021, 32.0% and 33.6%, respectively, of our revenues from continuing operations were originated in Canadian Dollars. As a result, changes in our reported results include the impacts of changes in foreign currency exchange rates for the Canadian Dollar.

Income Statement
Three Months Ended June 30,Six Months Ended June 30,
20222021$ Change% Change20222021$ Change% Change
Average Exchange Rates for the Canadian Dollar0.7835 0.8141 (0.0306)(3.8)%0.7864 $0.8019 ($0.0155)(1.9)%

Balance Sheet - Exchange Rate as of June 30, 2022 and December 31, 2021
June 30,December 31,Change
20222021$%
Exchange Rate for the Canadian Dollar0.7729 0.7846 (0.0117)(1.5)%

The following constant currency analysis removes the impact of the fluctuation in foreign exchange rates and utilizes constant currency results in our analysis of the Canada Direct Lending 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 the Canadian Dollar. We believe that the constant currency assessment below is a useful measure in assessing the comparable growth and profitability of our operations.

We calculated the revenues and gross margin below for our Canada segments during the three and six months ended June 30, 2022 using the actual average exchange rate during the three and six months ended June 30, 2021 (in thousands, unaudited).
Three Months Ended June 30,Six Months Ended June 30,
20222021$ Change% Change20222021$ Change% Change
Canada Direct Lending – constant currency basis:
Revenues$78,508 61,880 $16,628 26.9 %$149,951 120,320 $29,631 24.6 %
Net revenue51,467 53,324 (1,857)(3.5)%100,974 102,530 (1,556)(1.5)%
Segment operating income15,629 25,343 (9,714)(38.3)%34,129 47,590 (13,461)(28.3)%
Canada POS Lending – constant currency basis(1):
Revenues$24,073 7,019 $17,054 243.0 %44,345 8,638 35,707 413.4 %
Net revenue17,888 4,032 13,856 343.7 %29,400 4,796 24,604 513.0 %
Segment operating loss(11,927)(9,931)(1,996)20.1 %(22,447)(12,730)(9,717)76.3 %
(1) The totals reported for the six months ended June 30, 2021 include results from the date of acquisition, March 10, 2021, through June 30, 2021.

We calculated gross loans receivable for our Canada segments below as of June 30, 2022 using the actual exchange rate as of December 31, 2021 (in thousands, unaudited).
June 30,December 31,Change
20222021$%
Canada Direct Lending – constant currency basis:
Gross loans receivable$486,544 $427,197 $59,347 13.9 %
Canada POS Lending – constant currency basis:
Gross loans receivable$652,634 $459,176 $193,458 42.1 %

53



LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity to fund the loans we make to our customers are (i) cash provided by operations, (ii) our revolving credit facilities and our non-recourse funding facilities, as further described in Note 5, "Debt" of the Notes to the Consolidated Financial Statements, and (iii) funds from third-party lenders under our CSO programs.

As of June 30, 2022, we were in compliance with all financial ratios, covenants and other requirements in our debt agreements. We anticipate that our primary use of cash will be to fund growth in our working capital, finance capital expenditures to further our growth strategy in both the U.S. and Canada, and meet our debt obligations. We may also use cash for potential strategic investments in and acquisitions of other companies that help us extend our reach and product portfolio. Additionally, we may use cash to fund a return on capital for our stockholders through share repurchase programs, or in the form of dividends. In the first quarter of 2021, our Board of Directors increased the quarterly dividend to $0.11 per share, an increase of 100%. Additionally, in May 2021 our Board of Directors authorized a $50.0 million share repurchase program which concluded in February 2022. A new $25.0 million share repurchase program was authorized in February 2022, which will commence at our discretion. Refer to Note 15, "Share Repurchase Program" of the Notes to the unaudited Condensed Consolidated Financial Statements for further details of the program.

Our level of cash flow provided by operating activities typically experiences seasonal fluctuations 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 to the extent we experience any short-term or long-term funding shortfalls, such as tightening our credit approval practices (as we did during the COVID-19 pandemic), which has the effect of reducing cash outflow requirements while increasing cash inflows through loan repayments.

We may also sell or securitize our assets, draw on our available revolving credit facilities or lines of credit, enter into additional refinancing agreements or reduce our capital spending to generate additional liquidity. The impacts to cash as described in "—Cash Flows" below and other factors resulted in our available cash on hand of $47.6 million ($10.2 million held for sale) as of June 30, 2022. We believe our cash on hand and available borrowings provide us with sufficient liquidity for at least the next 12 months.

Our recent acquisitions of Flexiti and Heights Finance have increased our product offerings to include customers in the near-prime and prime space. The acquisition of Flexiti allows us to tailor our current product structure to its POS model, potentially expanding to sub-prime customers. The acquisition of Heights Finance accelerates our strategic transition in the U.S. toward longer term, higher balance and lower rate credit products and provides us with access to a larger addressable market while mitigating regulatory risk. These initiatives to expand our product offerings and grow the U.S. and Canada businesses can materially impact our future cash flows. For further information regarding the acquisitions, refer to Note 1, "Summary of Significant Accounting Policies and Nature of Operations," Note 13, "Goodwill," and Note 14,"Acquisitions and Divestiture" of the Notes to the unaudited Condensed Consolidated Financial Statements.

We have no additional material commitments or demands that are likely to affect our liquidity.

54



Debt Capitalization Summary
(in thousands, net of deferred financing costs)

CapacityInterest RateMaturityBalance as of June 30, 2022 (in USD)
7.50% Senior Secured Notes (due 2028) (2)
$1.0 billion7.50%August 1, 2028981,735 
Senior Secured Revolving Credit Facility (4)
$50.0 million
1-Mo LIBOR + 5.00%
July 31, 202250,000 
U.S. SPV (3)
$200.0 million
1-Mo LIBOR + 6.25%
April 8, 202446,295 
Heights Finance SPV
$350.0 million
1-Mo LIBOR + 5.25%
December 31, 2024292,309 
Canada SPV(1)
C$400.0 million
3-Mo CDOR + 6.00%
August 2, 2026302,619 
Flexiti SPE(1)
C$500.0 million
3-Mo CDOR + 4.40%
March 10, 2024159,045 
Flexiti Securitization(1)
C$526.5 million
1-Mo CDOR + 3.59%
December 9, 2025403,625 
CURO Canada Revolving Credit Facility (1)
C$10.0 million
Canada Prime Rate +1.95%
On-demand98 
(1) Capacity amounts are denominated in Canadian dollars, while outstanding balances as of June 30, 2022 are denominated in U.S. dollars.
(2) On July 30, 2021, we closed our $750 million aggregate principal amount of new 7.50% Senior Secured Notes, which was used to redeem our $690.0 million 8.25% Senior Secured Notes due 2025. On December 27, 2021, we issued an additional $250.0 million of our 7.50% Senior Secured Notes for a total capacity of $1.0 billion.
(3) Classified as Held for Sale, as of June 30, 2022.
(4) On July 29, 2022, we extended the maturity through August 31, 2022 and decreased the borrowing capacity to $45.0 million.

Refer to Note 5, "Debt," for details on each of our credit facilities and resources.

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Cash Flows

The following highlights our cash flow activity and the sources and uses of funding during the periods indicated (in thousands):
Six Months Ended June 30,
20222021
Net cash provided by operating activities$201,209 $162,895 
Net cash used in investing activities(485,492)(93,698)
Net cash provided by financing activities273,923 8,088 

As previously described, year-over-year comparisons were impacted by COVID-19 Impacts and the Runoff Portfolios from regulatory changes.

Operating Activities

Net cash provided by operating activities for the six months ended June 30, 2022 was $201.2 million, attributable to net loss of $24.7 million, the effect of non-cash reconciling items of $261.2 million, and changes in our operating assets and liabilities of $35.3 million. Our non-cash reconciling items of $261.2 million primarily included $227.1 million of provision for losses and $18.5 million of depreciation and amortization. Our changes in operating assets and liabilities of $35.3 million were primarily related to (i) $36.5 million of lower accounts payable and accrued liabilities as a result of timing on the settlement of certain accruals, and (ii) $14.7 million of lower income taxes receivable, partially offset by $10.7 million of lower accrued interest on our gross loans receivable.

Investing Activities

Net cash used in investing activities for the six months ended June 30, 2022 was $485.5 million, primarily due to net origination of loans of $463.2 million. In addition, we used cash to purchase $22.2 million of property, equipment and software, an increase from the prior year due to the acquisitions of Flexiti and Heights Finance.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2022 was $273.9 million primarily due to $300.0 million of net proceeds from our non-recourse debt facilities partially offset by (i) $13.5 million of share repurchases in the first quarter of 2022 and (ii) $9.2 million of cash dividends.

Critical Accounting Policies and Estimates

There have been no material changes to the information on critical accounting estimates described in Part II - Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates, in our 2021 Form 10-K, which information is incorporated by reference herein.

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.

Our reporting units consist of the U.S., Canada Direct Lending and Canada POS Lending segments, 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, 2021), the U.S., Canada Direct Lending, and Canada POS Lending reporting units' estimated fair values exceeded their carrying value. As described in our 2021 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 divestiture of a significant portion of a reporting unit or economic outlook. These and other macroeconomic factors were considered when performing the annual test as of October 1, 2021.

For the three months ended June 30, 2022, we reviewed goodwill for triggering events that would indicate a need for an interim quantitative or qualitative assessment of goodwill impairment. As a result of the review, no additional assessment was deemed necessary, and thus there was no goodwill impairment for any reporting unit.

There continues to be uncertainty surrounding macroeconomic factors that could impact our reporting units. Changes in the expected length of the current economic downturn, timing of recovery, or long-term revenue growth or profitability for these reporting units could increase the likelihood of a future goodwill 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.
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The following table summarizes the segment allocation of recorded goodwill on our unaudited Condensed Consolidated Balance Sheets as of June 30, 2022:
(in thousands)June 30, 2022Percent of TotalDecember 31, 2021Percent of Total
U.S. (2)
$375,158 84.5 %$359,779 83.7 %
Canada Direct Lending (1)
29,653 6.7 %30,105 7.0 %
Canada POS Lending (1)
39,310 8.9 %39,908 9.3 %
Total Goodwill$444,121 $429,792 
(1) Changes in Goodwill between December 31, 2021 and June 30, 2022 are due to fluctuations in foreign exchange rates. Refer to Note 13, "Goodwill" for additional details.
(2) Includes balance classified as Held for Sale, as of June 30, 2022.

Regulatory Environment and Compliance

There have been no significant developments with respect to our regulatory environment and compliance since December 31, 2021, as described in our 2021 Form 10-K, except for the following:

CFPB Supervisory Authority

The CFPB is expanding its supervisory authority using its Dormant Authority provided for in the Dodd-Frank Act. On April 25, 2022, the CFPB (or “Bureau”) announced that it will begin conducting supervisory examinations of non-bank financial entities (e.g., FinTechs) not currently subject to supervision and enforcement, if the Bureau believes the companies may be posing risks to consumers. The Bureau is also signaling that it may decide to publicly disclose some of its new supervisory activity so that other entities can be informed of areas the Bureau finds problematic. In the same announcement, the Bureau indicated that it is seeking public comments on a procedural rule to make the examination process more transparent.

CFPB Consumer Reviews

On March 22, 2022, the CFPB issued a compliance bulletin for financial companies and their service providers warning that restricting consumer reviews, silencing consumer reviews, pressuring consumers to remove a review, or posting fake reviews can violate the Consumer Review Fairness Act as well as constitute a UDAAP.

CFPB Anti-Discrimination

On March 16, 2022, CFPB announced that it was expanding its anti-discrimination efforts in all consumer finance markets. The announcement clarified that discrimination can be “unfair” and trigger UDAAP even though the discriminatory action could be covered under the Equal Credit Opportunity Act or another law. The CFPB updated its examination procedures manual for UDAAP to examine decision-making processes for assessing discriminatory risk and outcomes, including advertising, pricing, and other areas.

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 2021 Form 10-K. There have been no material changes to the quantitative and qualitative information presented therein.

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 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 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.

In conducting the evaluation of the effectiveness of its internal control over financial reporting as of June 30, 2022, the Company has excluded the operations of Heights Finance as permitted by the guidance issued by the Office of the Chief Accountant of the
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SEC (not to extend more than one year beyond the date of the acquisition or for more than one annual reporting period). The Heights Finance acquisition was completed on December 27, 2021. As of June 30, 2022, Heights Finance's assets represented approximately 30.2%% of the Company’s consolidated assets and for the three and six months ended June 30, 2022, its revenues represented approximately 24.4% and 23.5% respectively of the Company’s consolidated revenues.

See Note 14,"Acquisitions and Divestiture" of the Notes to the unaudited Condensed Consolidated Financial Statements for additional details on our acquisition of Heights Finance and its impact on our unaudited Condensed Consolidated Financial Statements.

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 June 30, 2022.

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

The Company is working to integrate Heights Finance into its overall internal control over financial reporting processes. Additionally, on March 10, 2021, the Company acquired Flexiti. See Note 14,"Acquisitions and Divestiture" of the Notes to the unaudited Condensed Consolidated Financial Statements for additional details. The Company continued the process of refining financial reporting controls on the operations associated with Flexiti as of June 30, 2022. Except for changes made in connection with the integration of Heights Finance and Flexiti, 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 three months ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II.     OTHER INFORMATION

Item 1.         Legal Proceedings
The information required by this item is included in Note 11, "Commitments and Contingencies" of the Notes to the unaudited Condensed Consolidated Financial Statements in this Form 10-Q and is incorporated herein by reference.

Item 1A.     Risk Factors
There were no material changes to our risk factors as described in our 2021 Form 10-K for the year ended December 31, 2021.

Item 2.         Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of our common stock during the period covered by this Quarterly Report on Form 10-Q.

Issuer Purchases of Equity Securities

In May 2021, our Board of Directors authorized a share repurchase program providing for the repurchase of up to $50.0 million of our common stock. The program commenced in June 2021 and was completed in February 2022.

The following table provides information with respect to repurchases we made of our common stock during the quarter ended June 30, 2022.

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Period
Total Number of Shares Purchased(1)(2)
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)
Dollar Value of Shares that may yet be Purchased under the Plans or Programs(3)
(in millions)
April 2022344 $12.72 — $— 
May 20228,685 $11.58 — $— 
June 20223,071 $7.36 — $— 
Total12,100 $10.54 — 
(1) Includes shares withheld from employees as tax payments for shares issued under our stock-based compensation plans. See Note 11, "Share-based compensation" of the 2021 Form 10-K for additional details on our stock-based compensation plans.
(2) All shares purchased as part of a publicly announced plan were purchased under the 2021 Repurchase Program, described in this Item 2.
(3) As of the end of the period.

Item 3.         Defaults Upon Senior Securities

None.

Item 4.         Mine Safety Disclosures

None.

Item 5.         Other Information

(a)    Disclosure of Unreported 8-K Information

None.

(b)    Material Changes to Director Nominee Procedures

None.
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Item 6.        Exhibits
Exhibit no.Exhibit DescriptionFiled/Incorporated by Reference from FormIncorporated by Reference from Exhibit NumberFiling Date
2.18-K2.15/19/2022
2.28-K2.25/19/2022
3.110-Q10.18/5/2020
3.28-K3.212/11/17
4.1S-14.111/28/17
4.2S-14.211/28/17
4.3S-14.35/17/18
4.410-K4.43/9/20
31.1 Filed herewith
31.2 Filed herewith
32.1 Filed herewith
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The following unaudited financial information from the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2022, filed with the SEC on May 3, 2022, formatted in Extensible Business Reporting Language (“XBRL”) includes: (i) Condensed Consolidated Balance Sheets at June 30, 2022 and December 31, 2021, (ii) Condensed Consolidated Statements of Operations for the three months ended June 30, 2022 and 2021, (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended June 30, 2022 and 2021, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021, and (v) Notes to Condensed Consolidated Financial Statements*
Filed herewith




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Signature

Pursuant to the requirements 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: August 8, 2022                CURO Group Holdings Corp.
By:/s/ Roger Dean
Roger Dean
Executive Vice President and Chief Financial Officer
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